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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023

Commission File Number 001-33653

(Exact name of Registrant as specified in its charter)

Ohio						31-0854434
(State or other jurisdiction						(I.R.S. Employer
of incorporation or organization)						Identification Number)

38 Fountain Square Plaza

Cincinnati, Ohio 45263

(Address of principal executive offices)

Registrant’s telephone number, including area code: (800) 972-3030

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock, Without Par Value

FITB

The

NASDAQ

Stock Market LLC

Depositary Shares Representing a 1/1000th Ownership Interest in a Share of

6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series I

FITBI

The

NASDAQ

Stock Market LLC

Depositary Shares Representing a 1/40th Ownership Interest in a Share of

6.00% Non-Cumulative Perpetual Class B Preferred Stock, Series A

FITBP

The

NASDAQ

Stock Market LLC

Depositary Shares Representing a 1/1000th Ownership Interest in a Share of

4.95% Non-Cumulative Perpetual Preferred Stock, Series K

FITBO

The

NASDAQ

Stock Market LLC

There were 680,716,026 shares of the Registrant’s common stock, without par value, outstanding as of April 30, 2023.

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Table of Contents

FINANCIAL CONTENTS

Part I. Financial Information
Glossary of Abbreviations and Acronyms			2
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2)			3
Overview			3
Non-GAAP Financial Measures			8
Recent Accounting Standards			10
Critical Accounting Policies			10
Statements of Income Analysis			12
Balance Sheet Analysis			19
Business Segment Review			26
Risk Management—Overview			33
Credit Risk Management			33
Interest Rate and Price Risk Management			49
Liquidity Risk Management			54
Capital Management			56
Quantitative and Qualitative Disclosures about Market Risk (Item 3)			59
Controls and Procedures (Item 4)			59
Condensed Consolidated Financial Statements and Notes (Item 1)			60
Balance Sheets (unaudited)			60
Statements of Income (unaudited)			61
Statements of Comprehensive Income (unaudited)			62
Statements of Changes in Equity (unaudited)			63
Statements of Cash Flows (unaudited)			64
Notes to Condensed Consolidated Financial Statements (unaudited)			65
Part II. Other Information
Legal Proceedings (Item 1)			125
Risk Factors (Item 1A)			125
Unregistered Sales of Equity Securities and Use of Proceeds (Item 2)			125
Defaults Upon Senior Securities (Item 3)			125
Mine Safety Disclosures (Item 4)			125
Other Information (Item 5)			125
Exhibits (Item 6)			126
Signature			127

FORWARD-LOOKING STATEMENTS

This report contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. All statements other than statements of historical fact are forward-looking statements. These statements relate to our financial condition, results of operations, plans, objectives, future performance, capital actions or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “are expected to,” “is anticipated,” “potential,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as “believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” or similar verbs. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) effects of the global COVID-19 pandemic; (2) deteriorating credit quality; (3) loan concentration by location or industry of borrowers or collateral; (4) problems encountered by other financial institutions; (5) inadequate sources of funding or liquidity; (6) unfavorable actions of rating agencies; (7) inability to maintain or grow deposits; (8) limitations on the ability to receive dividends from subsidiaries; (9) cyber-security risks; (10) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (11) failures by third-party service providers; (12) inability to manage strategic initiatives and/or organizational changes; (13) inability to implement technology system enhancements; (14) failure of internal controls and other risk management systems; (15) losses related to fraud, theft, misappropriation or violence; (16) inability to attract and retain skilled personnel; (17) adverse impacts of government regulation; (18) governmental or regulatory changes or other actions; (19) failures to meet applicable capital requirements; (20) regulatory objections to Fifth Third’s capital plan; (21) regulation of Fifth Third’s derivatives activities; (22) deposit insurance premiums; (23) assessments for the orderly liquidation fund; (24) replacement of LIBOR; (25) weakness in the national or local economies; (26) global political and economic uncertainty or negative actions; (27) changes in interest rates and the effects of inflation; (28) changes and trends in capital markets; (29) fluctuation of Fifth Third’s stock price; (30) volatility in mortgage banking revenue; (31) litigation, investigations, and enforcement proceedings by governmental authorities; (32) breaches of contractual covenants, representations and warranties; (33) competition and changes in the financial services industry; (34) changing retail distribution strategies, customer preferences and behavior; (35) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (36) potential dilution from future acquisitions; (37) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (38) results of investments or acquired entities; (39) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (40) inaccuracies or other failures from the use of models; (41) effects of critical accounting policies and judgments or the use of inaccurate estimates; (42) weather-related events, other natural disasters, or health emergencies (including pandemics); (43) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; (44) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases; and (45) Fifth Third’s ability to meet its environmental and/or social targets, goals and commitments. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The information contained herein is intended to be reviewed in its totality, and any stipulations, conditions or provisos that apply to a given piece of information in one part of this report should be read as applying mutatis mutandis to every other instance of such information appearing herein.

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PART I. FINANCIAL INFORMATION
Glossary of Abbreviations and Acronyms

Fifth Third Bancorp provides the following list of abbreviations and acronyms as a tool for the reader that are used in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Condensed Consolidated Financial Statements and the Notes to Condensed Consolidated Financial Statements.

ACL: Allowance for Credit Losses			FTS: Fifth Third Securities, Inc.
AFS: Available-For-Sale			GDP: Gross Domestic Product
ALCO: Asset Liability Management Committee			GNMA: Government National Mortgage Association
ALLL: Allowance for Loan and Lease Losses			HTM: Held-To-Maturity
AOCI: Accumulated Other Comprehensive Income (Loss)			IPO: Initial Public Offering
APR: Annual Percentage Rate			IRC: Internal Revenue Code
ARM: Adjustable Rate Mortgage			IRLC: Interest Rate Lock Commitment
ASC: Accounting Standards Codification			ISDA: International Swaps and Derivatives Association, Inc.
ASU: Accounting Standards Update			LIBOR: London Interbank Offered Rate
ATM: Automated Teller Machine			LIHTC: Low-Income Housing Tax Credit
BHC: Bank Holding Company			LLC: Limited Liability Company
BOLI: Bank Owned Life Insurance			LTV: Loan-to-Value Ratio
bps: Basis Points			MD&A: Management’s Discussion and Analysis of Financial
CD: Certificate of Deposit			Condition and Results of Operations
CDC: Fifth Third Community Development Corporation and Fifth Third			MSR: Mortgage Servicing Right
Community Development Company, LLC			N/A: Not Applicable
CECL: Current Expected Credit Loss			NII: Net Interest Income
CET1: Common Equity Tier 1			NM: Not Meaningful
CFPB: United States Consumer Financial Protection Bureau			OAS: Option-Adjusted Spread
C&I: Commercial and Industrial			OCC: Office of the Comptroller of the Currency
DCF: Discounted Cash Flow			OCI: Other Comprehensive Income (Loss)
DTCC: Depository Trust & Clearing Corporation			OREO: Other Real Estate Owned
DTI: Debt-to-Income Ratio			PPP: Paycheck Protection Program
ERM: Enterprise Risk Management			ROU: Right-of-Use
ERMC: Enterprise Risk Management Committee			SBA: Small Business Administration
EVE: Economic Value of Equity			SEC: United States Securities and Exchange Commission
FASB: Financial Accounting Standards Board			SOFR: Secured Overnight Financing Rate
FDIC: Federal Deposit Insurance Corporation			TBA: To Be Announced
FHA: Federal Housing Administration			TDR: Troubled Debt Restructuring
FHLB: Federal Home Loan Bank			TILA: Truth in Lending Act
FHLMC: Federal Home Loan Mortgage Corporation			U.S.: United States of America
FICO: Fair Isaac Corporation (credit rating)			USD: United States Dollar
FINRA: Financial Industry Regulatory Authority			U.S. GAAP: United States Generally Accepted Accounting
FNMA: Federal National Mortgage Association			Principles
FOMC: Federal Open Market Committee			VA: United States Department of Veterans Affairs
FRB: Federal Reserve Bank			VIE: Variable Interest Entity
FTE: Fully Taxable Equivalent			VRDN: Variable Rate Demand Note
FTP: Funds Transfer Pricing

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2)

The following is Management’s Discussion and Analysis of Financial Condition and Results of Operations of certain significant factors that have affected Fifth Third Bancorp’s (the “Bancorp” or “Fifth Third”) financial condition and results of operations during the periods included in the Condensed Consolidated Financial Statements, which are a part of this filing. Reference to the Bancorp incorporates the parent holding company and all consolidated subsidiaries. The Bancorp’s banking subsidiary is referred to as the Bank.

OVERVIEW

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. At March 31, 2023, the Bancorp had $209 billion in assets and operated 1,069 full-service banking centers and 2,118 Fifth Third branded ATMs in eleven states throughout the Midwestern and Southeastern regions of the U.S. The Bancorp reports on three business segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management.

This overview of MD&A highlights selected information in the financial results of the Bancorp and may not contain all of the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources and critical accounting policies and estimates, you should carefully read this entire document as well as the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022. Each of these items could have an impact on the Bancorp’s financial condition, results of operations and cash flows. In addition, refer to the Glossary of Abbreviations and Acronyms in this report for a list of terms included as a tool for the reader of this Quarterly Report on Form 10-Q. The abbreviations and acronyms identified therein are used throughout this MD&A, as well as the Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements.

Net interest income, net interest margin, net interest rate spread and the efficiency ratio are presented in MD&A on an FTE basis. The FTE basis adjusts for the tax-favored status of income from certain loans and leases and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison between taxable and non-taxable amounts. The FTE basis for presenting net interest income is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

The Bancorp’s revenues are dependent on both net interest income and noninterest income. For the three months ended March 31, 2023, net interest income on an FTE basis and noninterest income provided 69% and 31% of total revenue, respectively. The Bancorp derives the majority of its revenues within the U.S. from customers domiciled in the U.S. Revenue from foreign countries and external customers domiciled in foreign countries was immaterial to the Condensed Consolidated Financial Statements for the three months ended March 31, 2023. Changes in interest rates, credit quality, economic trends and the capital markets are primary factors that drive the performance of the Bancorp. As discussed later in the Risk Management section of MD&A, risk identification, measurement, monitoring, control and reporting are important to the management of risk and to the financial performance and capital strength of the Bancorp.

Net interest income is the difference between interest income earned on assets such as loans, leases and securities, and interest expense incurred on liabilities such as deposits, other short-term borrowings and long-term debt. Net interest income is affected by the general level of interest rates, the relative level of short-term and long-term interest rates, changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Generally, the rates of interest the Bancorp earns on its assets and pays on its liabilities are established for a period of time. The change in market interest rates over time exposes the Bancorp to interest rate risk through potential adverse changes to net interest income and financial position. The Bancorp manages this risk by continually analyzing and adjusting the composition of its assets and liabilities based on their payment streams and interest rates, the timing of their maturities and their sensitivity to changes in market interest rates. Additionally, in the ordinary course of business, the Bancorp enters into certain derivative transactions as part of its overall strategy to manage its interest rate and prepayment risks. The Bancorp is also exposed to the risk of loss on its loan and lease portfolio as a result of changing expected cash flows caused by borrower credit events, such as loan defaults and inadequate collateral.

Noninterest income is derived from commercial banking revenue, wealth and asset management revenue, service charges on deposits, card and processing revenue, mortgage banking net revenue, leasing business revenue, other noninterest income and net securities gains or losses. Noninterest expense includes compensation and benefits, technology and communications, net occupancy expense, equipment expense, leasing business expense, marketing expense, card and processing expense and other noninterest expense.

Current Economic Conditions

Economic activity expanded at a modest pace in the first quarter of 2023. The labor market has remained strong and inflation has remained elevated. In response to persistent inflationary pressures, the FRB has raised benchmark interest rates by 500 basis points since March 2022 and has signaled they will continue to monitor the cumulative economic effects of their policy actions, including tighter credit conditions for households and businesses, when determining future monetary actions. Amidst the rapid rate increases, several financial markets have experienced heightened volatility.

Changes in interest rates can affect numerous aspects of the Bancorp’s business and may impact the Bancorp’s future performance. If financial markets remain volatile, this may impact the future performance of various segments of the Bancorp’s business, including the value

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

of the Bancorp’s investment securities portfolio. The Bancorp continues to closely monitor the pace of inflation and the impacts of inflation on the broader market.

The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank and First Republic Bank have generated significant market volatility and have increased regulatory and market focus on the liquidity, asset-liability management and unrealized securities losses of banks. In March 2023, the FRB started the Bank Term Funding Program, which makes additional funding available to eligible depository institutions. The Bancorp continues to monitor regulatory changes related to these developments.

For further discussion on current economic conditions, refer to the Credit Risk Management subsection of the Risk Management section of MD&A. Additionally, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A for additional information about the Bancorp’s interest rate risk management activities.

Accelerated Share Repurchase Transaction

During the three months ended March 31, 2023, the Bancorp entered into and settled an accelerated share repurchase transaction. As part of the transaction, the Bancorp entered into a forward contract in which the final number of shares delivered at settlement was based generally on a discount to the average daily volume weighted-average price of the Bancorp’s common stock during the term of the repurchase agreement. Refer to Note 16 of the Notes to Condensed Consolidated Financial Statements for additional information on share repurchase activity.

LIBOR Transition

In July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA would stop persuading or compelling banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. Since then, central banks around the world, including the Federal Reserve, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for LIBOR.

On March 5, 2021, the FCA and ICE Benchmark Administration, Limited announced that the publication of the one-week and two-month USD LIBOR maturities and non-USD LIBOR maturities would cease immediately after December 31, 2021, with the remaining USD LIBOR maturities ceasing immediately after June 30, 2023. In the United States, the Alternative Rates Reference Committee (the “ARRC”), a group of market participants convened in 2014 to help ensure a successful transition away from USD LIBOR, identified SOFR as its preferred alternative rate. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. The composition and characteristics of SOFR are not the same as those of LIBOR, and SOFR is fundamentally different from LIBOR for two key reasons: (1) SOFR is a secured rate, while LIBOR is an unsecured rate, and (2) SOFR is an overnight rate, while LIBOR is a forward-looking rate that represents interbank funding over different maturities. As a result, there can be no assurance that SOFR, however calculated, will perform the same way as LIBOR would have at any time, including, as a result of changes in interest and yield rates in the market, market volatility, or global or regional economic, financial, political, regulatory, judicial or other events.

On March 15, 2022, President Biden signed the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) into law. The LIBOR Act offers a federal solution for transitioning legacy instruments that lack sufficient provisions addressing LIBOR’s cessation by outlining a uniform process to govern the transition from LIBOR to a replacement rate. The LIBOR Act also establishes a safe harbor for lenders, shielding lenders from litigation as a result of their choice of a replacement rate (such as SOFR) per FRB recommendations. On December 16, 2022, the FRB issued its final regulations which carry out the terms of the LIBOR Act, which became effective on February 27, 2023. These regulations: (i) address the applicability of the LIBOR Act to various LIBOR contracts, (ii) identify the FRB-selected benchmark replacements for various types of LIBOR contracts, (iii) include certain benchmark replacement conforming changes, (iv) address the issue of preemption and (v) provide other clarifications, definitions and information.

The Bancorp’s LIBOR transition plan is organized around key work streams, including continued engagement with central banks and industry working groups and regulators, active client engagement, comprehensive review of legacy documentation, internal operational and technological readiness, and risk management, among other things, to facilitate the transition to alternative reference rates.

The Bancorp has discontinued entering into new LIBOR-based contracts in accordance with regulatory guidance, except for permissible limited use, such as part of hedging and risk management programs. During the fourth quarter of 2021, the Bancorp expanded its offering of alternative reference rate products, including SOFR. In addition, the Bancorp is continuing its transition of existing LIBOR-based exposures to an appropriate alternative reference rate on or before June 30, 2023. As of March 31, 2023, the Bancorp had substantial exposure to LIBOR-based products throughout several of its lines of business. These exposures included derivative contracts with a total notional value of approximately $87 billion, loans outstanding of approximately $18 billion, preferred stock of approximately $1.4 billion and long-term debt of approximately $62 million. The Bancorp currently estimates that approximately 5% of the existing exposures will mature before June 30, 2023. For the contracts that will not mature prior to June 30, 2023, an additional portion of these contracts is subject to contractual terms specifying alternative reference rates (“fallback provisions”) that would become effective upon cessation of LIBOR’s publication. Existing exposures without fallback provisions are expected to either be amended prior to June 30, 2023 to include such provisions or to transition to

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

an alternative reference rate pursuant to the terms of the LIBOR Act and its related regulations. The Bancorp does not expect the cessation of LIBOR on June 30, 2023 to have a material impact on its financial results.

For a further discussion of the various risks the Bancorp faces in connection with the replacement of LIBOR on its operations, see “Risk Factors—Market Risks—The replacement of LIBOR could adversely affect Fifth Third’s revenue or expenses and the value of those assets or obligations.” in Item 1A. Risk Factors of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Key Performance Indicators

The Bancorp, as a banking institution, utilizes various key indicators of financial condition and operating results in managing and monitoring the performance of the business. In addition to traditional financial metrics, such as revenue and expense trends, the Bancorp monitors other financial measures that assist in evaluating growth trends, capital strength and operational efficiencies. The Bancorp analyzes these key performance indicators against its past performance, its forecasted performance and with the performance of its peer banking institutions. These indicators may change from time to time as the operating environment and businesses change.

The following are some of the key indicators used by management to assess the Bancorp’s business performance, including those which are considered in the Bancorp’s compensation programs:

•CET1 Capital Ratio: CET1 capital divided by risk-weighted assets as defined by the Basel III standardized approach to risk-weighting of assets

•Return on Average Tangible Common Equity (non-GAAP): Tangible net income available to common shareholders divided by average tangible common equity

•Return on Average Common Equity, Excluding AOCI (non-GAAP): Net income available to common shareholders divided by total equity, excluding AOCI and preferred stock

•Net Interest Margin (non-GAAP): Net interest income on an FTE basis divided by average interest-earning assets

•Efficiency Ratio (non-GAAP): Noninterest expense divided by the sum of net interest income on an FTE basis and noninterest income

•Earnings Per Share, Diluted: Net income allocated to common shareholders divided by average common shares outstanding after the effect of dilutive stock-based awards

•Nonperforming Portfolio Assets Ratio: Nonperforming portfolio assets divided by portfolio loans and leases and OREO

•Net Charge-off Ratio: Net losses charged-off divided by average portfolio loans and leases

•Return on Average Assets: Net income divided by average assets

•Loan-to-Deposit Ratio: Total loans divided by total deposits

•Household Growth: Change in the number of consumer households with retail relationship-based checking accounts

The list of indicators above is intended to summarize some of the most important metrics utilized by management in evaluating the Bancorp’s performance and does not represent an all-inclusive list of all performance measures that may be considered relevant or important to management or investors.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

TABLE 1: Earnings Summary
			For the three months ended March 31,						%
($ in millions, except for per share data)			2023			2022			Change
Income Statement Data
Net interest income (U.S. GAAP)			$	1,517		1,195			27
Net interest income (FTE)(a)(b)			1,522			1,198			27
Noninterest income			696			684			2
Total revenue (FTE)(a)(b)			2,218			1,882			18
Provision for credit losses			164			45			264
Noninterest expense			1,331			1,222			9
Net income			558			494			13
Net income available to common shareholders			535			474			13
Common Share Data
Earnings per share - basic			$	0.78		0.69			13
Earnings per share - diluted			0.78			0.68			15
Cash dividends declared per common share			0.33			0.30			10
Book value per share			23.87			26.33			(9)
Market value per share			26.64			43.04			(38)
Financial Ratios
Return on average assets			1.10		%	0.96			15
Return on average common equity			13.7			10.0			37
Return on average tangible common equity(b)			20.5			13.4			53
Dividend payout			42.3			43.5			(3)

(a)Amounts presented on an FTE basis. The FTE adjustments were $5 and $3 for the three months ended March 31, 2023 and 2022, respectively.

(b)These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

Earnings Summary

The Bancorp’s net income available to common shareholders for the first quarter of 2023 was $535 million, or $0.78 per diluted share, which was net of $23 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the first quarter of 2022 was $474 million, or $0.68 per diluted share, which was net of $20 million in preferred stock dividends.

Net interest income on an FTE basis (non-GAAP) was $1.5 billion for the three months ended March 31, 2023, an increase of $324 million compared to the same period in the prior year. Net interest income benefited from increases in market interest rates, resulting in increases in yields on average loans and leases and average other short-term investments for the three months ended March 31, 2023 compared to the same period in the prior year. Net interest income also benefited from increases in average taxable securities, average commercial and industrial loans and average other consumer loans for the three months ended March 31, 2023 compared to the same period in the prior year. These positive impacts were partially offset by increases in rates paid on average interest-bearing core deposits and average long-term debt as well as increases in the average balances of FHLB advances and CDs over $250,000 for the three months ended March 31, 2023 compared to the same period in the prior year. Net interest margin on an FTE basis (non-GAAP) was 3.29% for the three months ended March 31, 2023 compared to 2.59% for the comparable period in the prior year.

The provision for credit losses was $164 million and $45 million for the three months ended March 31, 2023 and 2022, respectively. Provision expense increased for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in net charge-offs and other factors which caused an increase in the ACL from December 31, 2022, including higher period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans. The increase in period-end loan and lease balances was primarily driven by commercial and industrial loan growth and originations of point-of-sale solar energy installation loans. Net losses charged off as a percent of average portfolio loans and leases were 0.26% and 0.12% for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023 and December 31, 2022, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.51% and 0.44%, respectively. For further discussion on credit quality, refer to the Credit Risk Management subsection of the Risk Management section of MD&A as well as Note 6 of the Notes to Condensed Consolidated Financial Statements.

Noninterest income increased $12 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in commercial banking revenue, securities gains and mortgage banking net revenue, partially offset by decreases in other noninterest income and service charges on deposits.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Noninterest expense increased $109 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in compensation and benefits expense, other noninterest expense, technology and communications expense and marketing expense.

For more information on net interest income, provision expense, noninterest income and noninterest expense refer to the Statements of Income Analysis section of MD&A.

Capital Summary

The Bancorp calculated its regulatory capital ratios under the Basel III standardized approach to risk-weighting of assets and pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital as of March 31, 2023. As of March 31, 2023, the Bancorp’s capital ratios, as defined by the U.S. banking agencies, were:

•CET1 capital ratio: 9.28%;

•Tier 1 risk-based capital ratio: 10.53%;

•Total risk-based capital ratio: 12.64%;

•Leverage ratio: 8.67%.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

NON-GAAP FINANCIAL MEASURES

The following are non-GAAP financial measures which provide useful insight to the reader of the Condensed Consolidated Financial Statements but should be supplemental to primary U.S. GAAP measures and should not be read in isolation or relied upon as a substitute for the primary U.S. GAAP measures. The Bancorp encourages readers to consider the Condensed Consolidated Financial Statements in their entirety and not to rely on any single financial measure.

The FTE basis adjusts for the tax-favored status of income from certain loans and leases and securities held by the Bancorp that are not taxable for federal income tax purposes. The Bancorp believes this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison between taxable and non-taxable amounts.

The following table reconciles the non-GAAP financial measures of net interest income on an FTE basis, interest income on an FTE basis, net interest margin, net interest rate spread and the efficiency ratio to U.S. GAAP:

TABLE 2: Non-GAAP Financial Measures - Financial Measures and Ratios on an FTE basis
												For the three months ended March 31,
($ in millions)												2023			2022
Net interest income (U.S. GAAP)												$	1,517		1,195
Add: FTE adjustment												5			3
Net interest income on an FTE basis (1)												$	1,522		1,198
Net interest income on an FTE basis (annualized) (2)												6,173			4,859
Interest income (U.S. GAAP)												$	2,213		1,289
Add: FTE adjustment												5			3
Interest income on an FTE basis												$	2,218		1,292
Interest income on an FTE basis (annualized) (3)												8,995			5,240
Interest expense (annualized) (4)												$	2,823		381
Noninterest income (5)												696			684
Noninterest expense (6)												1,331			1,222
Average interest-earning assets (7)												187,407			187,894
Average interest-bearing liabilities (8)												129,280			116,764
Ratios:
Net interest margin on an FTE basis (2) / (7)												3.29		%	2.59
Net interest rate spread on an FTE basis ((3) / (7)) - ((4) / (8))												2.62			2.46
Efficiency ratio on an FTE basis (6) / ((1) + (5))												60.0			64.9

The Bancorp believes return on average tangible common equity is an important measure for comparative purposes with other financial institutions, but is not defined under U.S. GAAP, and therefore is considered a non-GAAP financial measure. This measure is useful for evaluating the performance of a business as it calculates the return available to common shareholders without the impact of intangible assets and their related amortization.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table reconciles the non-GAAP financial measure of return on average tangible common equity to U.S. GAAP:

TABLE 3: Non-GAAP Financial Measures - Return on Average Tangible Common Equity
												For the three months ended March 31,
($ in millions)												2023			2022
Net income available to common shareholders (U.S. GAAP)												$	535		474
Add: Intangible amortization, net of tax												9			9
Tangible net income available to common shareholders												$	544		483
Tangible net income available to common shareholders (annualized) (1)												2,206			1,959
Average Bancorp shareholders’ equity (U.S. GAAP)												$	17,977		21,402
Less: Average preferred stock												2,116			2,116
Average goodwill												4,915			4,514
Average intangible assets												163			150
Average tangible common equity (2)												$	10,783		14,622
Return on average tangible common equity (1) / (2)												20.5		%	13.4

The Bancorp considers various measures when evaluating capital utilization and adequacy, including the tangible equity ratio and tangible common equity ratio, in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. As U.S. GAAP does not include capital ratio measures, the Bancorp believes there are no comparable U.S. GAAP financial measures to these ratios. These ratios are not formally defined by U.S. GAAP or codified in the federal banking regulations and, therefore, are considered to be non-GAAP financial measures.

The following table reconciles non-GAAP capital ratios to U.S. GAAP:

TABLE 4: Non-GAAP Financial Measures - Capital Ratios
As of ($ in millions)			March 31, 2023			December 31, 2022
Total Bancorp Shareholders’ Equity (U.S. GAAP)			$	18,364		17,327
Less: Preferred stock			2,116			2,116
Goodwill			4,915			4,915
Intangible assets			157			169
AOCI			(4,245)			(5,110)
Tangible common equity, excluding AOCI (1)			$	15,421		15,237
Add: Preferred stock			2,116			2,116
Tangible equity (2)			$	17,537		17,353
Total Assets (U.S. GAAP)			$	208,657		207,452
Less: Goodwill			4,915			4,915
Intangible assets			157			169
AOCI, before tax			(5,373)			(6,468)
Tangible assets, excluding AOCI (3)			$	208,958		208,836
Ratios:
Tangible equity as a percentage of tangible assets (2) / (3)			8.39		%	8.31
Tangible common equity as a percentage of tangible assets (1) / (3)			7.38			7.30

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

RECENT ACCOUNTING STANDARDS

Note 3 of the Notes to Condensed Consolidated Financial Statements provides a discussion of the significant new accounting standards applicable to the Bancorp and the expected impact of significant accounting standards issued, but not yet required to be adopted.

CRITICAL ACCOUNTING POLICIES

The Bancorp’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. Certain accounting policies require management to exercise judgment in determining methodologies, economic assumptions and estimates that may materially affect the Bancorp’s financial position, results of operations and cash flows. The Bancorp’s critical accounting policies include the accounting for the ALLL, reserve for unfunded commitments, valuation of servicing rights, fair value measurements, goodwill and legal contingencies. These accounting policies are discussed in detail in the Critical Accounting Policies section of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

As further discussed in Note 3 of the Notes to Condensed Consolidated Financial Statements, on January 1, 2023, the Bancorp adopted ASU 2022-02 (“Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”). In conjunction with the adoption of this amended guidance, the Bancorp has revised its Critical Accounting Policies for the ALLL as described below. Refer to the Critical Accounting Policies section of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 for discussion on the accounting policy for the ALLL for periods prior to January 1, 2023. There have been no other material changes to the valuation techniques or models during the three months ended March 31, 2023.

ALLL

The Bancorp disaggregates its portfolio loans and leases into portfolio segments for purposes of determining the ALLL. The Bancorp’s portfolio segments include commercial, residential mortgage and consumer. The Bancorp further disaggregates its portfolio segments into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. For an analysis of the Bancorp’s ALLL by portfolio segment and credit quality information by class, refer to Note 6 of the Notes to Condensed Consolidated Financial Statements.

The Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. Contractual terms are adjusted for expected prepayments but are not extended for expected extensions, renewals or modifications except in circumstances where extension or renewal options are embedded in the original contract and not unconditionally cancellable by the Bancorp. Accrued interest receivable on loans is presented in the Condensed Consolidated Financial Statements as a component of other assets. When accrued interest is deemed to be uncollectible (typically when a loan is placed on nonaccrual status), interest income is reversed. The Bancorp follows established policies for placing loans on nonaccrual status, so uncollectible accrued interest receivable is reversed in a timely manner. As a result, the Bancorp has elected not to measure a reserve for accrued interest receivable as part of its ALLL. However, the Bancorp does record a reserve for the portion of accrued interest receivable that it expects to be uncollectible. For additional information on the Bancorp’s accounting policies related to nonaccrual loans and leases, refer to Note 3 of the Notes to Condensed Consolidated Financial Statements.

Credit losses are charged and recoveries are credited to the ALLL. The ALLL is maintained at a level the Bancorp considers to be adequate and is based on ongoing quarterly assessments and evaluations of the collectability of loans and leases, including historical credit loss experience, current and forecasted market and economic conditions and consideration of various qualitative factors that, in management’s judgment, deserve consideration in estimating expected credit losses. Provisions for credit losses are recorded for the amounts necessary to adjust the ALLL to the Bancorp’s current estimate of expected credit losses on portfolio loans and leases. The Bancorp’s strategy for credit risk management includes a combination of conservative exposure limits significantly below legal lending limits and conservative underwriting, documentation and collections standards. The strategy also emphasizes diversification on a geographic, industry and customer level, regular credit examinations and quarterly management reviews of large credit exposures and loans experiencing deterioration of credit quality. Refer to the Credit Risk Management section of MD&A for additional information.

The Bancorp’s methodology for determining the ALLL requires significant management judgment and includes an estimate of expected credit losses on a collective basis for groups of loans and leases with similar risk characteristics and specific allowances for loans and leases which are individually evaluated.

Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million on nonaccrual status are individually evaluated for an ALLL. The Bancorp considers the current value of collateral, credit quality of any guarantees, the guarantor’s liquidity and willingness to cooperate, the loan or lease structure (including modifications, if any) and other factors when determining the amount of the ALLL. Other factors may include the borrower’s susceptibility to risks presented by the forecasted macroeconomic environment, the industry and geographic region of the borrower, size and financial condition of the borrower, cash flow and leverage of the borrower and the Bancorp’s evaluation of the borrower’s management. Significant management judgment is required when evaluating which of these factors are most relevant in individual circumstances, and when estimating the amount of expected credit losses based on those factors. When loans and leases are individually evaluated, allowances are determined based on management’s estimate of the borrower’s ability to repay the loan or lease given the availability of collateral and other sources of cash flow, as well as an evaluation of legal options available to the Bancorp. Allowances for individually evaluated loans and leases that are collateral-dependent are measured based on the fair

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

value of the underlying collateral, less expected costs to sell where applicable. Individually evaluated loans and leases that are not collateral-dependent are measured based on the observable market value of the loan or lease or present value of expected cash flows, discounted at the loan’s effective interest rate. Specific allowances on individually evaluated commercial loans and leases are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

The Bancorp considers loans to be collateral-dependent when it becomes probable that repayment of the loan will be provided through the sale or operation of the collateral instead of from payments made by the borrower. The expected credit losses for these loans are typically estimated based on the fair value of the underlying collateral, less expected costs to sell where applicable. Specific allowances on individually evaluated consumer and residential mortgage loans are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

Expected credit losses are estimated on a collective basis for loans and leases that are not individually evaluated. For collectively evaluated loans and leases, the Bancorp uses models to forecast expected credit losses based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. The estimate of the expected balance at the time of default considers prepayments and, for loans with available credit, expected utilization rates. The Bancorp’s expected credit loss models were developed based on historical credit loss experience and observations of migration patterns for various credit risk characteristics (such as internal credit risk grades, external credit ratings or scores, delinquency status, loan-to-value trends, etc.) over time, with those observations evaluated in the context of concurrent macroeconomic conditions. The Bancorp developed its models from historical observations capturing a full economic cycle when possible.

The Bancorp’s expected credit loss models consider historical credit loss experience, current market and economic conditions, and forecasted changes in market and economic conditions if such forecasts are considered reasonable and supportable. Generally, the Bancorp considers its forecasts to be reasonable and supportable for a period of up to three years from the estimation date. For periods beyond the reasonable and supportable forecast period, expected credit losses are estimated by reverting to historical loss information without adjustment for changes in economic conditions. This reversion is phased in over a two-year period. The Bancorp evaluates the length of its reasonable and supportable forecast period, its reversion period and reversion methodology at least annually, or more often if warranted by economic conditions or other circumstances.

The Bancorp also considers qualitative factors in determining the ALLL. These considerations inherently require significant management judgment to determine the appropriate factors to be considered and the extent of their impact on the ALLL estimate. Qualitative factors are used to capture characteristics in the portfolio that impact expected credit losses but that are not fully captured within the Bancorp’s expected credit loss models. These include adjustments for changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel and results of internal audit and quality control reviews. These may also include adjustments, when deemed necessary, for specific idiosyncratic risks such as geopolitical events, natural disasters and their effects on regional borrowers and changes in product structures. Qualitative factors may also be used to address the impacts of unforeseen events on key inputs and assumptions within the Bancorp’s expected credit loss models, such as the reasonable and supportable forecast period, changes to historical loss information or changes to the reversion period or methodology. When evaluating the adequacy of allowances, consideration is also given to regional geographic concentrations and the closely associated effect that changing economic conditions may have on the Bancorp’s customers.

Overall, the collective evaluation process requires significant management judgment when determining the estimation methodology and inputs into the models, as well as in evaluating the reasonableness of the modeled results and the appropriateness of qualitative adjustments. The Bancorp’s forecasts of market and economic conditions and the internal risk grades assigned to loans and leases in the commercial portfolio segment are examples of inputs to the expected credit loss models that require significant management judgment. These inputs have the potential to drive significant variability in the resulting ALLL.

Refer to the Allowance for Credit Losses subsection of the Risk Management section of MD&A for a discussion on the Bancorp’s ALLL sensitivity analysis.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

STATEMENTS OF INCOME ANALYSIS

Net Interest Income

Net interest income is the interest earned on loans and leases (including yield-related fees), securities and other short-term investments less the interest incurred on core deposits and wholesale funding. The net interest margin is calculated by dividing net interest income by average interest-earning assets. Net interest rate spread is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. Net interest margin is typically greater than net interest rate spread due to the interest income earned on those assets that are funded by noninterest-bearing liabilities, or free funding, such as demand deposits or shareholders’ equity.

Table 5 presents the components of net interest income, net interest margin and net interest rate spread for the three months ended March 31, 2023 and 2022, as well as the relative impact of changes in the average balance sheet and changes in interest rates on net interest income. Nonaccrual loans and leases and loans and leases held for sale have been included in the average loan and lease balances. Average outstanding securities balances are based on amortized cost with any unrealized gains or losses included in average other assets.

Net interest income on an FTE basis (non-GAAP) was $1.5 billion for the three months ended March 31, 2023, an increase of $324 million compared to the same period in the prior year. Net interest income benefited from increases in market interest rates, resulting in increases in yields of 222 bps on average loans and leases and 447 bps on average other short-term investments for the three months ended March 31, 2023 compared to the same period in the prior year. Net interest income also benefited from increases in average taxable securities, average commercial and industrial loans and average other consumer loans of $15.7 billion, $5.6 billion and $2.7 billion, respectively, for the three months ended March 31, 2023 compared to the same period in the prior year. These positive impacts were partially offset by increases in rates paid on average interest-bearing core deposits of 163 bps and average long-term debt of 166 bps as well as increases in the average balance of FHLB advances of $4.8 billion and CDs over $250,000 of $4.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year. Interest income recognized from PPP loans decreased to $2 million for the three months ended March 31, 2023 compared to $20 million for the same period in the prior year.

Net interest rate spread on an FTE basis (non-GAAP) was 2.62% for the three months ended March 31, 2023 compared to 2.46% for the comparable period in the prior year. Yields on average interest-earning assets increased 201 bps, partially offset by a 185 bps increase in rates paid on average interest-bearing liabilities for the three months ended March 31, 2023 compared to the same period in the prior year.

Net interest margin on an FTE basis (non-GAAP) was 3.29% for the three months ended March 31, 2023 compared to 2.59% for the comparable period in the prior year. Net interest margin for the three months ended March 31, 2023 was positively impacted by the previously mentioned increase in the net interest rate spread. Net interest margin results are expected to stabilize or decrease modestly as the repricing of the Bancorp’s asset portfolios into higher rates are more than offset by the impact of rising rates on deposits and other interest-bearing liabilities.

Interest income on an FTE basis (non-GAAP) from loans and leases increased $732 million during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 driven by the previously mentioned increases in market interest rates and average balances of commercial and industrial loans and other consumer loans. For more information on the Bancorp’s loan and lease portfolio, refer to the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A. Interest income on an FTE basis (non-GAAP) from investment securities and other short-term investments increased $194 million during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the previously mentioned increases in average taxable securities and yields on average other short-term investments.

Interest expense on average core deposits increased $424 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the previously mentioned increase in the cost of average interest-bearing core deposits to 167 bps for the three months ended March 31, 2023 from 4 bps for the three months ended March 31, 2022, as a result of increasing short-term interest rates. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s deposits.

Interest expense on average wholesale funding increased $178 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the previously mentioned increases in the average balances of FHLB advances and CDs over $250,000 as well as an increase in rates paid on average long-term debt. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. During the three months ended March 31, 2023, average wholesale funding represented 18% of average interest-bearing liabilities, compared to 11% for the three months ended March 31, 2022. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, see the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

TABLE 5: Condensed Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis
For the three months ended			March 31, 2023									March 31, 2022									Attribution of Change in Net Interest Income(a)
($ in millions)			Average Balance			Interest Earned/Paid			Average Yield/ Rate			Average Balance			Interest Earned/Paid			Average Yield/ Rate			Volume			Yield/ Rate			Total
Assets:
Interest-earning assets:
Loans and leases:(b)
Commercial and industrial loans			$	58,204		920			6.41		%	$	52,562		427			3.29		%	$	50		443			493
Commercial mortgage loans			11,121			152			5.54			10,529			78			3.00			5			69			74
Commercial construction loans			5,507			88			6.50			5,371			44			3.29			1			43			44
Commercial leases			2,663			23			3.48			2,943			21			2.85			(2)			4			2
Total commercial loans and leases			$	77,495		1,183			6.19			$	71,405		570			3.23			$	54		559			613
Residential mortgage loans			18,329			153			3.39			20,179			158			3.17			(15)			10			(5)
Home equity			4,006			64			6.47			4,010			35			3.52			—			29			29
Indirect secured consumer loans			16,598			162			3.95			17,136			130			3.08			(4)			36			32
Credit card			1,780			62			14.16			1,691			51			12.31			3			8			11
Other consumer loans			5,407			93			6.95			2,741			41			6.08			45			7			52
Total consumer loans			$	46,120		534			4.69			$	45,757		415			3.68			$	29		90			119
Total loans and leases			$	123,615		1,717			5.63		%	$	117,162		985			3.41		%	$	83		649			732
Securities:
Taxable			57,110			431			3.06			41,412			289			2.84			117			25			142
Exempt from income taxes(b)			1,404			10			3.11			1,010			6			2.40			2			2			4
Other short-term investments			5,278			60			4.65			28,310			12			0.18			(18)			66			48
Total interest-earning assets			$	187,407		2,218			4.80		%	$	187,894		1,292			2.79		%	$	184		742			926
Cash and due from banks			3,136									2,962
Other assets			16,687									20,186
Allowance for loan and lease losses			(2,146)									(1,892)
Total assets			$	205,084								$	209,150
Liabilities and Equity:
Interest-bearing liabilities:
Interest checking deposits			$	48,717		281			2.34		%	$	48,659		6			0.05		%	$	—		275			275
Savings deposits			23,107			34			0.59			22,772			1			0.02			—			33			33
Money market deposits			28,420			84			1.20			30,263			2			0.03			—			82			82
Foreign office deposits			143			1			1.91			126			—			0.04			—			1			1
CDs $250,000 or less			5,173			34			2.67			2,376			1			0.12			2			31			33
Total interest-bearing core deposits			$	105,560		434			1.67			$	104,196		10			0.04			$	2		422			424
CDs over $250,000			4,348			44			4.15			254			1			0.85			35			8			43
Federal funds purchased			487			5			4.55			259			—			0.15			—			5			5
Securities sold under repurchase agreements			327			1			0.73			491			—			0.01			—			1			1
FHLB advances			4,803			53			4.44			—			—			0.15			53			—			53
Derivative collateral and other borrowed money			245			3			5.90			399			—			0.31			—			3			3
Long-term debt			13,510			156			4.68			11,165			83			3.02			20			53			73
Total interest-bearing liabilities			$	129,280		696			2.18		%	$	116,764		94			0.33		%	$	110		492			602
Demand deposits			50,737									64,212
Other liabilities			7,090									6,772
Total liabilities			$	187,107								$	187,748
Total equity			$	17,977								$	21,402
Total liabilities and equity			$	205,084								$	209,150
Net interest income (FTE)(c)						$	1,522								$	1,198					$	74		250			324
Net interest margin (FTE)(c)									3.29		%							2.59		%
Net interest rate spread (FTE)(c)									2.62									2.46
Interest-bearing liabilities to interest-earning assets									68.98									62.14

(a)Changes in interest not solely due to volume or yield/rate are allocated in proportion to the absolute dollar amount of change in volume and yield/rate.

(b)The FTE adjustments included in the above table were $5 and $3 for the three months ended March 31, 2023 and 2022, respectively.

(c)Net interest income (FTE), net interest margin (FTE) and net interest rate spread (FTE) are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Provision for Credit Losses

The Bancorp provides, as an expense, an amount for expected credit losses within the loan and lease portfolio that is based on factors previously discussed in the Critical Accounting Policies section of MD&A. For a discussion of the factors used to determine the amount provided, as an expense, for expected credit losses within the portfolio of unfunded commitments, refer to the Critical Accounting Policies section of the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022. The provision is recorded to bring the ALLL and reserve for unfunded commitments to a level deemed appropriate by the Bancorp to cover losses expected in the portfolios. Actual credit losses on loans and leases are charged against the ALLL. The amount of loans and leases actually removed from the Condensed Consolidated Balance Sheets are referred to as charge-offs. Net charge-offs include current period charge-offs less recoveries on previously charged-off loans and leases.

The provision for credit losses was $164 million and $45 million for the three months ended March 31, 2023 and 2022, respectively. Provision expense increased for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in net charge-offs and other factors which caused an increase in the ACL from December 31, 2022, including higher period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans. The increase in period-end loan and lease balances was primarily driven by growth in commercial and industrial loans and other consumer loans (primarily point-of-sale solar energy installation loans).

The ALLL increased $21 million from December 31, 2022 to $2.2 billion at March 31, 2023 inclusive of a $49 million reduction from the impact of the adoption of ASU 2022-02 on January 1, 2023. Refer to Note 3 of the Notes to Condensed Consolidated Financial Statements for further information. At March 31, 2023, the ALLL as a percent of portfolio loans and leases decreased to 1.80%, compared to 1.81% at December 31, 2022. The reserve for unfunded commitments increased $16 million from December 31, 2022 to $232 million at March 31, 2023. At March 31, 2023, the ACL as a percent of portfolio loans and leases increased to 1.99%, compared to 1.98% at December 31, 2022.

Refer to the Credit Risk Management subsection of the Risk Management section of MD&A as well as Note 6 of the Notes to Condensed Consolidated Financial Statements for more detailed information on the provision for credit losses, including an analysis of loan and lease portfolio composition, nonperforming assets, net charge-offs and other factors considered by the Bancorp in assessing the credit quality of the loan and lease portfolio and determining the level of the ACL.

Noninterest Income

Noninterest income increased $12 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The following table presents the components of noninterest income:

TABLE 6: Components of Noninterest Income
			For the three months ended March 31,
($ in millions)			2023			2022			% Change
Commercial banking revenue			$	161		135			19
Wealth and asset management revenue			146			149			(2)
Service charges on deposits			137			152			(10)
Card and processing revenue			100			97			3
Mortgage banking net revenue			69			52			33
Leasing business revenue			57			62			(8)
Other noninterest income			22			52			(58)
Securities gains (losses), net			4			(14)			NM
Securities losses, net – non-qualifying hedges on mortgage servicing rights			—			(1)			(100)
Total noninterest income			$	696		684			2

Commercial banking revenue

Commercial banking revenue increased $26 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily driven by increases in loan syndication fees, fixed income sales and trading revenue and merger and acquisition fees, partially offset by a decrease in corporate bond fees.

Wealth and asset management revenue

Wealth and asset management revenue decreased $3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to a decrease in private client service fees. The Bancorp’s trust and registered investment advisory businesses had approximately $542 billion and $549 billion in total assets under care as of March 31, 2023 and 2022, respectively, and managed $57 billion and $61 billion in assets for individuals, corporations and not-for-profit organizations as of March 31, 2023 and 2022, respectively.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Service charges on deposits

Service charges on deposits decreased $15 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 due to a decrease in service charges on both commercial and consumer deposits. Service charges on commercial deposits were $100 million for the three months ended March 31, 2023, a decrease of $13 million from the three months ended March 31, 2022 primarily due to higher treasury management earnings credits driven by market interest rates, partially offset by an increase in commercial treasury management fees. Service charges on consumer deposits were $37 million for the three months ended March 31, 2023, a decrease of $2 million from the three months ended March 31, 2022 primarily due to a decrease in consumer deposit fees driven by the elimination of non-sufficient funds fees during 2022.

Card and processing revenue

Card and processing revenue increased $3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to increases in debit and commercial card interchange, driven by higher spend volumes. These increases were partially offset by increased reward costs.

Mortgage banking net revenue

Mortgage banking net revenue increased $17 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The following table presents the components of mortgage banking net revenue:

TABLE 7: Components of Mortgage Banking Net Revenue
			For the three months ended March 31,
($ in millions)			2023			2022
Origination fees and gains on loan sales			$	18		25
Net mortgage servicing revenue:
Gross mortgage servicing fees			83			71
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs			(32)			(44)
Net mortgage servicing revenue			51			27
Total mortgage banking net revenue			$	69		52

Origination fees and gains on loan sales decreased $7 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily driven by lower volumes of residential mortgage loan originations, partially offset by mark-to-market gains recognized on held for investment loans measured at fair value during the three months ended March 31, 2023. Residential mortgage loan originations decreased to $1.4 billion for the three months ended March 31, 2023 from $3.5 billion for the three months ended March 31, 2022 primarily due to the impact of higher market interest rates on refinance activity.

The following table presents the components of net valuation adjustments on the MSR portfolio and the impact of the Bancorp’s non-qualifying hedging strategy:

TABLE 8: Components of Net Valuation Adjustments on MSRs
			For the three months ended March 31,
($ in millions)			2023			2022
Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio			$	21		(181)
Changes in fair value:
Due to changes in inputs or assumptions(a)			(19)			190
Other changes in fair value(b)			(34)			(53)
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs			$	(32)		(44)

(a)Primarily reflects changes in prepayment speed and OAS assumptions which are updated based on market interest rates.

(b)Primarily reflects changes due to realized cash flows and the passage of time.

The Bancorp recognized losses of $53 million for three months ended March 31, 2023 and income of $137 million for the three months ended March 31, 2022 in mortgage banking net revenue for valuation adjustments on the MSR portfolio. The valuation adjustments on the MSR portfolio included a decrease of $19 million and an increase of $190 million for the three months ended March 31, 2023 and 2022, respectively, due to changes in market rates and other inputs in the valuation model, including future prepayment speeds and OAS assumptions. Mortgage rates decreased during the three months ended March 31, 2023, which caused an increase in modeled prepayment speeds. There was also a decrease in the modeled OAS assumptions for the three months ended March 31, 2023. The fair value of the MSR

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

portfolio decreased $34 million and $53 million as a result of contractual principal payments and actual prepayment activity for the three months ended March 31, 2023 and 2022, respectively.

Further detail on the valuation of MSRs can be found in Note 13 of the Notes to Condensed Consolidated Financial Statements. The Bancorp maintains a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the valuation of the MSR portfolio. Refer to Note 14 of the Notes to Condensed Consolidated Financial Statements for more information on the free-standing derivatives used to economically hedge the MSR portfolio.

In addition to the derivative positions used to economically hedge the MSR portfolio, the Bancorp acquires various securities as a component of its non-qualifying hedging strategy. The Bancorp recognized gains of an immaterial amount during the three months ended March 31, 2023 and recognized net losses of $1 million during the three months ended March 31, 2022, recorded in securities losses, net – non-qualifying hedges on mortgage servicing rights in the Bancorp’s Condensed Consolidated Statements of Income.

The Bancorp’s total residential mortgage loans serviced as of March 31, 2023 and 2022 were $120.4 billion and $114.5 billion, respectively, with $103.4 billion and $97.7 billion, respectively, of residential mortgage loans serviced for others.

Leasing business revenue

Leasing business revenue decreased $5 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to a decrease in leasing business solutions revenue related to the disposition of LaSalle Solutions during the second quarter of 2022.

Other noninterest income

The following table presents the components of other noninterest income:

TABLE 9: Components of Other Noninterest Income
			For the three months ended March 31,
($ in millions)			2023			2022
BOLI income			$	15		16
Cardholder fees			14			13
Private equity investment income			8			1
Banking center income			6			5
Consumer loan fees			5			4
Equity method investment income			4			8
Loss on swap associated with the sale of Visa, Inc. Class B Shares			(31)			(11)
Other, net			1			16
Total other noninterest income			$	22		52

Other noninterest income decreased $30 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an increase in the loss on the swap associated with the sale of Visa, Inc. Class B Shares, partially offset by an increase in private equity investment income.

The Bancorp recognized negative valuation adjustments of $31 million related to the Visa total return swap during the three months ended March 31, 2023 compared to negative valuation adjustments of $11 million during the three months ended March 31, 2022. For additional information on the valuation of the swap associated with the sale of Visa, Inc. Class B Shares, refer to Note 22 of the Notes to Condensed Consolidated Financial Statements. Private equity investment income increased $7 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by gains on sales recognized on certain private equity investments.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Noninterest Expense

Noninterest expense increased $109 million for the three months ended March 31, 2023 compared to the same period in the prior year.

The following table presents the components of noninterest expense:

TABLE 10: Components of Noninterest Expense
			For the three months ended March 31,
($ in millions)			2023			2022			% Change
Compensation and benefits			$	757		711			6
Technology and communications			118			101			17
Net occupancy expense			81			77			5
Equipment expense			37			36			3
Leasing business expense			34			32			6
Marketing expense			29			24			21
Card and processing expense			22			19			16
Other noninterest expense			253			222			14
Total noninterest expense			$	1,331		1,222			9
Efficiency ratio on an FTE basis(a)			60.0		%	64.9

(a)This is a non-GAAP measure. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

Compensation and benefits expense increased $46 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by the additional personnel costs of an acquired business, the impact of raising the Bancorp’s minimum wage in the third quarter of 2022, an increase in non-qualified deferred compensation expense and severance expense, partially offset by a decrease in performance-based compensation. Full-time equivalent employees totaled 19,474 at March 31, 2023 compared to 19,247 at March 31, 2022.

Technology and communications expense increased $17 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increased investment in strategic initiatives and technology modernization.

Marketing expense increased $5 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in account acquisition programs.

The following table presents the components of other noninterest expense:

TABLE 11: Components of Other Noninterest Expense
			For the three months ended March 31,
($ in millions)			2023			2022
FDIC insurance and other taxes			$	40		31
Loan and lease			30			45
Losses and adjustments			22			14
Data processing			22			19
Travel			17			13
Dues and subscriptions			15			14
Securities recordkeeping			12			13
Professional service fees			12			13
Cash and coin processing			12			11
Intangible amortization			12			11
Other, net			59			38
Total other noninterest expense			$	253		222

Other noninterest expense increased $31 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in FDIC insurance and other taxes and losses and adjustments, partially offset by a decrease in loan and lease expense.

FDIC insurance and other taxes increased $9 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of an increase in the FDIC insurance assessment rate. Losses and adjustments increased $8 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in credit valuation adjustments on customer accommodation derivatives and legal settlements, partially offset by a decrease in operational losses.

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Loan and lease expense decreased $15 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by a decrease in loan servicing expenses related to the Bancorp’s sales of certain government-guaranteed residential mortgage loans that were previously in forbearance programs and serviced by a third party.

Applicable Income Taxes

The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:

TABLE 12: Applicable Income Taxes
												For the three months ended March 31,
($ in millions)												2023			2022
Income before income taxes												$	718		612
Applicable income tax expense												160			118
Effective tax rate												22.3		%	19.2

Applicable income tax expense for all periods presented includes the benefit from tax-exempt income, tax-advantaged investments, and tax credits (and other related tax benefits), partially offset by the effect of proportional amortization of qualifying LIHTC investments and certain nondeductible expenses. The tax credits are primarily associated with the Low-Income Housing Tax Credit program established under Section 42 of the IRC, the New Markets Tax Credit program established under Section 45D of the IRC, the Rehabilitation Investment Tax Credit program established under Section 47 of the IRC and the Qualified Zone Academy Bond program established under Section 1397E of the IRC.

The effective tax rate increased to 22.3% for the three months ended March 31, 2023 compared to 19.2% for the same period in the prior year primarily due to a decrease in excess tax benefits associated with share-based compensation.

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BALANCE SHEET ANALYSIS

Loans and Leases

The Bancorp classifies its commercial loans and leases based upon primary purpose and consumer loans based upon product or collateral. Table 13 summarizes end of period loans and leases, including loans and leases held for sale, and Table 14 summarizes average total loans and leases, including average loans and leases held for sale.

TABLE 13: Components of Total Loans and Leases (including loans and leases held for sale)
			March 31, 2023									December 31, 2022
As of ($ in millions)			Carrying Value			% of Total						Carrying Value			% of Total
Commercial loans and leases:
Commercial and industrial loans			$	57,741		47		%				$	57,305		47		%
Commercial mortgage loans			11,228			9						11,020			9
Commercial construction loans			5,548			5						5,433			4
Commercial leases			2,746			2						2,704			2
Total commercial loans and leases			$	77,263		63		%				$	76,462		62		%
Consumer loans:
Residential mortgage loans			18,333			15						18,562			15
Home equity			3,958			3						4,039			3
Indirect secured consumer loans			16,484			13						16,552			14
Credit card			1,761			1						1,874			2
Other consumer loans			5,807			5						4,998			4
Total consumer loans			$	46,343		37		%				$	46,025		38		%
Total loans and leases			$	123,606		100		%				$	122,487		100		%
Total portfolio loans and leases     (excluding loans and leases held for sale)			$	122,857								$	121,480

Total loans and leases, including loans and leases held for sale, increased $1.1 billion, or 1%, from December 31, 2022 as a result of a $801 million, or 1%, increase in commercial loans and leases and a $318 million, or 1%, increase in consumer loans and leases.

Commercial loans and leases increased $801 million from December 31, 2022 primarily due to increases in commercial and industrial loans, commercial mortgage loans and commercial construction loans. Commercial and industrial loans increased $436 million, or 1%, from December 31, 2022 primarily as a result of increased revolving line of credit utilization and increased production. Commercial mortgage loans increased $208 million, or 2%, from December 31, 2022 as loan originations exceeded payoffs. Commercial construction loans increased $115 million, or 2%, from December 31, 2022 as draws on existing commitments and loan originations exceeded payoffs.

Consumer loans increased $318 million from December 31, 2022 driven by an increase in other consumer loans, partially offset by decreases in residential mortgage loans, credit card, home equity and indirect secured consumer loans. Other consumer loans increased $809 million, or 16%, from December 31, 2022 primarily driven by originations of point-of-sale solar energy installation loans. Residential mortgage loans decreased $229 million, or 1%, from December 31, 2022 primarily due to decreases in residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs. Credit card decreased $113 million, or 6%, from December 31, 2022 primarily due to seasonal paydowns on year-end balances. Home equity decreased $81 million, or 2%, from December 31, 2022 as payoffs exceeded loan originations and new advances. Indirect secured consumer loans decreased $68 million from December 31, 2022 primarily driven by paydowns exceeding loan originations.

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TABLE 14: Components of Average Loans and Leases (including average loans and leases held for sale)
			March 31, 2023									March 31, 2022
For the three months ended ($ in millions)			Carrying Value			% of Total						Carrying Value			% of Total
Commercial loans and leases:
Commercial and industrial loans			$	58,204		47		%				$	52,562		45		%
Commercial mortgage loans			11,121			9						10,529			9
Commercial construction loans			5,507			5						5,371			5
Commercial leases			2,663			2						2,943			2
Total commercial loans and leases			$	77,495		63		%				$	71,405		61		%
Consumer loans:
Residential mortgage loans			18,329			15						20,179			17
Home equity			4,006			3						4,010			3
Indirect secured consumer loans			16,598			13						17,136			15
Credit card			1,780			2						1,691			2
Other consumer loans			5,407			4						2,741			2
Total consumer loans			$	46,120		37		%				$	45,757		39		%
Total average loans and leases			$	123,615		100		%				$	117,162		100		%
Total average portfolio loans and leases     (excluding loans and leases held for sale)			$	122,812								$	113,467

Average loans and leases, including average loans and leases held for sale, increased $6.5 billion, or 6%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of a $6.1 billion, or 9%, increase in average commercial loans and leases.

Average commercial loans and leases increased $6.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year due to increases in average commercial and industrial loans, average commercial mortgage loans and average commercial construction loans, partially offset by a decrease in average commercial leases. Average commercial and industrial loans increased $5.6 billion, or 11%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increased revolving line of credit utilization and increased production, partially offset by PPP loan forgiveness and paydowns. Average commercial mortgage loans increased $592 million, or 6%, for the three months ended March 31, 2023 compared to the same period in the prior year as loan originations exceeded payoffs. Average commercial construction loans increased $136 million, or 3%, for the three months ended March 31, 2023 compared to the same period in the prior year as draws on existing commitments and loan originations exceeded payoffs. Average commercial leases decreased $280 million, or 10%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of a planned reduction in indirect non-relationship-based lease originations.

Average consumer loans increased $363 million, or 1%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in average other consumer loans and average credit card, partially offset by decreases in average residential mortgage loans and average indirect secured consumer loans. Average other consumer loans increased $2.7 billion, or 97%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by originations of point-of-sale solar energy installation loans, in addition to loans acquired in a business acquisition completed in the second quarter of 2022. Average credit card increased $89 million, or 5%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in balance-active customers, average balances per active account and card utilization rates. Average residential mortgage loans decreased $1.9 billion, or 9%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to decreases in residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs. Average indirect secured consumer loans decreased $538 million, or 3%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by paydowns and lower production.

Investment Securities

The Bancorp uses investment securities as a means of managing interest rate risk, providing collateral for pledging purposes and for liquidity risk management. Total investment securities were $52.2 billion at both March 31, 2023 and December 31, 2022. The taxable available-for-sale debt and other investment securities portfolio had an effective duration of 5.3 at March 31, 2023 compared to 5.4 at December 31, 2022.

Debt securities are classified as available-for-sale when, in management’s judgment, they may be sold in response to, or in anticipation of, changes in market conditions. Securities that management has the intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. Debt securities are classified as trading typically when bought and held principally for the purpose of selling them in the near term. At March 31, 2023, the Bancorp’s investment portfolio consisted primarily of AAA-rated available-for-sale debt and other securities. The Bancorp held an immaterial amount of below-investment grade available-for-sale debt and other securities at both March 31, 2023 and December 31, 2022.

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At both March 31, 2023 and December 31, 2022, the Bancorp completed its evaluation of the available-for-sale debt and other securities in an unrealized loss position and did not recognize an allowance for credit losses. The Bancorp did not recognize provision expense related to available-for-sale debt and other securities in an unrealized loss position during both the three months ended March 31, 2023 and 2022.

The following table summarizes the end of period components of investment securities:

TABLE 15: Components of Investment Securities
As of ($ in millions)			March 31, 2023			December 31, 2022
Available-for-sale debt and other securities (amortized cost basis):
U.S. Treasury and federal agencies securities			$	2,828		2,683
Obligations of states and political subdivisions securities			3			18
Mortgage-backed securities:
Agency residential mortgage-backed securities			12,246			12,604
Agency commercial mortgage-backed securities			29,231			29,824
Non-agency commercial mortgage-backed securities			5,057			5,235
Asset-backed securities and other debt securities			5,703			6,292
Other securities(a)			890			874
Total available-for-sale debt and other securities			$	55,958		57,530
Held-to-maturity securities (amortized cost basis):
Obligations of states and political subdivisions securities			$	—		3
Asset-backed securities and other debt securities			2			2
Total held-to-maturity securities			$	2		5
Trading debt securities (fair value):
U.S. Treasury and federal agencies securities			$	687		45
Obligations of states and political subdivisions securities			49			14
Agency residential mortgage-backed securities			11			8
Asset-backed securities and other debt securities			427			347
Total trading debt securities			$	1,174		414
Total equity securities (fair value)			$	323		317

(a)Other securities consist of FHLB, FRB and DTCC restricted stock holdings that are carried at cost.

On an amortized cost basis, available-for-sale debt and other securities decreased $1.6 billion from December 31, 2022 primarily due to decreases in agency commercial mortgage-backed securities, asset-backed securities and other debt securities and agency residential mortgage-backed securities. Trading debt securities increased $760 million from December 31, 2022 primarily due to purchases of U.S. Treasury securities during the three months ended March 31, 2023 related to the Bancorp’s management of collateral posted for derivative exposures.

On an amortized cost basis, available-for-sale debt and other securities were 29% and 30% of total interest-earning assets at March 31, 2023 and December 31, 2022, respectively. The estimated weighted-average life of the debt securities in the available-for-sale debt and other securities portfolio was 6.8 years at both March 31, 2023 and December 31, 2022. In addition, the debt securities in the available-for-sale debt and other securities portfolio had a weighted-average yield of 2.97% at both March 31, 2023 and December 31, 2022.

Information presented in Table 16 is on a weighted-average life basis, anticipating future prepayments. Yield information is presented on an FTE basis and is computed using amortized cost balances and reflects the impact of prepayments. Maturity and yield calculations for the total available-for-sale debt and other securities portfolio exclude other securities that have no stated yield or maturity. Total net unrealized losses on the available-for-sale debt and other securities portfolio were $5.2 billion and $6.0 billion at March 31, 2023 and December 31, 2022, respectively. The fair values of investment securities are impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value of the Bancorp’s investment securities portfolio generally decreases when interest rates increase or when credit spreads widen.

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TABLE 16: Characteristics of Available-for-Sale Debt and Other Securities
As of March 31, 2023 ($ in millions)			Amortized Cost			Fair Value			Weighted-Average Life (in years)			Weighted-Average Yield
U.S. Treasury and federal agencies securities:
Average life after one year through five years			$	1,470		1,404			3.1			2.80		%
Average life after five years through ten years			1,358			1,285			5.6			2.54
Total			$	2,828		2,689			4.3			2.67		%
Obligations of states and political subdivisions securities:
Average life after one year through five years			2			2			1.4			—
Average life after ten years			1			1			13.6			7.00
Total			$	3		3			6.1			2.68		%
Agency residential mortgage-backed securities:
Average life within one year			16			15			0.4			1.86
Average life after one year through five years			846			787			3.6			2.78
Average life after five years through ten years			10,291			9,346			8.1			3.00
Average life after ten years			1,093			925			11.8			3.08
Total			$	12,246		11,073			8.1			2.99		%
Agency commercial mortgage-backed securities:(a)
Average life within one year			1			1			0.2			3.27
Average life after one year through five years			7,563			7,080			3.6			2.80
Average life after five years through ten years			16,592			14,832			7.4			2.83
Average life after ten years			5,075			4,270			12.4			2.89
Total			$	29,231		26,183			7.3			2.83		%
Non-agency commercial mortgage-backed securities:
Average life within one year			119			117			0.6			3.56
Average life after one year through five years			2,795			2,634			2.7			3.26
Average life after five years through ten years			2,143			1,799			8.1			2.78
Total			$	5,057		4,550			5.0			3.07		%
Asset-backed securities and other debt securities:
Average life within one year			92			90			0.6			4.81
Average life after one year through five years			3,839			3,585			3.0			3.47
Average life after five years through ten years			1,728			1,612			5.8			4.20
Average life after ten years			44			44			12.6			5.65
Total			$	5,703		5,331			3.9			3.73		%
Other securities			890			890
Total available-for-sale debt and other securities			$	55,958		50,719			6.8			2.97		%

(a)Taxable-equivalent yield adjustments included in the above table are 0.21% and 0.04% for securities with an average life greater than 10 years and in total, respectively.

Other Short-Term Investments

Other short-term investments primarily include overnight interest-earning investments, including reserves held at the FRB. The Bancorp uses other short-term investments as part of its liquidity risk management tools. Other short-term investments were $9.8 billion and $8.4 billion at March 31, 2023 and December 31, 2022, respectively. The increase of $1.4 billion from December 31, 2022 was primarily attributable to the Bancorp’s decision to increase its liquidity position in response to conditions in the operating environment as of March 31, 2023.

Deposits

The Bancorp’s deposit balances represent an important source of funding and revenue growth opportunity. The Bancorp continues to focus on core deposit growth in its retail and commercial franchises by improving customer satisfaction, building full relationships and offering competitive rates. Average core deposits represented 76% and 81% of average total assets for the three months ended March 31, 2023 and 2022, respectively.

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The following table presents the end of period components of deposits:

TABLE 17: Components of Deposits
			March 31, 2023									December 31, 2022
As of ($ in millions)			Balance			% of Total						Balance			% of Total
Demand			$	49,649		30		%				$	53,125		33		%
Interest checking			49,924			31						51,653			32
Savings			22,563			14						23,469			14
Money market			28,482			18						28,220			17
Foreign office			134			—						182			—
Total transaction deposits			$	150,752		93						$	156,649		96
CDs $250,000 or less			6,624			4						3,809			2
Total core deposits			$	157,376		97						$	160,458		98
CDs over $250,000(a)			5,599			3						3,232			2
Total deposits			$	162,975		100		%				$	163,690		100		%

(a)Includes $5.2 billion of retail brokered certificates of deposit which are covered by FDIC insurance.

Core deposits decreased $3.1 billion, or 2%, from December 31, 2022 primarily due to seasonality and balance migration as a result of the higher interest rate environment with a decrease in transaction deposits, partially offset by an increase in CDs $250,000 or less. Transaction deposits decreased $5.9 billion, or 4%, from December 31, 2022 primarily with decreases in demand deposits, interest checking deposits and savings deposits, partially offset by an increase in money market deposits. In response to the higher interest rate environment, deposit balances have migrated and are expected to continue to migrate from noninterest-bearing products such as demand deposits into higher interest-bearing products such as money market accounts and CDs. Demand deposits decreased $3.5 billion, or 7%, from December 31, 2022 primarily as a result of lower balances per commercial customer account and balance migration into interest checking deposits, partially offset by consumer balance growth. Interest checking deposits decreased $1.7 billion, or 3%, from December 31, 2022 primarily as a result of lower balances per consumer customer account, partially offset by commercial balance growth and balance migration from demand deposits. Savings deposits decreased $906 million, or 4%, from December 31, 2022 primarily as a result of lower balances per consumer customer account due to increased consumer spending. Money market deposits increased $262 million, or 1%, from December 31, 2022 primarily as a result of higher balances per consumer customer account due to higher offering rates, partially offset by lower balances per commercial customer account. CDs $250,000 or less increased $2.8 billion, or 74%, from December 31, 2022 primarily due to higher offering rates.

CDs over $250,000 increased $2.4 billion, or 73%, from December 31, 2022 primarily due to an increase in retail brokered CDs issued, which are utilized as a short-term funding source.

The following table presents the components of average deposits for the three months ended:

TABLE 18: Components of Average Deposits
			March 31, 2023									March 31, 2022
($ in millions)			Balance			% of Total						Balance			% of Total
Demand			$	50,737		32		%				$	64,212		38		%
Interest checking			48,717			30						48,659			29
Savings			23,107			14						22,772			14
Money market			28,420			18						30,263			18
Foreign office			143			—						126			—
Total transaction deposits			$	151,124		94						$	166,032		99
CDs $250,000 or less			5,173			3						2,376			1
Total core deposits			$	156,297		97						$	168,408		100
CDs over $250,000(a)			4,348			3						254			—
Total average deposits			$	160,645		100		%				$	168,662		100		%

(a)Includes $4.1 billion of retail brokered certificates of deposit which are covered by FDIC insurance.

On an average basis, core deposits decreased $12.1 billion, or 7%, for the three months ended March 31, 2023 compared to the same period in the prior year due to a decrease in average transaction deposits, partially offset by an increase in average CDs $250,000 or less. Average transaction deposits decreased $14.9 billion, or 9% primarily driven by decreases in average demand deposits and average money market deposits, partially offset by increases in average savings deposits and average interest checking deposits. Average demand deposits decreased $13.5 billion, or 21%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of lower average balances per customer account and balance migration into interest checking deposits. Average money market deposits decreased $1.8 billion, or 6%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of lower average balances per commercial customer account and balance migration into interest checking deposits, partially offset by higher average

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

balances per consumer customer account. Average savings deposits increased $335 million, or 1%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in derivative collateral posted as a result of higher interest rates, partially offset by lower average balances per consumer customer account due to increased consumer spending. Average interest checking deposits increased $58 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of balance migration from demand deposits and money market deposits, partially offset by lower average balances per customer account. Average CDs $250,000 or less increased $2.8 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to higher offering rates. Lower average commercial customer account balances in demand deposits, money market deposits and interest checking deposits included the impact of deliberate runoff during the second quarter of 2022 of certain higher cost commercial deposits.

Average CDs over $250,000 increased $4.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in retail brokered CDs issued.

Contractual maturities

The contractual maturities of CDs as of March 31, 2023 are summarized in the following table:

TABLE 19: Contractual Maturities of CDs(a)
($ in millions)
Next 12 months			$	11,873
13-24 months			234
25-36 months			73
37-48 months			32
49-60 months			7
After 60 months			4
Total CDs			$	12,223

(a)Includes CDs $250,000 or less and CDs over $250,000.

Deposit insurance

The FDIC generally provides a standard amount of insurance of $250,000 per depositor, per insured bank, for each account ownership category defined by the FDIC. Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership categories and all FDIC requirements are met. All deposits that an account owner has in the same ownership category at the same bank are added together and insured up to the standard insurance amount. As of March 31, 2023 and December 31, 2022, approximately $98.2 billion, or 60%, and $94.1 billion, or 58%, respectively, of the Bancorp’s domestic deposits were insured. As of March 31, 2023 and December 31, 2022, approximately $64.6 billion and $69.4 billion, respectively, of the Bancorp’s domestic deposits were uninsured. At March 31, 2023 and December 31, 2022, approximately $1.3 billion and $727 million, respectively, of the Bancorp’s time deposits were not fully insured. The estimated uninsured portions of those time deposits were $542 million and $306 million at March 31, 2023 and December 31, 2022, respectively. Where information is not readily available to determine the amount of insured deposits, the amount of uninsured deposits is estimated, consistent with the methodologies and assumptions utilized in providing information to the Bank’s regulators.

Borrowings

The Bancorp accesses a variety of short-term and long-term funding sources. Borrowings with original maturities of one year or less are classified as short-term and include federal funds purchased and other short-term borrowings. Total average borrowings as a percent of average interest-bearing liabilities were 15% and 11% for the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes the end of period components of borrowings:

TABLE 20: Components of Borrowings
As of ($ in millions)			March 31, 2023			December 31, 2022
Federal funds purchased			$	177		180
Other short-term borrowings			7,364			4,838
Long-term debt			12,893			13,714
Total borrowings			$	20,434		18,732

Total borrowings increased $1.7 billion, or 9%, from December 31, 2022 primarily due to an increase in other short-term borrowings partially offset by a decrease in long-term debt. Other short-term borrowings increased $2.5 billion from December 31, 2022 primarily due to the Bancorp’s decision to increase its liquidity position in response to conditions in the current operating environment. The level of other short-term borrowings can fluctuate significantly from period to period depending on funding needs and the sources that are used to satisfy those needs. For further information on the components of other short-term borrowings, refer to Note 15 of the Notes to Condensed Consolidated Financial Statements. Long-term debt decreased $821 million from December 31, 2022 primarily driven by redemptions of $825 million of

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

notes and $76 million of paydowns associated with loan securitizations during the three months ended March 31, 2023 partially offset by $89 million of fair value adjustments associated with hedged long-term debt.

The following table summarizes components of average borrowings for the three months ended:

TABLE 21: Components of Average Borrowings
($ in millions)			March 31, 2023			March 31, 2022
Federal funds purchased			$	487		259
Other short-term borrowings			5,375			890
Long-term debt			13,510			11,165
Total average borrowings			$	19,372		12,314

Total average borrowings increased $7.1 billion, or 57%, for the three months ended March 31, 2023 compared to the same period in the prior year due to increases in average other short-term borrowings, average long-term debt and average federal funds purchased. Average other short-term borrowings and average federal funds purchased increased $4.5 billion and $228 million, respectively, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increased funding needs resulting from an increase in average investment securities, lower core deposit balances and the Bancorp’s decision to increase its liquidity position in response to conditions in the current operating environment. Average long-term debt increased $2.3 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by issuances of senior fixed-rate/floating-rate notes in 2022 totaling $4.0 billion, partially offset by redemptions of $1.5 billion of notes, $219 million of fair value adjustments associated with hedged long-term debt and $206 million of paydowns associated with loan securitizations since March 31, 2022. Information on the average rates paid on borrowings is discussed in the Net Interest Income subsection of the Statements of Income Analysis section of MD&A. In addition, refer to the Liquidity Risk Management subsection of the Risk Management section of MD&A for a discussion on the role of borrowings in the Bancorp’s liquidity management.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

BUSINESS SEGMENT REVIEW

The Bancorp reports on three business segments: Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management. Additional information on each business segment is included in Note 23 of the Notes to Condensed Consolidated Financial Statements. Results of the Bancorp’s business segments are presented based on its management structure and management accounting practices. The structure and accounting practices are specific to the Bancorp; therefore, the financial results of the Bancorp’s business segments are not necessarily comparable with similar information for other financial institutions. The Bancorp refines its methodologies from time to time as management’s accounting practices and businesses change.

The Bancorp manages interest rate risk centrally at the corporate level. By employing an FTP methodology, the business segments are insulated from most benchmark interest rate volatility, enabling them to focus on serving customers through the origination of loans and acceptance of deposits. The FTP methodology assigns charge and credit rates to classes of assets and liabilities, respectively, based on the estimated amount and timing of cash flows for each transaction. Assigning the FTP rate based on matching the duration of cash flows allocates interest income and interest expense to each business segment so its resulting net interest income is insulated from future changes in benchmark interest rates. The Bancorp’s FTP methodology also allocates the contribution to net interest income of the asset-generating and deposit-providing businesses on a duration-adjusted basis to better attribute the driver of the performance. As the asset and liability durations are not perfectly matched, the residual impact of the FTP methodology is captured in General Corporate and Other. The charge and credit rates are determined using the FTP rate curve, which is based on an estimate of Fifth Third’s marginal borrowing cost in the wholesale funding markets. The FTP curve is constructed using the U.S. swap curve, brokered CD pricing and unsecured debt pricing.

The Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and interest-bearing liabilities and by the review of behavioral assumptions, such as prepayment rates on interest-earning assets and the estimated durations for indeterminate-lived deposits. Key assumptions, including the credit rates provided for deposit accounts, are reviewed annually. Credit rates for deposit products and charge rates for loan products may be reset more frequently in response to changes in market conditions. In general, the charge rates on assets increased since December 31, 2022 as they were affected by the prevailing level of interest rates and by the duration and repricing characteristics of the portfolio. The credit rates for deposit products also increased since December 31, 2022, due to higher interest rates and modified assumptions. Thus, net interest income for asset-generating business segments was negatively impacted by the rates charged on assets while deposit-providing business segments were positively impacted during the three months ended March 31, 2023.

The Bancorp’s methodology for allocating provision for credit losses to the business segments includes charges or benefits associated with changes in criticized commercial loan levels in addition to actual net charge-offs experienced by the loans and leases owned by each business segment. Provision for credit losses attributable to loan and lease growth and changes in ALLL factors is captured in General Corporate and Other. The financial results of the business segments include allocations for shared services and headquarters expenses. Additionally, the business segments form synergies by taking advantage of relationship depth opportunities and funding operations by accessing the capital markets as a collective unit.

The following table summarizes net income (loss) by business segment:

TABLE 22: Net Income (Loss) by Business Segment
															For the three months ended March 31,
($ in millions)																		2023			2022
Commercial Banking																		$	580		341
Consumer and Small Business Banking																		659			112
Wealth and Asset Management																		74			29
General Corporate and Other																		(755)			12
Net income																		$	558		494

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Commercial Banking

Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing and syndicated finance.

The following table contains selected financial data for the Commercial Banking segment:

TABLE 23: Commercial Banking
			For the three months ended March 31,
($ in millions)			2023			2022
Income Statement Data
Net interest income (FTE)(a)			$	980		525
Provision for (benefit from) credit losses			46			(34)
Noninterest income:
Commercial banking revenue			160			135
Service charges on deposits			87			100
Leasing business revenue			57			62
Other noninterest income			32			42
Noninterest expense:
Compensation and benefits			190			182
Leasing business expense			34			32
Other noninterest expense			327			265
Income before income taxes (FTE)			719			419
Applicable income tax expense(a)(b)			139			78
Net income			$	580		341
Average Balance Sheet Data
Commercial loans and leases, including held for sale			$	73,740		67,611
Demand deposits			26,930			39,253
Interest checking deposits			26,965			22,781
Savings and money market deposits			5,069			6,944
Certificates of deposit			44			122
Foreign office deposits			143			126

(a)Includes FTE adjustments of $3 and $2 for the three months ended March 31, 2023 and 2022 respectively.

(b)Applicable income tax expense for all periods includes the tax benefit from tax-exempt income, tax-advantaged investments and tax credits partially offset by the effect of certain nondeductible expenses. Refer to the Applicable Income Taxes subsection of the Statements of Income Analysis section of MD&A for additional information.

Net income was $580 million for the three months ended March 31, 2023 compared to $341 million for the same period in the prior year. The increase was primarily driven by an increase in net interest income on an FTE basis, partially offset by increases in provision for credit losses and noninterest expense.

Net interest income on an FTE basis increased $455 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in yields on and average balances of commercial loans and leases as well as increases in FTP credit rates on deposits. These positive impacts were partially offset by increases in FTP charges on commercial loans and leases as well as increases in rates paid on interest checking deposits and savings and money market deposits.

The provision for credit losses was $46 million for the three months ended March 31, 2023 compared to a benefit from credit losses of $34 million for the three months ended March 31, 2022. The increase in provision for credit losses for the three months ended March 31, 2023 was primarily driven by an increase in commercial criticized asset levels as well as an increase in net charge-offs on commercial and industrial loans. Annualized net charge-offs as a percent of average portfolio loans and leases increased to 15 bps for the three months ended March 31, 2023, compared to 3 bps for the same period in the prior year.

Noninterest income decreased $3 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by decreases in service charges on deposits, other noninterest income and leasing business revenue, partially offset by an increase in commercial banking revenue. Service charges on deposits decreased $13 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to higher treasury management earnings credits driven by market interest rates, partially offset by an increase in commercial treasury management fees. Other noninterest income decreased $10 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to the recognition of securities losses during the three months ended

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March 31, 2023. Leasing business revenue decreased $5 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to a decrease in leasing business solutions revenue related to the disposition of LaSalle Solutions during the second quarter of 2022. Commercial banking revenue increased $25 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in loan syndication fees, fixed income sales and trading revenue and merger and acquisition fees, partially offset by a decrease in corporate bond fees.

Noninterest expense increased $72 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in other noninterest expense and compensation and benefits expense. Other noninterest expense increased $62 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of an increase in allocated expenses, credit valuation adjustments on customer accommodation derivatives and FDIC insurance and other taxes. The increase in allocated expenses was primarily related to cash management services, information technology support services and employee compensation. Compensation and benefits expense increased $8 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in incentive compensation.

Average commercial loans and leases increased $6.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in average commercial and industrial loans, average commercial mortgage loans and average commercial construction loans, partially offset by a decrease in average commercial leases. Average commercial and industrial loans increased for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increased revolving line of credit utilization and increased production. Average commercial mortgage loans increased for the three months ended March 31, 2023 compared to the same period in the prior year as loan originations exceeded payoffs. Average commercial construction loans increased for the three months ended March 31, 2023 compared to the same period in the prior year as draws on existing commitments and loan originations exceeded payoffs. Average commercial leases decreased for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of a planned reduction in indirect non-relationship-based lease originations.

Average deposits decreased $10.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to decreases in average demand deposits and average savings and money market deposits, partially offset by an increase in average interest checking deposits. Average demand deposits decreased $12.3 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of lower average balances per commercial customer account and balance migration into interest checking deposits. Average savings and money market deposits decreased $1.9 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of lower average balances per commercial customer account and balance migration into interest checking deposits. Average interest checking deposits increased $4.2 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of balance migration from demand deposits and money market deposits, partially offset by lower average balances per commercial customer account. Lower average commercial customer account balances in demand deposits, money market deposits and interest checking deposits included the impact of deliberate runoff during the second quarter of 2022 of certain higher cost commercial deposits.

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Consumer and Small Business Banking

Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine dealers. Other consumer lending activities include home improvement and solar energy installation loans originated through a network of contractors and installers.

The following table contains selected financial data for the Consumer and Small Business Banking segment:

TABLE 24: Consumer and Small Business Banking
			For the three months ended March 31,
($ in millions)			2023			2022
Income Statement Data
Net interest income			$	1,257		517
Provision for credit losses			51			29
Noninterest income:
Card and processing revenue			74			74
Mortgage banking net revenue			69			52
Wealth and asset management revenue			53			51
Service charges on deposits			51			53
Other noninterest income			26			26
Noninterest expense:
Compensation and benefits			224			218
Net occupancy and equipment expense			62			57
Card and processing expense			20			18
Other noninterest expense			339			308
Income before income taxes			$	834		143
Applicable income tax expense			175			31
Net income			$	659		112
Average Balance Sheet Data
Consumer loans, including held for sale			$	43,213		43,053
Commercial loans			2,474			1,333
Demand deposits			22,615			23,485
Interest checking deposits			13,608			15,491
Savings and money market deposits			41,618			42,707
Certificates of deposit			5,437			2,611

Net income was $659 million for the three months ended March 31, 2023 compared to $112 million for the same period in the prior year. The increase was primarily driven by increases in net interest income and noninterest income, partially offset by increases in noninterest expense and provision for credit losses.

Net interest income increased $740 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in FTP credit rates on deposits as well as an increase in yields on and average balances of loans. These positive impacts were partially offset by an increase in FTP charge rates on loans as well as increases in rates paid on deposits.

Provision for credit losses increased $22 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to increases in net charge-offs on other consumer loans, indirect secured consumer loans and credit card. Annualized net charge-offs as a percent of average portfolio loans and leases increased to 46 bps for the three months ended March 31, 2023 compared to 29 bps for the same period in the prior year.

Noninterest income increased $17 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in mortgage banking net revenue. Refer to the Noninterest Income subsection of the Statements of Income Analysis section of MD&A for additional information on the fluctuations in mortgage banking net revenue.

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Noninterest expense increased $44 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in other noninterest expense and compensation and benefits expense. Other noninterest expense increased $31 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in allocated expenses, FDIC insurance and other taxes and marketing expense. The increase in allocated expenses was primarily related to information technology support services and employee compensation. These increases were partially offset by a decrease in loan servicing expenses related to the Bancorp’s sales of certain government-guaranteed residential mortgage loans that were previously in forbearance programs and serviced by a third party. Compensation and benefits expense increased $6 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by the incremental impact of acquired businesses and the impact of raising the Bancorp’s minimum wage in the third quarter of 2022, partially offset by a decrease in incentive compensation related to lower residential mortgage origination volumes.

Average consumer loans increased $160 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to an increase in average other consumer loans, partially offset by decreases in average residential mortgage loans and average indirect secured consumer loans. Average other consumer loans increased for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by originations of point-of-sale solar energy installation loans, in addition to loans acquired in a business acquisition completed in the second quarter of 2022. Average residential mortgage loans decreased for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to decreases in residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs. Average indirect consumer loans decreased for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by paydowns and lower production. Average commercial loans increased $1.1 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in average commercial and industrial loans and average commercial mortgage loans as loan originations exceeded payoffs.

Average deposits decreased $1.0 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by decreases in average interest checking deposits, average savings and money market deposits and average demand deposits, partially offset by an increase in average certificates of deposit. Average interest checking deposits decreased $1.9 billion, average savings and money market deposits decreased $1.1 billion and average demand deposits decreased $870 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily as a result of lower average balances per customer account due to increased consumer spending. Average certificates of deposit increased $2.8 billion for the three months ended March 31, 2023 primarily due to higher offering rates.

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Wealth and Asset Management

Wealth and Asset Management provides a full range of wealth management services for individuals, companies and not-for-profit organizations. Wealth and Asset Management is made up of three main businesses: FTS, an indirect wholly-owned subsidiary of the Bancorp; Fifth Third Private Bank; and Fifth Third Institutional Services. FTS offers full service retail brokerage services to individual clients and broker-dealer services to the institutional marketplace. Fifth Third Private Bank offers wealth management strategies to high net worth and ultra-high net worth clients through wealth planning, investment management, banking, insurance, trust and estate services. Fifth Third Institutional Services provides advisory services for institutional clients including middle market businesses, non-profits, states and municipalities.

The following table contains selected financial data for the Wealth and Asset Management segment:

TABLE 25: Wealth and Asset Management
			For the three months ended March 31,
($ in millions)			2023			2022
Income Statement Data
Net interest income			$	101		35
Provision for credit losses			—			—
Noninterest income:
Wealth and asset management revenue			138			142
Other noninterest income			—			2
Noninterest expense:
Compensation and benefits			61			60
Other noninterest expense			85			82
Income before income taxes			$	93		37
Applicable income tax expense			19			8
Net income			$	74		29
Average Balance Sheet Data
Loans and leases, including held for sale			$	4,452		4,143
Deposits			12,298			13,874

Net income was $74 million for the three months ended March 31, 2023 compared to $29 million for the same period in the prior year. The increase was primarily driven by an increase in net interest income, partially offset by a decrease in noninterest income and an increase in noninterest expense.

Net interest income increased $66 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in FTP credit rates on deposits as well as an increase in yields on loans and leases. These positive impacts were partially offset by increases in rates paid on average deposits and an increase in FTP charge rates on loans and leases for the three months ended March 31, 2023 compared to the same period in the prior year.

Noninterest income decreased $6 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to a decrease in wealth and asset management revenue, which decreased $4 million for the three months ended March 31, 2023 driven by a decrease in private client service fees.

Noninterest expense increased $4 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in other noninterest expense. Other noninterest expense increased $3 million for the three months ended March 31, 2023 primarily as a result of an increase in allocated expenses related to information technology support services and employee compensation.

Average loans and leases increased $309 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by increases in average other consumer loans, average residential mortgage loans, average commercial mortgage and average commercial and industrial loans as a result of higher loan production.

Average deposits decreased $1.6 billion for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by decreases in average interest checking deposits and average demand deposits as a result of lower average balances per customer account, partially offset by an increase in average savings and money market deposits.

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General Corporate and Other

General Corporate and Other includes the unallocated portion of the investment securities portfolio, securities gains and losses, certain non-core deposit funding, unassigned equity, unallocated provision for credit losses expense or a benefit from the reduction of the ACL, the payment of preferred stock dividends and certain support activities and other items not attributed to the business segments.

Net interest income on an FTE basis decreased $938 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in FTP credits on deposits allocated to the business segments as well as increases in interest expense on long-term debt, other short-term borrowings and deposits and the impact of losses from cash flow hedges used to manage interest rate risk recognized in interest income. These negative impacts were partially offset by an increase in the benefit related to FTP charge rates on loans and leases allocated to the business segments as well as increases in interest income on investment securities.

The provision for credit losses increased $17 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by an increase in net charge-offs and other factors which caused an increase in the ACL from December 31, 2022, including higher period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans, partially offset by the impact of allocations to the business segments.

Noninterest income increased $6 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by the recognition of net securities gains during the three months ended March 31, 2023 compared to net securities losses during the three months ended March 31, 2022 and an increase in private equity investment income, partially offset by an increase in the loss on the swap associated with the sale of Visa, Inc. Class B shares.

Noninterest expense decreased $9 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily driven by the impact of an increase in corporate overhead allocations from General Corporate and Other to the other business segments, partially offset by an increase in compensation and benefits due to an increase in non-qualified deferred compensation expense as well as an increase in technology and communications expense.

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RISK MANAGEMENT - OVERVIEW

The Risk Management Overview section included in Item 7 of the Bancorp’s Annual Report on Form 10-K describes the Bancorp’s Enterprise Risk Management Framework and Three Lines of Defense structure as well as key areas of risk, which include credit risk, liquidity risk, interest rate risk, price risk, legal and regulatory compliance risk, operational risk, reputation risk and strategic risk. Item 7 of the Bancorp’s Annual Report on Form 10-K also includes additional detailed information about the Bancorp’s processes related to operational risk management as well as legal and regulatory compliance risk management. The following information should be read in conjunction with the Bancorp’s Annual Report on Form 10-K.

CREDIT RISK MANAGEMENT

The objective of the Bancorp’s credit risk management strategy is to quantify and manage credit risk on an aggregate portfolio basis, as well as to limit the risk of loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations to the Bancorp. The Bancorp’s credit risk management strategy is based on three core principles: conservatism, diversification and monitoring. The Bancorp believes that effective credit risk management begins with conservative lending practices which are described below. These practices include the use of intentional risk-based limits for single name exposures and counterparty selection criteria designed to reduce or eliminate exposure to borrowers who have higher than average default risk and defined weaknesses in financial performance. The Bancorp carefully designs and monitors underwriting, documentation and collection standards. The Bancorp’s credit risk management strategy also emphasizes diversification on a geographic, industry and customer level as well as ongoing portfolio monitoring and timely management reviews of large credit exposures and credits experiencing deterioration of credit quality. Credit officers with the authority to extend credit are delegated specific authority amounts based on risk and exposure amount, the use of which is closely monitored. Underwriting activities are centrally managed, and Credit Risk Management manages the policy and the authority delegation process directly. The Credit Risk Review function provides independent and objective assessments of the quality of underwriting and documentation, the accuracy of risk grades and the charge-off, nonaccrual and reserve analysis process. The Bancorp’s credit review process and overall assessment of the adequacy of the ACL is based on quarterly assessments of the estimated losses expected in the loan and lease portfolio. The Bancorp uses these assessments to maintain an adequate ACL and record any necessary charge-offs. Additional loans and leases with probable or observed credit weaknesses receive enhanced monitoring and undergo a periodic review. Refer to Note 6 of the Notes to Condensed Consolidated Financial Statements for further information on the Bancorp’s credit grade categories, which are derived from standard regulatory rating definitions. In addition, stress testing is performed on various commercial and consumer portfolios utilizing various models. For certain portfolios, such as real estate and leveraged lending, stress testing is performed at the individual loan level during credit underwriting.

In addition to the individual review of larger commercial loans that exhibit probable or observed credit weaknesses, the commercial credit review process includes the use of two risk grading systems. The first of these risk grading systems is based on regulatory guidance for credit risk systems. These ratings are used by the Bancorp to monitor and manage its credit risk. The Bancorp also separately maintains a dual risk rating system for credit approval and pricing, portfolio monitoring and capital allocation that includes a “through-the-cycle” rating philosophy for assessing a borrower’s creditworthiness. This “through-the-cycle” rating philosophy uses a grading scale that assigns ratings based on average default rates through an entire business cycle for borrowers with similar financial performance. The dual risk rating system includes thirteen grade categories for estimating probabilities of default and an additional eleven grade categories for estimating losses given an event of default. The probability of default and loss given default evaluations are not separated in the regulatory risk rating system.

The Bancorp utilizes internally developed models to estimate expected credit losses for portfolio loans and leases. For loans and leases that are collectively evaluated, the Bancorp utilizes these models to forecast expected credit losses over a reasonable and supportable forecast period based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. Refer to Note 3 of the Notes to Condensed Consolidated Financial Statements for additional information about the Bancorp’s processes for developing these models, estimating credit losses for periods beyond the reasonable and supportable forecast period and for estimating credit losses for individually evaluated loans.

For the commercial portfolio segment, the estimated probabilities of default are primarily based on the probability of default ratings assigned under the through-the-cycle dual risk rating system and historical observations of how those ratings migrate to a default over time in the context of macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions.

For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity) and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The Bancorp also utilizes

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various scoring systems, analytical tools and portfolio performance monitoring processes to assess the credit risk of the consumer and residential mortgage portfolios.

Overview

Financial market volatility remained elevated during the first quarter of 2023. The Federal Reserve created an additional liquidity facility for banks in response to recent idiosyncratic bank failures. Despite the volatility, both equities and bonds posted gains for the first quarter of 2023 as markets priced in expectations of decreased interest rates in future periods. At the recent FOMC meeting, FRB officials indicated greater uncertainty around future rate increases as tighter credit conditions are likely to weigh on economic activity. The adjustment to a positive real federal funds rate is expected to be disruptive to economic activity as banks focus on building liquidity and capital ahead of a potential recession.

Although employment data has remained resilient, other economic reports for consumer spending and business investment, along with sentiment surveys, have indicated a slowing economy. The downside risks to the economic outlook continue to increase as persistent inflation above the FRB’s 2% target may force the FOMC to keep interest rates higher for longer. Increasing geopolitical tensions may also lead to higher commodity prices and reverse some of the easing seen recently in headline inflation. Against this backdrop, tighter liquidity in the banking sector is limiting the supply of credit in the economy. Over time, these factors are expected to adversely impact business investment, job growth and consumer spending and ultimately may lead to a recession beginning as early as late 2023.

Loan Modifications to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Bancorp adopted ASU 2022-02, which eliminated the accounting guidance on TDRs for creditors for all loan modifications to borrowers experiencing financial difficulty occurring on or after January 1, 2023. For further information on the Bancorp’s adoption of ASU 2022-02, refer to Note 3 and Note 6 of the Notes to Condensed Consolidated Financial Statements.

Commercial Portfolio

The Bancorp’s credit risk management strategy seeks to minimize concentrations of risk through diversification. The Bancorp has commercial loan concentration limits based on industry, lines of business within the commercial segment, geography and credit product type. The risk within the commercial loan and lease portfolio is managed and monitored through an underwriting process utilizing detailed origination policies, continuous loan level reviews, monitoring of industry concentration and product type limits and continuous portfolio risk management reporting.

The Bancorp is closely monitoring various economic conditions and their impacts on commercial borrowers, including the pace of inflation, rising interest rates, labor and supply chain issues, volatility and changes in consumer discretionary spending patterns, among others. The Bancorp maintains focus on disciplined client selection, adherence to underwriting policy and attention to borrower and industry concentrations.

The Bancorp provides loans to a variety of customers ranging from large multinational firms to middle market businesses, sole proprietors and high net worth individuals. The origination policies for commercial and industrial loans outline the risks and underwriting requirements for loans to businesses in various industries. Included in the policies are maturity and amortization terms, collateral and leverage requirements, cash flow coverage measures and hold limits. The Bancorp aligns credit and sales teams with specific industry and regional expertise to better monitor and manage different industry and geographic segments of the portfolio.

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The following table provides detail on commercial loans and leases by industry classification (as defined by the North American Industry Classification System), by loan size and by state, illustrating the diversity and granularity of the Bancorp’s commercial loans and leases as of:

TABLE 26: Commercial Loan and Lease Portfolio (excluding loans and leases held for sale)
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			Exposure			Nonaccrual			Outstanding			Exposure			Nonaccrual
By Industry:
Real estate			$	11,920		18,812			24			11,275			17,938			25
Manufacturing			11,075			21,191			96			11,024			21,174			88
Financial services and insurance			9,926			20,896			—			9,927			20,674			—
Business services			6,079			10,547			22			5,971			10,240			4
Healthcare			5,810			7,941			20			5,576			7,838			28
Wholesale trade			5,447			10,397			6			5,538			10,620			4
Retail trade			4,700			10,857			8			4,495			10,570			9
Accommodation and food			4,492			7,292			50			4,340			7,028			10
Communication and information			3,528			6,799			13			3,428			6,944			—
Mining			3,489			6,682			—			3,634			6,811			—
Construction			2,888			6,349			14			2,945			6,265			15
Transportation and warehousing			2,516			4,685			2			2,621			4,664			2
Utilities			1,940			3,853			—			1,862			4,172			—
Entertainment and recreation			1,610			3,036			65			1,729			3,053			67
Other services			1,089			1,533			9			1,088			1,484			9
Agribusiness			379			662			—			456			651			—
Public administration			308			444			4			343			451			1
Individuals			43			76			—			76			117			—
Other			—			—			1			61			62			1
Total			$	77,239		142,052			334			76,389			140,756			263
By Loan Size:
Less than $1 million			4		%	3			14			4			3			17
$1 million to $5 million			7			5			13			7			6			12
$5 million to $10 million			5			4			12			5			4			17
$10 million to $25 million			13			12			34			14			12			28
$25 million to $50 million			23			23			27			23			22			26
Greater than $50 million			48			53			—			47			53			—
Total			100		%	100			100			100			100			100
By State:
Illinois			9		%	8			24			9			9			30
Ohio			9			11			7			9			11			8
Texas			9			9			7			9			9			9
California			9			8			7			9			8			3
Florida			7			7			6			7			7			6
Michigan			5			5			4			5			5			5
Georgia			4			5			1			4			4			1
Tennessee			3			3			1			3			3			2
Indiana			3			3			—			3			3			—
North Carolina			3			2			2			3			2			2
South Carolina			2			2			—			2			2			—
Kentucky			2			2			1			2			2			1
Other			35			35			40			35			35			33
Total			100		%	100			100			100			100			100

The origination policies for commercial real estate outline the risks and underwriting requirements for owner and nonowner-occupied and construction lending. Included in the policies are maturity and amortization terms, maximum LTVs, minimum debt service coverage ratios, construction loan monitoring procedures, appraisal requirements, pre-leasing requirements (as applicable), pro forma analysis requirements and interest rate sensitivity. The Bancorp requires a valuation of real estate collateral, which may include third-party appraisals, be performed at the time of origination and renewal in accordance with regulatory requirements and on an as-needed basis when market conditions justify. The Bancorp maintains an appraisal review department to order and review third-party appraisals in accordance with regulatory requirements. Collateral values on nonaccrual assets with relationships exceeding $1 million are reviewed quarterly to assess the appropriateness of the

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value ascribed in the assessment of charge-offs and specific reserves. Additionally, collateral values are also reviewed at least annually for all criticized assets.

The Bancorp assesses all real estate and non-real estate collateral securing a loan and considers all cross-collateralized loans in the calculation of the LTV ratio. The following tables provide detail on the most recent LTV ratios for commercial mortgage loans greater than $1 million, excluding commercial mortgage loans that are individually evaluated for an ACL. The Bancorp does not typically aggregate the LTV ratios for commercial mortgage loans less than $1 million.

TABLE 27: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of March 31, 2023 ($ in millions)			LTV > 100%			LTV 80-100%			LTV < 80%
Commercial mortgage owner-occupied loans			$	56		505			3,711
Commercial mortgage nonowner-occupied loans			4			45			4,598
Total			$	60		550			8,309
TABLE 28: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of December 31, 2022 ($ in millions)			LTV > 100%			LTV 80-100%			LTV < 80%
Commercial mortgage owner-occupied loans			$	63		533			3,566
Commercial mortgage nonowner-occupied loans			4			65			4,510
Total			$	67		598			8,076

The Bancorp views nonowner-occupied commercial real estate as a higher credit risk product compared to some other commercial loan portfolios due to the higher volatility of the industry.

The following tables provide an analysis of nonowner-occupied commercial real estate loans by state (excluding loans held for sale):

TABLE 29: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of March 31, 2023 ($ in millions)															For the three months ended March 31, 2023
			Outstanding			Exposure			90 Days Past Due			Nonaccrual			Net Charge-offs
By State:
Illinois			$	1,501		1,744			—			21			—
Florida			1,128			1,944			—			—			—
Ohio			1,064			1,504			—			—			—
Michigan			817			1,175			—			1			—
South Carolina			794			1,110			—			—			—
Texas			747			1,376			—			—			—
California			621			1,050			—			—			—
Georgia			436			919			—			—			—
All other states			3,339			5,523			—			1			—
Total			$	10,447		16,345			—			23			—

(a)Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A.

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TABLE 30: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of March 31, 2022 ($ in millions)															For the three months ended March 31, 2022
			Outstanding			Exposure			90 Days Past Due			Nonaccrual			Net Charge-offs
By State:
Illinois			$	1,628		1,832			—			21			—
Florida			1,130			1,706			—			—			—
Ohio			1,114			1,433			1			—			—
Michigan			778			965			—			—			—
South Carolina			769			932			—			—			—
Texas			800			1,147			—			—			—
California			373			558			—			—			—
Georgia			352			790			—			—			—
All other states			3,404			4,872			1			8			—
Total			$	10,348		14,235			2			29			—

(a)Included in commercial mortgage loans and commercial construction loans in the Loans and Leases subsection of the Balance Sheet Analysis section of MD&A.

Consumer Portfolio

Consumer credit risk management utilizes a framework that encompasses consistent processes for identifying, assessing, managing, monitoring and reporting credit risk. These processes are supported by a credit risk governance structure that includes Board oversight, policies, risk limits and risk committees.

The Bancorp’s consumer portfolio is materially comprised of five categories of loans: residential mortgage loans, home equity, indirect secured consumer loans, credit card and other consumer loans. The Bancorp has identified certain credit characteristics within these five categories of loans which it believes represent a higher level of risk compared to the rest of the consumer loan portfolio. The Bancorp does not update LTVs for the consumer portfolio subsequent to origination except as part of the charge-off process for real estate secured loans. The Bancorp actively manages the consumer portfolio through concentration limits, which mitigate credit risk through limiting the exposure to lower FICO scores, higher LTVs, specific geographic concentration risks and additional risk elements.

The Bancorp continues to ensure that underwriting standards and guidelines adequately account for the broader economic conditions that the consumer portfolio faces in a rising-rate environment. Guidelines are designed to ensure that the various consumer products fall within the Bancorp’s risk appetite. These guidelines will be monitored and adjusted as deemed appropriate in response to the prevailing economic conditions while remaining within the Bancorp’s risk tolerance limits.

The payment structures for certain variable rate products (such as residential mortgage loans, home equity and credit card) are susceptible to changes in benchmark interest rates. With increases in interest rates, minimum payments on these products also increase, raising the potential for the environment to be disruptive to some borrowers. The Bancorp actively monitors the portion of its consumer portfolio that is susceptible to increases in minimum payments and continues to assess the impact on the overall risk appetite and soundness of the portfolio.

Residential mortgage portfolio

The Bancorp manages credit risk in the residential mortgage portfolio through underwriting guidelines that limit exposure to loan characteristics determined to influence credit risk. Additionally, the portfolio is governed by concentration limits that ensure geographic, product and channel diversification. The Bancorp may also package and sell loans in the portfolio.

The Bancorp does not originate residential mortgage loans that permit customers to defer principal payments or make payments that are less than the accruing interest. The Bancorp originates both fixed-rate and ARM loans. Within the ARM portfolio, approximately $518 million of ARM loans will have rate resets during the next twelve months. Of these resets, 98% are expected to experience an increase in rate, with an average increase of approximately 1.95%. Underlying characteristics of these borrowers are relatively strong with a weighted average origination DTI of 34% and weighted average origination LTV of 72%.

Certain residential mortgage products have characteristics that may increase the Bancorp’s credit loss rates in the event of a decline in housing values. These types of mortgage products offered by the Bancorp include loans with high LTVs, multiple loans secured by the same collateral that when combined result in an LTV greater than 80% and interest-only loans. The Bancorp has deemed residential mortgage loans with greater than 80% LTVs and no mortgage insurance as loans that represent a higher level of risk.

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The following table provides an analysis of the residential mortgage portfolio loans outstanding by LTV at origination as of:

TABLE 31: Residential Mortgage Portfolio Loans by LTV at Origination
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			Weighted- Average LTV						Outstanding			Weighted- Average LTV
LTV ≤ 80%			$	12,336		62.1		%				$	12,395		61.9		%
LTV > 80%, with mortgage insurance(a)			3,127			94.7						3,092			94.7
LTV > 80%, no mortgage insurance			2,145			90.4						2,141			90.5
Total			$	17,608		71.4		%				$	17,628		71.3		%

(a)Includes loans with either borrower or lender paid mortgage insurance.

The following tables provide an analysis of the residential mortgage portfolio loans outstanding by state with a greater than 80% LTV at origination and no mortgage insurance:

TABLE 32: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of March 31, 2023 ($ in millions)												For the three months ended March 31, 2023
			Outstanding			90 Days Past Due			Nonaccrual			Net Charge-offs
By State:
Ohio			$	498		—			9			—
Illinois			433			—			5			—
Florida			353			—			3			—
Michigan			159			—			2			—
Indiana			157			—			2			—
North Carolina			148			—			1			—
Kentucky			113			—			1			—
All other states			284			—			7			—
Total			$	2,145		—			30			—

TABLE 33: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of March 31, 2022 ($ in millions)												For the three months ended March 31, 2022
			Outstanding			90 Days Past Due			Nonaccrual			Net (Recoveries) Charge-offs
By State:
Ohio			$	471		2			8			—
Illinois			410			1			3			—
Florida			312			—			3			(1)
Michigan			158			—			2			—
Indiana			139			—			2			—
North Carolina			133			—			—			—
Kentucky			106			—			1			—
All other states			272			—			4			—
Total			$	2,001		3			23			(1)

Home equity portfolio

The Bancorp’s home equity portfolio is primarily comprised of home equity lines of credit. Beginning in the first quarter of 2013, the Bancorp’s newly originated home equity lines of credit have a 10-year interest-only draw period followed by a 20-year amortization period. The home equity line of credit previously offered by the Bancorp was a revolving facility with a 20-year term, minimum payments of interest-only and a balloon payment of principal at maturity. Approximately 34% of the outstanding balances of the Bancorp’s portfolio of home equity lines of credit have a balloon structure at maturity. Peak maturity years for the balloon home equity lines of credit are 2025 to 2028 and approximately 13% of the balances mature before 2025.

The ALLL provides coverage for expected losses in the home equity portfolio. The allowance attributable to the portion of the home equity portfolio that is collectively evaluated is determined on a pooled basis using a probability of default, loss given default and exposure at default model framework to generate expected losses. The expected losses for the home equity portfolio are dependent upon loan

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delinquency, FICO scores, LTV, loan age and their historical correlation with macroeconomic variables including unemployment and the home price index. The expected losses generated from models are adjusted by certain qualitative adjustment factors to reflect risks associated with current conditions and trends. The qualitative factors include adjustments for changes in policies or procedures in underwriting, monitoring or collections, economic conditions, portfolio mix, lending and risk management personnel, results of internal audit and quality control reviews, collateral values and geographic concentrations.

The home equity portfolio is managed in two primary groups: loans outstanding with a combined LTV greater than 80% and those loans with an LTV of 80% or less based upon appraisals at origination. For additional information on these loans, refer to Table 35 and Table 36. Of the total $4.0 billion of outstanding home equity loans:

•77% reside within the Bancorp’s Midwest footprint of Ohio, Michigan, Illinois, Indiana and Kentucky as of March 31, 2023;

•38% are in senior lien positions and 62% are in junior lien positions at March 31, 2023;

•77% of non-delinquent borrowers made at least one payment greater than the minimum payment during the three months ended March 31, 2023; and

•The portfolio had a weighted average refreshed FICO score of 750 at March 31, 2023.

The Bancorp actively manages lines of credit and makes adjustments in lending limits when it believes it is necessary based on FICO score deterioration and property devaluation. The Bancorp does not routinely obtain appraisals on performing loans to update LTVs after origination. However, the Bancorp monitors the local housing markets by reviewing various home price indices and incorporates the impact of the changing market conditions in its ongoing credit monitoring processes. For junior lien home equity loans which become 60 days or more past due, the Bancorp tracks the performance of the senior lien loans in which the Bancorp is the servicer and utilizes consumer credit bureau attributes to monitor the status of the senior lien loans that the Bancorp does not service. If the senior lien loan is found to be 120 days or more past due, the junior lien home equity loan is placed on nonaccrual status unless both loans are well-secured and in the process of collection. Additionally, if the junior lien home equity loan becomes 120 days or more past due and the senior lien loan is also 120 days or more past due, the junior lien home equity loan is assessed for charge-off. Refer to the Analysis of Nonperforming Assets subsection of the Risk Management section of MD&A, Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 and Note 3 of the Notes to Condensed Consolidated Financial Statements for more information.

The following table provides an analysis of home equity portfolio loans outstanding disaggregated based upon refreshed FICO score as of:

TABLE 34: Home Equity Portfolio Loans Outstanding by Refreshed FICO Score
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			% of Total						Outstanding			% of Total
Senior Liens:
FICO ≤ 659			$	124		3		%				$	122		3		%
FICO 660-719			201			5						205			5
FICO ≥ 720			1,190			30						1,262			31
Total senior liens			$	1,515		38		%				$	1,589		39		%
Junior Liens:
FICO ≤ 659			213			6						211			5
FICO 660-719			440			11						433			11
FICO ≥ 720			1,790			45						1,806			45
Total junior liens			$	2,443		62		%				$	2,450		61		%
Total			$	3,958		100		%				$	4,039		100		%

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The Bancorp believes that home equity portfolio loans with a greater than 80% LTV (including senior liens, if applicable) present a higher level of risk. The following table provides an analysis of the home equity portfolio loans outstanding in a senior and junior lien position by LTV at origination as of:

TABLE 35: Home Equity Portfolio Loans Outstanding by LTV at Origination
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			Weighted- Average LTV						Outstanding			Weighted- Average LTV
Senior Liens:
LTV ≤ 80%			$	1,327		51.7		%				$	1,395		52.1		%
LTV > 80%			188			88.7						194			88.8
Total senior liens			$	1,515		56.5						1,589			56.8
Junior Liens:
LTV ≤ 80%			1,628			65.4						1,628			65.6
LTV > 80%			815			89.1						822			89.2
Total junior liens			$	2,443		73.8						2,450			74.1
Total			$	3,958		67.1		%				$	4,039		67.2		%

The following tables provide an analysis of home equity portfolio loans outstanding by state with a LTV greater than 80% (including senior liens, if applicable) at origination:

TABLE 36: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of March 31, 2023 ($ in millions)															For the three months ended March 31, 2023
			Outstanding			Exposure			90 Days Past Due			Nonaccrual			Net (Recoveries) Charge-offs
By State:
Ohio			$	312		846			—			7			—
Illinois			157			361			1			3			(1)
Michigan			155			422			—			3			—
Indiana			97			258			—			2			—
Kentucky			84			218			—			2			—
Florida			80			193			—			2			—
All other states			118			295			—			3			—
Total			$	1,003		2,593			1			22			(1)

TABLE 37: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of March 31, 2022 ($ in millions)															For the three months ended March 31, 2022
			Outstanding			Exposure			90 Days Past Due			Nonaccrual			Net (Recoveries) Charge-offs
By State:
Ohio			$	326		856			—			8			—
Illinois			170			360			1			5			(2)
Michigan			175			453			—			4			(2)
Indiana			100			246			—			3			—
Kentucky			85			217			—			2			—
Florida			71			163			—			1			(1)
All other states			114			268			—			4			(1)
Total			$	1,041		2,563			1			27			(6)

Indirect secured consumer portfolio

The indirect secured consumer portfolio is comprised of $13.6 billion of automobile loans and $2.9 billion of indirect motorcycle, powersport, recreational vehicle and marine loans as of March 31, 2023. All concentration and guideline changes are monitored monthly to ensure alignment with original credit performance and return projections.

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The following table provides an analysis of indirect secured consumer portfolio loans outstanding disaggregated based upon FICO score at origination as of:

TABLE 38: Indirect Secured Consumer Portfolio Loans Outstanding by FICO Score at Origination
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			% of Total						Outstanding			% of Total
FICO ≤ 659			$	238		1		%				$	248		1		%
FICO 660-719			3,537			22						3,564			22
FICO ≥ 720			12,709			77						12,740			77
Total			$	16,484		100		%				$	16,552		100		%

It is a common industry practice to advance on these types of loans an amount in excess of the collateral value due to the inclusion of negative equity trade-in, maintenance/warranty products, taxes, title and other fees paid at closing. The Bancorp monitors its exposure to these higher risk loans.

The following table provides an analysis of indirect secured consumer portfolio loans outstanding by LTV at origination as of:

TABLE 39: Indirect Secured Consumer Portfolio Loans Outstanding by LTV at Origination
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			Weighted- Average LTV						Outstanding			Weighted- Average LTV
LTV ≤ 100%			$	12,026		79.6		%				$	12,087		79.6		%
LTV > 100%			4,458			110.5						4,465			110.5
Total			$	16,484		87.9		%				$	16,552		87.9		%

The following table provides an analysis of the Bancorp’s indirect secured consumer portfolio loans outstanding with an LTV greater than 100% at origination:

TABLE 40: Indirect Secured Consumer Portfolio Loans Outstanding with an LTV Greater than 100% at Origination
As of ($ in millions)			Outstanding			90 Days Past Due and Accruing			Nonaccrual			Net Charge-offs for the Three Months Ended
March 31, 2023			$	4,458		—			15			8
March 31, 2022			4,731			5			13			5

Credit card portfolio

The credit card portfolio consists of predominantly prime accounts with 98% of balances existing within the Bancorp’s footprint at both March 31, 2023 and December 31, 2022. At March 31, 2023 and December 31, 2022 71% and 72%, respectively, of the outstanding balances were originated through branch-based relationships with the remainder coming from direct mail campaigns and online acquisitions.

Given the variable nature of the credit card portfolio, interest rate increases impact this product and it is regularly monitored to ensure the portfolio remains within the Bancorp’s risk tolerance.

The following table provides an analysis of the Bancorp’s outstanding credit card portfolio disaggregated based upon FICO score at origination as of:

TABLE 41: Credit Card Portfolio Loans Outstanding by FICO Score at Origination
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			% of Total						Outstanding			% of Total
FICO ≤ 659			$	70		4		%				$	80		4		%
FICO 660-719			493			28						528			28
FICO ≥ 720			1,198			68						1,266			68
Total			$	1,761		100		%				$	1,874		100		%

Other consumer portfolio loans

Other consumer portfolio loans are comprised of secured and unsecured loans originated through the Bancorp’s branch network, home improvement and solar energy installation loans originated through a network of contractors and installers, and other point-of-sale loans originated or purchased in connection with third-party companies. The Bancorp closely monitors the credit performance of point-of-sale loans. Loans originated in connection with one third-party company are impacted by certain credit loss protection coverage provided by that company. The Bancorp discontinued origination of new loans with this third-party company in September 2022.

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The following table provides an analysis of other consumer portfolio loans outstanding by product type as of:

TABLE 42: Other Consumer Portfolio Loans Outstanding by Product Type
			March 31, 2023									December 31, 2022
($ in millions)			Outstanding			% of Total						Outstanding			% of Total
Point-of-sale			$	3,219		55		%				$	2,297		46		%
Third-party point-of-sale			1,135			20						1,262			25
Other secured			925			16						909			18
Unsecured			528			9						530			11
Total			$	5,807		100		%				$	4,998		100		%

Analysis of Nonperforming Assets

Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest is uncertain and certain other assets, including OREO and other repossessed property. A summary of nonperforming assets is included in Table 43. For further information on the Bancorp’s policies related to accounting for delinquent and nonperforming loans and leases, refer to the Nonaccrual Loans and Leases section of Note 3 of the Notes to Condensed Consolidated Financial Statements.

Nonperforming assets were $623 million at March 31, 2023 compared to $539 million at December 31, 2022.

Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.51% and 0.44% at March 31, 2023 and December 31, 2022, respectively. Nonaccrual loans and leases secured by real estate were 39% of nonaccrual loans and leases as of March 31, 2023 compared to 42% as of December 31, 2022.

Portfolio commercial nonaccrual loans and leases were $334 million at March 31, 2023, an increase of $71 million from December 31, 2022. Portfolio consumer nonaccrual loans were $259 million at March 31, 2023, an increase of $7 million from December 31, 2022. Refer to Table 44 for a rollforward of portfolio nonaccrual loans and leases.

OREO and other repossessed property was $30 million and $24 million at March 31, 2023 and December 31, 2022, respectively. The Bancorp recognized an immaterial amount of losses and $1 million of gains on the transfer, sale or write-down of OREO properties for the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023 and 2022, approximately $10 million and $6 million, respectively, of interest income would have been recognized if the nonaccrual portfolio loans and leases had been current in accordance with their contractual terms. Although these values help demonstrate the costs of carrying nonaccrual credits, the Bancorp does not expect to recover the full amount of interest as nonaccrual loans and leases are generally carried below their principal balance.

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TABLE 43: Summary of Nonperforming Assets and Delinquent Loans and Leases
As of ($ in millions)			March 31, 2023			December 31, 2022
Nonaccrual portfolio loans and leases:
Commercial and industrial loans			$	280		215
Commercial mortgage loans			44			40
Commercial construction loans			5			8
Commercial leases			5			—
Residential mortgage loans			129			124
Home equity			68			67
Indirect secured consumer loans			27			29
Credit card			29			27
Other consumer loans			6			5
Total nonaccrual portfolio loans and leases(a)			$	593		515
OREO and other repossessed property			30			24
Total nonperforming portfolio loans and leases and OREO			$	623		539
Nonaccrual loans held for sale			—			—
Total nonperforming assets			$	623		539
Total portfolio loans and leases 90 days past due and still accruing:
Commercial and industrial loans			$	17		11
Commercial leases			—			2
Residential mortgage loans(b)			9			7
Home equity			1			1
Credit card			18			18
Other consumer loans			1			1
Total portfolio loans and leases 90 days past due and still accruing			$	46		40
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO			0.51		%	0.44
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases			0.48			0.42
ACL as a percent of nonperforming portfolio loans and leases			413			468
ACL as a percent of nonperforming portfolio assets			393			447

(a)Includes $17 and $15 of nonaccrual government insured commercial loans whose repayments are insured by the SBA as of March 31, 2023 and December 31, 2022, respectively.

(b)Information for all periods presented excludes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. These advances were $208 as of March 31, 2023 and $212 as of December 31, 2022. The Bancorp recognized losses of an immaterial amount and $1 for the three months ended March 31, 2023 and 2022, respectively, due to claim denials and curtailments associated with these insured or guaranteed loans.

The following tables provide a rollforward of portfolio nonaccrual loans and leases, by portfolio segment:

TABLE 44: Rollforward of Portfolio Nonaccrual Loans and Leases
For the three months ended March 31, 2023 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
Balance, beginning of period			$	263		124			128			515
Transfers to nonaccrual status			121			22			77			220
Transfers to accrual status			(1)			(9)			(24)			(34)
Loan paydowns/payoffs			(22)			(7)			(15)			(44)
Transfers to OREO			—			(2)			(3)			(5)
Charge-offs			(33)			—			(33)			(66)
Draws/other extensions of credit			6			1			—			7
Balance, end of period			$	334		129			130			593

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TABLE 45: Rollforward of Portfolio Nonaccrual Loans and Leases
For the three months ended March 31, 2022 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
Balance, beginning of period			$	337		33			128			498
Transfers to nonaccrual status			54			64			33			151
Transfers to accrual status			(2)			(7)			(16)			(25)
Transfers to held for sale			(4)			—			—			(4)
Loan paydowns/payoffs			(52)			(1)			(15)			(68)
Transfers to OREO			—			(1)			—			(1)
Charge-offs			(11)			—			(7)			(18)
Draws/other extensions of credit			1			—			—			1
Balance, end of period			$	323		88			123			534

Analysis of Net Loan Charge-offs

Net charge-offs were 26 bps and 12 bps of average portfolio loans and leases for the three months ended March 31, 2023 and 2022, respectively. Table 46 provides a summary of credit loss experience and net charge-offs as a percentage of average portfolio loans and leases outstanding by loan category.

The ratio of commercial loan and lease net charge-offs as a percent of average portfolio commercial loans and leases increased to 17 bps during the three months ended March 31, 2023, compared to 5 bps during the same period in the prior year primarily due to an increase in net charge-offs on commercial and industrial loans of $21 million.

The ratio of consumer loan net charge-offs as a percent of average portfolio consumer loans increased to 42 bps during the three months ended March 31, 2023, compared to 25 bps during the same period in the prior year primarily due to increases in net charge-offs on other consumer loans and indirect secured consumer loans of $10 million and $7 million, respectively.

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TABLE 46: Summary of Credit Loss Experience
			For the three months ended March 31,
($ in millions)			2023			2022
Losses charged-off:
Commercial and industrial loans			$	(32)		(11)
Commercial mortgage loans			—			—
Commercial construction loans			(1)			—
Commercial leases			—			—
Residential mortgage loans			(1)			(1)
Home equity			(1)			(2)
Indirect secured consumer loans			(23)			(16)
Credit card			(20)			(17)
Other consumer loans(a)			(32)			(17)
Total losses charged-off			$	(110)		(64)
Recoveries of losses previously charged-off:
Commercial and industrial loans			$	2		2
Commercial mortgage loans			—			1
Commercial construction loans			—			—
Commercial leases			—			—
Residential mortgage loans			1			2
Home equity			1			3
Indirect secured consumer loans			9			9
Credit card			5			4
Other consumer loans(a)			14			9
Total recoveries of losses previously charged-off			$	32		30
Net losses charged-off:
Commercial and industrial loans			$	(30)		(9)
Commercial mortgage loans			—			1
Commercial construction loans			(1)			—
Commercial leases			—			—
Residential mortgage loans			—			1
Home equity			—			1
Indirect secured consumer loans			(14)			(7)
Credit card			(15)			(13)
Other consumer loans			(18)			(8)
Total net losses charged-off			$	(78)		(34)
Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans			0.21		%	0.07
Commercial mortgage loans			0.01			(0.03)
Commercial construction loans			0.10			—
Commercial leases			(0.04)			(0.02)
Total commercial loans and leases			0.17		%	0.05
Residential mortgage loans			—			(0.02)
Home equity			(0.04)			(0.07)
Indirect secured consumer loans			0.34			0.17
Credit card			3.43			3.13
Other consumer loans			1.41			1.07
Total consumer loans			0.42		%	0.25
Total net losses charged-off as a percent of average portfolio loans and leases			0.26		%	0.12

(a)For the three months ended March 31, 2023 and 2022, the Bancorp recorded $9 and $8, respectively, in both losses charged off and recoveries of losses previously charged off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.

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Allowance for Credit Losses

The allowance for credit losses is comprised of the ALLL and the reserve for unfunded commitments. As described in Note 3 of the Notes to Condensed Consolidated Financial Statements, the Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms of the related loans and leases (as adjusted for prepayments). The Bancorp’s methodology for determining the ALLL includes an estimate of expected credit losses on a collective basis for groups of loans and leases with similar risk characteristics and specific allowances for loans and leases which are individually evaluated. For collectively evaluated loans and leases, the Bancorp uses quantitative models to forecast expected credit losses based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. The Bancorp’s expected credit loss models consider historical credit loss experience, current market and economic conditions, and forecasted changes in market and economic conditions if such forecasts are considered reasonable and supportable.

The Bancorp also considers qualitative factors in determining the ALLL. Qualitative adjustments are used to capture characteristics in the portfolio that impact expected credit losses which are not fully captured within the Bancorp’s expected credit loss models. These factors include adjustments for changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel and results of internal audit and quality control reviews. In addition, the qualitative adjustment framework can be utilized to address specific idiosyncratic risks such as geopolitical events, natural disasters or changes in current economic conditions that are not reflected in the quantitative credit loss models, and their effects on regional borrowers and changes in product structures. Qualitative factors may also be used to address the impacts of unforeseen events on key inputs and assumptions within the Bancorp’s expected credit loss models, such as the reasonable and supportable forecast period, changes to historical loss information or changes to the reversion period or methodology.

In addition to the ALLL, the Bancorp maintains a reserve for unfunded commitments recorded in other liabilities in the Condensed Consolidated Balance Sheets. The methodology used to determine the adequacy of this reserve is similar to the Bancorp’s methodology for determining the ALLL. The provision for unfunded commitments is included in the provision for credit losses in the Condensed Consolidated Statements of Income.

For the commercial portfolio segment, the estimates for probability of default are primarily based on internal ratings assigned to each commercial borrower on a 13-point scale and historical observations of how those ratings migrate to a default over time in the context of macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions.

For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity) and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions.

At both March 31, 2023 and December 31, 2022, the Bancorp used three forward-looking economic scenarios during the reasonable and supportable forecast period in its expected credit loss models to address the inherent imprecision in macroeconomic forecasting. Each of the three scenarios was developed by a third party that is subject to the Bancorp’s Third-Party Risk Management program including oversight by the Bancorp’s independent model risk management group. The scenarios included a most likely outcome (Baseline) and two less probable scenarios with one being more favorable than the Baseline and the other being less favorable. The more favorable alternative scenario (Upside) depicted a stronger near-term growth outlook while the less favorable outlook (Downside) depicted a moderate recession.

The Baseline scenario was developed such that the expectation is that the economy will perform better than the projection 50% of the time and worse than the projection 50% of the time. The Upside scenario was developed such that there is a 10% probability that the economy will perform better than the projection and a 90% probability that it will perform worse. The Downside scenario was developed such that there is a 90% probability that the economy will perform better than the projection and a 10% probability that it will perform worse.

March 31, 2023 ACL

The ACL as of March 31, 2023 was impacted by several factors, including higher period-end loan and lease balances and increases to specific reserves on individually evaluated commercial loans. The increase in period-end loan and lease balances was primarily driven by commercial and industrial loan growth and originations of point-of-sale solar energy installation loans. As of March 31, 2023, the Bancorp’s economic scenarios included estimates of the expected impacts of the changes in economic conditions caused by inflationary and rising interest rate pressures and the ongoing Russia-Ukraine conflict. At March 31, 2023, the Bancorp assigned an 80% probability weighting to the Baseline scenario and 10% to each the Upside and Downside scenarios.

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The Baseline scenario assumed real GDP growth for the year ended 2023 at 1.3% with the forecast increasing to 2.2% and 2.7% in 2024 and 2025, respectively. The Baseline scenario also assumed an average unemployment rate of 3.5% for the year ended 2023, increasing to an average of 3.9% in the forecast for 2024 and modestly increasing to an average of 4.0% in 2025. Lastly, the Baseline scenario assumed continued increases to the target federal funds rate, peaking at 4.8% in 2023, and decreasing to an average of 4.2% and 3.2% in 2024 and 2025, respectively. The Upside scenario assumed a faster than anticipated resolution to the Russia-Ukraine conflict with related improvement to economic measures. The Upside scenario assumed that, on an average annual basis, the change in real GDP is 2.1% in 2023, increasing to 3.3% in 2024 and decreasing to an average of 2.5% in 2025. The Upside scenario also assumed an unemployment rate at an annual average of 3.1% and 3.2% in 2023 and 2024, respectively, and slightly increasing to 3.5% in 2025. In the Upside scenario, the forecast for the federal funds rate was consistent with the Baseline scenario. The Downside scenario included significant worsening of the Russia-Ukraine conflict resulting in continued inflation, causing the U.S. economy to fall into a recession in the second quarter of 2023. The Downside scenario assumed that real GDP declines throughout 2023 at an average of (0.4%) and throughout 2024 at an average of (0.3%), recovering to an average growth rate of 2.6% in 2025. The Downside scenario unemployment rate peaks at an average of 7.6% in 2024 and decreases to an average of 6.3% in 2025. In the Downside scenario, the forecast for the federal funds rate included higher increases than the Baseline scenario for 2023, followed by a decrease to an average target rate of 2.9% in 2024 and 1.2% in 2025.

The Bancorp’s quantitative credit loss models are sensitive to changes in economic forecast assumptions over the reasonable and supportable forecast period. Applying a 100% probability weighting to the Downside scenario rather than using the probability-weighted three scenario approach would result in an increase in the quantitative ACL of approximately $2.2 billion. This sensitivity calculation only reflects the impact of changing the probability weighting of the scenarios in the quantitative credit loss models and excludes any additional considerations associated with the qualitative component of the ACL that might be warranted if probability weights were adjusted.

At March 31, 2023, the Bancorp utilized its qualitative adjustment framework to incorporate consideration of two alternative macroeconomic scenarios in addition to its existing Baseline, Upside and Downside scenarios. These alternative scenarios depict potential macroeconomic outcomes from bank failures, including those that have recently occurred in the U.S.

The following table provides a rollforward of the Bancorp’s ACL:

TABLE 47: Changes in Allowance for Credit Losses
												For the three months ended March 31,
($ in millions)												2023			2022
ALLL:
Balance, beginning of period												$	2,194		1,892
Impact of adoption of ASU 2022-02(b)												(49)			—
Losses charged-off(a)												(110)			(64)
Recoveries of losses previously charged-off(a)												32			30
Provision for loan and lease losses												148			50
Balance, end of period												$	2,215		1,908
Reserve for unfunded commitments:
Balance, beginning of period												$	216		182
Provision for (benefit from) the reserve for unfunded commitments												16			(5)
Balance, end of period												$	232		177

(a)For the three months ended March 31, 2023 and 2022, the Bancorp recorded $9 and $8, respectively, in both losses charged-off and recoveries of losses previously charged off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.

(b)Refer to Note 3 of the Notes to Condensed Consolidated Financial Statements for further information.

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The following table provides an attribution of the Bancorp’s ALLL to portfolio loans and leases:

TABLE 48: Attribution of Allowance for Loan and Lease Losses to Portfolio Loans and Leases
As of ($ in millions)			March 31, 2023			December 31, 2022
Attributed ALLL:
Commercial and industrial loans			$	811		776
Commercial mortgage loans			245			246
Commercial construction loans			69			90
Commercial leases			18			15
Residential mortgage loans			185			245
Home equity			124			133
Indirect secured consumer loans			212			187
Credit card			236			254
Other consumer loans			315			248
Total ALLL			$	2,215		2,194
Portfolio loans and leases:
Commercial and industrial loans			$	57,720		57,232
Commercial mortgage loans			11,228			11,020
Commercial construction loans			5,548			5,433
Commercial leases			2,743			2,704
Residential mortgage loans(a)			17,608			17,628
Home equity			3,958			4,039
Indirect secured consumer loans			16,484			16,552
Credit card			1,761			1,874
Other consumer loans			5,807			4,998
Total portfolio loans and leases			$	122,857		121,480
Attributed ALLL as a percent of respective portfolio loans and leases:
Commercial and industrial loans			1.41		%	1.36
Commercial mortgage loans			2.18			2.23
Commercial construction loans			1.24			1.66
Commercial leases			0.66			0.55
Residential mortgage loans			1.05			1.39
Home equity			3.13			3.29
Indirect secured consumer loans			1.29			1.13
Credit card			13.40			13.55
Other consumer loans			5.42			4.96
Total ALLL as a percent of portfolio loans and leases			1.80		%	1.81
Total ACL as a percent of portfolio loans and leases			1.99			1.98

(a)Includes residential mortgage loans measured at fair value of $128 at March 31, 2023 and $123 at December 31, 2022.

The Bancorp’s ALLL may vary significantly from period to period based on changes in economic conditions, economic forecasts and the composition and credit quality of the Bancorp’s loan and lease portfolio. For additional information on the Bancorp’s methodology for measuring the ALLL, refer to Note 3 of the Notes to Condensed Consolidated Financial Statements. For additional information on the Bancorp’s methodology for measuring the reserve for unfunded commitments, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

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INTEREST RATE AND PRICE RISK MANAGEMENT

Interest rate risk is the risk to earnings or capital arising from movement of interest rates. This risk primarily impacts the Bancorp’s income categories through changes in interest income on earning assets and the cost of interest-bearing liabilities, and through fee items that are related to interest sensitive activities such as mortgage origination and servicing income and through earnings credits earned on commercial deposits that offset commercial deposit fees. Price risk is the risk to earnings or capital arising from changes in the value of financial instruments and portfolios due to movements in interest rates, volatilities, foreign exchange rates, equity prices and commodity prices. Management considers interest rate risk a prominent market risk in terms of its potential impact on earnings. Interest rate risk may occur for any one or more of the following reasons:

•Assets and liabilities mature or reprice at different times;

•Short-term and long-term market interest rates change by different amounts; or

•The expected maturities of various assets or liabilities shorten or lengthen as interest rates change.

In addition to the direct impact of interest rate changes on NII and interest-sensitive fees, interest rates can impact earnings through their effect on loan and deposit demand, credit losses, mortgage origination volumes, the value of servicing rights and other sources of the Bancorp’s earnings. Changes in interest rates and other market factors can impact earnings through changes in the value of portfolios, if not appropriately hedged. Stability of the Bancorp’s net income is largely dependent upon the effective management of interest rate risk and to a lesser extent price risk. Management continually reviews the Bancorp’s on- and off-balance sheet composition, earnings flows, and hedging strategies and models interest rate risk and price risk exposures, and possible actions to manage these risks, given numerous possible future interest rate and market factor scenarios. A series of policy limits and key risk indicators are employed to ensure that risks are managed within the Bancorp’s risk tolerance for interest rate risk and price risk.

In addition to the traditional forms of interest rate risk discussed in this section, the Bancorp is exposed to interest rate risk associated with the retirement and replacement of LIBOR. For more information on the LIBOR transition, refer to the Overview section of MD&A.

The Commercial Banking and Wealth and Asset Management lines of business manage price risk for capital markets sales and trading activities related to their respective businesses. The Consumer and Small Business Banking line of business manages price risk for the origination and sale of conforming residential mortgage loans to government agencies and government-sponsored enterprises. The Bancorp’s Treasury department manages interest rate risk and price risk for all other activities. Independent oversight is provided by ERM, and key risk indicators and Board-approved policy limits are used to ensure risks are managed within the Bancorp’s risk tolerance.

The Bancorp’s Market Risk Management Committee, which includes senior management representatives and reports to the Corporate Credit Committee (accountable to the ERMC), provides oversight and monitors price risk for the capital markets sales and trading activities. The Bancorp’s ALCO, which includes senior management representatives and is accountable to the ERMC, provides oversight and monitors interest rate and price risks for Mortgage and Treasury activities.

Net Interest Income Sensitivity

The Bancorp employs a variety of measurement techniques to identify and manage its interest rate risk, including the use of an NII simulation model to analyze the sensitivity of NII to changes in interest rates. The model is based on contractual and estimated cash flows and repricing characteristics for all of the Bancorp’s assets, liabilities and off-balance sheet exposures and incorporates market-based assumptions regarding the effect of changing interest rates on the prepayment rates of certain assets and attrition rates of certain liabilities. The model also includes senior management’s projections of the future volume and pricing of each of the product lines offered by the Bancorp as well as other pertinent assumptions. The NII simulation model does not represent a forecast of the Bancorp’s net interest income but is a tool utilized to assess the risk of the impact of changing market interest rates across a range of market interest rate environments. As a result, actual results will differ from simulated results for multiple reasons, which may include actual balance sheet composition differences, timing, magnitude and frequency of interest rate changes, deviations from projected customer behavioral assumptions as well as from changes in market conditions and management strategies.

As of March 31, 2023, the Bancorp’s interest rate risk exposure is governed by a risk framework that utilizes the change in NII over 12-month and 24-month horizons under parallel ramped increases and decreases in interest rates. Policy limits are utilized for scenarios assuming a 200 bps increase and a 200 bps decrease in interest rates over twelve months. The Bancorp routinely analyzes various potential and extreme scenarios, including parallel ramps and shocks as well as steepening and other non-parallel shifts in rates, to assess where risks to net interest income persist or develop as changes in the balance sheet and market rates evolve. Additionally, the Bancorp routinely evaluates its exposures to changes in the bases between interest rates.

In order to recognize the risk of noninterest-bearing demand deposit balance migration or attrition in a rising interest rate environment, the Bancorp’s NII sensitivity modeling assumes additional attrition of approximately $800 million of demand deposit balances over a period of 24 months for each 100 bps increase in short-term market interest rates. Similarly, the Bancorp’s NII sensitivity modeling incorporates approximately $800 million of incremental growth in noninterest-bearing deposit balances over 24 months for each 100 bps decrease in short-

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term market interest rates. The incremental balance attrition and growth are modeled to flow into and out of funding products that reprice in conjunction with short-term market rate changes.

Another important deposit modeling assumption is the amount by which interest-bearing deposit rates will increase or decrease when market interest rates increase or decrease. This deposit repricing sensitivity is known as the beta, and it represents the expected amount by which the Bancorp’s interest-bearing deposit rates will change for a given change in short-term market rates. The Bancorp utilizes dynamic deposit beta models to adjust assumed repricing sensitivity depending on market rate levels. The dynamic beta models were developed utilizing the Bancorp’s performance during prior interest rate cycles. Through the current tightening cycle, the Bancorp’s actual cumulative deposit repricing has been slower than what was experienced in prior interest rate cycles, and as a result, the Bancorp has outperformed previous NII simulation expectations. Using the dynamic beta models, the Bancorp’s NII sensitivity modeling assumes weighted-average rising-rate interest-bearing deposit betas at the end of the ramped parallel scenarios of 75% and 76%, for a 100 bps and 200 bps increase in rates, respectively. In the event of rate cuts, this approach assumes a weighted-average falling-rate interest-bearing deposit beta at the end of the ramped parallel scenarios of 63% and 62% for a 100 bps and 200 bps increase in rates, respectively. In falling rate scenarios, deposit rate floors are utilized to ensure modeled deposit rates will not become negative. NII simulation modeling assumes no lag between the timing of changes in market rates and the timing of deposit repricing despite such timing lags having occurred in prior rate cycles. In addition, modeled and forecasted deposit migration from low-beta deposit products to more rate-sensitive deposit products in the rising rate scenarios contribute additional beta of 10%-15%, resulting in an effective beta of approximately 85%-90% in the Bancorp’s baseline NII sensitivity profile. Future actual performance will be dependent on market conditions, the level of competition for deposits and the magnitude of continued interest rate increases. The Bancorp provides sensitivity analysis in Tables 50 and 51 for key assumptions related to its deposit modeling, including beta and DDA balance performance.

The Bancorp continually evaluates the sensitivity of its interest rate risk measures to these important deposit modeling assumptions. The Bancorp also regularly monitors the sensitivity of other important modeling assumptions, such as loan and security prepayments and early withdrawals on fixed-rate customer liabilities.

The following table shows the Bancorp’s estimated NII sensitivity profile and ALCO policy limits as of:

TABLE 49: Estimated NII Sensitivity Profile and ALCO Policy Limits

March 31, 2023

March 31, 2022

% Change in NII (FTE)

ALCO Policy Limit

% Change in NII (FTE)

ALCO Policy Limit

Change in Interest Rates (bps)

12  Months

13-24 Months

12 Months

13-24 Months

12  Months

13-24 Months

12 Months

13-24 Months

+200 Ramp over 12 months

(3.11)

%

(5.16)

(4.00)

(6.00)

5.64

13.59

(4.00)

(6.00)

+100 Ramp over 12 months

(1.46)

(2.30)

N/A

N/A

3.45

8.61

N/A

N/A

-25 Ramp over 3 months

N/A

N/A

N/A

N/A

(2.72)

(3.99)

(8.00)

(12.00)

-100 Ramp over 12 months

0.44

0.17

N/A

N/A

N/A

N/A

N/A

N/A

-200 Ramp over 12 months

0.48

(0.56)

(8.00)

(12.00)

N/A

N/A

N/A

N/A

Table 49 presents the change in estimated net interest income for 12 month and 13-24 month horizons for alternative interest rate scenarios relative to the net interest income projection for a static rate scenario for those same time horizons. As previously mentioned, these numbers do not represent a forecast, but are instead risk measures that are monitored to evaluate the consolidated interest rate risk position of the Bancorp. At March 31, 2023, the Bancorp’s NII sensitivity in the rising-rate scenarios is negative in years one and two as interest expense is expected to increase more than interest income due to deposit repricing and balance migration estimates given the high interest rate environment. The Bancorp’s NII simulation projects an increase in year one and a slight decrease in year two NII under the parallel 200 bps ramp decrease in interest rates. In year one, the NII increase is driven by deposits repricing faster than assets as a result of positioning in securities with less near-term principal cash flows. Additionally, receive-fixed hedges have added significant protection from declining rates. In year two, NII declines driven by fixed-rate asset portfolios continuing to reprice lower while only being partially offset by liabilities continuing to reprice lower. The changes in the estimated NII sensitivity profile compared to March 31, 2022 were primarily attributable to significant deployment of cash and other short-term investments into long-term fixed-rate securities in 2022, combined with higher market interest rates driving higher expected betas.

Tables 50 and 51 provide the sensitivity of the Bancorp’s estimated NII profile at March 31, 2023 to changes to certain deposit balance and deposit repricing sensitivity (beta) assumptions.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table includes the Bancorp’s estimated NII sensitivity profile with an immediate $1 billion decrease and an immediate $1 billion increase in demand deposit balances as of March 31, 2023:

TABLE 50: Estimated NII Sensitivity Profile at March 31, 2023 with a $1 Billion Change in Demand Deposit Assumption
			% Change in NII (FTE)
			Immediate $1 Billion Balance Decrease									Immediate $1 Billion Balance Increase
Change in Interest Rates (bps)			12 Months			13-24 Months						12 Months			13-24 Months
+200 Ramp over 12 months			(4.08)		%	(6.20)						(2.14)			(4.13)
+100 Ramp over 12 months			(2.34)			(3.19)						(0.58)			(1.41)
-100 Ramp over 12 months			(0.26)			(0.41)						1.15			0.76
-200 Ramp over 12 months			(0.14)			(1.00)						1.10			(0.13)

The following table includes the Bancorp’s estimated NII sensitivity profile with a 10% increase and a 10% decrease to the corresponding deposit beta assumptions as of March 31, 2023:

TABLE 51: Estimated NII Sensitivity Profile at March 31, 2023 with Deposit Beta Assumptions Changes
			% Change in NII (FTE)
			Betas 10% Higher(a)									Betas 10% Lower(a)
Change in Interest Rates (bps)			12  Months			13-24 Months						12 Months			13-24 Months
+200 Ramp over 12 months			(4.46)		%	(7.63)						(1.75)			(2.66)
+100 Ramp over 12 months			(2.12)			(3.51)						(0.78)			(1.07)
-100 Ramp over 12 months			0.99			1.15						(0.11)			(0.82)
-200 Ramp over 12 months			1.55			1.32						(0.61)			(2.48)

(a)Applies a +/- 10% multiple on assumed betas.

Economic Value of Equity Sensitivity

The Bancorp also uses EVE as a measurement tool to govern and manage its interest rate risk exposure. Policy limits are utilized for scenarios assuming an instantaneous 200 bps increase and a 200 bps decrease in interest rates. Whereas the NII sensitivity analysis highlights the impact on forecasted NII on an FTE basis (non-GAAP) over one- and two-year time horizons, EVE is a point-in-time analysis of the economic sensitivity of current balance sheet and off-balance sheet positions that incorporates all cash flows over their estimated remaining lives. The EVE of the balance sheet is defined as the discounted present value of all asset and net derivative cash flows less the discounted value of all liability cash flows. Due to this longer horizon, the sensitivity of EVE to changes in the level of interest rates is a measure of longer-term interest rate risk. EVE values only the current balance sheet and does not incorporate any assumptions related to continued production or renewal activities used in the NII sensitivity analysis. As with the NII simulation model, assumptions about the timing and variability of existing balance sheet cash flows are critical in the EVE analysis. Particularly important are assumptions driving loan and security prepayments and the expected balance attrition and pricing of indeterminate-lived deposits.

The following table shows the Bancorp’s estimated EVE sensitivity profile as of:

TABLE 52: Estimated EVE Sensitivity Profile

March 31, 2023

March 31, 2022

Change in Interest Rates (bps)

% Change in EVE

ALCO Policy Limit

% Change in EVE

ALCO Policy Limit

+200 Shock

(5.08)

%

(12.00)

(3.63)

(12.00)

+100 Shock

(2.11)

N/A

(1.46)

N/A

-25 Shock

N/A

N/A

0.16

(12.00)

-100 Shock

1.02

N/A

N/A

N/A

-200 Shock

(0.84)

(12.00)

N/A

N/A

The EVE sensitivity is negative in both a +200 bps rising-rate scenario and a -200 bps falling-rate scenario at March 31, 2023. The changes in the estimated EVE sensitivity profile from March 31, 2022 were primarily related to the significant deployment of cash and other short-term investments into long-term fixed-rate securities, the execution of new forward-starting receive-fixed hedging transactions and increased deposit repricing betas.

While an instantaneous shift in spot interest rates followed by forward projections is used in this analysis to provide an estimate of exposure, the Bancorp believes that a gradual shift in interest rates would have a more modest impact. Since EVE measures the discounted present

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value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (e.g., the current fiscal year). Further, EVE does not account for factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships and changing product spreads that could mitigate or exacerbate the impact of changes in interest rates. The NII simulations and EVE analyses do not necessarily include certain actions that management may undertake to manage risk in response to actual changes in interest rates.

The Bancorp regularly evaluates its exposures to a static balance sheet forecast, LIBOR, SOFR, Prime Rate and other basis risks, yield curve twist risks and embedded options risks. In addition, the impacts on NII on an FTE basis and EVE of extreme changes in interest rates are modeled, wherein the Bancorp employs the use of yield curve shocks and environment-specific scenarios.

Use of Derivatives to Manage Interest Rate Risk

An integral component of the Bancorp’s interest rate risk management strategy is its use of derivative instruments to minimize significant fluctuations in earnings caused by changes in market interest rates. Examples of derivative instruments that the Bancorp may use as part of its interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward contracts, forward starting interest rate swaps, options, swaptions and TBA securities.

Tables 53 and 54 show all swap and floor positions that are utilized for purposes of managing the Bancorp’s exposures to the variability of interest rates. These positions are used to convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) to another interest rate index, to hedge the exposure to changes in fair value of a recognized asset attributable to changes in the benchmark interest rate or to hedge forecasted transactions for the variability in cash flows attributable to the contractually specified interest rate. The volume, maturity and mix of portfolio swaps change frequently as the Bancorp adjusts its broader interest rate risk management objectives and the balance sheet positions to be hedged. For further information, refer to Note 14 of the Notes to Condensed Consolidated Financial Statements.

The following tables present additional information about the interest rate swaps and floors used in Fifth Third’s asset and liability management activities:

TABLE 53: Weighted-Average Maturity, Receive Rate and Pay Rate on Qualifying Hedging Instruments
As of March 31, 2023 ($ in millions)			Notional Amount			Fair Value			Remaining (years)			Fixed Rate			Index
Interest rate swaps related to C&I loans – cash flow – receive-fixed			$	8,000		(80)			1.7			3.06		%	1 ML
Interest rate swaps related to C&I loans – cash flow – receive-fixed – forward starting(a)			10,000			5			8.2			3.06			1 ML
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed			4,000			(14)			1.8			0.99			1 ML
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed – forward starting(a)			4,000			4			8.8			3.50			1 ML
Interest rate swaps related to long-term debt – fair value – receive-fixed			5,955			20			5.6			5.18			SOFR
Total interest rate swaps			$	31,955		(65)
Interest rate floors related to C&I loans – cash flow – receive-fixed			$	3,000		4			1.7			2.25			1 ML

(a)Forward starting swaps will become effective on various dates between October 2023 and February 2025.

TABLE 54: Weighted-Average Maturity, Receive Rate and Pay Rate on Qualifying Hedging Instruments
As of December 31, 2022 ($ in millions)			Notional Amount			Fair Value			Remaining (years)			Fixed Rate			Index
Interest rate swaps related to C&I loans – cash flow – receive-fixed			$	8,000		(76)			1.0			3.02		%	1 ML
Interest rate swaps related to C&I loans – cash flow – receive-fixed – forward starting(a)			11,000			22			8.3			3.05			1 ML
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed			4,000			(25)			2.1			0.99			1 ML
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed – forward starting(a)			4,000			5			9.1			3.50			1 ML
Interest rate swaps related to long-term debt – fair value – receive-fixed			5,955			(69)			5.9			5.18			1 ML / 3 ML / SOFR
Total interest rate swaps			$	32,955		(143)
Interest rate floors related to C&I loans – cash flow – receive-fixed			$	3,000		4			2.0			2.25			1 ML

(a)Forward starting swaps will become effective on various dates between February 2023 and February 2025.

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Additionally, as part of its overall risk management strategy relative to its residential mortgage banking activities, the Bancorp enters into forward contracts accounted for as free-standing derivatives to economically hedge IRLCs that are also considered free-standing derivatives. The Bancorp economically hedges its exposure to residential mortgage loans held for sale through the use of forward contracts and mortgage options as well. See the Residential Mortgage Servicing Rights and Price Risk section for the discussion of the use of derivatives to economically hedge this exposure.

The Bancorp also enters into derivative contracts with major financial institutions to economically hedge market risks assumed in interest rate derivative contracts with commercial customers. Generally, these contracts have similar terms in order to protect the Bancorp from market volatility. Credit risk arises from the possible inability of the counterparties to meet the terms of their contracts, which the Bancorp minimizes through collateral arrangements, approvals, limits and monitoring procedures. The Bancorp has risk limits and internal controls in place to help ensure excessive risk is not being taken in providing this service to customers. These controls include an independent determination of interest rate volatility and potential future exposure on these contracts and counterparty credit approvals performed by independent risk management. For further information, including the notional amount and fair values of these derivatives, refer to Note 14 of the Notes to Condensed Consolidated Financial Statements.

Residential Mortgage Servicing Rights and Price Risk

The fair value of the residential MSR portfolio was $1.7 billion at both March 31, 2023 and December 31, 2022. The value of servicing rights can fluctuate sharply depending on changes in interest rates and other factors. Generally, as interest rates decline and loans are prepaid to take advantage of refinancing, the total value of existing servicing rights declines because no further servicing fees are collected on repaid loans. For further information on the significant drivers and components of the valuation adjustments on MSRs, refer to the Noninterest Income subsection of the Statements of Income Analysis section of MD&A. The Bancorp maintains a non-qualifying hedging strategy relative to its mortgage banking activity in order to manage a portion of the risk associated with changes in the value of its MSR portfolio as a result of changing interest rates. The Bancorp may adjust its hedging strategy to reflect its assessment of the composition of its MSR portfolio, the cost of hedging and the anticipated effectiveness of the hedges given the economic environment. Refer to Note 13 of the Notes to Condensed Consolidated Financial Statements for further discussion on servicing rights and the instruments used to hedge price risk on MSRs.

Foreign Currency Risk

The Bancorp may enter into foreign exchange derivative contracts to economically hedge certain foreign denominated loans. The derivatives are classified as free-standing instruments with the revaluation gain or loss being recorded in other noninterest income in the Condensed Consolidated Statements of Income. The balance of the Bancorp’s foreign denominated loans at March 31, 2023 and December 31, 2022 was $1.1 billion and $1.0 billion, respectively. The Bancorp also enters into foreign exchange contracts for the benefit of commercial customers to hedge their exposure to foreign currency fluctuations. Similar to the hedging of price risk from interest rate derivative contracts entered into with commercial customers, the Bancorp also enters into foreign exchange contracts with major financial institutions to economically hedge a substantial portion of the exposure from client driven foreign exchange activity. The Bancorp has risk limits and internal controls in place to help ensure excessive risk is not being taken in providing this service to customers. These controls include an independent determination of currency volatility and potential future exposure on these contracts, counterparty credit approvals and country limits performed by independent risk management.

Commodity Risk

The Bancorp also enters into commodity contracts for the benefit of commercial customers to hedge their exposure to commodity price fluctuations. Similar to the hedging of foreign exchange and price risk from interest rate derivative contracts, the Bancorp also enters into commodity contracts with major financial institutions to economically hedge a substantial portion of the exposure from client driven commodity activity. The Bancorp may also offset this risk with exchange-traded commodity contracts. The Bancorp has risk limits and internal controls in place to help ensure excessive risk is not taken in providing this service to customers. These controls include an independent determination of commodity volatility and potential future exposure on these contracts and counterparty credit approvals performed by independent risk management.

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LIQUIDITY RISK MANAGEMENT

The goal of liquidity management is to provide adequate funds to meet changes in loan and lease demand, unexpected levels of deposit withdrawals and other contractual obligations. Mitigating liquidity risk is accomplished by maintaining liquid assets in the form of cash and investment securities, maintaining sufficient unused borrowing capacity in the debt markets and delivering consistent growth in core deposits. A summary of certain obligations and commitments to make future payments under contracts is included in Note 17 of the Notes to Condensed Consolidated Financial Statements.

The Bancorp’s Treasury department manages funding and liquidity based on point-in-time metrics as well as forward-looking projections, which incorporate different sources and uses of funds under base and stress scenarios. Liquidity risk is monitored and managed by the Treasury department with independent oversight provided by ERM, and a series of Policy Limits and Key Risk Indicators are established to ensure risks are managed within the Bancorp’s risk tolerance. The Bancorp maintains a contingency funding plan that provides for liquidity stress testing, which assesses the liquidity needs under varying market conditions, time horizons, asset growth rates and other events. The contingency plan provides for ongoing monitoring of unused borrowing capacity and available sources of contingent liquidity to prepare for unexpected liquidity needs and to cover unanticipated events that could affect liquidity. The contingency plan also outlines the Bancorp’s response to various levels of liquidity stress and actions that should be taken during various scenarios.

Liquidity risk is monitored and managed for both Fifth Third Bancorp and its subsidiaries. The Bancorp receives substantially all of its liquidity from dividends from its subsidiaries, primarily Fifth Third Bank, National Association. Subsidiary dividends are supplemented with term debt to enable the Bancorp to maintain sufficient liquidity to meet its cash obligations, including debt service and scheduled maturities, common and preferred dividends, unfunded commitments to subsidiaries and other planned capital actions in the form of share repurchases. Liquidity resources are more limited at the Bancorp, making its liquidity position more susceptible to market disruptions. Bancorp liquidity is assessed using a cash coverage horizon, ensuring the entity maintains sufficient liquidity to withstand a period of sustained market disruption while meeting its anticipated obligations over an extended stressed horizon.

The Bancorp’s ALCO, which includes senior management representatives and is accountable to the ERMC, monitors and manages liquidity and funding risk within Board-approved policy limits. In addition to the risk management activities of ALCO, the Bancorp has a liquidity risk management function as part of ERM that provides independent oversight of liquidity risk management.

Sources of Funds

The Bancorp’s primary sources of funds relate to cash flows from loan and lease repayments, payments from securities related to sales and maturities, the sale or securitization of loans and leases and funds generated by core deposits, in addition to the use of public and private debt offerings.

Of the $50.7 billion of securities in the Bancorp’s available-for-sale debt and other securities portfolio at March 31, 2023, $4.2 billion in principal and interest is expected to be received in the next 12 months and an additional $5.5 billion is expected to be received in the next 13 to 24 months. For further information on the Bancorp’s securities portfolio, refer to the Investment Securities subsection of the Balance Sheet Analysis section of MD&A.

Asset-driven liquidity is provided by the Bancorp’s ability to pledge, sell or securitize loans and leases. In order to reduce the exposure to interest rate fluctuations and to manage liquidity, the Bancorp has developed securitization and sale procedures for several types of interest-sensitive assets. A majority of the long-term, fixed-rate single-family residential mortgage loans underwritten according to FHLMC or FNMA guidelines are sold for cash upon origination. Additional assets such as certain other residential mortgage loans, certain commercial loans and leases, home equity loans, automobile loans and other consumer loans (including point-of-sale solar energy installation loans) are also capable of being securitized or sold. For the three months ended March 31, 2023 and 2022, the Bancorp sold loans and leases totaling $1.3 billion and $3.5 billion, respectively. For further information, refer to Note 13 of the Notes to Condensed Consolidated Financial Statements.

Core deposits have historically provided the Bancorp with a sizeable source of relatively stable and low-cost funds. The Bancorp’s average core deposits and average shareholders’ equity funded 85% and 91% of its average total assets for the three months ended March 31, 2023 and 2022, respectively. In addition to core deposit funding, the Bancorp also accesses a variety of other short-term and long-term funding sources, which include the use of the FHLB system. Management does not rely on any one source of liquidity and manages availability in response to changing balance sheet needs.

In June of 2022, the Board of Directors authorized $5.0 billion of debt or other securities for issuance, of which $3.0 billion of debt or other securities were available for issuance as of March 31, 2023. The Bancorp is authorized to file any necessary registration statements with the SEC to permit ready access to the public securities markets; however, access to these markets may depend on market conditions.

As of March 31, 2023, the Bank’s global bank note program had a borrowing capacity of $25.0 billion, of which $20.9 billion was available for issuance. Additionally, at March 31, 2023, the Bank had approximately $59.5 billion of borrowing capacity available through secured borrowing sources, including the FRB (through the Bank Term Funding Program and the Discount Window) and the FHLB.

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Current Liquidity Position

The Bancorp maintains a strong liquidity profile driven by strong core deposit funding and approximately $100 billion in current available liquidity. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A for more information regarding the Bancorp’s deposit portfolio characteristics. The Bancorp is managing liquidity prudently in the current environment and maintains a liquidity profile focused on core deposit and stable long-term funding sources, while supplementing with a variety of secured and unsecured wholesale funding sources across the maturity spectrum, which allows for the effective management of concentration and rollover risk. The Bancorp’s investment portfolio remains highly concentrated in liquid and readily marketable instruments and is a significant source of secured borrowing capacity. As part of its liquidity management activities, the Bancorp maintains collateral at its secured funding providers to ensure immediate availability of funding. Additionally, the Bancorp executes periodic test trades to assess the operational processes associated with its secured funding sources, including the Discount Window and the newly created Bank Term Funding Program.

As of March 31, 2023, the Bancorp (parent company) has sufficient liquidity to meet contractual obligations and all preferred and common dividends without accessing the capital markets or receiving upstream dividends from the Bank subsidiary for 21 months.

Credit Ratings

The cost and availability of financing to the Bancorp and Bank are impacted by its credit ratings. A downgrade to the Bancorp’s or Bank’s credit ratings could affect its ability to access the credit markets and increase its borrowing costs, thereby adversely impacting the Bancorp’s or Bank’s financial condition and liquidity. Key factors in maintaining high credit ratings include a stable and diverse earnings stream, strong credit quality, strong capital ratios and diverse funding sources, in addition to disciplined liquidity monitoring procedures.

The Bancorp’s and Bank’s credit ratings are summarized in Table 55. The ratings reflect the ratings agency’s view on the Bancorp’s and Bank’s capacity to meet financial commitments.*

*As an investor, you should be aware that a security rating is not a recommendation to buy, sell or hold securities, that it may be subject to revision or withdrawal at any time by the assigning rating organization and that each rating should be evaluated independently of any other rating. Additional information on the credit rating ranking within the overall classification system is located on the website of each credit rating agency.

TABLE 55: Agency Ratings

As of May 9, 2023

Moody’s

Standard and Poor’s

Fitch

DBRS Morningstar

Fifth Third Bancorp:

Short-term borrowings

No rating

A-2

F1

R-1L

Senior debt

Baa1

BBB+

A-

A

Subordinated debt

Baa1

BBB

BBB+

AL

Fifth Third Bank, National Association:

Short-term borrowings

P-2

A-2

F1

R-1M

Short-term deposit

P-1

No rating

F1

No rating

Long-term deposit

A1

No rating

A

AH

Senior debt

A3

A-

A-

AH

Subordinated debt

A3

BBB+

BBB+

A

Rating Agency Outlook for Fifth Third Bancorp and Fifth Third Bank, National Association

Stable

Stable

Stable

Stable

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CAPITAL MANAGEMENT

Management regularly reviews the Bancorp’s capital levels to help ensure it is appropriately positioned under various operating environments. The Bancorp has established a Capital Committee which is responsible for making capital plan recommendations to management. These recommendations are reviewed by the ERMC and the annual capital plan is approved by the Board of Directors. The Capital Committee is responsible for execution and oversight of the capital actions of the capital plan.

Regulatory Capital Ratios

The Basel III Final Rule sets minimum regulatory capital ratios as well as defines the measure of “well-capitalized” for insured depository institutions.

TABLE 56: Prescribed Capital Ratios
			Minimum			Well-Capitalized
CET1 capital:
Fifth Third Bancorp			4.50		%	N/A
Fifth Third Bank, National Association			4.50			6.50
Tier 1 risk-based capital:
Fifth Third Bancorp			6.00			6.00
Fifth Third Bank, National Association			6.00			8.00
Total risk-based capital:
Fifth Third Bancorp			8.00			10.00
Fifth Third Bank, National Association			8.00			10.00
Leverage:
Fifth Third Bancorp			4.00			N/A
Fifth Third Bank, National Association			4.00			5.00

The Bancorp is subject to the stress capital buffer requirement and must maintain capital ratios above its buffered minimum (regulatory minimum plus stress capital buffer) in order to avoid certain limitations on capital distributions and discretionary bonuses to executive officers. The FRB uses the supervisory stress test to determine the Bancorp’s stress capital buffer, subject to a floor of 2.5%. The Bancorp’s stress capital buffer requirement has been 2.5% since the introduction of this framework and was most recently affirmed as part of the FRB’s 2022 supervisory stress test with an effective date of October 1, 2022. The Bancorp’s capital ratios have exceeded the stress capital buffer requirement for all periods presented.

The Bancorp adopted ASU 2016-13 on January 1, 2020 and elected the five-year transition phase-in option for the impact of CECL on regulatory capital with its regulatory filings as of March 31, 2020. The Bancorp’s modified CECL transition amount became subject to the phase-out provisions of the final rule on January 1, 2022, and will be fully phased-out by January 1, 2025. The impact of the modified CECL transition amount on the Bancorp’s regulatory capital at March 31, 2023 was an increase in capital of approximately $249 million. On a fully phased-in basis, the Bancorp’s CET1 ratio would be reduced by 13 bps as of March 31, 2023.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table summarizes the Bancorp’s capital ratios as of:

TABLE 57: Capital Ratios
($ in millions)			March 31, 2023			December 31, 2022
Quarterly average total Bancorp shareholders’ equity as a percent of average assets			8.77		%	8.18
Tangible equity as a percent of tangible assets(a)(b)			8.39			8.31
Tangible common equity as a percent of tangible assets(a)(b)			7.38			7.30
Regulatory capital:(c)
CET1 capital			$	15,727		15,670
Tier 1 capital			17,843			17,786
Total regulatory capital			21,431			21,606
Risk-weighted assets			169,510			168,909
Regulatory capital ratios:(c)
CET1 capital			9.28		%	9.28
Tier 1 risk-based capital			10.53			10.53
Total risk-based capital			12.64			12.79
Leverage			8.67			8.56

(a)These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

(b)Excludes AOCI.

(c)Regulatory capital ratios as of both March 31, 2023 and December 31, 2022 are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital.

Capital Planning

In 2011, the FRB adopted the capital plan rule, which requires BHCs with consolidated assets of $50 billion or more to submit annual capital plans to the FRB for review. Under the rule, these capital plans must include detailed descriptions of the following: the BHC’s internal processes for assessing capital adequacy; the policies governing capital actions such as common stock issuances, dividends and share repurchases; and all planned capital actions over a nine-quarter planning horizon. Furthermore, each BHC must report to the FRB the results of stress tests conducted by the BHC under a number of scenarios that assess the sources and uses of capital under baseline and stressed economic conditions.

Under the Enhanced Prudential Standards tailoring rules, the Bancorp is subject to Category IV standards, under which the Bancorp is no longer required to file semi-annual, company-run stress tests with the FRB and publicly disclose the results. However, the Bancorp is required to develop and maintain a capital plan approved by the Board of Directors on an annual basis. As an institution subject to Category IV standards, the Bancorp is subject to the FRB’s supervisory stress tests every two years, the Board capital plan rule and certain FR Y-14 reporting requirements. The supervisory stress tests are forward-looking quantitative evaluations of the impact of stressful economic and financial market conditions on the Bancorp’s capital. The Bancorp became subject to Category IV standards on December 31, 2019, and the requirements outlined above apply to the stress test cycle that started on January 1, 2020. The Bancorp was not subject to the 2023 supervisory stress test conducted by the FRB, but submitted the Board-approved capital plan and information contained in Schedule C - Regulatory Capital Instruments as required by the April 5, 2023 deadline.

Dividend Policy and Stock Repurchase Program

The Bancorp’s common stock dividend policy and stock repurchase program reflect its earnings outlook, desired payout ratios, the need to maintain adequate capital levels, the ability of its subsidiaries to pay dividends and the need to comply with safe and sound banking practices as well as meet regulatory requirements and expectations. The Bancorp declared dividends per common share of $0.33 and $0.30 for the three months ended March 31, 2023 and 2022, respectively. Pursuant to the Bancorp’s Board-approved capital plan, during the first quarter of 2023, the Bancorp entered into and settled an accelerated share repurchase transaction in the amount of $200 million. Refer to Note 16 of the Notes to Condensed Consolidated Financial Statements for additional information on share repurchase activity. The Bancorp does not currently expect to repurchase any common stock, except pursuant to employee compensation plans, during the second quarter of 2023.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table summarizes the monthly share repurchase activity for the three months ended March 31, 2023:

TABLE 58: Share Repurchases
Period			Total Number of Shares Purchased(a)			Average Price Paid per Share						Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs			Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs(b)
January 1 - January 31, 2023			4,963,378			$	35.76					4,911,875			32,793,932
February 1 - February 28, 2023			1,164,581			36.99						—			32,793,932
March 1 - March 31, 2023			772,335			35.53						678,121			32,115,811
Total			6,900,294			$	35.95					5,589,996			32,115,811

(a)    Includes 1,310,298 shares repurchased during the first quarter of 2023 in connection with various employee compensation plans. These purchases do not count against the maximum number of shares that may yet be purchased under the Board of Directors’ authorization.

(b)    On June 18, 2019, the Bancorp announced that its Board of Directors had authorized management to purchase 100 million shares of the Bancorp’s common stock through the open market or in any private party transactions. This authorization did not include specific targets or an expiration date.

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Quantitative and Qualitative Disclosures about Market Risk (Item 3)

Information presented in the Interest Rate and Price Risk Management section of Management’s Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference. This information contains certain statements that the Bancorp believes are forward-looking statements. Refer to page 1 for cautionary information regarding forward-looking statements.

Controls and Procedures (Item 4)

The Bancorp conducted an evaluation, under the supervision and with the participation of the Bancorp’s management, including the Bancorp’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Bancorp’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on the foregoing, as of the end of the period covered by this report, the Bancorp’s Chief Executive Officer and Chief Financial Officer concluded that the Bancorp’s disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Bancorp files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required and information is accumulated and communicated to the Bancorp’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The Bancorp’s management also conducted an evaluation of internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Bancorp’s internal control over financial reporting. Based on this evaluation there has been no such change during the period covered by this report.

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Fifth Third Bancorp and Subsidiaries Condensed Consolidated Financial Statements and Notes (Item 1)
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
			As of
			March 31,			December 31,
($ in millions, except share data)			2023			2022
Assets
Cash and due from banks			$	2,780		3,466
Other short-term investments(a)			9,794			8,351
Available-for-sale debt and other securities(b)			50,719			51,503
Held-to-maturity securities(c)			2			5
Trading debt securities			1,174			414
Equity securities			323			317
Loans and leases held for sale(d)			749			1,007
Portfolio loans and leases(a)(e)			122,857			121,480
Allowance for loan and lease losses(a)			(2,215)			(2,194)
Portfolio loans and leases, net			120,642			119,286
Bank premises and equipment(f)			2,219			2,187
Operating lease equipment			578			627
Goodwill			4,915			4,915
Intangible assets			157			169
Servicing rights			1,725			1,746
Other assets(a)			12,880			13,459
Total Assets			$	208,657		207,452
Liabilities
Deposits:
Noninterest-bearing deposits			$	49,649		53,125
Interest-bearing deposits			113,326			110,565
Total deposits			162,975			163,690
Federal funds purchased			177			180
Other short-term borrowings			7,364			4,838
Accrued taxes, interest and expenses			1,577			1,822
Other liabilities(a)			5,307			5,881
Long-term debt(a)			12,893			13,714
Total Liabilities			$	190,293		190,125
Equity
Common stock(g)			$	2,051		2,051
Preferred stock(h)			2,116			2,116
Capital surplus			3,682			3,684
Retained earnings			22,032			21,689
Accumulated other comprehensive loss			(4,245)			(5,110)
Treasury stock(g)			(7,272)			(7,103)
Total Equity			$	18,364		17,327
Total Liabilities and Equity			$	208,657		207,452

(a)Includes $5 and $17 of other short-term investments, $44 and $185 of portfolio loans and leases, $(1) and $(2) of ALLL, $0 and $2 of other assets, $9 and $9 of other liabilities, and $38 and $118 of long-term debt from consolidated VIEs that are included in their respective captions above at March 31, 2023 and December 31, 2022, respectively. For further information, refer to Note 12.

(b)Amortized cost of $55,958 and $57,530 at March 31, 2023 and December 31, 2022, respectively.

(c)Fair value of $2 and $5 at March 31, 2023 and December 31, 2022, respectively.

(d)Includes $599 and $600 of residential mortgage loans held for sale measured at fair value at March 31, 2023 and December 31, 2022, respectively.

(e)Includes $128 and $123 of residential mortgage loans measured at fair value at March 31, 2023 and December 31, 2022, respectively.

(f)Includes $22 and $24 of bank premises and equipment held for sale at March 31, 2023 and December 31, 2022, respectively.

(g)Common shares: Stated value $2.22 per share; authorized 2,000,000,000; outstanding at March 31, 2023 – 680,536,608 (excludes 243,355,973 treasury shares), December 31, 2022 – 683,385,880 (excludes 240,506,701 treasury shares).

(h)500,000 shares of no par value preferred stock were authorized at both March 31, 2023 and December 31, 2022. There were 422,000 unissued shares of undesignated no par value preferred stock at both March 31, 2023 and December 31, 2022. Each issued share of no par value preferred stock has a liquidation preference of $25,000. 500,000 shares of no par value Class B preferred stock were authorized at both March 31, 2023 and December 31, 2022. There were 300,000 unissued shares of undesignated no par value Class B preferred stock at both March 31, 2023 and December 31, 2022. Each issued share of no par value Class B preferred stock has a liquidation preference of $1,000.

Refer to the Notes to Condensed Consolidated Financial Statements.

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Fifth Third Bancorp and Subsidiaries Condensed Consolidated Financial Statements and Notes (continued)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
			For the three months ended March 31,
($ in millions, except share data)			2023			2022
Interest Income
Interest and fees on loans and leases			$	1,714		983
Interest on securities			439			294
Interest on other short-term investments			60			12
Total interest income			2,213			1,289
Interest Expense
Interest on deposits			478			11
Interest on federal funds purchased			5			—
Interest on other short-term borrowings			57			—
Interest on long-term debt			156			83
Total interest expense			696			94
Net Interest Income			1,517			1,195
Provision for credit losses			164			45
Net Interest Income After Provision for Credit Losses			1,353			1,150
Noninterest Income
Commercial banking revenue			161			135
Wealth and asset management revenue			146			149
Service charges on deposits			137			152
Card and processing revenue			100			97
Mortgage banking net revenue			69			52
Leasing business revenue			57			62
Other noninterest income			22			52
Securities gains (losses), net			4			(14)
Securities losses, net – non-qualifying hedges on mortgage servicing rights			—			(1)
Total noninterest income			696			684
Noninterest Expense
Compensation and benefits			757			711
Technology and communications			118			101
Net occupancy expense			81			77
Equipment expense			37			36
Leasing business expense			34			32
Marketing expense			29			24
Card and processing expense			22			19
Other noninterest expense			253			222
Total noninterest expense			1,331			1,222
Income Before Income Taxes			718			612
Applicable income tax expense			160			118
Net Income			558			494
Dividends on preferred stock			23			20
Net Income Available to Common Shareholders			$	535		474
Earnings per share - basic			$	0.78		0.69
Earnings per share - diluted			$	0.78		0.68
Average common shares outstanding - basic			684,017,462			687,537,989
Average common shares outstanding - diluted			689,566,425			696,242,395

Refer to the Notes to Condensed Consolidated Financial Statements.

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Fifth Third Bancorp and Subsidiaries Condensed Consolidated Financial Statements and Notes (continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
			For the three months ended March 31,
($ in millions)			2023			2022
Net Income			$	558		494
Other Comprehensive Income (Loss), Net of Tax:
Net unrealized losses on available-for-sale debt securities:
Unrealized holding gains (losses) arising during period			600			(1,929)
Reclassification adjustment for net gains losses included in net income			—			(2)
Net unrealized losses on cash flow hedge derivatives:
Unrealized holding gains (losses) arising during period			215			(313)
Reclassification adjustment for net losses (gains) included in net income			50			(60)
Defined benefit pension plans, net:
Reclassification of amounts to net periodic benefit costs			—			1
Other comprehensive income (loss), net of tax			865			(2,303)
Comprehensive Income (Loss)			$	1,423		(1,809)

Refer to the Notes to Condensed Consolidated Financial Statements.

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Fifth Third Bancorp and Subsidiaries Condensed Consolidated Financial Statements and Notes (continued)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)
($ in millions, except per share data)			Common Stock			Preferred Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Treasury Stock			Total Equity
Balance at December 31, 2021			$	2,051		2,116			3,624			20,236			1,207			(7,024)			22,210
Net income												494									494
Other comprehensive loss, net of tax															(2,303)						(2,303)
Cash dividends declared:
Common stock ($0.30 per share)												(209)									(209)
Preferred stock:
Series I ($414.06 per share)												(7)									(7)
Series J ($209.48 per share)												(3)									(3)
Series K ($309.38 per share)												(3)									(3)
Series L ($281.25 per share)												(4)									(4)
Class B, Series A ($15.00 per share)												(3)									(3)
Impact of stock transactions under stock compensation plans, net									(9)									14			5
Balance at March 31, 2022			$	2,051		2,116			3,615			20,501			(1,096)			(7,010)			20,177
Balance at December 31, 2022			$	2,051		2,116			3,684			21,689			(5,110)			(7,103)			17,327
Impact of cumulative effect of change in accounting principle(a)												37									37
Balance at January 1, 2023			$	2,051		2,116			3,684			21,726			(5,110)			(7,103)			17,364
Net income												558									558
Other comprehensive income, net of tax															865						865
Cash dividends declared:
Common stock ($0.33 per share)												(229)									(229)
Preferred stock:
Series I ($414.06 per share)												(7)									(7)
Series J ($492.75 per share)												(6)									(6)
Series K ($309.38 per share)												(3)									(3)
Series L ($281.25 per share)												(4)									(4)
Class B, Series A ($15.00 per share)												(3)									(3)
Shares acquired for treasury																		(201)			(201)
Impact of stock transactions under stock compensation plans, net									(2)									32			30
Balance at March 31, 2023			$	2,051		2,116			3,682			22,032			(4,245)			(7,272)			18,364

(a)Related to the adoption of ASU 2022-02 as of January 1, 2023. Refer to Note 3 for additional information.

Refer to the Notes to Condensed Consolidated Financial Statements.

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Fifth Third Bancorp and Subsidiaries Condensed Consolidated Financial Statements and Notes (continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
			For the three months ended March 31,
($ in millions)			2023			2022
Operating Activities
Net income			$	558		494
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			164			45
Depreciation, amortization and accretion			117			109
Stock-based compensation expense			76			79
(Benefit from) provision for deferred income taxes			(42)			19
Securities (gains) losses , net			(5)			18
MSR fair value adjustment			53			(137)
Net gains on sales of loans and fair value adjustments on loans held for sale			(18)			(8)
Net gains on disposition and impairment of bank premises and equipment and operating lease equipment			(1)			(3)
Proceeds from sales of loans held for sale			1,335			3,398
Loans originated or purchased for sale, net of repayments			(1,071)			(2,001)
Dividends representing return on equity investments			16			11
Net change in:
Equity and trading debt securities			(133)			186
Other assets			514			287
Accrued taxes, interest and expenses and other liabilities			(242)			(810)
Net Cash Provided by Operating Activities			1,321			1,687
Investing Activities
Proceeds from sales:
AFS securities and other investments			2,054			993
Loans and leases			—			43
Bank premises and equipment			3			—
Proceeds from repayments / maturities of AFS and HTM securities and other investments			608			1,438
Purchases:
AFS securities and other investments			(2,045)			(14,423)
Bank premises and equipment			(113)			(63)
MSRs			(16)			(139)
Proceeds from settlement of BOLI			8			19
Proceeds from sales and dividends representing return of equity investments			14			8
Net change in:
Other short-term investments			(1,443)			14,043
Portfolio loans and leases			(1,452)			(3,504)
Operating lease equipment			19			(32)
Net Cash Used in Investing Activities			(2,363)			(1,617)
Financing Activities
Net change in deposits			(715)			1,287
Net change in other short-term borrowings and federal funds purchased			2,523			(139)
Dividends paid on common and preferred stock			(294)			(230)
Proceeds from issuance of long-term debt			6			12
Repayment of long-term debt			(917)			(870)
Repurchases of treasury stock and related forward contract			(200)			—
Other			(47)			(75)
Net Cash Provided by (Used in) Financing Activities			356			(15)
(Decrease) Increase in Cash and Due from Banks			(686)			55
Cash and Due from Banks at Beginning of Period			3,466			2,994
Cash and Due from Banks at End of Period			$	2,780		3,049

Refer to the Notes to Condensed Consolidated Financial Statements. Note 2 contains cash payments related to interest and income taxes in addition to non-cash investing and financing activities.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation

The Condensed Consolidated Financial Statements include the accounts of the Bancorp and its majority-owned subsidiaries and VIEs in which the Bancorp has been determined to be the primary beneficiary. Other entities, including certain joint ventures in which the Bancorp has the ability to exercise significant influence over operating and financial policies of the investee, but upon which the Bancorp does not possess control, are accounted for by the equity method and not consolidated. The investments in those entities in which the Bancorp does not have the ability to exercise significant influence are generally carried at fair value unless the investment does not have a readily determinable fair value. The Bancorp accounts for equity investments without a readily determinable fair value using the measurement alternative to fair value, representing the cost of the investment minus any impairment recorded and plus or minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. Intercompany transactions and balances among consolidated entities have been eliminated.

In the opinion of management, the unaudited Condensed Consolidated Financial Statements include all adjustments, which consist of normal recurring accruals, necessary to present fairly the results for the periods presented. In accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial information, these statements do not include certain information and footnote disclosures required for complete annual financial statements and it is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Bancorp’s Annual Report on Form 10-K. The results of operations, comprehensive income, cash flows and changes in equity for the three months ended March 31, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year. Financial information as of December 31, 2022 has been derived from the Bancorp’s Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

2. Supplemental Cash Flow Information

Cash payments related to interest and income taxes in addition to non-cash investing and financing activities are presented in the following table for the three months ended March 31:

($ in millions)			2023			2022
Cash Payments:
Interest			$	682		158
Income taxes			21			11
Transfers:
Portfolio loans and leases to loans and leases held for sale			$	3		71
Loans and leases held for sale to portfolio loans and leases			4			402
Portfolio loans and leases to OREO			3			2
Bank premises and equipment to OREO			8			15
Supplemental Disclosures:
Net additions to lease liabilities under operating leases			$	1		31
Net additions to lease liabilities under finance leases			—			3

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

3. Accounting and Reporting Developments

Standards Adopted in 2023

The Bancorp adopted the following new accounting standards during the three months ended March 31, 2023:

ASU 2021-08 – Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, which provides guidance on the accounting for revenue contracts with customers which are acquired in a business combination. The amendments generally state that an acquirer accounts for an acquired revenue contract with a customer as if it had originated the contract. The amendments also provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and liabilities. The Bancorp adopted the amended guidance on January 1, 2023 on a prospective basis and will apply the amendments for business combinations occurring on or after the adoption date. The adoption of the amended guidance did not have a material impact on the Bancorp’s Condensed Consolidated Financial Statements.

ASU 2022-01 – Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method

In March 2022, the FASB issued ASU 2022-01, which clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets and renames the last-of-layer method the portfolio layer method. Under previous guidance, the last-of-layer method enabled an entity to apply fair value hedging to a stated amount of a closed portfolio of prepayable financial assets without having to consider prepayment risk or credit risk when measuring those assets. ASU 2022-01 expands the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. It allows entities to designate multiple layers within a single closed portfolio as individual hedged items. Further, ASU 2022-01 clarifies that the fair value basis adjustments should be adjusted at the portfolio level and should not be allocated to individual assets within the portfolio. The Bancorp adopted the amended guidance on January 1, 2023 on a prospective basis, except for the amendments related to fair value basis adjustments that, if applicable, were required to be applied on a modified retrospective basis. The adoption of the amended guidance did not have a material impact on the Bancorp’s Condensed Consolidated Financial Statements.

ASU 2022-02 – Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the FASB issued ASU 2022-02, which eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40, amends the guidance on calculating the allowance for credit losses for restructured financing receivables and requires entities to evaluate all receivable modifications under ASC 310-20 to determine whether a modification made to a borrower results in a new loan or the continuation of an existing loan. The amended guidance adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The amended guidance also requires disclosure of current period gross charge-offs by year of origination within the vintage disclosures required by ASC 326. The Bancorp adopted the amended guidance on January 1, 2023 on a prospective basis, except for the amendments impacting the measurement of the ACL for TDRs and reasonably expected TDRs, which were adopted on a modified retrospective basis. Upon adoption, the Bancorp recorded a decrease to the ACL of $49 million and a cumulative-effect adjustment to retained earnings of $37 million, net of tax. This adjustment was primarily attributable to the removal of the requirement to use a discounted cash flow approach to measure the impact of certain concessions granted as part of a TDR and the removal of the requirement to consider the impacts of reasonably expected TDRs when estimating expected credit losses. The required disclosures are included in Note 6.

ASU 2022-04 – Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04, which provides guidance on the disclosure requirements for supplier finance programs. The amendments require that a buyer in a supplier finance program disclose sufficient qualitative and quantitative information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The Bancorp adopted the amended guidance on January 1, 2023 on a retrospective basis, except for the amendments related to disclosure of rollforward information, which are required to be adopted on January 1, 2024 on a prospective basis. The adoption of the amended guidance did not have a material impact on the Bancorp’s Condensed Consolidated Financial Statements.

Significant Accounting Standards Issued but Not Yet Adopted

The following significant accounting standards were issued but not yet adopted by the Bancorp as of March 31, 2023:

ASU 2022-03 – Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

In June 2022, the FASB issued ASU 2022-03, which clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to contractual sale restrictions, stating that such restrictions are not considered part of the unit of account of the security and therefore are not considered in measuring fair value. The amended guidance also requires disclosure of the fair value of equity securities subject to contractual sale restrictions and certain additional information about those restrictions. The amended guidance is effective for the Bancorp on January 1, 2024, with early adoption permitted, and is to be applied prospectively.

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ASU 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

In March 2023, the FASB issued ASU 2023-02, which expands the permitted usage of the proportional amortization method to include additional tax credit investment programs beyond qualifying LIHTC structures if certain conditions are met. The amended guidance permits entities to make elections to apply the proportional amortization method on a program-by-program basis for qualifying programs and also makes certain amendments to measurement and disclosure guidance. The amended disclosure guidance applies to all investments within programs where the proportional amortization method has been elected, including investments within those programs which do not meet the criteria to permit application of the proportional amortization method. The amended guidance is effective for the Bancorp on January 1, 2024, with early adoption permitted, and is to be applied on a modified retrospective or retrospective basis, except for certain provisions affecting the measurement of existing LIHTC investments which may be applied prospectively. The Bancorp is in the process of evaluating the impact of the amended guidance on the Condensed Consolidated Financial Statements.

Reference Rate Reform and LIBOR Transition

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in the ASU apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, which clarified that the optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting also apply to derivatives that are affected by the discounting transition. The expedients and exceptions provided by the amendments did not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 for which an entity had elected certain optional expedients. Subsequently, in December 2022, the FASB issued ASU 2022-06 which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments in ASU 2020-04 (as amended) are effective for the Bancorp as of March 12, 2020 and may be applied through December 31, 2024. The Bancorp is in the process of evaluating and applying, as applicable, the optional expedients and exceptions in accounting for eligible contract modifications, eligible existing hedging relationships and new hedging relationships available through December 31, 2024.

Updates to Significant Accounting and Reporting Policies

In conjunction with the adoption of ASU 2022-02 on January 1, 2023, the Bancorp has updated its accounting and reporting policies for nonaccrual loans and leases, loan modifications and the ALLL as described below. Refer to Note 1 of the Notes to Consolidated Financial Statements in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 for discussion of these accounting and reporting policies for periods prior to January 1, 2023.

Portfolio loans and leases - nonaccrual loans and leases

The Bancorp places loans and leases on nonaccrual status when full repayment of principal and interest is not expected, unless the loan or lease is well-secured and in the process of collection. When a loan is placed on nonaccrual status, the accrual of interest, amortization of loan premium, accretion of loan discount and amortization/accretion of deferred net direct loan origination fees or costs are discontinued and all previously accrued and unpaid interest is reversed against income. The Bancorp utilizes the following policies to determine when full repayment of principal and interest on a loan or lease is not expected:

•Commercial loans are placed on nonaccrual status when there is a clear indication that the borrower’s cash flows may not be sufficient to meet payments as they become due. Such loans are also placed on nonaccrual status when the principal or interest is past due 90 days or more, unless the loan is fully or partially guaranteed by a government agency.

•Residential mortgage loans are placed on nonaccrual status when principal and interest payments become past due 150 days or more, unless repayment of the loan is fully or partially guaranteed by a government agency. Residential mortgage loans may stay on nonaccrual status for an extended time as the foreclosure process typically lasts longer than 180 days. The Bancorp maintains a reserve for the portion of accrued interest receivable that it estimates will be uncollectible, at the portfolio level, for residential mortgage loans which are past due 90 days or more and on accrual status. This reserve is recorded as a component of other assets on the Bancorp’s Condensed Consolidated Balance Sheets, consistent with the classification of the related accrued interest receivable.

•Home equity loans and lines of credit are placed on nonaccrual status if principal or interest has been in default for 90 days or more. Home equity loans and lines of credit that have been in default for 60 days or more are also placed on nonaccrual status if the senior lien has been in default 120 days or more.

•Credit card loans that have been modified for a borrower experiencing financial difficulty are placed on nonaccrual status at the time of the modification. Subsequent to the modification, accounts are placed on nonaccrual status when required payments become past due 90 days or more in accordance with the modified terms.

•Indirect secured consumer loans and other consumer loans are generally placed on nonaccrual status when principal or interest becomes past due 90 days or more.

•Loans discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower are considered collateral-dependent loans and placed on nonaccrual status, regardless of the borrower’s payment history or capacity to repay in the future.

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Well-secured loans are collateralized by perfected security interests in real and/or personal property for which the Bancorp estimates proceeds from the sale would be sufficient to recover the outstanding principal and accrued interest balance of the loan and pay all costs to sell the collateral. The Bancorp considers a loan in the process of collection if collection efforts or legal action is proceeding and the Bancorp expects to collect funds sufficient to bring the loan current or recover the entire outstanding principal and accrued interest balance in the near future.

Nonaccrual loans and leases may be returned to accrual status when all delinquent principal and interest payments become current in accordance with the loan agreement and the remaining principal and interest payments are reasonably assured of repayment in accordance with the contractual terms of the loan agreement, or when the loan is both well-secured and in the process of collection. Nonaccrual loans that have been modified for a borrower experiencing financial difficulty may not be returned to accrual status unless such loans have sustained repayment performance of six months or more and are reasonably assured of repayment in accordance with the modified terms. Loans discharged in a Chapter 7 bankruptcy and not reaffirmed by the borrower may be returned to accrual status provided there is a sustained payment history of twelve months or more after bankruptcy and collectability is reasonably assured for all remaining contractual payments.

Except for loans discharged in a Chapter 7 bankruptcy that are not reaffirmed by the borrower, accruing residential mortgage loans, home equity loans and lines of credit, indirect secured consumer loans and other consumer loans modified for borrowers experiencing financial difficulty are maintained on accrual status, provided there is reasonable assurance of repayment and of performance according to the modified terms based upon a current, well-documented credit evaluation. Accruing commercial loans modified for borrowers experiencing financial difficulty are maintained on accrual status provided there is a sustained payment history of six months or more prior to the modification and collectability is reasonably assured for all remaining contractual payments under the modified terms. Modifications of commercial loans and credit card loans for borrowers experiencing financial difficulty that do not have a sustained payment history of six months or more in accordance with their modified terms remain on nonaccrual status until a six-month payment history is sustained.

Nonaccrual loans and leases are generally accounted for on the cost recovery method due to the existence of doubt as to the collectability of the remaining amortized cost basis of nonaccrual assets. Under the cost recovery method, any payments received are applied to reduce principal. Once the entire amortized cost basis is collected, additional payments received are treated as recoveries of amounts previously charged-off until recovered in full, and any subsequent payments are treated as interest income. In certain circumstances when the remaining amortized cost basis of a nonaccrual loan or lease is deemed to be fully collectible, the Bancorp may utilize the cash basis method to account for interest payments received on a nonaccrual loan or lease. Under the cash basis method, interest income is recognized when cash is received, to the extent such income would have been accrued on the loan’s remaining balance at the contractual rate.

The Bancorp records a charge-off to the ALLL when all or a portion of a loan or lease is deemed to be uncollectible, after considering the net realizable value of any underlying collateral. Commercial loans and leases on nonaccrual status and criticized commercial loans with aggregate borrower relationships exceeding $1 million are subject to an individual review to identify charge-offs. The Bancorp does not have an established delinquency threshold for partially or fully charging off commercial loans and leases. The Bancorp records charge-offs on consumer loans in accordance with applicable regulatory guidelines, which are primarily based on a loan’s delinquency status.

Portfolio loans and leases - loan modifications

In circumstances where an existing loan is modified (including a restructuring, refinancing, or other changes in terms which affect the loan’s contractual cash flows), the Bancorp evaluates whether the modification results in a continuation of the existing loan or the origination of a new loan. The Bancorp accounts for a modification as a new loan if the terms of the modified loan are at least as favorable to the Bancorp as the terms for comparable loans to other borrowers with similar collection risks who are obtaining new loans, or if the modification of terms is considered more than minor. If neither of these conditions are met, then the Bancorp will account for the loan as a continuation of the existing loan. When a modification is accounted for as a new loan, any unamortized net deferred fees or costs from the original loan are recognized in interest income when the new loan is originated. When a modification is accounted for as a continuation of the existing loan, the unamortized net deferred fees or costs from the original loan and any additional incremental direct fees and costs are carried forward and deferred as part of the amortized cost basis of the modified loan.

ALLL

The Bancorp disaggregates its portfolio loans and leases into portfolio segments for purposes of determining the ALLL. The Bancorp’s portfolio segments include commercial, residential mortgage and consumer. The Bancorp further disaggregates its portfolio segments into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes within the commercial portfolio segment include commercial and industrial, commercial mortgage owner-occupied, commercial mortgage nonowner-occupied, commercial construction and commercial leasing. The residential mortgage portfolio segment is also considered a class. Classes within the consumer portfolio segment include home equity, indirect secured consumer, credit card and other consumer loans.

The Bancorp maintains the ALLL to absorb the amount of credit losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. Contractual terms are adjusted for expected prepayments but are not extended for expected extensions, renewals or modifications except in circumstances where extension or renewal options are embedded in the original contract and not unconditionally cancellable by the Bancorp. Accrued interest receivable on loans is presented in the Condensed Consolidated Financial Statements as a component of other assets. When accrued interest is deemed to be uncollectible (typically when a loan is placed on

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nonaccrual status), interest income is reversed. The Bancorp follows established policies for placing loans on nonaccrual status, so uncollectible accrued interest receivable is reversed in a timely manner. As a result, the Bancorp has elected not to measure a reserve for accrued interest receivable as part of its ALLL. However, the Bancorp does record a reserve for the portion of accrued interest receivable that it expects to be uncollectible.

Credit losses are charged and recoveries are credited to the ALLL. The ALLL is maintained at a level the Bancorp considers to be adequate and is based on ongoing quarterly assessments and evaluations of the collectability of loans and leases, including historical credit loss experience, current and forecasted market and economic conditions and consideration of various qualitative factors that, in management’s judgment, deserve consideration in estimating expected credit losses. Provisions for credit losses are recorded for the amounts necessary to adjust the ALLL to the Bancorp’s current estimate of expected credit losses on portfolio loans and leases.

The Bancorp’s methodology for determining the ALLL includes an estimate of expected credit losses on a collective basis for groups of loans and leases with similar risk characteristics and specific allowances for loans and leases which are individually evaluated.

Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million on nonaccrual status are individually evaluated for an ALLL. The Bancorp considers the current value of collateral, credit quality of any guarantees, the guarantor’s liquidity and willingness to cooperate, the loan or lease structure (including modifications, if any) and other factors when determining the amount of the ALLL. Other factors may include the borrower’s susceptibility to risks presented by the forecasted macroeconomic environment, the industry and geographic region of the borrower, size and financial condition of the borrower, cash flow and leverage of the borrower and the Bancorp’s evaluation of the borrower’s management. When loans and leases are individually evaluated, allowances are determined based on management’s estimate of the borrower’s ability to repay the loan or lease given the availability of collateral and other sources of cash flow, as well as an evaluation of legal options available to the Bancorp. Allowances for individually evaluated loans and leases that are collateral-dependent are measured based on the fair value of the underlying collateral, less expected costs to sell where applicable. Individually evaluated loans and leases that are not collateral-dependent are measured based on the observable market value of the loan or lease or the present value of its expected cash flows discounted at the loan’s effective interest rate. Specific allowances on individually evaluated commercial loans and leases are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

The Bancorp considers loans to be collateral-dependent when it becomes probable that repayment of the loan will be provided through the sale or operation of the collateral instead of from payments made by the borrower. The expected credit losses for these loans are typically estimated based on the fair value of the underlying collateral, less expected costs to sell where applicable. Specific allowances on individually evaluated consumer and residential mortgage loans are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

Expected credit losses are estimated on a collective basis for loans and leases that are not individually evaluated. For collectively evaluated loans and leases, the Bancorp uses models to forecast expected credit losses based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. The estimate of the expected balance at the time of default considers prepayments and, for loans with available credit, expected utilization rates. The Bancorp’s expected credit loss models were developed based on historical credit loss experience and observations of migration patterns for various credit risk characteristics (such as internal credit risk grades, external credit ratings or scores, delinquency status, loan-to-value trends, etc.) over time, with those observations evaluated in the context of concurrent macroeconomic conditions. The Bancorp developed its models from historical observations capturing a full economic cycle when possible.

The Bancorp’s expected credit loss models consider historical credit loss experience, current market and economic conditions, and forecasted changes in market and economic conditions if such forecasts are considered reasonable and supportable. Generally, the Bancorp considers its forecasts to be reasonable and supportable for a period of up to three years from the estimation date. For periods beyond the reasonable and supportable forecast period, expected credit losses are estimated by reverting to historical loss information without adjustment for changes in economic conditions. This reversion is phased in over a two-year period. The Bancorp evaluates the length of its reasonable and supportable forecast period, its reversion period and reversion methodology at least annually, or more often if warranted by economic conditions or other circumstances.

The Bancorp also considers qualitative factors in determining the ALLL. Qualitative factors are used to capture characteristics in the portfolio that impact expected credit losses but that are not fully captured within the Bancorp’s expected credit loss models. These include adjustments for changes in policies or procedures in underwriting, monitoring or collections, lending and risk management personnel and results of internal audit and quality control reviews. These may also include adjustments, when deemed necessary, for specific idiosyncratic risks such as geopolitical events, natural disasters and their effects on regional borrowers, and changes in product structures. Qualitative factors may also be used to address the impacts of unforeseen events on key inputs and assumptions within the Bancorp’s expected credit loss models, such as the reasonable and supportable forecast period, changes to historical loss information or changes to the reversion period or methodology. When evaluating the adequacy of allowances, consideration is also given to regional geographic concentrations and the closely associated effect that changing economic conditions may have on the Bancorp’s customers.

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4. Investment Securities

The following tables provide the amortized cost, unrealized gains and losses and fair value for the major categories of the available-for-sale debt and other securities and held-to-maturity securities portfolios as of:

March 31, 2023 ($ in millions)			Amortized Cost			Unrealized Gains			Unrealized Losses			Fair Value
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities			$	2,828		1			(140)			2,689
Obligations of states and political subdivisions securities			3			—			—			3
Mortgage-backed securities:
Agency residential mortgage-backed securities			12,246			6			(1,179)			11,073
Agency commercial mortgage-backed securities			29,231			10			(3,058)			26,183
Non-agency commercial mortgage-backed securities			5,057			—			(507)			4,550
Asset-backed securities and other debt securities			5,703			2			(374)			5,331
Other securities(a)			890			—			—			890
Total available-for-sale debt and other securities			$	55,958		19			(5,258)			50,719
Held-to-maturity securities:
Asset-backed securities and other debt securities			$	2		—			—			2
Total held-to-maturity securities			$	2		—			—			2

(a)Other securities consist of FHLB, FRB and DTCC restricted stock holdings of $396, $491 and $3, respectively, at March 31, 2023, that are carried at cost.

December 31, 2022 ($ in millions)			Amortized Cost			Unrealized Gains			Unrealized Losses			Fair Value
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities			$	2,683		—			(188)			2,495
Obligations of states and political subdivisions securities			18			—			—			18
Mortgage-backed securities:
Agency residential mortgage-backed securities			12,604			5			(1,372)			11,237
Agency commercial mortgage-backed securities			29,824			11			(3,513)			26,322
Non-agency commercial mortgage-backed securities			5,235			—			(520)			4,715
Asset-backed securities and other debt securities			6,292			3			(453)			5,842
Other securities(a)			874			—			—			874
Total available-for-sale debt and other securities			$	57,530		19			(6,046)			51,503
Held-to-maturity securities:
Obligations of states and political subdivisions securities			$	3		—			—			3
Asset-backed securities and other debt securities			2			—			—			2
Total held-to-maturity securities			$	5		—			—			5

(a)Other securities consist of FHLB, FRB and DTCC restricted stock holdings of $381, $491 and $2, respectively, at December 31, 2022, that are carried at cost.

The following table provides the fair value of trading debt securities and equity securities as of:

($ in millions)			March 31, 2023			December 31, 2022
Trading debt securities			$	1,174		414
Equity securities			323			317

The amounts reported in the preceding tables exclude accrued interest receivable on investment securities of $137 million and $131 million at March 31, 2023 and December 31, 2022, respectively, which is presented as a component of other assets in the Condensed Consolidated Balance Sheets.

The Bancorp uses investment securities as a means of managing interest rate risk, providing collateral for pledging purposes and for liquidity risk management. As part of managing interest rate risk, the Bancorp acquires securities as a component of its MSR non-qualifying hedging strategy, with net gains or losses recorded in securities losses, net – non-qualifying hedges on mortgage servicing rights in the Condensed Consolidated Statements of Income.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents the components of net securities gains and losses recognized in the Condensed Consolidated Statements of Income, including those recognized related to the Bancorp’s non-qualifying hedging strategy for MSRs:

			For the three months ended March 31,
($ in millions)			2023			2022
Available-for-sale debt and other securities:
Realized gains			$	29		3
Realized losses			(29)			—
Net realized gains on available-for-sale debt and other securities			$	—		3
Trading debt securities:
Net realized losses			—			(1)
Net unrealized gains			—			11
Net trading debt securities gains			$	—		10
Equity securities:
Net realized gains			—			1
Net unrealized gains (losses)			4			(29)
Net equity securities gains (losses)			$	4		(28)
Total gains (losses) recognized in income from available-for-sale debt and other securities, trading debt securities and equity securities(a)			$	4		(15)

(a)Excludes $1 of net securities gains and $3 of net securities losses for the three months ended March 31, 2023 and 2022, respectively, related to securities held by FTS to facilitate the timely execution of customer transactions. These losses are included in commercial banking revenue and wealth and asset management revenue in the Condensed Consolidated Statements of Income.

At both March 31, 2023 and December 31, 2022, the Bancorp completed its evaluation of the available-for-sale debt and other securities in an unrealized loss position and did not recognize an allowance for credit losses. The Bancorp did not recognize provision expense related to available-for-sale debt and other securities in an unrealized loss position during both the three months ended March 31, 2023 and 2022.

At March 31, 2023 and December 31, 2022, investment securities with a fair value of $21.1 billion and $11.0 billion, respectively, were pledged to secure borrowing capacity, public deposits, trust funds, derivative contracts and for other purposes as required or permitted by law.

The expected maturity distribution of the Bancorp’s mortgage-backed securities and the contractual maturity distribution of the remainder of the Bancorp’s available-for-sale debt and other securities and held-to-maturity securities as of March 31, 2023 are shown in the following table:

($ in millions)			Available-for-Sale Debt and Other						Held-to-Maturity
			Amortized Cost			Fair Value			Amortized Cost			Fair Value
Debt securities:(a)
Due in 1 year or less			$	136		133			—			—
Due after 1 year through 5 years			13,519			12,697			—			—
Due after 5 years through 10 years			30,863			27,727			—			—
Due after 10 years			10,550			9,272			2			2
Other securities			890			890			—			—
Total			$	55,958		50,719			2			2

(a)Actual maturities may differ from contractual maturities when a right to call or prepay obligations exists with or without call or prepayment penalties.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table provides the fair value and gross unrealized losses on available-for-sale debt and other securities in an unrealized loss position, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of:

			Less than 12 months						12 months or more						Total
($ in millions)			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
March 31, 2023
U.S. Treasury and federal agencies securities			$	863		(15)			1,622			(125)			2,485			(140)
Obligations of states and political subdivisions securities			—			—			1			—			1			—
Agency residential mortgage-backed securities			4,293			(291)			6,616			(888)			10,909			(1,179)
Agency commercial mortgage-backed securities			12,883			(1,047)			12,881			(2,011)			25,764			(3,058)
Non-agency commercial mortgage-backed securities			788			(43)			3,761			(464)			4,549			(507)
Asset-backed securities and other debt securities			1,529			(42)			3,630			(332)			5,159			(374)
Total			$	20,356		(1,438)			28,511			(3,820)			48,867			(5,258)
December 31, 2022
U.S. Treasury and federal agencies securities			$	2,400		(188)			—			—			2,400			(188)
Obligations of states and political subdivisions securities			—			—			1			—			1			—
Agency residential mortgage-backed securities			10,078			(1,170)			938			(202)			11,016			(1,372)
Agency commercial mortgage-backed securities			22,083			(2,487)			3,697			(1,026)			25,780			(3,513)
Non-agency commercial mortgage-backed securities			3,621			(272)			1,059			(248)			4,680			(520)
Asset-backed securities and other debt securities			3,164			(178)			2,495			(275)			5,659			(453)
Total			$	41,346		(4,295)			8,190			(1,751)			49,536			(6,046)

At March 31, 2023 and December 31, 2022, $20 million and $42 million, respectively, of unrealized losses in the available-for-sale debt and other securities portfolio were related to non-rated securities.

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5. Loans and Leases

The Bancorp diversifies its loan and lease portfolio by offering a variety of loan and lease products with various payment terms and rate structures. The Bancorp’s commercial loan and lease portfolio consists of lending to various industry types. Management periodically reviews the performance of its loan and lease products to evaluate whether they are performing within acceptable interest rate and credit risk levels and changes are made to underwriting policies and procedures as needed. The Bancorp maintains an allowance to absorb loan and lease losses that are expected to be incurred over the remaining contractual terms of the related loans and leases. For further information on credit quality and the ALLL, refer to Note 6.

The following table provides a summary of commercial loans and leases classified by primary purpose and consumer loans classified based upon product or collateral as of:

($ in millions)			March 31, 2023			December 31, 2022
Loans and leases held for sale:
Commercial and industrial loans			$	21		73
Commercial leases			3			—
Residential mortgage loans			725			934
Total loans and leases held for sale			$	749		1,007
Portfolio loans and leases:
Commercial and industrial loans			$	57,720		57,232
Commercial mortgage loans			11,228			11,020
Commercial construction loans			5,548			5,433
Commercial leases			2,743			2,704
Total commercial loans and leases			$	77,239		76,389
Residential mortgage loans			$	17,608		17,628
Home equity			3,958			4,039
Indirect secured consumer loans			16,484			16,552
Credit card			1,761			1,874
Other consumer loans			5,807			4,998
Total consumer loans			$	45,618		45,091
Total portfolio loans and leases			$	122,857		121,480

Portfolio loans and leases are recorded net of unearned income, which totaled $262 million and $238 million as of March 31, 2023 and December 31, 2022, respectively. Additionally, portfolio loans and leases are recorded net of unamortized premiums and discounts, deferred direct loan origination fees and costs and fair value adjustments (associated with acquired loans or loans designated as fair value upon origination) which totaled a net discount of $51 million and net premium of $146 million as of March 31, 2023 and December 31, 2022, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $548 million and $518 million at March 31, 2023 and December 31, 2022, respectively, which is presented as a component of other assets in the Condensed Consolidated Balance Sheets.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $15.8 billion and $15.9 billion as of March 31, 2023 and December 31, 2022, respectively, pledged to the FHLB, and loans of $56.1 billion and $57.1 billion at March 31, 2023 and December 31, 2022, respectively, pledged to the FRB.

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The following table presents a summary of the total loans and leases owned by the Bancorp as of:

			Carrying Value						90 Days Past Due and Still Accruing(a)
($ in millions)			March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022
Commercial and industrial loans			$	57,741		57,305			17			11
Commercial mortgage loans			11,228			11,020			—			—
Commercial construction loans			5,548			5,433			—			—
Commercial leases			2,746			2,704			—			2
Residential mortgage loans			18,333			18,562			9			7
Home equity			3,958			4,039			1			1
Indirect secured consumer loans			16,484			16,552			—			—
Credit card			1,761			1,874			18			18
Other consumer loans			5,807			4,998			1			1
Total loans and leases			$	123,606		122,487			46			40
Less: Loans and leases held for sale			749			1,007
Total portfolio loans and leases			$	122,857		121,480

(a)Excludes government guaranteed residential mortgage loans.

The following table presents a summary of net charge-offs (recoveries):

			For the three months ended March 31,
($ in millions)			2023			2022
Commercial and industrial loans			$	30		9
Commercial mortgage loans			—			(1)
Commercial construction loans			1			—
Residential mortgage loans			—			(1)
Home equity			—			(1)
Indirect secured consumer loans			14			7
Credit card			15			13
Other consumer loans			18			8
Total net charge-offs			$	78		34

The following table presents the components of the net investment in portfolio leases as of:

($ in millions)(a)			March 31, 2023			December 31, 2022
Net investment in direct financing leases:
Lease payment receivable (present value)			$	582		570
Unguaranteed residual assets (present value)			109			107
Net investment in sales-type leases:
Lease payment receivable (present value)			1,728			1,704
Unguaranteed residual assets (present value)			76			76

(a)Excludes $248 and $247 of leveraged leases at March 31, 2023 and December 31, 2022, respectively.

Interest income recognized in the Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 was $6 million and $8 million, respectively, for direct financing leases and $15 million and $11 million, respectively, for sales-type leases.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents undiscounted cash flows for both direct financing and sales-type leases for the remainder of 2023 through 2028 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:

As of March 31, 2023 ($ in millions)			Direct Financing Leases			Sales-Type Leases
Remainder of 2023			$	145		388
2024			159			471
2025			113			409
2026			95			239
2027			58			177
2028			18			108
Thereafter			37			82
Total undiscounted cash flows			$	625		1,874
Less: Difference between undiscounted cash flows and discounted cash flows			43			146
Present value of lease payments (recognized as lease receivables)			$	582		1,728

The lease residual value represents the present value of the estimated fair value of the leased equipment at the end of the lease. The Bancorp performs quarterly reviews of residual values associated with its leasing portfolio considering factors such as the subject equipment, structure of the transaction, industry, prior experience with the lessee and other factors that impact the residual value to assess for impairment. The Bancorp maintained an allowance of $18 million and $15 million at March 31, 2023 and December 31, 2022, respectively, to cover the losses that are expected to be incurred over the remaining contractual terms of the related leases, including the potential losses related to the lease residual value. Refer to Note 6 for additional information on credit quality and the ALLL.

6. Credit Quality and the Allowance for Loan and Lease Losses

The Bancorp disaggregates ALLL balances and transactions in the ALLL by portfolio segment. Credit quality related disclosures for loans and leases are further disaggregated by class.

Allowance for Loan and Lease Losses

The following tables summarize transactions in the ALLL by portfolio segment:

For the three months ended March 31, 2023 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
Balance, beginning of period			$	1,127		245			822			2,194
Impact of adoption of ASU 2022-02			4			(36)			(17)			(49)
Losses charged off(a)			(33)			(1)			(76)			(110)
Recoveries of losses previously charged off(a)			2			1			29			32
Provision for (benefit from) loan and lease losses			43			(24)			129			148
Balance, end of period			$	1,143		185			887			2,215

(a)The Bancorp recorded $9 in both losses charged off and recoveries of losses previously charged off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.

For the three months ended March 31, 2022 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
Balance, beginning of period			$	1,102		235			555			1,892
Losses charged off(a)			(11)			(1)			(52)			(64)
Recoveries of losses previously charged off(a)			3			2			25			30
Benefit from loan and lease losses			16			3			31			50
Balance, end of period			$	1,110		239			559			1,908

(a)The Bancorp recorded $8 in both losses charged off and recoveries of losses previously charged off related to customer defaults on point-of-sale consumer loans for which the Bancorp obtained recoveries under third-party credit enhancements.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:

As of March 31, 2023 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
ALLL:(a)
Individually evaluated			$	78		—			2			80
Collectively evaluated			1,065			185			885			2,135
Total ALLL			$	1,143		185			887			2,215
Portfolio loans and leases:(b)
Individually evaluated			$	319		92			49			460
Collectively evaluated			76,920			17,388			27,961			122,269
Total portfolio loans and leases			$	77,239		17,480			28,010			122,729

(a)Includes $2 related to commercial leveraged leases at March 31, 2023.

(b)Excludes $128 of residential mortgage loans measured at fair value and includes $248 of commercial leveraged leases, net of unearned income at March 31, 2023.

As of December 31, 2022 ($ in millions)			Commercial			Residential Mortgage			Consumer			Total
ALLL:(a)
Individually evaluated			$	30		47			45			122
Collectively evaluated			1,097			198			777			2,072
Total ALLL			$	1,127		245			822			2,194
Portfolio loans and leases:(b)
Individually evaluated			$	531		560			297			1,388
Collectively evaluated			75,858			16,945			27,166			119,969
Total portfolio loans and leases			$	76,389		17,505			27,463			121,357

(a)Includes $2 related to commercial leveraged leases at December 31, 2022.

(b)Excludes $123 of residential mortgage loans measured at fair value and includes $247 of commercial leveraged leases, net of unearned income at December 31, 2022.

CREDIT RISK PROFILE

Commercial Portfolio Segment

For purposes of monitoring the credit quality and risk characteristics of its commercial portfolio segment, the Bancorp disaggregates the segment into the following classes: commercial and industrial, commercial mortgage owner-occupied, commercial mortgage nonowner-occupied, commercial construction and commercial leases.

To facilitate the monitoring of credit quality within the commercial portfolio segment, the Bancorp utilizes the following categories of credit grades: pass, special mention, substandard, doubtful and loss. The five categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter.

Pass ratings, which are assigned to those borrowers that do not have identified potential or well-defined weaknesses and for which there is a high likelihood of orderly repayment, are updated at least annually based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter.

The Bancorp assigns a special mention rating to loans and leases that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or lease or the Bancorp’s credit position.

The Bancorp assigns a substandard rating to loans and leases that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans and leases have well-defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans and leases in this grade also are characterized by the distinct possibility that the Bancorp will sustain some loss if the deficiencies noted are not addressed and corrected.

The Bancorp assigns a doubtful rating to loans and leases that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Loans and leases classified as loss are considered uncollectible and are charged off in the period in which they are determined to be uncollectible. Because loans and leases in this category are fully charged off, they are not included in the following tables.

For loans and leases that are collectively evaluated for an ACL, the Bancorp utilizes models to forecast expected credit losses over a reasonable and supportable forecast period based on the probability of a loan or lease defaulting, the expected balance at the estimated date of default and the expected loss percentage given a default. For the commercial portfolio segment, the estimates for probability of default are primarily based on internal ratings assigned to each commercial borrower on a 13-point scale and historical observations of how those ratings migrate to a default over time in the context of macroeconomic conditions. For loans with available credit, the estimate of the expected balance at the time of default considers expected utilization rates, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. For more information about the Bancorp’s processes for developing these models, estimating credit losses for periods beyond the reasonable and supportable forecast period and for estimating credit losses for individually evaluated loans, refer to Note 3.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables present the amortized cost basis of the Bancorp’s commercial portfolio segment, by class and vintage, disaggregated by credit risk grade:

As of March 31, 2023 ($ in millions)			Term Loans and Leases by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2023			2022			2021			2020			2019			Prior									Total
Commercial and industrial loans:
Pass			$	805		4,364			2,673			885			402			648			44,136			—			53,913
Special mention			7			44			11			8			36			36			1,414			—			1,556
Substandard			76			121			58			218			25			108			1,630			—			2,236
Doubtful			—			—			2			—			—			—			13			—			15
Total commercial and industrial loans			$	888		4,529			2,744			1,111			463			792			47,193			—			57,720
Commercial mortgage owner-occupied loans:
Pass			$	240		1,139			754			477			248			369			1,743			—			4,970
Special mention			12			14			29			3			2			12			22			—			94
Substandard			25			20			21			17			71			37			140			—			331
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial mortgage owner- occupied loans			$	277		1,173			804			497			321			418			1,905			—			5,395
Commercial mortgage nonowner-occupied loans:
Pass			$	165		1,087			447			474			393			345			2,508			—			5,419
Special mention			47			—			32			26			—			2			139			—			246
Substandard			27			30			24			18			1			17			51			—			168
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial mortgage nonowner-occupied loans			$	239		1,117			503			518			394			364			2,698			—			5,833
Commercial construction loans:
Pass			$	14		73			31			87			8			34			4,980			—			5,227
Special mention			—			—			33			—			—			—			147			—			180
Substandard			4			49			—			—			—			2			86			—			141
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial construction loans			$	18		122			64			87			8			36			5,213			—			5,548
Commercial leases:
Pass			$	271		495			606			280			186			799			—			—			2,637
Special mention			—			3			9			4			2			16			—			—			34
Substandard			7			5			15			2			3			40			—			—			72
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial leases			$	278		503			630			286			191			855			—			—			2,743
Total commercial loans and leases:
Pass			$	1,495		7,158			4,511			2,203			1,237			2,195			53,367			—			72,166
Special mention			66			61			114			41			40			66			1,722			—			2,110
Substandard			139			225			118			255			100			204			1,907			—			2,948
Doubtful			—			—			2			—			—			—			13			—			15
Total commercial loans and leases			$	1,700		7,444			4,745			2,499			1,377			2,465			57,009			—			77,239

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

As of December 31, 2022 ($ in millions)			Term Loans and Leases by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2022			2021			2020			2019			2018			Prior									Total
Commercial and industrial loans:
Pass			$	3,825		3,098			994			445			269			488			44,521			—			53,640
Special mention			65			24			15			36			10			24			1,221			—			1,395
Substandard			150			77			233			26			7			107			1,597			—			2,197
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial and industrial loans			$	4,040		3,199			1,242			507			286			619			47,339			—			57,232
Commercial mortgage owner-occupied loans:
Pass			$	1,177		826			522			257			160			264			1,624			—			4,830
Special mention			17			15			13			12			13			2			56			—			128
Substandard			51			14			20			73			11			25			106			—			300
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial mortgage owner-occupied loans			$	1,245		855			555			342			184			291			1,786			—			5,258
Commercial mortgage nonowner-occupied loans:
Pass			$	1,127		462			490			397			220			170			2,453			—			5,319
Special mention			1			84			26			—			—			23			88			—			222
Substandard			65			19			18			1			1			17			100			—			221
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial mortgage nonowner-occupied loans			$	1,193		565			534			398			221			210			2,641			—			5,762
Commercial construction loans:
Pass			$	82		31			93			8			35			7			4,684			—			4,940
Special mention			—			—			—			—			—			—			293			—			293
Substandard			53			—			—			—			—			2			145			—			200
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial construction loans			$	135		31			93			8			35			9			5,122			—			5,433
Commercial leases:
Pass			$	584		664			306			192			146			696			—			—			2,588
Special mention			—			4			2			4			7			19			—			—			36
Substandard			1			20			2			4			21			32			—			—			80
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial leases			$	585		688			310			200			174			747			—			—			2,704
Total commercial loans and leases:
Pass			$	6,795		5,081			2,405			1,299			830			1,625			53,282			—			71,317
Special mention			83			127			56			52			30			68			1,658			—			2,074
Substandard			320			130			273			104			40			183			1,948			—			2,998
Doubtful			—			—			—			—			—			—			—			—			—
Total commercial loans and leases			$	7,198		5,338			2,734			1,455			900			1,876			56,888			—			76,389

The following table summarizes the Bancorp’s gross charge-offs within the commercial portfolio segment, by class and vintage:

For the three months ended March 31, 2023 ($ in millions)			Term Loans and Leases by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2023			2022			2021			2020			2019			Prior									Total
Commercial loans and leases:
Commercial and industrial loans			$	—		1			11			—			—			—			20			—			32
Commercial construction loans			—			—			—			—			—			—			1			—			1
Total commercial loans and leases			$	—		1			11			—			—			—			21			—			33

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Age Analysis of Past Due Commercial Loans and Leases

The following tables summarize the Bancorp’s amortized cost basis in portfolio commercial loans and leases, by age and class:

			Current Loans and Leases(a)			Past Due									Total Loans and Leases			90 Days Past Due and Still Accruing
As of March 31, 2023 ($ in millions)						30-89 Days(a)			90 Days or More(a)			Total Past Due
Commercial loans and leases:
Commercial and industrial loans			$	57,549		109			62			171			57,720			17
Commercial mortgage owner-occupied loans			5,386			6			3			9			5,395			—
Commercial mortgage nonowner-occupied loans			5,832			1			—			1			5,833			—
Commercial construction loans			5,541			2			5			7			5,548			—
Commercial leases			2,723			16			4			20			2,743			—
Total portfolio commercial loans and leases			$	77,031		134			74			208			77,239			17

(a)Includes accrual and nonaccrual loans and leases.

			Current Loans and Leases(a)			Past Due									Total Loans and Leases			90 Days Past Due and Still Accruing
As of December 31, 2022 ($ in millions)						30-89 Days(a)			90 Days or More(a)			Total Past Due
Commercial loans and leases:
Commercial and industrial loans			$	57,092		98			42			140			57,232			11
Commercial mortgage owner-occupied loans			5,241			14			3			17			5,258			—
Commercial mortgage nonowner-occupied loans			5,756			6			—			6			5,762			—
Commercial construction loans			5,424			7			2			9			5,433			—
Commercial leases			2,698			4			2			6			2,704			2
Total portfolio commercial loans and leases			$	76,211		129			49			178			76,389			13

(a)Includes accrual and nonaccrual loans and leases.

Residential Mortgage and Consumer Portfolio Segments

For purposes of monitoring the credit quality and risk characteristics of its consumer portfolio segment, the Bancorp disaggregates the segment into the following classes: home equity, indirect secured consumer loans, credit card and other consumer loans. The Bancorp’s residential mortgage portfolio segment is also a separate class.

The Bancorp considers repayment performance as the best indicator of credit quality for residential mortgage and consumer loans, which includes both the delinquency status and performing versus nonperforming status of the loans. The delinquency status of all residential mortgage and consumer loans and the performing versus nonperforming status are presented in the following tables.

For collectively evaluated loans in the consumer and residential mortgage portfolio segments, the Bancorp’s expected credit loss models primarily utilize the borrower’s FICO score and delinquency history in combination with macroeconomic conditions when estimating the probability of default. The estimates for loss severity are primarily based on collateral type and coverage levels and the susceptibility of those characteristics to changes in macroeconomic conditions. The expected balance at the estimated date of default is also especially impactful in the expected credit loss models for portfolio classes which generally have longer terms (such as residential mortgage loans and home equity) and portfolio classes containing a high concentration of loans with revolving privileges (such as home equity). The estimate of the expected balance at the time of default considers expected prepayment and utilization rates where applicable, which are primarily based on macroeconomic conditions and the utilization history of similar borrowers under those economic conditions. Refer to Note 3 for additional information about the Bancorp’s process for developing these models and its process for estimating credit losses for periods beyond the reasonable and supportable forecast period.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables present the amortized cost basis of the Bancorp’s residential mortgage and consumer portfolio segments, by class and vintage, disaggregated by both age and performing versus nonperforming status:

As of March 31, 2023 ($ in millions)			Term Loans by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2023			2022			2021			2020			2019			Prior									Total
Residential mortgage loans:
Performing:
Current(a)			$	249		3,222			5,355			2,931			1,028			4,543			—			—			17,328
30-89 days past due			—			1			2			3			1			10			—			—			17
90 days or more past due			—			1			2			—			1			5			—			—			9
Total performing			249			3,224			5,359			2,934			1,030			4,558			—			—			17,354
Nonperforming			—			1			3			4			4			114			—			—			126
Total residential mortgage loans(b)			$	249		3,225			5,362			2,938			1,034			4,672			—			—			17,480
Home equity:
Performing:
Current			$	14		45			3			7			14			106			3,663			14			3,866
30-89 days past due			—			—			—			—			—			2			21			—			23
90 days or more past due			—			—			—			—			—			1			—			—			1
Total performing			14			45			3			7			14			109			3,684			14			3,890
Nonperforming			—			—			—			—			—			7			60			1			68
Total home equity			$	14		45			3			7			14			116			3,744			15			3,958
Indirect secured consumer loans:
Performing:
Current			$	1,595		5,526			5,355			2,302			1,041			528			—			—			16,347
30-89 days past due			2			32			33			19			14			10			—			—			110
90 days or more past due			—			—			—			—			—			—			—			—			—
Total performing			1,597			5,558			5,388			2,321			1,055			538			—			—			16,457
Nonperforming			—			5			5			7			5			5			—			—			27
Total indirect secured consumer loans			$	1,597		5,563			5,393			2,328			1,060			543			—			—			16,484
Credit card:
Performing:
Current			$	—		—			—			—			—			—			1,696			—			1,696
30-89 days past due			—			—			—			—			—			—			18			—			18
90 days or more past due			—			—			—			—			—			—			18			—			18
Total performing			—			—			—			—			—			—			1,732			—			1,732
Nonperforming			—			—			—			—			—			—			29			—			29
Total credit card			$	—		—			—			—			—			—			1,761			—			1,761
Other consumer loans:
Performing:
Current			$	722		2,928			481			323			149			229			903			31			5,766
30-89 days past due			—			19			5			2			2			3			3			—			34
90 days or more past due			—			1			—			—			—			—			—			—			1
Total performing			722			2,948			486			325			151			232			906			31			5,801
Nonperforming			—			3			1			—			—			1			1			—			6
Total other consumer loans			$	722		2,951			487			325			151			233			907			31			5,807
Total residential mortgage and consumer loans:
Performing:
Current			$	2,580		11,721			11,194			5,563			2,232			5,406			6,262			45			45,003
30-89 days past due			2			52			40			24			17			25			42			—			202
90 days or more past due			—			2			2			—			1			6			18			—			29
Total performing			2,582			11,775			11,236			5,587			2,250			5,437			6,322			45			45,234
Nonperforming			—			9			9			11			9			127			90			1			256
Total residential mortgage and consumer loans(b)			$	2,582		11,784			11,245			5,598			2,259			5,564			6,412			46			45,490

(a)Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of March 31, 2023, $76 of these loans were 30-89 days past due and $154 were 90 days or more past due. The Bancorp recognized an immaterial amount of losses during the three months ended March 31, 2023, due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $128 of residential mortgage loans measured at fair value at March 31, 2023, including $3 of nonperforming loans.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

As of December 31, 2022 ($ in millions)			Term Loans by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2022			2021			2020			2019			2018			Prior									Total
Residential mortgage loans:
Performing:
Current(a)			$	3,195		5,440			2,981			1,051			344			4,336			—			—			17,347
30-89 days past due			4			4			3			1			2			15			—			—			29
90 days or more past due			—			—			1			—			1			5			—			—			7
Total performing			3,199			5,444			2,985			1,052			347			4,356			—			—			17,383
Nonperforming			—			3			4			4			7			104			—			—			122
Total residential mortgage loans(b)			$	3,199		5,447			2,989			1,056			354			4,460			—			—			17,505
Home equity:
Performing:
Current			$	46		3			7			15			17			94			3,741			18			3,941
30-89 days past due			—			—			—			—			—			2			28			—			30
90 days or more past due			—			—			—			—			—			1			—			—			1
Total performing			46			3			7			15			17			97			3,769			18			3,972
Nonperforming			—			—			—			—			—			8			58			1			67
Total home equity			$	46		3			7			15			17			105			3,827			19			4,039
Indirect secured consumer loans:
Performing:
Current			$	6,034		5,875			2,600			1,217			416			239			—			—			16,381
30-89 days past due			34			42			28			22			11			5			—			—			142
90 days or more past due			—			—			—			—			—			—			—			—			—
Total performing			6,068			5,917			2,628			1,239			427			244			—			—			16,523
Nonperforming			4			6			7			6			4			2			—			—			29
Total indirect secured consumer loans			$	6,072		5,923			2,635			1,245			431			246			—			—			16,552
Credit card:
Performing:
Current			$	—		—			—			—			—			—			1,808			—			1,808
30-89 days past due			—			—			—			—			—			—			21			—			21
90 days or more past due			—			—			—			—			—			—			18			—			18
Total performing			—			—			—			—			—			—			1,847			—			1,847
Nonperforming			—			—			—			—			—			—			27			—			27
Total credit card			$	—		—			—			—			—			—			1,874			—			1,874
Other consumer loans:
Performing:
Current			$	2,704		540			355			169			112			146			908			26			4,960
30-89 days past due			14			6			3			2			2			2			3			—			32
90 days or more past due			—			—			—			—			—			—			1			—			1
Total performing			2,718			546			358			171			114			148			912			26			4,993
Nonperforming			2			1			—			—			—			1			1			—			5
Total other consumer loans			$	2,720		547			358			171			114			149			913			26			4,998
Total residential mortgage and consumer loans:
Performing:
Current			$	11,979		11,858			5,943			2,452			889			4,815			6,457			44			44,437
30-89 days past due			52			52			34			25			15			24			52			—			254
90 days or more past due			—			—			1			—			1			6			19			—			27
Total performing			12,031			11,910			5,978			2,477			905			4,845			6,528			44			44,718
Nonperforming			6			10			11			10			11			115			86			1			250
Total residential mortgage and consumer loans(b)			$	12,037		11,920			5,989			2,487			916			4,960			6,614			45			44,968

(a)Information includes advances made pursuant to servicing agreements for GNMA mortgage pools whose repayments are insured by the FHA or guaranteed by the VA. As of December 31, 2022, $81 of these loans were 30-89 days past due and $147 were 90 days or more past due. The Bancorp recognized $1 of losses during the three months ended March 31, 2022 due to claim denials and curtailments associated with these insured or guaranteed loans.

(b)Excludes $123 of residential mortgage loans measured at fair value at December 31, 2022, including $1 of 30-89 days past due loans and $2 of nonperforming loans.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table summarizes the Bancorp’s gross charge-offs within the residential mortgage and consumer portfolio segments, by class and vintage:

For the three months ended March 31, 2023 ($ in millions)			Term Loans by Origination Year																		Revolving Loans			Revolving Loans Converted to Term Loans
			2023			2022			2021			2020			2019			Prior									Total
Residential mortgage loans			$	—		—			—			—			—			1			—			—			1
Consumer loans:
Home equity			—			—			—			—			—			—			1			—			1
Indirect secured consumer loans			—			8			6			4			3			2			—			—			23
Credit cards			—			—			—			—			—			20			—			—			20
Other consumer loans			—			10			5			3			2			3			8			1			32
Total residential mortgage and consumer loans			$	—		18			11			7			5			26			9			1			77

Collateral-Dependent Loans and Leases

The Bancorp considers a loan or lease to be collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. When a loan or lease is collateral-dependent, its fair value is generally based on the fair value less cost to sell of the underlying collateral.

The following table presents the amortized cost basis of the Bancorp’s collateral-dependent loans and leases, by portfolio class, as of:

($ in millions)			March 31, 2023			December 31, 2022
Commercial loans and leases:
Commercial and industrial loans			$	276		433
Commercial mortgage owner-occupied loans			12			14
Commercial mortgage nonowner-occupied loans			21			27
Commercial construction loans			5			56
Commercial leases			5			1
Total commercial loans and leases			$	319		531
Residential mortgage loans			92			57
Consumer loans:
Home equity			43			46
Indirect secured consumer loans			6			6
Total consumer loans			$	49		52
Total portfolio loans and leases			$	460		640

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Nonperforming Assets

Nonperforming assets include nonaccrual loans and leases for which ultimate collectability of the full amount of the principal and/or interest is uncertain and certain other assets, including OREO and other repossessed property.

The following table presents the amortized cost basis of the Bancorp’s nonaccrual loans and leases, by class, and OREO and other repossessed property as of:

			March 31, 2023												December 31, 2022
($ in millions)			With an ALLL			No Related ALLL			Total						With an ALLL			No Related ALLL			Total
Commercial loans and leases:
Commercial and industrial loans			$	239		41			280						114			101			215
Commercial mortgage owner-occupied loans			11			11			22						9			7			16
Commercial mortgage nonowner-occupied loans			18			4			22						20			4			24
Commercial construction loans			3			2			5						6			2			8
Commercial leases			4			1			5						—			—			—
Total nonaccrual portfolio commercial loans and leases			$	275		59			334						149			114			263
Residential mortgage loans			92			37			129						81			43			124
Consumer loans:
Home equity			55			13			68						45			22			67
Indirect secured consumer loans			26			1			27						26			3			29
Credit card			29			—			29						27			—			27
Other consumer loans			6			—			6						5			—			5
Total nonaccrual portfolio consumer loans			$	116		14			130						103			25			128
Total nonaccrual portfolio loans and leases(a)(b)			$	483		110			593						333			182			515
OREO and other repossessed property			—			30			30						—			24			24
Total nonperforming portfolio assets(a)(b)			$	483		140			623						333			206			539

(a)Excludes an immaterial amount of nonaccrual loans held for sale as of both March 31, 2023 and December 31, 2022.

(b)Includes $17 and $15 of nonaccrual government insured commercial loans whose repayments are insured by the SBA as of March 31, 2023 and December 31, 2022, respectively.

The Bancorp recognized an immaterial amount of interest income on nonaccrual loans and leases for both the three months ended March 31, 2023 and 2022.

The Bancorp’s amortized cost basis of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction was $175 million and $154 million as of March 31, 2023 and December 31, 2022, respectively.

Modifications to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Bancorp adopted ASU 2022-02, which eliminated the recognition and measurement guidance for TDRs. The amended accounting and disclosure requirements are applicable to loan modifications to borrowers experiencing financial difficulty which are completed on or after the adoption date. For further information on the adoption of ASU 2022-02, refer to Note 3.

In the course of servicing its loans, the Bancorp works with borrowers who are experiencing financial difficulty to identify solutions that are mutually beneficial to both parties with the objective of mitigating the risk of losses on the loan. These efforts often result in modifications to the payment terms of the loan. The types of modifications offered to borrowers vary by type of loan and may include term extensions, interest rate reductions, payment delays (other than those that are insignificant) or combinations thereof. The Bancorp typically does not provide principal forgiveness except in circumstances where the loan has already been fully or partially charged off.

The Bancorp applies its expected credit loss models consistently to both modified and non-modified loans when estimating the ALLL. For loans which are modified for borrowers experiencing financial difficulty, there is generally not a significant change to the ALLL upon modification because the Bancorp’s ALLL estimation methodologies already consider those borrowers’ financial difficulties and the resulting effects of potential modifications when estimating expected credit losses.

As of March 31, 2023, portfolio loans with an amortized cost basis of $202 million, or 0.16% of total portfolio loans and leases, were modified during the three months ended March 31, 2023 for borrowers experiencing financial difficulty, as further discussed in the following sections. This amount excludes $13 million of consumer and residential mortgage loans as of March 31, 2023 which have been granted a concession under provisions of the Federal Bankruptcy Act and are monitored separately from loans modified under the Bancorp’s loan

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

modification programs. As of March 31, 2023, the Bancorp had commitments of $109 million to lend additional funds to borrowers experiencing financial difficulty whose terms have been modified during the three months ended March 31, 2023.

Commercial portfolio segment

Commercial loan modifications are individually negotiated and may vary depending on the borrower’s financial situation, but the Bancorp most commonly utilizes term extensions for periods of 3 to 12 months. In less common situations and when specifically warranted by the borrower’s situation, the Bancorp may also consider offering commercial borrowers interest rate reductions or payment deferrals, which may be combined with a term extension.

The following table presents the amortized cost basis of the Bancorp’s commercial portfolio loans that were modified for borrowers experiencing financial difficulty during the three months ended March 31, 2023, by portfolio class and type of modification:

($ in millions)			Term Extension			Interest Rate Reduction			Term Extension and Interest Rate Reduction			Total			% of Total Class
Commercial and industrial loans			$	105		1			—			106			0.18		%
Commercial mortgage owner-occupied loans			1			—			—			1			0.02
Commercial mortgage nonowner-occupied loans			22			—			3			25			0.43
Commercial construction loans			31			—			—			31			0.56
Total commercial portfolio loans			$	159		1			3			163			0.21		%

Residential mortgage portfolio segment

The Bancorp has established residential mortgage loan modification programs which define the type of modifications available as well as the eligibility criteria for borrowers. The designs of the Bancorp’s modification programs for residential mortgage loans are similar to those utilized by the various GSEs. The most common modification program utilized for residential mortgage loans is a term extension for up to 480 months from the modification date, combined with a change in interest rate to a fixed rate (which may be an increase or decrease from the rate in the original loan). As part of these modifications, the Bancorp may capitalize delinquent amounts due at the time of the modification into the principal balance of the loan when determining its modified payment structure. For loans where the modification results in a new monthly payment amount, borrowers are generally required to complete a trial period of three to four months before the loan is permanently modified. The Bancorp also offers payment delay modifications to qualified borrowers which allow either the deferral of repayment for delinquent amounts due until maturity or capitalization of delinquent amounts due into the principal balance of the loan. The number of monthly payments delayed varies by borrower but is most commonly within a range of 6 to 12 months.

The following table presents the amortized cost basis of the Bancorp’s residential mortgage loans that were modified for borrowers experiencing financial difficulty during the three months ended March 31, 2023, by type of modification:

($ in millions)			Total			% of Total Class
Payment delay			$	8		0.05		%
Term extension and payment delay			14			0.08
Term extension, interest rate reduction and payment delay			2			0.01
Total residential mortgage portfolio loans			$	24		0.14		%

The Bancorp had $18 million of in-process modifications to residential mortgage loans outstanding as of March 31, 2023 which are excluded from the completed modification activity in the table above. These in-process modifications will be reported as completed modifications once the borrower satisfies the applicable contingencies in the modification agreement and the loan is contractually modified to make the modified terms permanent.

Consumer portfolio segment

The Bancorp’s modification programs for consumer loans vary based on type of loan. The most common modification program for home equity is a term extension for up to 360 months combined with a deferral of delinquent amounts due until maturity, which may also be combined with an interest rate reduction. Modification programs for credit card typically involve an interest rate reduction and an increase to the minimum monthly payment in order to repay a larger portion of outstanding balances. Modifications for indirect secured consumer loans and other consumer loans are less commonly utilized as part of the Bancorp’s loss mitigation activities and programs vary by specific product type.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents the amortized cost basis of the Bancorp’s consumer portfolio loans that were modified for borrowers experiencing financial difficulty during the three months ended March 31, 2023, by portfolio class and type of modification:

($ in millions)			Interest Rate Reduction			Payment Deferral			Term Extension and Payment Deferral			Term Extension, Interest Rate Reduction and Payment Deferral			Total			% of Total Class
Home equity			$	—		—			1			3			4			0.10		%
Credit card			10			—			—			—			10			0.57
Other consumer loans			—			1			—			—			1			0.02
Total consumer portfolio loans			$	10		1			1			3			15			0.05		%

Financial effects of loan modifications

The following table presents the financial effects of the Bancorp’s portfolio loan modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2023, by portfolio class:

			Financial Effects
Commercial loans:
Commercial and industrial loans			Weighted-average length of term extensions was 5 months.
Commercial mortgage owner-occupied loans			Weighted-average length of term extensions was 4 months.
Commercial mortgage nonowner-occupied loans			Weighted-average length of term extensions was 8 months and the weighted-average interest rate reduction was from 9.1% to 8.9%.
Commercial construction loans			Weighted-average length of term extensions was 12 months.
Residential mortgage loans			Weighted-average length of term extensions was 130 months and the amount of payment delays represented approximately 16% of the related loan balances.
Consumer loans:
Home equity			Weighted-average length of term extensions was 24.8 years, the weighted-average interest rate reduction was from 8.0% to 6.5% and the amount of payment deferrals represented approximately 6% of the related loan balances.
Credit card			Weighted-average interest rate reduction was from 23.2% to 3.9%.
Other consumer loans			Amount of payment deferrals represented approximately 6% of the related loan balances.

Credit quality of modified loans

The Bancorp closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the Bancorp’s portfolio loans that were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2023, by age and portfolio class:

						Past Due
($ in millions)			Current			30-89 Days			90 Days or More			Total
Commercial loans:
Commercial and industrial loans			$	106		—			—			106
Commercial mortgage owner-occupied loans			1			—			—			1
Commercial mortgage nonowner-occupied loans			25			—			—			25
Commercial construction loans			31			—			—			31
Residential mortgage loans			23			1			—			24
Consumer loans:
Home equity			4			—			—			4
Credit card(a)			6			3			1			10
Other consumer loans			1			—			—			1
Total portfolio loans			$	197		4			1			202

(a)Credit card loans continue to be reported as delinquent after modification as they are not returned to current status until the borrower demonstrates a willingness and ability to repay the loan according to its modified terms.

The Bancorp considers modifications to borrowers experiencing financial difficulty that subsequently become 90 days or more past due under the modified terms as subsequently defaulted. Since the adoption of ASU 2022-02 on January 1, 2023, there were no modifications to borrowers experiencing financial difficulty that had become 90 days or more past due under the modified terms at March 31, 2023.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Troubled Debt Restructurings

Prior to the adoption of ASU 2022-02 on January 1, 2023, loans were accounted for as TDRs if the Bancorp, for economic or legal reasons related to the borrower’s financial difficulties, granted a concession to the borrower that it would not otherwise consider. Refer to Note 1 and Note 6 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the Bancorp’s accounting policies for the identification and measurement of TDRs and the related impact on the ALLL.

The Bancorp had commitments to lend additional funds to borrowers whose terms have been modified in a TDR, consisting of line of credit and letter of credit commitments of $130 million and $60 million, respectively, as of December 31, 2022.

The following table provides a summary of portfolio loans, by class, modified in a TDR by the Bancorp during the three months ended:

March 31, 2022 ($ in millions)			Number of Loans Modified in a TDR During the Period(a)			Amortized Cost Basis in Loans Modified in a TDR During the Period			Increase (Decrease) to ALLL Upon Modification			Charge-offs Recognized Upon Modification
Commercial loans:
Commercial and industrial loans			30			$	91		13			—
Commercial mortgage owner-occupied loans			5			4			(1)			—
Residential mortgage loans			260			42			3			—
Consumer loans:
Home equity			52			7			(1)			—
Indirect secured consumer loans			1,274			27			—			—
Credit card			1,121			6			2			—
Total portfolio loans			2,742			$	177		16			—

(a)Represents number of loans post-modification and excludes loans previously modified in a TDR.

The Bancorp considered TDRs that became 90 days or more past due under the modified terms as subsequently defaulted. The following table provides a summary of TDRs that subsequently defaulted during the three months ended March 31, 2022 and were within 12 months of the restructuring date:

March 31, 2022 ($ in millions)(a)			Number of Contracts			Amortized Cost
Commercial loans:
Commercial and industrial loans			6			$	—
Residential mortgage loans			29			3
Consumer loans:
Home equity			10			1
Indirect secured consumer loans			25			—
Credit card			105			1
Total portfolio loans			175			$	5

(a)Excludes all loans held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

7. Bank Premises and Equipment

The following table provides a summary of bank premises and equipment as of:

($ in millions)			March 31, 2023			December 31, 2022
Equipment			$	2,532		2,492
Buildings(a)			1,712			1,699
Land and improvements(a)			637			640
Leasehold improvements			581			568
Construction in progress(a)			133			124
Bank premises and equipment held for sale:
Land and improvements			16			17
Buildings			6			7
Accumulated depreciation and amortization			(3,398)			(3,360)
Total bank premises and equipment			$	2,219		2,187

(a)Buildings, land and improvements and construction in progress included $26 and $27 associated with parcels of undeveloped land intended for future branch expansion at March 31, 2023 and December 31, 2022, respectively.

The Bancorp monitors changing customer preferences associated with the channels it uses for banking transactions to evaluate the efficiency, competitiveness and quality of the customer service experience in its consumer distribution network. As part of this ongoing assessment, the Bancorp may determine that it is no longer fully committed to maintaining full-service banking centers at certain locations. Similarly, the Bancorp may also determine that it is no longer fully committed to building banking centers on certain parcels of land which had previously been held for future branch expansion. The Bancorp closed a total of 23 banking centers throughout its footprint during the three months ended March 31, 2023.

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. Impairment losses associated with such assessments and lower of cost or market adjustments were $1 million and immaterial for the three months ended March 31, 2023 and 2022, respectively. The recognized impairment losses were recorded in other noninterest income in the Condensed Consolidated Statements of Income.

8. Operating Lease Equipment

Operating lease equipment was $578 million and $627 million at March 31, 2023 and December 31, 2022, respectively, net of accumulated depreciation of $339 million and $338 million at March 31, 2023 and December 31, 2022, respectively. The Bancorp recorded lease income of $37 million and $36 million relating to lease payments for operating leases in leasing business revenue in the Condensed Consolidated Statements of Income during the three months ended March 31, 2023 and 2022, respectively. Depreciation expense related to operating lease equipment was $31 million and $29 million during the three months ended March 31, 2023 and 2022, respectively. The Bancorp received payments of $41 million and $36 million related to operating leases during the three months ended March 31, 2023 and 2022, respectively.

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. As a result of these recoverability assessments, the Bancorp did not recognize impairment losses during the three months ended March 31, 2023 and recognized $2 million of impairment losses during the three months ended March 31, 2022 associated with operating lease assets. The recognized impairment losses were recorded in leasing business revenue in the Condensed Consolidated Statements of Income.

The following table presents future lease payments receivable from operating leases for the remainder of 2023 through 2028 and thereafter:

As of March 31, 2023 ($ in millions)			Undiscounted Cash Flows
Remainder of 2023			$	100
2024			105
2025			79
2026			51
2027			25
2028			10
Thereafter			15
Total operating lease payments			$	385

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

9. Lease Obligations – Lessee

The Bancorp leases certain banking centers, ATM sites, land for owned buildings and equipment. The Bancorp’s lease agreements typically do not contain any residual value guarantees or any material restrictive covenants. For more information on the accounting for lease obligations, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

The following table provides a summary of lease assets and lease liabilities as of:

($ in millions)			Condensed Consolidated Balance Sheets Caption			March 31, 2023			December 31, 2022
Assets
Operating lease right-of-use assets			Other assets			$	491		508
Finance lease right-of-use assets			Bank premises and equipment			145			150
Total right-of-use assets(a)						$	636		658
Liabilities
Operating lease liabilities			Accrued taxes, interest and expenses			$	582		599
Finance lease liabilities			Long-term debt			152			156
Total lease liabilities						$	734		755

(a)    Operating and finance lease right-of-use assets are recorded net of accumulated amortization of $271 and $71, respectively, as of March 31, 2023, and $255 and $66, respectively, as of December 31, 2022.

The following table presents the components of lease costs:

($ in millions)			Condensed Consolidated Statements of Income Caption			For the three months ended March 31,
						2023			2022
Lease costs:
Amortization of ROU assets			Net occupancy and equipment expense			$	5		5
Interest on lease liabilities			Interest on long-term debt			1			1
Total finance lease costs						$	6		6
Operating lease cost			Net occupancy expense			$	22		20
Short-term lease cost			Net occupancy expense			1			—
Variable lease cost			Net occupancy expense			7			7
Sublease income			Net occupancy expense			(1)			(1)
Total operating lease costs						$	29		26
Total lease costs						$	35		32

The Bancorp performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values may not be recoverable. In addition to the lease costs disclosed in the table above, the Bancorp recognized $1 million of impairment losses and termination charges for the ROU assets related to certain operating leases during both the three months ended March 31, 2023 and 2022. The recognized losses were recorded in net occupancy expense in the Condensed Consolidated Statements of Income.

The following table presents undiscounted cash flows for both operating leases and finance leases for the remainder of 2023 through 2028 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease liabilities:

As of March 31, 2023 ($ in millions)			Operating Leases			Finance Leases			Total
Remainder of 2023			$	67		15			82
2024			86			21			107
2025			78			14			92
2026			69			9			78
2027			62			8			70
2028			53			9			62
Thereafter			298			120			418
Total undiscounted cash flows			$	713		196			909
Less: Difference between undiscounted cash flows and discounted cash flows			131			44			175
Present value of lease liabilities			$	582		152			734

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table presents the weighted-average remaining lease term and weighted-average discount rate as of:

			March 31, 2023						December 31, 2022
Weighted-average remaining lease term (years):
Operating leases			10.70						10.80
Finance leases			15.31						15.31
Weighted-average discount rate:
Operating leases			3.43			%			3.35
Finance leases			2.97						2.94

The following table presents information related to lease transactions for the three months ended March 31:

($ in millions)			2023			2022
Cash paid for amounts included in the measurement of lease liabilities:(a)
Operating cash flows from operating leases			$	23		22
Operating cash flows from finance leases			1			1
Financing cash flows from finance leases			4			4
Gains on sale-leaseback transactions			1			—

(a)    The cash flows related to the short-term and variable lease payments are not included in the amounts in the table as they were not included in the measurement of lease liabilities.

10. Goodwill

During the first quarter of 2023, the Bancorp performed a qualitative assessment of its goodwill in consideration of the current economic environment. Based upon this assessment, the Bancorp concluded it was not more likely than not that the fair value of its reporting units were less than their carrying amounts.

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11. Intangible Assets

Intangible assets consist of core deposit intangibles, developed technology, customer relationships, and other intangible assets which include trade names, backlog, operating leases and non-compete agreements. Intangible assets are amortized on either a straight-line or an accelerated basis over their estimated useful lives and, based on the type of intangible asset, the amortization expense may be recorded in either leasing business revenue or other noninterest expense in the Condensed Consolidated Statements of Income.

The details of the Bancorp’s intangible assets are shown in the following table:

($ in millions)			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
As of March 31, 2023
Core deposit intangibles			$	209		(169)			40
Developed technology			106			(20)			86
Customer relationships			30			(8)			22
Other			18			(9)			9
Total intangible assets			$	363		(206)			157
As of December 31, 2022
Core deposit intangibles			$	229		(182)			47
Developed technology			106			(17)			89
Customer relationships			30			(7)			23
Other			20			(10)			10
Total intangible assets			$	385		(216)			169

As of March 31, 2023, all of the Bancorp’s intangible assets were being amortized. Amortization expense recognized on intangible assets was $12 million and $11 million for the three months ended March 31, 2023 and 2022, respectively. The Bancorp’s projections of amortization expense shown in the following table are based on existing asset balances as of March 31, 2023. Future amortization expense may vary from these projections.

Estimated amortization expense for the remainder of 2023 through 2027 is as follows:

($ in millions)			Total
Remainder of 2023			$	31
2024			35
2025			28
2026			22
2027			14

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12. Variable Interest Entities

The Bancorp, in the normal course of business, engages in a variety of activities that involve VIEs, which are legal entities that lack sufficient equity at risk to finance their activities without additional subordinated financial support or the equity investors of the entities as a group lack any of the characteristics of a controlling interest. The Bancorp evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Bancorp is the primary beneficiary and should consolidate the entity based on the variable interests it held both at inception and when there is a change in circumstances that requires a reconsideration. If the Bancorp is determined to be the primary beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Bancorp is determined not to be the primary beneficiary of a VIE but holds a variable interest in the entity, such variable interests are accounted for under the equity method of accounting or other accounting standards as appropriate.

Consolidated VIEs

The Bancorp has consolidated VIEs related to an automobile loan securitization and a solar loan securitization where it has determined that it is the primary beneficiary. The following table provides a summary of assets and liabilities carried on the Condensed Consolidated Balance Sheets for the consolidated VIEs as of:

($ in millions)			March 31, 2023			December 31, 2022
Assets:
Other short-term investments			$	5		17
Indirect secured consumer loans			—			141
Other consumer loans			44			44
ALLL			(1)			(2)
Other assets			—			2
Total assets			$	48		202
Liabilities:
Other liabilities			$	9		9
Long-term debt			38			118
Total liabilities			$	47		127

As a result of a business acquisition in the second quarter of 2022, the Bancorp acquired interests in a previously completed securitization transaction in which solar loans were transferred to a bankruptcy remote trust which was deemed to be a VIE. Additionally, the Bancorp previously completed a securitization transaction in which the Bancorp transferred certain consumer automobile loans to a bankruptcy remote trust which was deemed to be a VIE. On January 17, 2023, the Bancorp exercised its cleanup call option on the outstanding automobile securitization. The Bancorp acquired all remaining automobile loans plus accrued interest, and those proceeds were used by the trust to repay the outstanding securitized debt. In each of these securitization transactions, the primary purposes of the VIEs were to issue asset-backed securities with varying levels of credit subordination and payment priority, as well as residual interests, and to provide access to liquidity for originated loans. The Bancorp retained residual interests in the VIEs and, therefore, has an obligation to absorb losses and a right to receive benefits from the VIEs that could potentially be significant to the VIEs. In addition, the Bancorp retained servicing rights for the underlying loans and, therefore, holds the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs. As a result, the Bancorp concluded that it is the primary beneficiary of the VIEs and has consolidated these VIEs. The assets of the VIEs are restricted to the settlement of the asset-backed securities and other obligations of the VIEs. The third-party holders of the asset-backed notes do not have recourse to the general assets of the Bancorp.

The economic performance of the VIEs is most significantly impacted by the performance of the underlying loans. The principal risks to which the VIEs are exposed include credit risk and prepayment risk. The credit and prepayment risks are managed through credit enhancements in the form of reserve accounts, overcollateralization, excess interest on the loans and the subordination of certain classes of asset-backed securities to other classes.

Non-consolidated VIEs

The following tables provide a summary of assets and liabilities carried on the Condensed Consolidated Balance Sheets related to non-consolidated VIEs for which the Bancorp holds an interest, but is not the primary beneficiary of the VIE, as well as the Bancorp’s maximum exposure to losses associated with its interests in the entities as of:

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March 31, 2023 ($ in millions)			Total Assets			Total Liabilities			Maximum Exposure
CDC investments			$	1,886		687			1,886
Private equity investments			187			—			360
Loans provided to VIEs			4,171			—			6,306
Lease pool entities			55			—			55
Solar loan securitizations			10			—			10

December 31, 2022 ($ in millions)			Total Assets			Total Liabilities			Maximum Exposure
CDC investments			$	1,856		653			1,856
Private equity investments			186			—			349
Loans provided to VIEs			4,374			—			6,438
Lease pool entities			61			—			61
Solar loan securitizations			10			—			10

CDC investments

CDC invests in projects to create affordable housing and revitalize business and residential areas. CDC generally co-invests with other unrelated companies and/or individuals and typically makes investments in a separate legal entity that owns the property under development. The entities are usually formed as limited partnerships and LLCs and CDC typically invests as a limited partner/investor member in the form of equity contributions. The economic performance of the VIEs is driven by the performance of their underlying investment projects as well as the VIEs’ ability to operate in compliance with the rules and regulations necessary for the qualification of tax credits generated by equity investments. The Bancorp has determined that it is not the primary beneficiary of these VIEs because it lacks the power to direct the activities that most significantly impact the economic performance of the underlying project or the VIEs’ ability to operate in compliance with the rules and regulations necessary for the qualification of tax credits generated by equity investments. This power is held by the managing members who exercise full and exclusive control of the operations of the VIEs. For information regarding the Bancorp’s accounting for these investments, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Bancorp’s funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions. The Bancorp’s maximum exposure to loss as a result of its involvement with the VIEs is limited to the carrying amounts of the investments, including the unfunded commitments. The carrying amounts of these investments, which are included in other assets in the Condensed Consolidated Balance Sheets, and the liabilities related to the unfunded commitments, which are included in other liabilities in the Condensed Consolidated Balance Sheets, are included in the previous tables for all periods presented. The Bancorp has no other liquidity arrangements or obligations to purchase assets of the VIEs that would expose the Bancorp to a loss. In certain arrangements, the general partner/managing member of the VIE has guaranteed a level of projected tax credits to be received by the limited partners/investor members, thereby minimizing a portion of the Bancorp’s risk.

At both March 31, 2023 and December 31, 2022, the Bancorp’s CDC investments included $1.6 billion of investments in affordable housing tax credits recognized in other assets in the Condensed Consolidated Balance Sheets. The unfunded commitments related to these investments were $679 million and $643 million at March 31, 2023 and December 31, 2022, respectively. The unfunded commitments as of March 31, 2023 are expected to be funded from 2023 to 2040.

The Bancorp has accounted for all of its qualifying LIHTC investments using the proportional amortization method of accounting. The following table summarizes the impact to the Condensed Consolidated Statements of Income related to these investments:

			Condensed Consolidated Statements of Income Caption(a)			For the three months ended March 31,
($ in millions)						2023			2022
Proportional amortization			Applicable income tax expense			$	43		35
Tax credits and other benefits			Applicable income tax expense			(51)			(41)

(a)The Bancorp did not recognize impairment losses resulting from the forfeiture or ineligibility of tax credits or other circumstances during both the three months ended March 31, 2023 and 2022.

Private equity investments

The Bancorp invests as a limited partner in private equity investments which provide the Bancorp an opportunity to obtain higher rates of return on invested capital, while also providing strategic opportunities in certain cases. Each of the limited partnerships has an unrelated third-party general partner responsible for appointing the fund manager. The Bancorp has not been appointed fund manager for any of these private

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equity investments. The funds finance primarily all of their activities from the partners’ capital contributions and investment returns. The Bancorp has determined that it is not the primary beneficiary of the funds because it does not have the obligation to absorb the funds’ expected losses or the right to receive the funds’ expected residual returns that could potentially be significant to the funds and lacks the power to direct the activities that most significantly impact the economic performance of the funds. The Bancorp, as a limited partner, does not have substantive participating or substantive kick-out rights over the general partner. Therefore, the Bancorp accounts for its investments in these limited partnerships under the equity method of accounting.

The Bancorp is exposed to losses arising from the negative performance of the underlying investments in the private equity investments. As a limited partner, the Bancorp’s maximum exposure to loss is limited to the carrying amounts of the investments plus unfunded commitments. The carrying amounts of these investments, which are included in other assets in the Condensed Consolidated Balance Sheets, are presented in previous tables. Also, at March 31, 2023 and December 31, 2022, the Bancorp’s unfunded commitment amounts to the private equity funds were $173 million and $163 million, respectively. As part of previous commitments, the Bancorp made capital contributions to private equity investments of $12 million and $9 million during the three months ended March 31, 2023 and 2022, respectively.

Loans provided to VIEs

The Bancorp has provided funding to certain unconsolidated VIEs sponsored by third parties. These VIEs are generally established to finance certain consumer and small business loans originated by third parties. The entities are primarily funded through the issuance of a loan from the Bancorp or a syndication through which the Bancorp is involved. The sponsor/administrator of the entities is responsible for servicing the underlying assets in the VIEs. Because the sponsor/administrator, not the Bancorp, holds the servicing responsibilities, which include the establishment and employment of default mitigation policies and procedures, the Bancorp does not hold the power to direct the activities that most significantly impact the economic performance of the entity and, therefore, is not the primary beneficiary.

The principal risk to which these entities are exposed is credit risk related to the underlying assets. The Bancorp’s maximum exposure to loss is equal to the carrying amounts of the loans and unfunded commitments to the VIEs. The Bancorp’s outstanding loans to these VIEs are included in commercial loans in Note 5. At both March 31, 2023 and December 31, 2022, the Bancorp’s unfunded commitments to these entities were $2.1 billion. The loans and unfunded commitments to these VIEs are included in the Bancorp’s overall analysis of the ALLL and reserve for unfunded commitments, respectively. The Bancorp does not provide any implicit or explicit liquidity guarantees or principal value guarantees to these VIEs.

Lease pool entities

The Bancorp is a co-investor with other unrelated leasing companies in three LLCs designed for the purpose of purchasing pools of residual interests in leases which have been originated or purchased by the other investing member. For each LLC, the leasing company is the managing member and has full authority over the day-to-day operations of the entity. While the Bancorp holds more than 50% of the equity interests in each LLC, the operating agreements require both members to consent to significant corporate actions, such as liquidating the entity or removing the manager. In addition, the Bancorp has a preference with regards to distributions such that all of the Bancorp’s equity contribution for each pool must be distributed, plus a pre-defined rate of return, before the other member may receive distributions. The leasing company is also entitled to the return of its investment plus a pre-defined rate of return before any residual profits are distributed to the members.

The lease pool entities are primarily subject to risk of losses on the lease residuals purchased. The Bancorp’s maximum exposure to loss is equal to the carrying amount of the investments. The Bancorp has determined that it is not the primary beneficiary of these VIEs because it does not have the power to direct the activities that most significantly impact the economic performance of the entities. This power is held by the leasing company, who as managing member controls the servicing of the leases and collection of the proceeds on the residual interests.

Solar loan securitizations

As a result of a business acquisition in the second quarter of 2022, the Bancorp acquired interests in previously completed securitization transactions in which solar loans were transferred to bankruptcy remote trusts which were deemed to be VIEs. In each of these securitization transactions, the primary purposes of the VIEs were to issue asset-backed securities with varying levels of credit subordination and payment priority, as well as residual interests, and to provide access to liquidity for originated loans. The Bancorp retained certain risk retention interests in the classes of securities issued by the VIEs and retained servicing rights for the underlying loans. The Bancorp’s maximum exposure to loss is equal to the carrying amount of the investments. The Bancorp has determined that it is not the primary beneficiary of the VIEs because it does not have the obligation to absorb the VIEs expected losses or the right to receive the VIEs expected residual returns that could potentially be significant to the VIEs. The risk retention interests held by the Bancorp were included in available-for-sale debt and other securities in the Condensed Consolidated Balance Sheets.

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13. Sales of Receivables and Servicing Rights

Residential Mortgage Loan Sales

The Bancorp sold fixed and adjustable-rate residential mortgage loans during the three months ended March 31, 2023 and 2022. In those sales, the Bancorp obtained servicing responsibilities and provided certain standard representations and warranties; however, the investors have no recourse to the Bancorp’s other assets for failure of debtors to pay when due. The Bancorp receives servicing fees based on a percentage of the outstanding balance. The Bancorp identifies classes of servicing assets based on financial asset type and interest rates.

Information related to residential mortgage loan sales and the Bancorp’s mortgage banking activity, which is included in mortgage banking net revenue in the Condensed Consolidated Statements of Income, is as follows:

			For the three months ended March 31,
($ in millions)			2023			2022
Residential mortgage loan sales(a)			$	1,275		3,400
Origination fees and gains on loan sales			18			25
Gross mortgage servicing fees			83			71

(a)Represents the unpaid principal balance at the time of the sale.

Servicing Rights

The Bancorp measures all of its mortgage servicing rights at fair value with changes in fair value reported in mortgage banking net revenue in the Condensed Consolidated Statements of Income.

The following table presents changes in the servicing rights related to residential mortgage loans for the three months ended March 31:

($ in millions)			2023			2022
Balance, beginning of period			$	1,746		1,121
Servicing rights originated			16			47
Servicing rights purchased			16			139
Changes in fair value:
Due to changes in inputs or assumptions(a)			(19)			190
Other changes in fair value(b)			(34)			(53)
Balance, end of period			$	1,725		1,444

(a)Primarily reflects changes in prepayment speed and OAS assumptions which are updated based on market interest rates.

(b)Primarily reflects changes due to realized cash flows and the passage of time.

The Bancorp maintains a non-qualifying hedging strategy to manage a portion of the risk associated with changes in the value of the MSR portfolio. This strategy may include the purchase of free-standing derivatives and various available-for-sale debt and trading debt securities. The interest income, mark-to-market adjustments and gain or loss from sale activities associated with these portfolios are expected to economically hedge a portion of the change in value of the MSR portfolio caused by fluctuating OAS, earnings rates and prepayment speeds. The fair value of the servicing asset is based on the present value of expected future cash flows.

The following table presents activity related to valuations of the MSR portfolio and the impact of the non-qualifying hedging strategy:

			For the three months ended March 31,
($ in millions)			2023			2022
Securities losses, net – non-qualifying hedges on mortgage servicing rights			$	—		(1)
Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio(a)			21			(181)
MSR fair value adjustment due to changes in inputs or assumptions(a)			(19)			190

(a)Included in mortgage banking net revenue in the Condensed Consolidated Statements of Income.

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The key economic assumptions used in measuring the servicing rights related to residential mortgage loans that continued to be held by the Bancorp at the date of sale, securitization or purchase resulting from transactions completed during the three months ended March 31, 2023 and 2022 were as follows:

			March 31, 2023												March 31, 2022
			Weighted- Average Life (in years)			Prepayment Speed (annual)			OAS (bps)						Weighted- Average Life (in years)			Prepayment Speed (annual)			OAS (bps)
Fixed-rate			6.7			12.4		%	621						7.3			8.1		%	729
Adjustable-rate			3.0			27.9			774						2.8			27.7			798

At March 31, 2023 and December 31, 2022, the Bancorp serviced $103.4 billion and $103.2 billion, respectively, of residential mortgage loans for other investors. The value of MSRs that continue to be held by the Bancorp is subject to credit, prepayment and interest rate risks on the sold financial assets. The weighted-average coupon of the MSR portfolio was 3.62% and 3.59% at March 31, 2023 and December 31, 2022, respectively.

At March 31, 2023, the sensitivity of the current fair value of residual cash flows to immediate 10%, 20% and 50% adverse changes in prepayment speed assumptions and immediate 10% and 20% adverse changes in OAS for servicing rights related to residential mortgage loans are as follows:

($ in millions)(a)									Prepayment Speed Assumption															OAS Assumption
			Fair Value			Weighted- Average Life (in years)						Impact of Adverse Change on Fair Value												OAS (bps)			Impact of Adverse Change on Fair Value
									Rate			10%			20%			50%									10%			20%
Fixed-rate			$	1,720		8.6			5.6		%	$	(42)		(80)			(178)						629			$	(45)		(87)
Adjustable-rate			5			5.1			20.3			(1)			(1)			(2)						1,204			—			—

(a)The impact of the weighted-average default rate on the current fair value of residual cash flows for all scenarios is immaterial.

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on these variations in the assumptions typically cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. The Bancorp believes that variations of these levels are reasonably possible; however, there is the potential that adverse changes in key assumptions could be even greater. Also, in the previous table, the effect of a variation in a particular assumption on the fair value of the interests that continue to be held by the Bancorp is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which might magnify or counteract these sensitivities.

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14. Derivative Financial Instruments

The Bancorp maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce certain risks related to interest rate, prepayment and foreign currency volatility. Additionally, the Bancorp holds derivative instruments for the benefit of its commercial customers and for other business purposes. The Bancorp does not enter into unhedged speculative derivative positions.

The Bancorp’s interest rate risk management strategy involves modifying the repricing characteristics of certain financial instruments so that changes in interest rates do not adversely affect the Bancorp’s net interest margin and cash flows. Derivative instruments that the Bancorp may use as part of its interest rate risk management strategy include interest rate swaps, interest rate floors, interest rate caps, forward contracts, forward starting interest rate swaps, options, swaptions and TBA securities. Interest rate swap contracts are exchanges of interest payments, such as fixed-rate payments for floating-rate payments, based on a stated notional amount and maturity date. Interest rate floors protect against declining rates, while interest rate caps protect against rising interest rates. Forward contracts are contracts in which the buyer agrees to purchase, and the seller agrees to make delivery of, a specific financial instrument at a predetermined price or yield. Options provide the purchaser with the right, but not the obligation, to purchase or sell a contracted item during a specified period at an agreed-upon price. Swaptions are financial instruments granting the owner the right, but not the obligation, to enter into or cancel a swap.

Prepayment volatility arises mostly from changes in fair value of the largely fixed-rate MSR portfolio, mortgage loans and mortgage-backed securities. The Bancorp may enter into various free-standing derivatives (principal-only swaps, interest rate swaptions, interest rate floors, mortgage options, TBA securities and interest rate swaps) to economically hedge prepayment volatility. Principal-only swaps are total return swaps based on changes in the value of the underlying mortgage principal-only trust. TBA securities are a forward purchase agreement for a mortgage-backed securities trade whereby the terms of the security are undefined at the time the trade is made.

Foreign currency volatility occurs as the Bancorp enters into certain loans denominated in foreign currencies. Derivative instruments that the Bancorp may use to economically hedge these foreign denominated loans include foreign exchange swaps and forward contracts.

The Bancorp also enters into derivative contracts (including foreign exchange contracts, commodity contracts and interest rate contracts) for the benefit of commercial customers and other business purposes. The Bancorp economically hedges significant exposures related to these free-standing derivatives by entering into offsetting third-party contracts with approved, reputable and independent counterparties with substantially matching terms and currencies. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Bancorp’s exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. Credit risk is minimized through credit approvals, limits, counterparty collateral and monitoring procedures.

The fair value of derivative instruments is presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. Derivative instruments with a positive fair value are reported in other assets in the Condensed Consolidated Balance Sheets while derivative instruments with a negative fair value are reported in other liabilities in the Condensed Consolidated Balance Sheets. Cash collateral payables and receivables associated with the derivative instruments are not added to or netted against the fair value amounts with the exception of certain variation margin payments that are considered legal settlements of the derivative contracts. For derivative contracts cleared through certain central clearing parties who have modified their rules to treat variation margin payments as settlements, the variation margin payments are applied to net the fair value of the respective derivative contracts.

The Bancorp’s derivative assets include certain contractual features in which the Bancorp requires the counterparties to provide collateral, typically in the form of cash or securities, to offset changes in the fair value of the derivatives, including changes in the fair value due to credit risk of the counterparty. As of March 31, 2023 and December 31, 2022, the balance of collateral held by the Bancorp for derivative assets was $1.5 billion and $1.3 billion, respectively. For derivative contracts cleared through certain central clearing parties whose rules treat variation margin payments as settlements of the derivative contract, the payments for variation margin of $854 million and $1.0 billion as of March 31, 2023 and December 31, 2022, respectively, were applied to reduce the respective derivative contracts and were also not included in the total amount of collateral held. As of March 31, 2023 and December 31, 2022, the credit component negatively impacting the fair value of derivative assets associated with customer accommodation contracts was $10 million and $9 million, respectively.

In measuring the fair value of derivative liabilities, the Bancorp considers its own credit risk, taking into consideration collateral maintenance requirements of certain derivative counterparties and the duration of instruments with counterparties that do not require collateral maintenance. When necessary, the Bancorp posts collateral, primarily in the form of cash or securities, to offset changes in fair value of the derivatives, including changes in fair value due to the Bancorp’s credit risk. As of March 31, 2023 and December 31, 2022, the balance of collateral posted by the Bancorp for derivative liabilities was $853 million and $913 million, respectively. Additionally, as of March 31, 2023 and December 31, 2022, $684 million and $1.0 billion, respectively, of variation margin payments were applied to the respective derivative contracts to reduce the Bancorp’s derivative liabilities and were also not included in the total amount of collateral posted. Certain of the Bancorp’s derivative liabilities contain credit risk-related contingent features that could result in the requirement to post additional collateral upon the occurrence of specified events. As of both March 31, 2023 and December 31, 2022, the fair value of the additional collateral that could be required to be posted as a result of the credit risk-related contingent features being triggered was immaterial to the Bancorp’s Condensed Consolidated Financial Statements. The posting of collateral has been determined to remove the need for further consideration of

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credit risk. As a result, the Bancorp determined that the impact of the Bancorp’s credit risk to the valuation of its derivative liabilities was immaterial to the Bancorp’s Condensed Consolidated Financial Statements.

The Bancorp holds certain derivative instruments that qualify for hedge accounting treatment and are designated as either fair value hedges or cash flow hedges. Derivative instruments that do not qualify for hedge accounting treatment, or for which hedge accounting is not established, are held as free-standing derivatives. All customer accommodation derivatives are held as free-standing derivatives.

The following tables reflect the notional amounts and fair values for all derivative instruments included in the Condensed Consolidated Balance Sheets as of:

						Fair Value
March 31, 2023 ($ in millions)			Notional Amount			Derivative Assets			Derivative Liabilities
Derivatives Designated as Qualifying Hedging Instruments:
Fair value hedges:
Interest rate swaps related to long-term debt			$	5,955		164			144
Total fair value hedges						164			144
Cash flow hedges:
Interest rate floors related to C&I loans			3,000			4			—
Interest rate swaps related to C&I loans			8,000			—			80
Interest rate swaps related to C&I loans - forward starting(a)			10,000			6			1
Interest rate swaps related to commercial mortgage and commercial construction loans			4,000			—			14
Interest rate swaps related to commercial mortgage and commercial construction loans -    forward starting(a)			4,000			4			—
Total cash flow hedges						14			95
Total derivatives designated as qualifying hedging instruments						178			239
Derivatives Not Designated as Qualifying Hedging Instruments:
Free-standing derivatives – risk management and other business purposes:
Interest rate contracts related to MSR portfolio			2,700			61			3
Forward contracts related to residential mortgage loans held for sale(b)			960			1			8
Swap associated with the sale of Visa, Inc. Class B Shares			3,644			—			192
Foreign exchange contracts			194			—			1
Interest-only strips			58			4			—
Interest rate contracts for collateral management			12,000			10			10
Interest rate contracts for LIBOR transition			597			—			—
Total free-standing derivatives – risk management and other business purposes						76			214
Free-standing derivatives – customer accommodation:
Interest rate contracts(c)			91,778			893			1,385
Interest rate lock commitments			367			7			—
Commodity contracts			16,942			1,153			1,056
TBA securities			34			—			—
Foreign exchange contracts			24,329			450			406
Total free-standing derivatives – customer accommodation						2,503			2,847
Total derivatives not designated as qualifying hedging instruments						2,579			3,061
Total						$	2,757		3,300

(a)Forward starting swaps will become effective on various dates between October 2023 and February 2025.

(b)Includes forward sale and forward purchase contracts which are utilized to manage market risk on residential mortgage loans held for sale and the related interest rate lock commitments.

(c)Derivative assets and liabilities are presented net of variation margin of $505 and $27, respectively.

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						Fair Value
December 31, 2022 ($ in millions)			Notional Amount			Derivative Assets			Derivative Liabilities
Derivatives Designated as Qualifying Hedging Instruments:
Fair value hedges:
Interest rate swaps related to long-term debt			$	5,955		126			195
Total fair value hedges						126			195
Cash flow hedges:
Interest rate floors related to C&I loans			3,000			4			—
Interest rate swaps related to C&I loans			8,000			—			76
Interest rate swaps related to C&I loans - forward starting(a)			11,000			22			—
Interest rate swaps related to commercial mortgage and commercial construction loans			4,000			—			25
Interest rate swaps related to commercial mortgage and commercial construction loans - forward starting(a)			4,000			5			—
Total cash flow hedges						31			101
Total derivatives designated as qualifying hedging instruments						157			296
Derivatives Not Designated as Qualifying Hedging Instruments:
Free-standing derivatives – risk management and other business purposes:
Interest rate contracts related to MSR portfolio			2,975			62			17
Forward contracts related to residential mortgage loans held for sale(b)			1,869			9			7
Swap associated with the sale of Visa, Inc. Class B Shares			3,358			—			195
Foreign exchange contracts			156			1			—
Interest-only strips			58			4			—
Interest rate contracts for collateral management			12,000			9			1
Interest rate contracts for LIBOR transition			597			—			—
Total free-standing derivatives – risk management and other business purposes						85			220
Free-standing derivatives – customer accommodation:
Interest rate contracts(c)			83,605			998			1,663
Interest rate lock commitments			216			2			1
Commodity contracts			16,122			1,478			1,350
TBA securities			62			—			—
Foreign exchange contracts			25,322			453			422
Total free-standing derivatives – customer accommodation						2,931			3,436
Total derivatives not designated as qualifying hedging instruments						3,016			3,656
Total						$	3,173		3,952

(a)Forward starting swaps will become effective on various dates between February 2023 and February 2025.

(b)Includes forward sale and forward purchase contracts which are utilized to manage market risk on residential mortgage loans held for sale and the related interest rate lock commitments.

(c)Derivative assets and liabilities are presented net of variation margin of $694 and $37, respectively.

Fair Value Hedges

The Bancorp may enter into interest rate swaps to convert its fixed-rate funding to floating-rate or to hedge the exposure to changes in fair value of a recognized asset attributable to changes in the benchmark interest rate. Decisions to enter into these interest rate swaps are made primarily through consideration of the asset/liability mix of the Bancorp, the desired asset/liability sensitivity and interest rate levels. As of March 31, 2023, certain interest rate swaps met the criteria required to qualify for the shortcut method of accounting that permits the assumption of perfect offset. For all designated fair value hedges of interest rate risk as of March 31, 2023 that were not accounted for under the shortcut method of accounting, the Bancorp performed an assessment of hedge effectiveness using regression analysis with changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability attributable to the hedged risk recorded in the same income statement line in current period net income.

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The following table reflects the changes in fair value of interest rate contracts, designated as fair value hedges and the changes in fair value of the related hedged items attributable to the risk being hedged, as well as the line items in the Condensed Consolidated Statements of Income in which the corresponding gains or losses are recorded:

			Condensed Consolidated Statements of Income Caption			For the three months ended March 31,
($ in millions)						2023			2022
Long-term debt:
Change in fair value of interest rate swaps hedging long-term debt			Interest on long-term debt			$	92		(152)
Change in fair value of hedged long-term debt attributable to the risk being hedged			Interest on long-term debt			(89)			152
Available-for-sale debt and other securities:
Change in fair value of interest rate swaps hedging available-for-sale debt and other securities			Interest on securities			—			8
Change in fair value of hedged available-for-sale debt and other securities attributable to the risk being hedged			Interest on securities			—			(8)

The following amounts were recorded in the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of:

($ in millions)			Condensed Consolidated Balance Sheets Caption			March 31, 2023			December 31, 2022
Long-term debt:
Carrying amount of the hedged items			Long-term debt			$	5,954		5,865
Cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged items			Long-term debt			25			(64)
Available-for-sale debt and other securities:
Cumulative amount of fair value hedging adjustments remaining for hedged items for which hedge accounting has been discontinued			Available-for-sale debt and other securities			(13)			(14)

(a)The carrying amount represents the amortized cost basis of the hedged items (which excludes unrealized gains and losses) plus the fair value hedging adjustments.

Cash Flow Hedges

The Bancorp may enter into interest rate swaps to convert floating-rate assets and liabilities to fixed rates or to hedge certain forecasted transactions for the variability in cash flows attributable to the contractually specified interest rate. The assets or liabilities may be grouped in circumstances where they share the same risk exposure that the Bancorp desires to hedge. The Bancorp may also enter into interest rate caps and floors to limit cash flow variability of floating-rate assets and liabilities. As of March 31, 2023, all hedges designated as cash flow hedges were assessed for effectiveness using regression analysis. The entire change in the fair value of the interest rate swap included in the assessment of hedge effectiveness is recorded in AOCI and reclassified from AOCI to current period earnings when the hedged item affects earnings. As of March 31, 2023, the maximum length of time over which the Bancorp is hedging its exposure to the variability in future cash flows is 106 months.

Reclassified gains and losses on interest rate contracts related to commercial and industrial loans are recorded within interest income in the Condensed Consolidated Statements of Income. As of March 31, 2023 and December 31, 2022, respectively, $233 million and $498 million of net deferred losses, net of tax, on cash flow hedges were recorded in AOCI in the Condensed Consolidated Balance Sheets. As of March 31, 2023, $265 million in net unrealized losses, net of tax, recorded in AOCI are expected to be reclassified into earnings during the next 12 months. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations or the addition of other hedges subsequent to March 31, 2023.

During both the three months ended March 31, 2023 and 2022, there were no gains or losses reclassified from AOCI into earnings associated with the discontinuance of cash flow hedges because it was probable that the original forecasted transaction would no longer occur by the end of the originally specified time period or within the additional period of time as defined by U.S. GAAP.

The following table presents the pre-tax net gains (losses) recorded in the Condensed Consolidated Statements of Income and in the Condensed Consolidated Statements of Comprehensive Income relating to derivative instruments designated as cash flow hedges:

			For the three months ended March 31,
($ in millions)			2023			2022
Amount of pre-tax net gains (losses) recognized in OCI			$	278		(407)
Amount of pre-tax net (losses) gains reclassified from OCI into net income			(65)			78

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Free-Standing Derivative Instruments – Risk Management and Other Business Purposes

As part of its overall risk management strategy relative to its mortgage banking activity, the Bancorp may enter into various free-standing derivatives (principal-only swaps, interest rate swaptions, interest rate floors, mortgage options, TBA securities and interest rate swaps) to economically hedge changes in fair value of its largely fixed-rate MSR portfolio. Principal-only swaps hedge the spread between mortgage rates and LIBOR because these swaps appreciate in value as a result of tightening spreads. Principal-only swaps also provide prepayment protection by increasing in value when prepayment speeds increase, as opposed to MSRs that lose value in a faster prepayment environment. Receive fixed/pay floating interest rate swaps and swaptions increase in value when interest rates do not increase as quickly as expected.

The Bancorp enters into forward contracts and mortgage options to economically hedge the change in fair value of certain residential mortgage loans held for sale due to changes in interest rates. These contracts generally settle within one year or less. IRLCs issued on residential mortgage loan commitments that will be held for sale are also considered free-standing derivative instruments and the interest rate exposure on these commitments is economically hedged primarily with forward contracts. Revaluation gains and losses from free-standing derivatives related to mortgage banking activity are recorded as a component of mortgage banking net revenue in the Condensed Consolidated Statements of Income.

In conjunction with the sale of Visa, Inc. Class B Shares in 2009, the Bancorp entered into a total return swap in which the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Class B Shares into Class A Shares. This total return swap is accounted for as a free-standing derivative. Refer to Note 22 for further discussion of significant inputs and assumptions used in the valuation of this instrument.

The Bancorp entered into certain interest rate swap contracts for the purpose of managing its collateral positions across two central clearing parties. These interest rate swaps were perfectly offsetting positions that allowed the Bancorp to lower the cash posted as required initial margin at the clearing parties, which reduced its credit exposure to the clearing parties. Given that all relevant terms for these interest rate swaps are offsetting, these trades create no additional market risk for the Bancorp.

As part of the LIBOR to SOFR transition, the Bancorp received certain interest rate swap contracts from the two central clearing parties that are moving from an Effective Federal Funds Rate discounting curve to a SOFR discounting curve. The purpose of these interest rate swaps was to neutralize the impact on collateral requirements due to the change in discounting curves implemented by the central clearing parties.

The net (losses) gains recorded in the Condensed Consolidated Statements of Income relating to free-standing derivative instruments used for risk management and other business purposes are summarized in the following table:

			Condensed Consolidated Statements of Income Caption			For the three months ended March 31,
($ in millions)						2023			2022
Interest rate contracts:
Forward contracts related to residential mortgage loans held for sale			Mortgage banking net revenue			$	(9)		33
Interest rate contracts related to MSR portfolio			Mortgage banking net revenue			21			(181)
Foreign exchange contracts:
Foreign exchange contracts for risk management purposes			Other noninterest income			—			(2)
Equity contracts:
Swap associated with sale of Visa, Inc. Class B Shares			Other noninterest income			(31)			(11)

Free-Standing Derivative Instruments – Customer Accommodation

The majority of the free-standing derivative instruments the Bancorp enters into are for the benefit of its commercial customers. These derivative contracts are not designated against specific assets or liabilities on the Condensed Consolidated Balance Sheets or to forecasted transactions and, therefore, do not qualify for hedge accounting. These instruments include foreign exchange derivative contracts entered into for the benefit of commercial customers involved in international trade to hedge their exposure to foreign currency fluctuations, commodity contracts to hedge such items as natural gas and various other derivative contracts. The Bancorp may economically hedge significant exposures related to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms. The Bancorp hedges its interest rate exposure on commercial customer transactions by executing offsetting swap agreements with primary dealers. Revaluation gains and losses on interest rate, foreign exchange, commodity and other commercial customer derivative contracts are recorded as a component of commercial banking revenue or other noninterest income in the Condensed Consolidated Statements of Income.

The Bancorp enters into risk participation agreements, under which the Bancorp assumes credit exposure relating to certain underlying interest rate derivative contracts. The Bancorp only enters into these risk participation agreements in instances in which the Bancorp has participated in the loan that the underlying interest rate derivative contract was designed to hedge. The Bancorp will make payments under these agreements if a customer defaults on its obligation to perform under the terms of the underlying interest rate derivative contract. The total notional amount of the risk participation agreements was $3.9 billion and $3.7 billion at March 31, 2023 and December 31, 2022,

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respectively, and the fair value was a liability of $8 million and $7 million at March 31, 2023 and December 31, 2022, respectively, which is included in other liabilities in the Condensed Consolidated Balance Sheets. As of March 31, 2023, the risk participation agreements had a weighted-average remaining life of 3.5 years.

The Bancorp’s maximum exposure in the risk participation agreements is contingent on the fair value of the underlying interest rate derivative contracts in an asset position at the time of default. The Bancorp monitors the credit risk associated with the underlying customers in the risk participation agreements through the same risk grading system currently utilized for establishing loss reserves in its loan and lease portfolio.

Risk ratings of the notional amount of risk participation agreements under this risk rating system are summarized in the following table as of:

($ in millions)			March 31, 2023			December 31, 2022
Pass			$	3,738		3,597
Special mention			61			81
Substandard			72			32
Total			$	3,871		3,710

The net gains (losses) recorded in the Condensed Consolidated Statements of Income relating to free-standing derivative instruments used for customer accommodation are summarized in the following table:

			Condensed Consolidated Statements of Income Caption			For the three months ended March 31,
($ in millions)						2023			2022
Interest rate contracts:
Interest rate contracts for customers (contract revenue)			Commercial banking revenue			$	10		16
Interest rate contracts for customers (credit portion of fair value adjustment)			Other noninterest expense			(3)			6
Interest rate lock commitments			Mortgage banking net revenue			13			—
Commodity contracts:
Commodity contracts for customers (contract revenue)			Commercial banking revenue			10			9
Commodity contracts for customers (credit portion of fair value adjustment)			Other noninterest expense			(1)			(1)
Foreign exchange contracts:
Foreign exchange contracts for customers (contract revenue)			Commercial banking revenue			19			16
Foreign exchange contracts for customers (contract revenue)			Other noninterest income			(3)			2
Foreign exchange contracts for customers (credit portion of fair value adjustment)			Other noninterest expense			1			(1)

Offsetting Derivative Financial Instruments

The Bancorp’s derivative transactions are generally governed by ISDA Master Agreements and similar arrangements, which include provisions governing the setoff of assets and liabilities between the parties. When the Bancorp has more than one outstanding derivative transaction with a single counterparty, the setoff provisions contained within these agreements generally allow the non-defaulting party the right to reduce its liability to the defaulting party by amounts eligible for setoff, including the collateral received as well as eligible offsetting transactions with that counterparty, irrespective of the currency, place of payment or booking office. The Bancorp’s policy is to present its derivative assets and derivative liabilities on the Condensed Consolidated Balance Sheets on a gross basis, even when provisions allowing for setoff are in place. However, for derivative contracts cleared through certain central clearing parties who have modified their rules to treat variation margin payments as settlements, the fair value of the respective derivative contracts is reported net of the variation margin payments.

Collateral amounts included in the tables below consist primarily of cash and highly rated government-backed securities and do not include variation margin payments for derivative contracts with legal rights of setoff for both periods shown.

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The following table provides a summary of offsetting derivative financial instruments:

			Gross Amount Recognized in the Condensed Consolidated Balance Sheets(a)			Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
						Derivatives			Collateral(b)			Net Amount
As of March 31, 2023
Derivative assets			$	2,750		(1,096)			(894)			760
Derivative liabilities			3,300			(1,096)			(219)			1,985
As of December 31, 2022
Derivative assets			$	3,171		(1,405)			(887)			879
Derivative liabilities			3,951			(1,405)			(406)			2,140

(a)Amount does not include IRLCs because these instruments are not subject to master netting or similar arrangements.

(b)Amount of collateral received as an offset to asset positions or pledged as an offset to liability positions. Collateral values in excess of related derivative amounts recognized in the Condensed Consolidated Balance Sheets were excluded from this table.

15. Other Short-Term Borrowings

Borrowings with original maturities of one year or less are classified as short-term. The following table presents a summary of the Bancorp’s other short-term borrowings as of:

($ in millions)			March 31, 2023			December 31, 2022
FHLB advances			$	6,800		4,300
Securities sold under repurchase agreements			330			388
Derivative collateral			208			124
Other borrowed money			26			26
Total other short-term borrowings			$	7,364		4,838

The Bancorp’s securities sold under repurchase agreements are accounted for as secured borrowings and are collateralized by securities included in available-for-sale debt and other securities in the Condensed Consolidated Balance Sheets. These securities are subject to changes in market value and, therefore, the Bancorp may increase or decrease the level of securities pledged as collateral based upon these movements in market value. As of both March 31, 2023 and December 31, 2022, all securities sold under repurchase agreements were secured by agency residential mortgage-backed securities and the repurchase agreements had an overnight remaining contractual maturity.

16. Capital Actions

Accelerated Share Repurchase Transaction

During the three months ended March 31, 2023, the Bancorp entered into and settled an accelerated share repurchase transaction. As part of the transaction, the Bancorp entered into a forward contract in which the final number of shares delivered at settlement was based generally on a discount to the average daily volume weighted-average price of the Bancorp’s common stock during the term of the repurchase agreement. The accelerated share repurchase was treated as two separate transactions, (i) the repurchase of treasury shares on the repurchase date and (ii) a forward contract indexed to the Bancorp’s common stock.

The following table presents a summary of the Bancorp’s accelerated share repurchase transaction that was entered into and settled during the three months ended March 31, 2023:

Repurchase Date

Amount ($ in millions)

Shares Repurchased on Repurchase Date

Shares Received from Forward Contract Settlement

Total Shares Repurchased

Final Settlement Date

January 24, 2023

$

200

4,911,875

678,121

5,589,996

March 06, 2023

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17. Commitments, Contingent Liabilities and Guarantees

The Bancorp, in the normal course of business, enters into financial instruments and various agreements to meet the financing needs of its customers. The Bancorp also enters into certain transactions and agreements to manage its interest rate and prepayment risks, provide funding, equipment and locations for its operations and invest in its communities. These instruments and agreements involve, to varying degrees, elements of credit risk, counterparty risk and market risk in excess of the amounts recognized in the Condensed Consolidated Balance Sheets. The creditworthiness of counterparties for all instruments and agreements is evaluated on a case-by-case basis in accordance with the Bancorp’s credit policies. The Bancorp’s significant commitments, contingent liabilities and guarantees in excess of the amounts recognized in the Condensed Consolidated Balance Sheets are discussed in the following sections.

Commitments

The Bancorp has certain commitments to make future payments under contracts. The following table reflects a summary of significant commitments as of:

($ in millions)			March 31, 2023			December 31, 2022
Commitments to extend credit			$	84,732		83,437
Letters of credit			2,046			2,009
Forward contracts related to residential mortgage loans held for sale			960			1,869
Capital commitments for private equity investments			173			163
Purchase obligations			102			113
Capital expenditures			97			94

Commitments to extend credit

Commitments to extend credit are agreements to lend, typically having fixed expiration dates or other termination clauses that may require payment of a fee. Since many of the commitments to extend credit may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. The Bancorp is exposed to credit risk in the event of nonperformance by the counterparty for the amount of the contract. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and the Bancorp’s exposure is limited to the replacement value of those commitments. As of March 31, 2023 and December 31, 2022, the Bancorp had a reserve for unfunded commitments, including letters of credit, totaling $232 million and $216 million, respectively, included in other liabilities in the Condensed Consolidated Balance Sheets. The Bancorp monitors the credit risk associated with commitments to extend credit using the same standard regulatory risk rating systems utilized for its loan and lease portfolio.

Risk ratings of outstanding commitments to extend credit under this risk rating system are summarized in the following table as of:

($ in millions)			March 31, 2023			December 31, 2022
Pass			$	82,677		81,345
Special mention			756			976
Substandard			1,299			1,116
Total commitments to extend credit			$	84,732		83,437

Letters of credit

Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and expire as summarized in the following table as of March 31, 2023:

($ in millions)
Less than 1 year(a)			$	988
1 - 5 years(a)			1,047
Over 5 years			11
Total letters of credit			$	2,046

(a)Includes $2 and $3 issued on behalf of commercial customers to facilitate trade payments in U.S. dollars and foreign currencies which expire in less than 1 year and between 1 - 5 years, respectively.

Standby letters of credit accounted for approximately 99% of total letters of credit at both March 31, 2023 and December 31, 2022 and are considered guarantees in accordance with U.S. GAAP. Approximately 67% of the total standby letters of credit were collateralized as of both March 31, 2023 and December 31, 2022. In the event of nonperformance by the customers, the Bancorp has rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The reserve related to these standby letters of credit, which was included in the total reserve for unfunded commitments, was $22 million at both March 31, 2023 and December 31, 2022. The Bancorp monitors the credit risk associated with letters of credit using the same standard regulatory risk rating systems utilized for its loan and lease portfolio.

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Risk ratings of outstanding letters of credit under this risk rating system are summarized in the following table as of:

($ in millions)			March 31, 2023			December 31, 2022
Pass			$	1,849		1,827
Special mention			58			47
Substandard			138			135
Doubtful			1			—
Total letters of credit			$	2,046		2,009

At March 31, 2023 and December 31, 2022, the Bancorp had outstanding letters of credit that were supporting certain securities issued as VRDNs. The Bancorp facilitates financing for its commercial customers, which consist of companies and municipalities, by marketing the VRDNs to investors. The VRDNs pay interest to holders at a rate of interest that fluctuates based upon market demand. The VRDNs generally have long-term maturity dates, but can be tendered by the holder for purchase at par value upon proper advance notice. When the VRDNs are tendered, a remarketing agent generally finds another investor to purchase the VRDNs to keep the securities outstanding in the market. As of March 31, 2023 and December 31, 2022, total VRDNs, of which FTS was the remarketing agent for all, were $421 million and $423 million, respectively. As remarketing agent, FTS is responsible for actively remarketing VRDNs to other investors when they have been tendered. If another investor is not identified, FTS may choose to purchase the VRDNs into inventory at its discretion while it continues to remarket them. If FTS purchases the VRDNs into inventory, it can subsequently tender back the VRDNs to the issuer’s trustee with proper advance notice. The Bancorp issued letters of credit, as a credit enhancement, to $100 million and $102 million of the VRDNs remarketed by FTS at March 31, 2023 and December 31, 2022, respectively. These letters of credit are included in the total letters of credit balance provided in the previous tables. The Bancorp held $5 million and $3 million of these VRDNs in its portfolio and classified them as trading debt securities at March 31, 2023 and December 31, 2022, respectively.

Forward contracts related to residential mortgage loans held for sale

The Bancorp enters into forward contracts to economically hedge the change in fair value of certain residential mortgage loans held for sale due to changes in interest rates. The outstanding notional amounts of these forward contracts are included in the summary of significant commitments table for all periods presented.

Other commitments

The Bancorp has entered into a limited number of agreements for work related to banking center construction and to purchase goods or services.

Contingent Liabilities

Legal claims

There are legal claims pending against the Bancorp and its subsidiaries that have arisen in the normal course of business. Refer to Note 18 for additional information regarding these proceedings.

Guarantees

The Bancorp has performance obligations upon the occurrence of certain events under financial guarantees provided in certain contractual arrangements as discussed in the following sections.

Residential mortgage loans sold with representation and warranty provisions

Conforming residential mortgage loans sold to unrelated third parties are generally sold with representation and warranty provisions. A contractual liability arises only in the event of a breach of these representations and warranties and, in general, only when a loss results from the breach. The Bancorp may be required to repurchase any previously sold loan, or indemnify or make whole the investor or insurer for which the representation or warranty of the Bancorp proves to be inaccurate, incomplete or misleading. For more information on how the Bancorp establishes the residential mortgage repurchase reserve, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

As of both March 31, 2023 and December 31, 2022, the Bancorp maintained reserves related to loans sold with representation and warranty provisions totaling $9 million included in other liabilities in the Condensed Consolidated Balance Sheets.

The Bancorp uses the best information available when estimating its mortgage representation and warranty reserve; however, the estimation process is inherently uncertain and imprecise and, accordingly, losses in excess of the amounts reserved as of March 31, 2023 are reasonably possible. The Bancorp currently estimates that it is reasonably possible that it could incur losses related to mortgage representation and warranty provisions in an amount up to approximately $12 million in excess of amounts reserved. This estimate was derived by modifying the key assumptions to reflect management’s judgment regarding reasonably possible adverse changes to those assumptions. The actual

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repurchase losses could vary significantly from the recorded mortgage representation and warranty reserve or this estimate of reasonably possible losses, depending on the outcome of various factors, including those previously discussed.

During both the three months ended March 31, 2023 and 2022, the Bancorp paid an immaterial amount in the form of make-whole payments and repurchased $18 million and $14 million, respectively, in outstanding principal of loans to satisfy investor demands. Total repurchase demand requests during the three months ended March 31, 2023 and 2022 were $36 million and $23 million, respectively. Total outstanding repurchase demand inventory was $23 million and $25 million at March 31, 2023 and December 31, 2022, respectively.

Margin accounts

FTS, an indirect wholly-owned subsidiary of the Bancorp, guarantees the collection of all margin account balances held by its brokerage clearing agent for the benefit of its customers. FTS is responsible for payment to its brokerage clearing agent for any loss, liability, damage, cost or expense incurred as a result of customers failing to comply with margin or margin maintenance calls on all margin accounts. The margin account balances held by the brokerage clearing agent were $14 million at both March 31, 2023 and December 31, 2022. In the event of customer default, FTS has rights to the underlying collateral provided. Given the existence of the underlying collateral provided and negligible historical credit losses, the Bancorp does not maintain a loss reserve related to the margin accounts.

Long-term borrowing obligations

The Bancorp had certain fully and unconditionally guaranteed long-term borrowing obligations issued by wholly-owned issuing trust entities of $62 million at both March 31, 2023 and December 31, 2022.

Visa litigation

The Bancorp, as a member bank of Visa prior to Visa’s reorganization and IPO (the “IPO”) of its Class A common shares (the “Class A Shares”) in 2008, had certain indemnification obligations pursuant to Visa’s certificate of incorporation and bylaws and in accordance with its membership agreements. In accordance with Visa’s bylaws prior to the IPO, the Bancorp could have been required to indemnify Visa for the Bancorp’s proportional share of losses based on the pre-IPO membership interests. As part of its reorganization and IPO, the Bancorp’s indemnification obligation was modified to include only certain known or anticipated litigation (the “Covered Litigation”) as of the date of the restructuring. This modification triggered a requirement for the Bancorp to recognize a liability equal to the fair value of the indemnification liability.

In conjunction with the IPO, the Bancorp received 10.1 million of Visa’s Class B common shares (the “Class B Shares”) based on the Bancorp’s membership percentage in Visa prior to the IPO. The Class B Shares are not transferable (other than to another member bank) until the later of the third anniversary of the IPO closing or the date on which the Covered Litigation has been resolved; therefore, the Bancorp’s Class B Shares were classified in other assets and accounted for at their carryover basis of $0. Visa deposited $3 billion of the proceeds from the IPO into a litigation escrow account, established for the purpose of funding judgments in, or settlements of, the Covered Litigation. Since then, when Visa’s litigation committee determined that the escrow account was insufficient, Visa issued additional Class A Shares and deposited the proceeds from the sale of the Class A Shares into the litigation escrow account. When Visa funded the litigation escrow account, the Class B Shares were subjected to dilution through an adjustment in the conversion rate of Class B Shares into Class A Shares.

In 2009, the Bancorp completed the sale of Visa, Inc. Class B Shares and entered into a total return swap in which the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Class B Shares into Class A Shares. The swap terminates on the later of the third anniversary of Visa’s IPO or the date on which the Covered Litigation is settled. Refer to Note 22 for additional information on the valuation of the swap. The counterparty to the swap as a result of its ownership of the Class B Shares will be impacted by dilutive adjustments to the conversion rate of the Class B Shares into Class A Shares caused by any Covered Litigation losses in excess of the litigation escrow account. If actual judgments in, or settlements of, the Covered Litigation significantly exceed current expectations, then additional funding by Visa of the litigation escrow account and the resulting dilution of the Class B Shares could result in a scenario where the Bancorp’s ultimate exposure associated with the Covered Litigation (the “Visa Litigation Exposure”) exceeds the value of the Class B Shares owned by the swap counterparty (the “Class B Value”). In the event the Bancorp concludes that it is probable that the Visa Litigation Exposure exceeds the Class B Value, the Bancorp would record a litigation reserve liability and a corresponding amount of other noninterest expense for the amount of the excess. Any such litigation reserve liability would be separate and distinct from the fair value derivative liability associated with the total return swap.

As of the date of the Bancorp’s sale of the Visa Class B Shares and through March 31, 2023, the Bancorp has concluded that it is not probable that the Visa Litigation Exposure will exceed the Class B value. Based on this determination, upon the sale of Class B Shares, the Bancorp reversed its net Visa litigation reserve liability and recognized a free-standing derivative liability associated with the total return swap. The fair value of the swap liability was $192 million at March 31, 2023 and $195 million at December 31, 2022. Refer to Note 14 and Note 22 for further information.

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After the Bancorp’s sale of the Class B Shares, Visa has funded additional amounts into the litigation escrow account which have resulted in further dilutive adjustments to the conversion of Class B Shares into Class A Shares, and along with other terms of the total return swap, required the Bancorp to make cash payments in varying amounts to the swap counterparty as follows:

Period ($ in millions)			Visa Funding Amount			Bancorp Cash Payment Amount
Q2 2010			$	500		20
Q4 2010			800			35
Q2 2011			400			19
Q1 2012			1,565			75
Q3 2012			150			6
Q3 2014			450			18
Q2 2018			600			26
Q3 2019			300			12
Q4 2021			250			11
Q2 2022			600			25
Q4 2022			350			15

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18. Legal and Regulatory Proceedings

Litigation

Visa/MasterCard Merchant Interchange Litigation

In April 2006, the Bancorp was added as a defendant in a consolidated antitrust class action lawsuit originally filed against Visa®, MasterCard® and several other major financial institutions in the United States District Court for the Eastern District of New York (In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 5-MD-1720). The plaintiffs, merchants operating commercial businesses throughout the U.S. and trade associations, claimed that the interchange fees charged by card-issuing banks were unreasonable and sought injunctive relief and unspecified damages. In addition to being a named defendant, the Bancorp is currently also subject to a possible indemnification obligation of Visa as discussed in Note 17 and has also entered into judgment and loss sharing agreements with Visa, MasterCard and certain other named defendants. In October 2012, the parties to the litigation entered into a settlement agreement that was initially approved by the trial court but reversed by the U.S. Second Circuit Court of Appeals and remanded to the district court for further proceedings. More than 500 of the merchants who requested exclusion from the class filed separate federal lawsuits against Visa, MasterCard and certain other defendants alleging similar antitrust violations. These individual federal lawsuits were transferred to the United States District Court for the Eastern District of New York. While the Bancorp is only named as a defendant in one of the individual federal lawsuits, it may have obligations pursuant to indemnification arrangements and/or the judgment or loss sharing agreements noted above. On September 17, 2018, the defendants in the consolidated class action signed a second settlement agreement (the “Amended Settlement Agreement”) resolving the claims seeking monetary damages by the proposed plaintiffs’ class (the “Plaintiff Damages Class”) and superseding the original settlement agreement entered into in October 2012. The Amended Settlement Agreement included, among other terms, a release from participating class members for liability for claims that accrue no later than five years after the Amended Settlement Agreement becomes final. The Amended Settlement Agreement provided for a total payment by all defendants of approximately $6.24 billion, composed of approximately $5.34 billion held in escrow plus an additional $900 million in new funds. Pursuant to the terms of the Settlement Agreement, $700 million of the additional $900 million has been returned to the defendants due to the level of opt-outs from the class. The Bancorp’s allocated share of the settlement is within existing reserves, including funds maintained in escrow. On December 13, 2019, the Court entered an order granting final approval for the settlement, and on March 15, 2023, the Second Circuit affirmed that order. The settlement does not resolve the claims of the separate proposed plaintiffs’ class seeking injunctive relief or the claims of merchants who have opted out of the proposed class settlement and are pursuing, or may in the future decide to pursue, private lawsuits. On September 27, 2021, the Court entered an order certifying a class of merchants pursuing claims for injunctive relief. The ultimate outcome in this matter, including the timing of resolution, remains uncertain. Refer to Note 17 for further information.

Klopfenstein v. Fifth Third Bank

On August 3, 2012, William Klopfenstein and Adam McKinney filed a lawsuit against Fifth Third Bank in the United States District Court for the Northern District of Ohio (Klopfenstein et al. v. Fifth Third Bank), alleging that the 120% APR that Fifth Third disclosed on its Early Access program was misleading. Early Access is a deposit-advance program offered to eligible customers with checking accounts. The plaintiffs sought to represent a nationwide class of customers who used the Early Access program and repaid their cash advances within 30 days. On October 31, 2012, the case was transferred to the United States District Court for the Southern District of Ohio. In 2013, four similar putative class action lawsuits were filed against Fifth Third Bank in federal courts throughout the country (Lori and Danielle Laskaris v. Fifth Third Bank, Janet Fyock v. Fifth Third Bank, Jesse McQuillen v. Fifth Third Bank, and Brian Harrison v. Fifth Third Bank). Those four lawsuits were transferred to the Southern District of Ohio and consolidated with the original lawsuit as In re: Fifth Third Early Access Cash Advance Litigation (Case No. 1:12-CV-851). On behalf of a putative class, the plaintiffs sought unspecified monetary and statutory damages, injunctive relief, punitive damages, attorneys’ fees, and pre- and post-judgment interest. On March 30, 2015, the court dismissed all claims alleged in the consolidated lawsuit except a claim under the TILA. On May 28, 2019, the Sixth Circuit Court of Appeals reversed the dismissal of plaintiffs’ breach of contract claim and remanded for further proceedings. The plaintiffs’ claimed damages for the alleged breach of contract claim exceed $440 million, plus prejudgment interest. On March 26, 2021, the trial court granted plaintiffs’ motion for class certification. On March 29, 2023, the trial court issued an order granting summary judgement on plaintiffs’ TILA claim, with statutory damages capped at $2 million plus costs and attorney fees. Plaintiffs’ claim for breach of contract proceeded to trial beginning on April 17, 2023. On April 27, 2023, the jury returned a verdict in favor of the Bank, finding a breach of contract, but that the voluntary payment doctrine is a complete defense to the breach of contract claim. Fifth Third expects plaintiffs to appeal.

Bureau of Consumer Financial Protection v. Fifth Third Bank, National Association

On March 9, 2020, the CFPB filed a lawsuit against Fifth Third in the United States District Court for the Northern District of Illinois entitled CFPB v. Fifth Third Bank, National Association, Case No. 1:20-CV-1683 (N.D. Ill.) (ABW), alleging violations of the Consumer Financial Protection Act, TILA, and Truth in Savings Act related to Fifth Third’s alleged opening of unspecified numbers of allegedly unauthorized credit card, savings, checking, online banking and early access accounts from 2010 through 2016. The CFPB seeks unspecified amounts of civil monetary penalties as well as unspecified customer remediation. On February 12, 2021, the court granted Fifth Third’s motion to transfer venue to the United States District Court for the Southern District of Ohio. The case is currently in discovery and no trial date has been set.

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Shareholder Litigation

On July 31, 2020, a putative shareholder class action lawsuit captioned Dr. Steven Fox, individually and on behalf of all others similarly situated v. Fifth Third Bancorp, et al., Case No. 2020CH05219 was filed on behalf of former shareholders of MB Financial, Inc. in the Cook County, Illinois Circuit Court. The suit brings claims for violation of Sections 11 and 12(a)(2) of the Securities Act of 1933, alleging that the Bancorp and certain of its officers and directors made material misstatements and omissions regarding an alleged improper cross-selling strategy in filings made in connection with the Bancorp’s merger with MB Financial, Inc. On March 19, 2021, the trial court denied the defendants’ motion to dismiss. The parties have reached an agreement in principle to resolve the matter, subject to documentation and court approval. The Bancorp does not expect the settlement to have a material impact on the Bancorp’s Condensed Consolidated Financial Statements.

In addition, shareholder derivative lawsuits have been filed seeking monetary damages on behalf of the Bancorp alleging certain claims against various officers and directors relating to an alleged improper cross-selling strategy. Five lawsuits have been consolidated into a single action pending in the U.S. District Court for the Northern District of Illinois captioned In re Fifth Third Bancorp Derivative Litigation, Case No. 1:20-cv-04115. Those cases consist of: (1) Pemberton v. Carmichael, et al., Case No. 20-cv-4115 (filed July 13, 2020); (2) Meyer v. Carmichael, et al., Case No. 20-cv-4244 (filed July 17, 2020); (3) Cox v. Carmichael, et al., Case No. 20-cv-4660 (filed August 7, 2020); (4) Hansen v. Carmichael, et al., Case No. 20-cv-5339 (filed September 10, 2020); and (5) Reese v. Carmichael, et al., Case No. 1:21-cv-01631 (filed November 4, 2020 originally as Case No. 20-cv-866 in the Southern District of Ohio). On March 31, 2022, the district court granted the defendants’ motion to dismiss those cases without prejudice. On April 29, 2022, plaintiffs filed an amended complaint. On March 8, 2023, the district court granted the defendants’ motion to dismiss the amended complaint with prejudice. There was no appeal, so the case is terminated. Also separately pending in the Hamilton County, Ohio Court of Common Pleas is Sandys v. Carmichael, et al., Case No. A2004539 (filed December 28, 2020) and The City of Miami Firefighters’ and Police Officers’ Retirement Trust v. Carmichael, et al., Case No. A2200330 (filed January 27, 2022). On April 18, 2022, the Sandys shareholder voluntarily dismissed the lawsuit without prejudice. The case brought by The City of Miami Firefighters’ and Police Officers’ Retirement Trust is pending.

The Bancorp has also received several shareholder demands under Ohio Rev. Code § 1701.37(c) and lawsuits have been filed arising out of the same. Finally, the Bancorp has received shareholder demands that the Bancorp’s Board of Directors investigate and commence a civil action for failure to detect and/or prevent the alleged illegal cross-selling strategy.

Howards v. Fifth Third Bank

On March 8, 2018, Plaintiff Troy Howards filed a putative class action against Fifth Third Bank in the United States District Court for the Central District of California (Case No. 1:18-CV-869, S.D. OH 2018), alleging that Fifth Third improperly charged certain fees related to insufficient funds, customer overdrafts, and out-of-network ATM use. Venue was subsequently transferred to the United States District Court for the Southern District of Ohio. Plaintiff filed claims for breach of contract, breach of the implied covenant of good faith and fair dealing, for violation of the California Unfair Competition Law (Ca. Bus. & Prof. Code sec. 17200, et seq)., and the California Consumer Legal Remedies Act (Cal. Civ. Code sec. 1750 et seq.). Plaintiff seeks to represent putative nationwide classes and California classes of consumers allegedly charged improper repeated insufficient funds fees, improper overdraft fees, and fees for out-of-network ATM use from the beginning of the applicable statute of limitations to present. Plaintiff seeks damages of restitution and disgorgement in the amount of the allegedly unlawfully charged fees, damages proved at trial together with interest as allowed by applicable law. Fifth Third filed a motion to dismiss all claims. On February 6, 2023, the trial court issued an order dismissing the Plaintiff’s breach of contract claim with respect to out-of-network ATM fees and dismissing the two claims for violations of California consumer protection statutes. The Court denied Fifth Third’s motion to dismiss as it relates to the claims for breach of contract and breach of the implied covenant of good faith and fair dealing for certain customer overdrafts and insufficient funds fees. The case is now set to begin discovery, and no trial date has been set.

Other litigation

The Bancorp and its subsidiaries are not parties to any other material litigation. However, there are other litigation matters that arise in the normal course of business. While it is impossible to ascertain the ultimate resolution or range of financial liability with respect to these contingent matters, management believes that the resulting liability, if any, from these other actions would not have a material effect upon the Bancorp’s consolidated financial position, results of operations or cash flows.

Governmental Investigations and Proceedings

The Bancorp and/or its affiliates are or may become involved in information-gathering requests, reviews, investigations and proceedings (both formal and informal) by various governmental regulatory agencies and law enforcement authorities, including but not limited to the FRB, OCC, CFPB, SEC, FINRA, U.S. Department of Justice, etc., as well as state and other governmental authorities and self-regulatory bodies regarding their respective businesses. For example, the Bancorp’s broker-dealer and investment advisory subsidiaries are cooperating with an investigation by the SEC regarding compliance with certain record-keeping requirements for business-related electronic communications on unapproved channels. Likewise, the Commodity Futures Trading Commission (“CFTC”) is conducting a similar investigation into the Bancorp’s provisionally registered swap dealer. The SEC and CFTC are conducting similar investigations of record-keeping practices at other financial institutions. Additional matters will likely arise from time to time. Any of these matters may result in material adverse consequences or reputational harm to the Bancorp, its affiliates and/or their respective directors, officers and other personnel, including adverse judgments, findings, settlements, fines, penalties, orders, injunctions or other actions, amendments and/or

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restatements of the Bancorp’s SEC filings and/or financial statements, as applicable, and/or determinations of material weaknesses in our disclosure controls and procedures. Investigations by regulatory authorities may from time to time result in civil or criminal referrals to law enforcement. Additionally, in some cases, regulatory authorities may take supervisory actions that are considered to be confidential supervisory information which may not be publicly disclosed.

Reasonably Possible Losses in Excess of Accruals

The Bancorp and its subsidiaries are parties to numerous claims and lawsuits as well as threatened or potential actions or claims concerning matters arising from the conduct of its business activities. The outcome of claims or litigation and the timing of ultimate resolution are inherently difficult to predict. The following factors, among others, contribute to this lack of predictability: claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete and material facts may be disputed or unsubstantiated. As a result of these factors, the Bancorp is not always able to provide an estimate of the range of reasonably possible outcomes for each claim. An accrual for a potential litigation loss is established when information related to the loss contingency indicates both that a loss is probable and that the amount of loss can be reasonably estimated. Any such accrual is adjusted from time to time thereafter as appropriate to reflect changes in circumstances. The Bancorp also determines, when possible (due to the uncertainties described above), estimates of reasonably possible losses or ranges of reasonably possible losses, in excess of amounts accrued. Under U.S. GAAP, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” Thus, references to the upper end of the range of reasonably possible loss for cases in which the Bancorp is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the Bancorp believes the risk of loss is more than slight. For matters where the Bancorp is able to estimate such possible losses or ranges of possible losses, the Bancorp currently estimates that it is reasonably possible that it could incur losses related to legal and regulatory proceedings in an aggregate amount up to approximately $151 million in excess of amounts accrued, with it also being reasonably possible that no losses will be incurred in these matters. The estimates included in this amount are based on the Bancorp’s analysis of currently available information, and as new information is obtained the Bancorp may change its estimates.

For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established accrual that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established accruals, the Bancorp believes that the eventual outcome of the actions against the Bancorp and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on the Bancorp’s consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to the Bancorp’s results of operations for any particular period, depending, in part, upon the size of the loss or liability imposed and the operating results for the applicable period.

19. Income Taxes

The applicable income tax expense was $160 million and $118 million for the three months ended March 31, 2023 and 2022, respectively. The effective tax rates for the three months ended March 31, 2023 and 2022 were 22.3% and 19.2%, respectively.

While it is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of the Bancorp’s uncertain tax positions could increase or decrease during the next twelve months, the Bancorp believes it is unlikely that its unrecognized tax benefits will change by a material amount during the next twelve months.

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20. Accumulated Other Comprehensive Income

The tables below present the activity of the components of OCI and AOCI for the three months ended:

			Total OCI									Total AOCI
March 31, 2023 ($ in millions)			Pre-tax Activity			Tax Effect			Net Activity			Beginning Balance			Net Activity			Ending Balance
Unrealized holding gains on available-for-sale debt securities arising during period			$	788		(188)			600
Reclassification adjustment for net gains on available-for-sale debt securities included in net income			—			—			—
Net unrealized losses on available-for-sale debt securities			788			(188)			600			(4,589)			600			(3,989)
Unrealized holding gains on cash flow hedge derivatives arising during period			278			(63)			215
Reclassification adjustment for net losses on cash flow hedge derivatives included in net income			65			(15)			50
Net unrealized losses on cash flow hedge derivatives			343			(78)			265			(498)			265			(233)
Reclassification of amounts to net periodic benefit costs			—			—			—
Defined benefit pension plans, net			—			—			—			(19)			—			(19)
Other			—			—			—			(4)			—			(4)
Total			$	1,131		(266)			865			(5,110)			865			(4,245)

			Total OCI									Total AOCI
March 31, 2022 ($ in millions)			Pre-tax Activity			Tax Effect			Net Activity			Beginning Balance			Net Activity			Ending Balance
Unrealized holding losses on available-for-sale debt securities arising during period			$	(2,505)		576			(1,929)
Reclassification adjustment for net gains on available-for-sale debt securities included in net income			(3)			1			(2)
Net unrealized losses on available-for-sale debt securities			(2,508)			577			(1,931)			891			(1,931)			(1,040)
Unrealized holding losses on cash flow hedge derivatives arising during period			(407)			94			(313)
Reclassification adjustment for net gains on cash flow hedge derivatives included in net income			(78)			18			(60)
Net unrealized losses on cash flow hedge derivatives			(485)			112			(373)			353			(373)			(20)
Reclassification of amounts to net periodic benefit costs			1			—			1
Defined benefit pension plans, net			1			—			1			(33)			1			(32)
Other			—			—			—			(4)			—			(4)
Total			$	(2,992)		689			(2,303)			1,207			(2,303)			(1,096)

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The table below presents reclassifications out of AOCI:

			Condensed Consolidated Statements of Income Caption			For the three months ended March 31,
($ in millions)						2023			2022
Net unrealized losses on available-for-sale debt securities:(b)
Net gains included in net income			Securities gains (losses), net			$	—		3
			Income before income taxes			—			3
			Applicable income tax expense			—			(1)
			Net income			—			2
Net unrealized losses on cash flow hedge derivatives:(b)
Interest rate contracts related to C&I, commercial mortgage and commercial construction loans			Interest and fees on loans and leases			(65)			78
			Income before income taxes			(65)			78
			Applicable income tax expense			15			(18)
			Net income			(50)			60
Net periodic benefit costs:(b)
Amortization of net actuarial loss			Compensation and benefits(a)			—			(1)
			Income before income taxes			—			(1)
			Applicable income tax expense			—			—
			Net income			—			(1)
Total reclassifications for the period			Net income			$	(50)		61

(a)This AOCI component is included in the computation of net periodic benefit cost. Refer to Note 22 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 for further information.

(b)Amounts in parentheses indicate reductions to net income.

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21. Earnings Per Share

The following table provides the calculation of earnings per share and the reconciliation of earnings per share and earnings per diluted share:

			2023									2022
For the three months ended March 31, (in millions, except per share data)			Income			Average Shares			Per Share Amount			Income			Average Shares			Per Share Amount
Earnings Per Share:
Net income available to common shareholders			$	535								$	474
Less: Income allocated to participating securities			—									1
Net income allocated to common shareholders			$	535		684			$	0.78		$	473		688			$	0.69
Earnings Per Diluted Share:
Net income available to common shareholders			$	535								$	474
Effect of dilutive securities:
Stock-based awards			—			6						—			8
Net income available to common shareholders plus assumed conversions			$	535								$	474
Less: Income allocated to participating securities			—									1
Net income allocated to common shareholders plus assumed conversions			$	535		690			$	0.78		$	473		696			$	0.68

Shares are excluded from the computation of earnings per diluted share when their inclusion has an anti-dilutive effect on earnings per share. The diluted earnings per share computation for the three months ended March 31, 2023 and 2022 excludes 4 million and 1 million shares, respectively, of stock-based awards because their inclusion would have been anti-dilutive.

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22. Fair Value Measurements

The Bancorp measures certain financial assets and liabilities at fair value in accordance with U.S. GAAP, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. For more information regarding the fair value hierarchy, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of:

			Fair Value Measurements Using
March 31, 2023 ($ in millions)			Level 1			Level 2			Level 3			Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities			$	2,689		—			—			2,689
Obligations of states and political subdivisions securities			—			3			—			3
Mortgage-backed securities:
Agency residential mortgage-backed securities			—			11,073			—			11,073
Agency commercial mortgage-backed securities			—			26,183			—			26,183
Non-agency commercial mortgage-backed securities			—			4,550			—			4,550
Asset-backed securities and other debt securities			—			5,331			—			5,331
Available-for-sale debt and other securities(a)			2,689			47,140			—			49,829
Trading debt securities:
U.S. Treasury and federal agencies securities			669			18			—			687
Obligations of states and political subdivisions securities			—			49			—			49
Agency residential mortgage-backed securities			—			11			—			11
Asset-backed securities and other debt securities			—			427			—			427
Trading debt securities			669			505			—			1,174
Equity securities			311			12			—			323
Residential mortgage loans held for sale			—			599			—			599
Residential mortgage loans(b)			—			—			128			128
Servicing rights			—			—			1,725			1,725
Derivative assets:
Interest rate contracts			3			1,140			11			1,154
Foreign exchange contracts			—			450			—			450
Commodity contracts			125			1,028			—			1,153
Derivative assets(c)			128			2,618			11			2,757
Total assets			$	3,797		50,874			1,864			56,535
Liabilities:
Derivative liabilities:
Interest rate contracts			$	8		1,629			8			1,645
Foreign exchange contracts			—			407			—			407
Equity contracts			—			—			192			192
Commodity contracts			34			1,022			—			1,056
Derivative liabilities(d)			42			3,058			200			3,300
Short positions:
U.S. Treasury and federal agencies securities			74			—			—			74
Asset-backed securities and other debt securities			—			148			—			148
Short positions(d)			74			148			—			222
Total liabilities			$	116		3,206			200			3,522

(a)Excludes FHLB, FRB and DTCC restricted stock holdings totaling $396, $491 and $3, respectively, at March 31, 2023.

(b)Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.

(c)Included in other assets in the Condensed Consolidated Balance Sheets.

(d)Included in other liabilities in the Condensed Consolidated Balance Sheets.

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			Fair Value Measurements Using
December 31, 2022 ($ in millions)			Level 1			Level 2			Level 3			Total Fair Value
Assets:
Available-for-sale debt and other securities:
U.S. Treasury and federal agencies securities			$	2,495		—			—			2,495
Obligations of states and political subdivisions securities			—			18			—			18
Mortgage-backed securities:
Agency residential mortgage-backed securities			—			11,237			—			11,237
Agency commercial mortgage-backed securities			—			26,322			—			26,322
Non-agency commercial mortgage-backed securities			—			4,715			—			4,715
Asset-backed securities and other debt securities			—			5,842			—			5,842
Available-for-sale debt and other securities(a)			2,495			48,134			—			50,629
Trading debt securities:
U.S. Treasury and federal agencies securities			23			22			—			45
Obligations of states and political subdivisions securities			—			14			—			14
Agency residential mortgage-backed securities			—			8			—			8
Asset-backed securities and other debt securities			—			347			—			347
Trading debt securities			23			391			—			414
Equity securities			306			11			—			317
Residential mortgage loans held for sale			—			600			—			600
Residential mortgage loans(b)			—			—			123			123
Servicing rights			—			—			1,746			1,746
Derivative assets:
Interest rate contracts			12			1,222			7			1,241
Foreign exchange contracts			—			454			—			454
Commodity contracts			56			1,422			—			1,478
Derivative assets(c)			68			3,098			7			3,173
Total assets			$	2,892		52,234			1,876			57,002
Liabilities:
Derivative liabilities:
Interest rate contracts			$	7		1,970			8			1,985
Foreign exchange contracts			—			422			—			422
Equity contracts			—			—			195			195
Commodity contracts			92			1,258			—			1,350
Derivative liabilities(d)			99			3,650			203			3,952
Short positions:
U.S. Treasury and federal agencies securities			66			—			—			66
Asset-backed securities and other debt securities			—			112			—			112
Short positions(d)			66			112			—			178
Total liabilities			$	165		3,762			203			4,130

(a)Excludes FHLB, FRB and DTCC restricted stock holdings totaling $381, $491 and $2, respectively, at December 31, 2022.

(b)Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.

(c)Included in other assets in the Condensed Consolidated Balance Sheets.

(d)Included in other liabilities in the Condensed Consolidated Balance Sheets.

The following is a description of the valuation methodologies used for significant instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-sale debt and other securities, trading debt securities and equity securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities and equity securities. If quoted market prices are not available, then fair values are estimated using pricing models which primarily utilize quoted prices of securities with similar characteristics. Level 2 securities may include federal agencies securities, obligations of states and political subdivisions securities, agency residential mortgage-backed securities, agency and non-agency commercial mortgage-backed securities, asset-backed securities and other debt securities and equity securities. These securities are generally valued using a market approach based on observable prices of securities with similar characteristics.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Residential mortgage loans held for sale

For residential mortgage loans held for sale for which the fair value election has been made, fair value is estimated based upon mortgage-backed securities prices and spreads to those prices or, for certain ARM loans, DCF models that may incorporate the anticipated portfolio composition, credit spreads of asset-backed securities with similar collateral and market conditions. The anticipated portfolio composition includes the effect of interest rate spreads and discount rates due to loan characteristics such as the state in which the loan was originated, the loan amount and the ARM margin. Residential mortgage loans held for sale that are valued based on mortgage-backed securities prices are classified within Level 2 of the valuation hierarchy as the valuation is based on external pricing for similar instruments. ARM loans classified as held for sale are also classified within Level 2 of the valuation hierarchy due to the use of observable inputs in the DCF model. These observable inputs include interest rate spreads from agency mortgage-backed securities market rates and observable discount rates.

Residential mortgage loans

For residential mortgage loans for which the fair value election has been made, and that are reclassified from held for sale to held for investment, the fair value estimation is based on mortgage-backed securities prices, interest rate risk and an internally developed credit component. Therefore, these loans are transferred from Level 2 to Level 3 of the valuation hierarchy. An adverse change in the loss rate or severity assumption would result in a decrease in fair value of the related loans.

Servicing rights

MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available. Accordingly, the Bancorp estimates the fair value of MSRs using internal OAS models with certain unobservable inputs, primarily prepayment speed assumptions, OAS and weighted-average lives, resulting in a classification within Level 3 of the valuation hierarchy. Refer to Note 13 for further information on the assumptions used in the valuation of the Bancorp’s MSRs.

Derivatives

Exchange-traded derivatives valued using quoted prices and certain over-the-counter derivatives valued using active bids are classified within Level 1 of the valuation hierarchy. Most of the Bancorp’s derivative contracts are valued using DCF or other models that incorporate current market interest rates, credit spreads assigned to the derivative counterparties and other market parameters and, therefore, are classified within Level 2 of the valuation hierarchy. Such derivatives include basic and structured interest rate, foreign exchange and commodity swaps and options. Derivatives that are valued based upon models with significant unobservable market parameters are classified within Level 3 of the valuation hierarchy. At March 31, 2023 and December 31, 2022, derivatives classified as Level 3, which are valued using models containing unobservable inputs, consisted primarily of a total return swap associated with the Bancorp’s sale of Visa, Inc. Class B Shares as well as IRLCs, which utilize internally generated loan closing rate assumptions as a significant unobservable input in the valuation process.

Under the terms of the total return swap, the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Visa, Inc. Class B Shares into Class A Shares. Additionally, the Bancorp will make a quarterly payment based on Visa’s stock price and the conversion rate of the Visa, Inc. Class B Shares into Class A Shares until the date on which the Covered Litigation is settled. The fair value of the total return swap was calculated using a DCF model based on unobservable inputs consisting of management’s estimate of the probability of certain litigation scenarios, the timing of the resolution of the Covered Litigation and Visa litigation loss estimates in excess, or shortfall, of the Bancorp’s proportional share of escrow funds.

An increase in the loss estimate or a delay in the resolution of the Covered Litigation would result in an increase in the fair value of the derivative liability; conversely, a decrease in the loss estimate or an acceleration of the resolution of the Covered Litigation would result in a decrease in the fair value of the derivative liability. Refer to Note 17 for additional information on the Covered Litigation.

The net asset fair value of the Bancorp’s IRLCs at March 31, 2023 was $7 million. Immediate decreases in current interest rates of 25 bps and 50 bps would result in increases in the fair value of the IRLCs of approximately $2 million and $4 million, respectively. Immediate increases in current interest rates of 25 bps and 50 bps would result in decreases in the fair value of the IRLCs of approximately $3 million and $6 million, respectively. The decrease in fair value of IRLCs due to immediate 10% and 20% adverse changes in the assumed loan closing rates would both be approximately $1 million, and the increase in fair value due to immediate 10% and 20% favorable changes in the assumed loan closing rates would both be approximately $1 million. These sensitivities are hypothetical and should be used with caution, as changes in fair value based on a variation in assumptions typically cannot be extrapolated because the relationship of the change in assumptions to the change in fair value may not be linear.

Short positions

Where quoted prices are available in an active market, short positions are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. If quoted market prices are not available, then fair values are estimated using pricing models which primarily utilize quoted prices of securities with similar characteristics and therefore are classified within Level 2 of the valuation hierarchy. Level 2 securities include asset-backed and other debt securities.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables are a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

			Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the three months ended March 31, 2023 ($ in millions)			Residential Mortgage Loans			Servicing Rights			Interest Rate Derivatives, Net(a)			Equity Derivatives			Total Fair Value
Balance, beginning of period			$	123		1,746			(1)			(195)			1,673
Total (losses) gains (realized/unrealized):(b)
Included in earnings			3			(53)			14			(31)			(67)
Purchases/originations			—			32			(2)			—			30
Settlements			(2)			—			(8)			34			24
Transfers into Level 3(c)			4			—			—			—			4
Balance, end of period			$	128		1,725			3			(192)			1,664
The amount of total (losses) gains for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at March 31, 2023			$	3		(35)			7			(31)			(56)

(a)Net interest rate derivatives include derivative assets and liabilities of $11 and $8, respectively, as of March 31, 2023.

(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at March 31, 2023.

(c)Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.

			Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
For the three months ended March 31, 2022 ($ in millions)			Residential Mortgage Loans			Servicing Rights			Interest Rate Derivatives, Net(a)			Equity Derivatives			Total Fair Value
Balance, beginning of period			$	154		1,121			4			(214)			1,065
Total gains (losses) (realized/unrealized):(b)
Included in earnings			(6)			137			2			(11)			122
Purchases/originations			—			186			(2)			—			184
Settlements			(9)			—			(6)			27			12
Transfers into Level 3(c)			6			—			—			—			6
Balance, end of period			$	145		1,444			(2)			(198)			1,389
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to instruments still held at March 31, 2022			$	(6)		207			7			(11)			197

(a)Net interest rate derivatives include derivative assets and liabilities of $8 and $10, respectively, as of March 31, 2022.

(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at March 31, 2022.

(c)Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.

The total losses and gains included in earnings for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were recorded in the Condensed Consolidated Statements of Income as follows:

			For the three months ended March 31,
($ in millions)			2023			2022
Mortgage banking net revenue			$	(37)		132
Commercial banking revenue			1			1
Other noninterest income			(31)			(11)
Total (losses) gains			$	(67)		122

The total losses and gains included in earnings attributable to changes in unrealized gains and losses related to Level 3 assets and liabilities still held at March 31, 2023 and 2022 were recorded in the Condensed Consolidated Statements of Income as follows:

			For the three months ended March 31,
($ in millions)			2023			2022
Mortgage banking net revenue			$	(26)		207
Commercial banking revenue			1			1
Other noninterest income			(31)			(11)
Total (losses) gains			$	(56)		197

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables present information as of March 31, 2023 and 2022 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured at fair value on a recurring basis:

As of March 31, 2023 ($ in millions)
Financial Instrument			Fair Value			Valuation Technique			Significant Unobservable Inputs			Range of Inputs									Weighted-Average
Residential mortgage loans			$	128		Loss rate model			Interest rate risk factor			(22.2)			-			5.7%						(10.3)		%	(a)
									Credit risk factor			—			-			23.2%						0.5		%	(a)
																					(Fixed)			5.6		%	(b)
Servicing rights			1,725			DCF			Prepayment speed			—			-			100.0%			(Adjustable)			20.3		%	(b)
																					(Fixed)			629			(b)
									OAS (bps)			477			-			1,447			(Adjustable)			1,204			(b)
IRLCs, net			7			DCF			Loan closing rates			22.3			-			97.5%						82.5		%	(c)
Swap associated with the sale of Visa, Inc. Class B Shares			(192)			DCF			Timing of the resolution    of the Covered Litigation			Q1 2024			-			Q1 2027			Q2 2025						(d)

(a)Unobservable inputs were weighted by the relative carrying value of the instruments.

(b)Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.

(c)Unobservable inputs were weighted by the relative notional amount of the instruments.

(d)Unobservable inputs were weighted by the probability of the final funding date of the instruments.

As of March 31, 2022 ($ in millions)
Financial Instrument			Fair Value			Valuation Technique			Significant Unobservable Inputs			Range of Inputs									Weighted-Average
Residential mortgage loans			$	145		Loss rate model			Interest rate risk factor			(13.2)			-			5.9 %						(3.7)		%	(a)
									Credit risk factor			—			-			20.7 %						0.2		%	(a)
																					(Fixed)			6.7		%	(b)
Servicing rights			1,444			DCF			Prepayment speed			—			-			100.0 %			(Adjustable)			19.7		%	(b)
																					(Fixed)			749			(b)
									OAS (bps)			615			-			1,513			(Adjustable)			1,092			(b)
IRLCs, net			6			DCF			Loan closing rates			42.0			-			98.3 %						85.9		%	(c)
Swap associated with the sale of Visa, Inc. Class B Shares			(198)			DCF			Timing of the resolution    of the Covered Litigation			Q1 2023			-			Q2 2025			Q2 2024						(d)

(a)Unobservable inputs were weighted by the relative carrying value of the instruments.

(b)Unobservable inputs were weighted by the relative unpaid principal balance of the instruments.

(c)Unobservable inputs were weighted by the relative notional amount of the instruments.

(d)Unobservable inputs were weighted by the probability of the final funding date of the instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following tables provide the fair value hierarchy and carrying amount of all assets that were held as of March 31, 2023 and 2022, and for which a nonrecurring fair value adjustment was recorded during the three months ended March 31, 2023 and 2022, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.

			Fair Value Measurements Using												Total Losses
As of March 31, 2023 ($ in millions)			Level 1			Level 2			Level 3			Total			For the three months ended March 31, 2023
Commercial loans held for sale			$	—		—			21			21			—
Commercial loans and leases			—			—			160			160			(76)
Consumer and residential mortgage loans			—			—			138			138			(2)
OREO			—			—			2			2			—
Bank premises and equipment			—			—			5			5			(1)
Private equity investments			—			—			2			2			(1)
Total			$	—		—			328			328			(80)

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

			Fair Value Measurements Using												Total (Losses) Gains
As of March 31, 2022 ($ in millions)			Level 1			Level 2			Level 3			Total			For the three months ended March 31, 2022
Commercial loans and leases			—			—			178			178			(32)
Consumer and residential mortgage loans			—			—			117			117			—
OREO			—			—			1			1			1
Bank premises and equipment			—			—			1			1			—
Operating lease equipment			—			—			6			6			(2)
Private equity investments			—			9			2			11			(6)
Total			$	—		9			305			314			(39)

The following tables present information as of March 31, 2023 and 2022 about significant unobservable inputs related to the Bancorp’s material categories of Level 3 financial assets and liabilities measured on a nonrecurring basis:

As of March 31, 2023 ($ in millions)

Financial Instrument

Fair Value

Valuation Technique

Significant Unobservable Inputs

Ranges of Inputs

Weighted-Average

Commercial loans held for sale

$

21

Comparable company analysis

Market comparable transactions

NM

NM

Commercial loans and leases

160

Appraised value

Collateral value

NM

NM

Consumer and residential mortgage loans

138

Appraised value

Collateral value

NM

NM

OREO

2

Appraised value

Appraised value

NM

NM

Bank premises and equipment

5

Appraised value

Appraised value

NM

NM

Private equity investments

2

Comparable company analysis

Market comparable transactions

NM

NM

As of March 31, 2022 ($ in millions)

Financial Instrument

Fair Value

Valuation Technique

Significant Unobservable Inputs

Ranges of Inputs

Weighted-Average

Commercial loans and leases

$

178

Appraised value

Collateral value

NM

NM

Consumer and residential mortgage loans

117

Appraised value

Collateral value

NM

NM

OREO

1

Appraised value

Appraised value

NM

NM

Bank premises and equipment

1

Appraised value

Appraised value

NM

NM

Operating lease equipment

6

Appraised value

Appraised value

NM

NM

Private equity investments

2

Comparable company analysis

Market comparable transactions

NM

NM

Commercial loans held for sale

The Bancorp estimated the fair value of certain commercial loans held for sale during the three months ended March 31, 2023 and 2022. These valuations were based on appraisals of the underlying collateral or by applying unobservable inputs such as an estimated market discount to the unpaid principal balance of the loans or the appraised values of the assets (Level 3 of the valuation hierarchy).

Portfolio loans and leases

During the three months ended March 31, 2023 and 2022, the Bancorp recorded nonrecurring adjustments to certain collateral-dependent portfolio loans and leases. When a loan is collateral-dependent, the fair value of the loan is generally based on the fair value less cost to sell of the underlying collateral supporting the loan and therefore these loans were classified within Level 3 of the valuation hierarchy. In cases where the amortized cost basis of the loan or lease exceeds the estimated net realizable value of the collateral, then an ALLL is recognized, or a charge-off once the remaining amount is considered uncollectible.

OREO

During the three months ended March 31, 2023 and 2022, the Bancorp recorded nonrecurring adjustments to certain commercial and residential real estate properties and branch-related real estate no longer intended to be used for banking purposes classified as OREO and measured at the lower of carrying amount or fair value. These nonrecurring losses were primarily due to declines in real estate values of the properties recorded in OREO. These losses include an immaterial amount in losses recorded as charge-offs on new OREO properties transferred from loans, during both the three months ended March 31, 2023 and 2022. These losses also included an immaterial amount recorded as negative fair value adjustments and $1 million recorded as positive fair value adjustments for properties subsequent to their transfer into OREO for the three months ended March 31, 2023 and 2022, respectively. The fair value amounts are generally based on appraisals of the property values, resulting in a classification within Level 3 of the valuation hierarchy. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. The previous tables reflect the fair value measurements of the properties before deducting the estimated costs to sell.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

Bank premises and equipment

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. These properties were written down to their lower of cost or market values. At least annually thereafter, the Bancorp will review these properties for market fluctuations. The fair value amounts were generally based on appraisals of the property values, resulting in a classification within Level 3 of the valuation hierarchy. For further information on bank premises and equipment, refer to Note 7.

Operating lease equipment

The Bancorp performs assessments of the recoverability of long-lived assets when events or changes in circumstances indicate that their carrying values may not be recoverable. When evaluating whether an individual asset is impaired, the Bancorp considers the current fair value of the asset, the changes in overall market demand for the asset and the rate of change in advancements associated with technological improvements that impact the demand for the specific asset under review. As part of this ongoing assessment, the Bancorp determined that the carrying values of certain operating lease equipment were not recoverable and, as a result, the Bancorp recorded an impairment loss equal to the amount by which the carrying value of the assets exceeded the fair value. The fair value amounts were generally based on appraised values of the assets, resulting in a classification within Level 3 of the valuation hierarchy.

Private equity investments

The Bancorp accounts for its private equity investments using the measurement alternative to fair value, except for those accounted for under the equity method of accounting. Under the measurement alternative, the Bancorp carries each investment at its cost basis minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Bancorp did not recognize gains during the three months ended March 31, 2023 and recognized gains of $4 million during the three months ended March 31, 2022 resulting from observable price changes. The carrying value of the Bancorp’s private equity investments still held as of March 31, 2023 includes a cumulative $40 million of positive adjustments as a result of observable price changes since January 1, 2018. Because these adjustments are based on observable transactions in inactive markets, they are classified in Level 2 of the fair value hierarchy.

For private equity investments which are accounted for using the measurement alternative to fair value, the Bancorp qualitatively evaluates each investment quarterly to determine if impairment may exist. If necessary, the Bancorp then measures impairment by estimating the value of its investment and comparing that to the investment’s carrying value, whether or not the Bancorp considers the impairment to be temporary. These valuations are typically developed using a DCF method, but other methods may be used if more appropriate for the circumstances. These valuations are based on unobservable inputs and therefore are classified in Level 3 of the fair value hierarchy. The Bancorp recognized impairments of $1 million and $10 million for the three months ended March 31, 2023 and 2022, respectively. The carrying value of the Bancorp’s private equity investments still held as of March 31, 2023 includes a cumulative $35 million of impairment charges recognized since adoption of the measurement alternative to fair value on January 1, 2018.

Fair Value Option

The Bancorp elected to measure certain residential mortgage loans held for sale under the fair value option as allowed under U.S. GAAP. Electing to measure residential mortgage loans held for sale at fair value reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. Management’s intent to sell residential mortgage loans classified as held for sale may change over time due to such factors as changes in the overall liquidity in markets or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified to loans held for investment and maintained in the Bancorp’s loan portfolio. In such cases, the loans will continue to be measured at fair value.

Fair value changes recognized in earnings for residential mortgage loans held at March 31, 2023 and 2022 for which the fair value option was elected, as well as the changes in fair value of the underlying IRLCs, included losses of $8 million and $10 million, respectively. These losses are reported in mortgage banking net revenue in the Condensed Consolidated Statements of Income.

Valuation adjustments related to instrument-specific credit risk for residential mortgage loans measured at fair value negatively impacted the fair value of those loans by $1 million at both March 31, 2023 and December 31, 2022. Interest on loans measured at fair value is accrued as it is earned using the effective interest method and is reported as interest income in the Condensed Consolidated Statements of Income.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following table summarizes the difference between the fair value and the unpaid principal balance for residential mortgage loans measured at fair value as of:

March 31, 2023 ($ in millions)			Aggregate Fair Value			Aggregate Unpaid Principal Balance			Difference
Residential mortgage loans measured at fair value			$	727		735			(8)
Nonaccrual loans			3			3			—
December 31, 2022
Residential mortgage loans measured at fair value			$	723		733			(10)
Past due loans of 30-89 days or more			1			1			—
Nonaccrual loans			2			2			—

The Bancorp may invest in certain hybrid financial instruments with embedded derivatives that are not clearly and closely related to the host contracts. The Bancorp elected to measure the entire instrument at fair value with changes in fair value recognized in earnings. The Bancorp did not hold these investments as of March 31, 2023 and December 31, 2022. Fair value changes recognized in earnings included gains of zero and $11 million for the three months ended March 31, 2023 and 2022, respectively, reported in securities (losses) gains, net in the Condensed Consolidated Statements of Income.

Fair Value of Certain Financial Instruments

The following tables summarize the carrying amounts and estimated fair values for certain financial instruments, excluding financial instruments measured at fair value on a recurring basis:

			Net Carrying Amount			Fair Value Measurements Using									Total Fair Value
As of March 31, 2023 ($ in millions)						Level 1			Level 2			Level 3
Financial assets:
Cash and due from banks			$	2,780		2,780			—			—			2,780
Other short-term investments			9,794			9,794			—			—			9,794
Other securities			890			—			890			—			890
Held-to-maturity securities			2			—			—			2			2
Loans and leases held for sale			150			—			—			154			154
Portfolio loans and leases:
Commercial loans and leases			76,096			—			—			76,271			76,271
Consumer and residential mortgage loans			44,418			—			—			43,170			43,170
Total portfolio loans and leases, net			$	120,514		—			—			119,441			119,441
Financial liabilities:
Deposits			$	162,975		—			162,924			—			162,924
Federal funds purchased			177			177			—			—			177
Other short-term borrowings			7,364			—			7,362			—			7,362
Long-term debt			12,868			11,900			394			—			12,294

			Net Carrying Amount			Fair Value Measurements Using									Total Fair Value
As of December 31, 2022 ($ in millions)						Level 1			Level 2			Level 3
Financial assets:
Cash and due from banks			$	3,466		3,466			—			—			3,466
Other short-term investments			8,351			8,351			—			—			8,351
Other securities			874			—			874			—			874
Held-to-maturity securities			5			—			—			5			5
Loans and leases held for sale			407			—			—			414			414
Portfolio loans and leases:
Commercial loans and leases			75,262			—			—			75,104			75,104
Consumer and residential mortgage loans			43,901			—			—			42,193			42,193
Total portfolio loans and leases, net			$	119,163		—			—			117,297			117,297
Financial liabilities:
Deposits			$	163,690		—			163,634			—			163,634
Federal funds purchased			180			180			—			—			180
Other short-term borrowings			4,838			—			4,829			—			4,829
Long-term debt			13,778			13,218			411			—			13,629

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

23. Business Segments

The Bancorp reports on three business segments: Commercial Banking, Consumer & Small Business Banking and Wealth and Asset Management. Results of the Bancorp’s business segments are presented based on its management structure and management accounting practices. The structure and accounting practices are specific to the Bancorp; therefore, the financial results of the Bancorp’s business segments are not necessarily comparable with similar information for other financial institutions. The Bancorp refines its methodologies from time to time as management’s accounting practices and businesses change.

The Bancorp manages interest rate risk centrally at the corporate level. By employing an FTP methodology, the business segments are insulated from most benchmark interest rate volatility, enabling them to focus on serving customers through the origination of loans and acceptance of deposits. The FTP methodology assigns charge and credit rates to classes of assets and liabilities, respectively, based on the estimated amount and timing of the cash flows for each transaction. Assigning the FTP rate based on matching the duration of cash flows allocates interest income and interest expense to each business segment so its resulting net interest income is insulated from future changes in benchmark interest rates. The Bancorp’s FTP methodology also allocates the contribution to net interest income of the asset-generating and deposit-providing businesses on a duration-adjusted basis to better attribute the driver of the performance. As the asset and liability durations are not perfectly matched, the residual impact of the FTP methodology is captured in General Corporate and Other. The charge and credit rates are determined using the FTP rate curve, which is based on an estimate of Fifth Third’s marginal borrowing cost in the wholesale funding markets. The FTP curve is constructed using the U.S. swap curve, brokered CD pricing and unsecured debt pricing.

The Bancorp adjusts the FTP charge and credit rates as dictated by changes in interest rates for various interest-earning assets and interest-bearing liabilities and by the review of behavioral assumptions, such as prepayment rates on interest-earning assets and the estimated durations for indeterminate-lived deposits. Key assumptions, including the credit rates provided for deposit accounts, are reviewed annually. Credit rates for deposit products and charge rates for loan products may be reset more frequently in response to changes in market conditions.

The Bancorp’s methodology for allocating provision for credit losses to the business segments includes charges or benefits associated with changes in criticized commercial loan levels in addition to actual net charge-offs experienced by the loans and leases owned by each business segment. Provision for credit losses attributable to loan and lease growth and changes in ALLL factors is captured in General Corporate and Other. The financial results of the business segments include allocations for shared services and headquarters expenses. Additionally, the business segments form synergies by taking advantage of relationship depth opportunities and funding operations by accessing the capital markets as a collective unit.

The following is a description of each of the Bancorp’s business segments and the products and services they provide to their respective client bases.

Commercial Banking offers credit intermediation, cash management and financial services to large and middle-market businesses and government and professional customers. In addition to the traditional lending and depository offerings, Commercial Banking products and services include global cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing and syndicated finance.

Consumer and Small Business Banking provides a full range of deposit and loan products to individuals and small businesses through a network of full-service banking centers and relationships with indirect and correspondent loan originators in addition to providing products designed to meet the specific needs of small businesses, including cash management services. Consumer and Small Business Banking includes the Bancorp’s residential mortgage, home equity loans and lines of credit, credit cards, automobile and other indirect lending and other consumer lending activities. Residential mortgage activities include the origination, retention and servicing of residential mortgage loans, sales and securitizations of those loans and all associated hedging activities. Indirect lending activities include extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers and marine dealers. Other consumer lending activities include home improvement and solar energy installation loans originated through a network of contractors and installers.

Wealth and Asset Management provides a full range of wealth management services for individuals, companies and not-for-profit organizations. Wealth and Asset Management is made up of three main businesses: FTS, an indirect wholly-owned subsidiary of the Bancorp; Fifth Third Private Bank; and Fifth Third Institutional Services. FTS offers full service retail brokerage services to individual clients and broker-dealer services to the institutional marketplace. Fifth Third Private Bank offers wealth management strategies to high net worth and ultra-high net worth clients through wealth planning, investment management, banking, insurance, trust and estate services. Fifth Third Institutional Services provides advisory services for institutional clients including middle market businesses, non-profits, states and municipalities.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

The following tables present the results of operations and assets by business segment for the three months ended:

March 31, 2023 ($ in millions)			Commercial Banking						Consumer and Small Business Banking			Wealth and Asset Management			General Corporate and Other						Eliminations						Total
Net interest income			$	977					1,257			101			(818)						—						1,517
Provision for credit losses			46						51			—			67						—						164
Net interest income after provision for credit losses			$	931					1,206			101			(885)						—						1,353
Noninterest income:
Commercial banking revenue			$	160					1			—			—						—						161
Wealth and asset management revenue			1						53			138			—						(46)			(a)			146
Service charges on deposits			87						51			—			(1)						—						137
Card and processing revenue			22						74			1			3						—						100
Mortgage banking net revenue			—						69			—			—						—						69
Leasing business revenue			57						—			—			—						—						57
Other noninterest income(b)			16						25			(1)			(18)						—						22
Securities gains (losses), net			(7)						—			—			11						—						4
Securities losses, net – non-qualifying hedges on MSRs			—						—			—			—						—						—
Total noninterest income			$	336					273			138			(5)						(46)						696
Noninterest expense:
Compensation and benefits			$	190					224			61			282						—						757
Technology and communications			2						7			—			109						—						118
Net occupancy expense(d)			11						51			3			16						—						81
Equipment expense			7						11			—			19						—						37
Leasing business expense			34						—			—			—						—						34
Marketing expense			—						17			—			12						—						29
Card and processing expense			3						20			—			(1)						—						22
Other noninterest expense			304						315			82			(402)						(46)						253
Total noninterest expense			$	551					645			146			35						(46)						1,331
Income (loss) before income taxes			$	716					834			93			(925)						—						718
Applicable income tax expense (benefit)			136						175			19			(170)						—						160
Net income (loss)			$	580					659			74			(755)						—						558
Total goodwill			$	2,324					2,365			226			—						—						4,915
Total assets			$	83,545					85,296			11,707			28,109			(c)			—						208,657

(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Condensed Consolidated Statements of Income.

(b)Includes impairment charges of $1 for bank premises and equipment recorded in Consumer and Small Business Banking and an immaterial amount recorded in General Corporate and Other. For more information, refer to Note 7 and Note 22.

(c)Includes bank premises and equipment of $22 classified as held for sale. For more information, refer to Note 7.

(d)Includes impairment losses and termination charges of $1 for ROU assets related to certain operating leases. For more information, refer to Note 9.

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Fifth Third Bancorp and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)

March 31, 2022 ($ in millions)			Commercial Banking						Consumer and Small Business Banking			Wealth and Asset Management			General Corporate and Other						Eliminations						Total
Net interest income			$	523					517			35			120						—						1,195
Provision for (benefit from) credit losses			(34)						29			—			50						—						45
Net interest income after provision for (benefit from) credit losses			$	557					488			35			70						—						1,150
Noninterest income:
Commercial banking revenue			$	135					—			—			—						—						135
Wealth and asset management revenue			—						51			142			—						(44)			(a)			149
Service charges on deposits			100						53			—			(1)						—						152
Card and processing revenue			20						74			1			2						—						97
Mortgage banking net revenue			—						52			—			—						—						52
Leasing business revenue			62			(c)			—			—			—						—						62
Other noninterest income(b)			22						27			1			2						—						52
Securities losses, net			—						—			—			(14)						—						(14)
Securities losses, net – non-qualifying hedges on MSRs			—						(1)			—			—						—						(1)
Total noninterest income			$	339					256			144			(11)						(44)						684
Noninterest expense:
Compensation and benefits			$	182					218			60			251						—						711
Technology and communications			5						4			—			92						—						101
Net occupancy expense(e)			10						48			3			16						—						77
Equipment expense			7						9			—			20						—						36
Leasing business expense			32						—			—			—						—						32
Marketing expense			1						11			—			12						—						24
Card and processing expense			2						18			—			(1)						—						19
Other noninterest expense			240						293			79			(346)						(44)						222
Total noninterest expense			$	479					601			142			44						(44)						1,222
Income before income taxes			$	417					143			37			15						—						612
Applicable income tax expense			76						31			8			3						—						118
Net income			$	341					112			29			12						—						494
Total goodwill			$	1,980					2,303			231			—						—						4,514
Total assets			$	79,970					86,626			13,715			31,148			(d)			—						211,459

(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Condensed Consolidated Statements of Income.

(b)Includes impairment charges of an immaterial amount for bank premises and equipment recorded in Consumer and Small Business Banking. For more information, refer to Note 7 and Note 22.

(c)Includes impairment charges of $2 for operating lease equipment. For more information, refer to Note 8 and Note 22.

(d)Includes bank premises and equipment of $25 classified as held for sale. For more information, refer to Note 7.

(e)Includes impairment losses and termination charges of $1 for ROU assets related to certain operating leases. For more information, refer to Note 9.

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PART II. OTHER INFORMATION

Legal Proceedings (Item 1)

Refer to Note 18 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 for information regarding legal proceedings.

Risk Factors (Item 1A)

There have been no material changes made during the first quarter of 2023 to any of the risk factors as previously disclosed in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Unregistered Sales of Equity Securities and Use of Proceeds (Item 2)

Refer to the “Capital Management” section within Management’s Discussion and Analysis in Part I, Item 2 for information regarding purchases and sales of equity securities by the Bancorp during the first quarter of 2023.

Defaults Upon Senior Securities (Item 3)

None.

Mine Safety Disclosures (Item 4)

Not applicable.

Other Information (Item 5)

None.

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Exhibits (Item 6)

3.1			Amended Articles of Incorporation of Fifth Third Bancorp. Incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q filed on May 7, 2021.
3.2			Regulations of Fifth Third Bancorp, as Amended as of April 12, 2022. Incorporated by reference to Exhibit 3.2 of the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2022.
10.1			Bancorp Director Pay Program.*
10.2			Supplemental Confirmation dated January 20, 2023, to Master Confirmation dated July 29, 2015, for accelerated share repurchase transaction between Fifth Third Bancorp and Morgan Stanley & Co. LLC. Incorporated by reference to Exhibit 10.73 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.**
31(i)			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
31(ii)			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
32(i)			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
32(ii)			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
101.INS			Inline XBRL Instance Document.
101.SCH			Inline XBRL Taxonomy Extension Schema.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase.
101.DEF			Inline XBRL Taxonomy Definition Linkbase.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Denotes management contract or compensation plan or arrangement.
**Selected portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Fifth Third Bancorp
Registrant

Date: May 9, 2023

/s/ James C. Leonard
James C. Leonard
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer & Principal Financial Officer)

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