Fifth Third Q3 2026 Earnings Rise as Comerica Integration Advances

Fifth Third Bancorp reported stronger sequential third-quarter earnings as net interest income and adjusted fee revenue increased while adjusted expenses declined, showing greater earnings capacity following its merger with Comerica. The bank also said it completed the systems integration, retained clients and bankers at strong levels, and secured the full $850 million annual expense-synergy run rate for the fourth quarter.

The Cincinnati-based bank reported third-quarter 2026 net income of $866 million, including $828 million available to common shareholders. Reported earnings were $0.90 per share, while adjusted earnings were $1.13 per share. The difference reflected a net negative impact of $0.23 per share from merger-related charges, interchange litigation and technology-related asset impairments.

Adjusted pre-provision net revenue rose to $1.51 billion from $1.40 billion in the second quarter. Adjusted return on assets increased 10 basis points to 1.41%, its highest level since the fourth quarter of 2022, while adjusted return on average tangible common equity rose 160 basis points to 20.6%. The adjusted efficiency ratio improved to 54.6% from 57.1%.

Revenue rises as deposits and loans expand

Fully taxable-equivalent net interest income increased 3% sequentially to $2.28 billion. Core loan and deposit performance contributed $30 million to the increase, while one additional day added $18 million and fixed-rate asset repricing contributed $8 million. Net interest margin narrowed by 2 basis points to 3.34%, partly reflecting a 4-basis-point impact from conversion-related cash.

Average loans and leases excluding held-for-sale balances increased to $179.2 billion from $177.6 billion in the previous quarter. Average commercial balances rose 1.2% to $125.6 billion, while average consumer balances increased 0.4% to $53.7 billion. Commercial loans accounted for 70% of the portfolio.

Average deposits increased to $238.3 billion from $231.5 billion. Average core deposits rose to $235.6 billion, representing sequential growth of about 3%, and the loan-to-core deposit ratio was 76%. The total cost of deposits increased to 1.64% from 1.54%, while the cost of interest-bearing deposits rose to 2.24% from 2.13%.

Adjusted noninterest income, excluding securities gains and losses, increased 1% from the second quarter and 33% from a year earlier to $1.05 billion. Growth in wealth and asset management, commercial payments and commercial banking more than offset lower capital-markets fees. Those three growing categories represented 61% of adjusted fee revenue.

Wealth and asset management revenue rose 1% sequentially to $259 million, commercial payments revenue increased 1% to $256 million, and commercial banking revenue gained 2% to $128 million. Capital-markets fees fell 5% to $147 million, while mortgage banking revenue increased 21% to $47 million.

Integration costs remain elevated

Adjusted noninterest expense declined 2% sequentially to $1.82 billion, as lower compensation and benefits costs offset higher conversion-related technology spending. Reported noninterest expense was $2.05 billion, down 3% from the previous quarter but 62% above the year-earlier period.

Fifth Third recognized approximately $1.04 billion of merger-related charges during the first nine months of 2026, consistent with its integration timeline. Third-quarter reported earnings included a $225 million pre-tax merger-related charge, a $34 million interchange-litigation charge and $19 million of technology-related asset impairments.

Management said organic growth was broadening across legacy and acquired markets, supported by deposit-share gains, commercial relationship growth and continued momentum in the Southeast. The company also said the combined bank’s stronger pre-provision net revenue, returns and operating efficiency were becoming more evident.

Credit remains stable, with some areas to monitor

Net charge-offs were $139 million, or an annualized 0.31% of average portfolio loans and leases, compared with 0.30% in the second quarter. The nonperforming-loan ratio increased slightly to 0.59% from 0.58%, while loans 30 to 89 days past due declined to 0.30% of the portfolio from 0.31%.

The allowance for credit losses was $3.13 billion, equal to 1.74% of portfolio loans and leases, down from 1.76% in the prior quarter. The solar-energy installation portfolio continued to carry elevated credit costs, with a 2.18% net charge-off ratio and an 8.44% allowance ratio, although its period-end balance declined 2.8% sequentially to $4.2 billion.

The bank ended the quarter with an estimated common equity Tier 1 ratio of 10.0%, up from 9.9% in the second quarter. Available liquidity sources totaled $142 billion, and the liquidity coverage ratio ended at 102%.

Fourth-quarter expectations

For the fourth quarter, Fifth Third expects average loans and leases, including held-for-sale balances, to rise 1% to 2% from the third quarter. Net interest income is expected to increase 2.5% to 3.5% from a $2.28 billion baseline, assuming a federal funds rate of 4.25% at year-end and including purchase-accounting accretion.

The bank expects adjusted noninterest income, excluding securities gains and losses, to rise 2% to 4% from a $1.05 billion baseline. Adjusted noninterest expense is projected to decline 2% to 3% from $1.82 billion, including approximately $60 million of anticipated core deposit intangible amortization and excluding acquisition-related charges. Management expects a net charge-off ratio of 30 to 35 basis points and an effective tax rate of 22.5%.

Those expectations remain subject to credit deterioration, deposit and liquidity pressures, interest-rate changes, economic weakness, regulatory actions and cybersecurity risks. Fifth Third also identified risks tied to the Comerica transaction, including the possibility that anticipated merger benefits are not fully realized and that post-merger integration disrupts the business.