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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
Commission File Number 001-33653

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(Exact name of Registrant specified in its charter)
Ohio 31-0854434
(State or other jurisdiction
of incorporation or organization)		 (I.R.S. Employer
Identification Number) 
38 Fountain Square Plaza
Cincinnati, Ohio 45263
(Address of principal executive offices)
Registrant's telephone number, including area code: (800) 972-3030

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
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes: ☒ No: ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes: ☐ No: ☒
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 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes: ☐ No: ☒
There were 681,221,886 shares of the Bancorp’s Common Stock, without par value, outstanding as of January 31, 2024. The Aggregate Market Value of the Voting Stock held by non-affiliates of the Bancorp was $15,509,992,776 as of June 30, 2023.
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DOCUMENTS INCORPORATED BY REFERENCE

This report incorporates into a single document the requirements of the U.S. Securities and Exchange Commission (the “SEC”) with respect to annual reports on Form 10-K and annual reports to shareholders. Sections of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

Only those sections of this 2023 Annual Report to Shareholders that are specified in this Cross Reference Index constitute part of the registrant’s Form 10-K for the year ended December 31, 2023. No other information contained in this 2023 Annual Report to Shareholders shall be deemed to constitute any part of this Form 10-K nor shall any such information be incorporated into the Form 10-K and shall not be deemed “filed” as part of the registrant’s Form 10-K.

10-K CROSS REFERENCE INDEX
PART I
Item 1.
16, 67
69, 207
76, 134
75, 137
80, 169
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES


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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 the Risk Factors section in Item 1A in this Annual Report on Form 10-K. 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) deteriorating credit quality; (2) loan concentration by location or industry of borrowers or collateral; (3) problems encountered by other financial institutions; (4) inadequate sources of funding or liquidity; (5) unfavorable actions of rating agencies; (6) inability to maintain or grow deposits; (7) limitations on the ability to receive dividends from subsidiaries; (8) cyber-security risks; (9) Fifth Third’s ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks; (10) failures by third-party service providers; (11) inability to manage strategic initiatives and/or organizational changes; (12) inability to implement technology system enhancements; (13) failure of internal controls and other risk management programs; (14) losses related to fraud, theft, misappropriation or violence; (15) inability to attract and retain skilled personnel; (16) adverse impacts of government regulation; (17) governmental or regulatory changes or other actions; (18) failures to meet applicable capital requirements; (19) regulatory objections to Fifth Third’s capital plan; (20) regulation of Fifth Third’s derivatives activities; (21) deposit insurance premiums; (22) assessments for the orderly liquidation fund; (23) weakness in the national or local economies; (24) global political and economic uncertainty or negative actions; (25) changes in interest rates and the effects of inflation; (26) changes and trends in capital markets; (27) fluctuation of Fifth Third’s stock price; (28) volatility in mortgage banking revenue; (29) litigation, investigations, and enforcement proceedings by governmental authorities; (30) breaches of contractual covenants, representations and warranties; (31) competition and changes in the financial services industry; (32) potential impacts of the adoption of real-time payment networks; (33) changing retail distribution strategies, customer preferences and behavior; (34) difficulties in identifying, acquiring or integrating suitable strategic partnerships, investments or acquisitions; (35) potential dilution from future acquisitions; (36) loss of income and/or difficulties encountered in the sale and separation of businesses, investments or other assets; (37) results of investments or acquired entities; (38) changes in accounting standards or interpretation or declines in the value of Fifth Third’s goodwill or other intangible assets; (39) inaccuracies or other failures from the use of models; (40) effects of critical accounting policies and judgments or the use of inaccurate estimates; (41) weather-related events, other natural disasters, or health emergencies (including pandemics); (42) the impact of reputational risk created by these or other developments on such matters as business generation and retention, funding and liquidity; (43) changes in law or requirements imposed by Fifth Third’s regulators impacting our capital actions, including dividend payments and stock repurchases; and (44) 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
ITEM 1. BUSINESS
General Information
Fifth Third Bancorp (the “Bancorp” or “Fifth Third”), an Ohio corporation organized in 1975, is a bank holding company (“BHC”) as defined by the Bank Holding Company Act of 1956, as amended (the “BHCA”), and has elected to be treated as a financial holding company (“FHC”) under the Gramm-Leach-Bliley Act of 1999 (“GLBA”) and regulations of the Board of Governors of the Federal Reserve System (the “FRB”).

The Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio and is the indirect holding company of Fifth Third Bank, National Association (the “Bank”). As of December 31, 2023, Fifth Third had $215 billion in assets and operates 1,088 full-service Banking Centers and 2,104 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. The Bancorp operates three main businesses: Commercial Banking, Consumer and Small Business Banking and Wealth & Asset Management. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2023, had $574 billion in assets under care, of which it managed $59 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed on the Bancorp’s Investor Relations website at ir.53.com. Information on or accessible through our website is not deemed to be incorporated into this Annual Report on Form 10-K. Website references in this Annual Report are merely textual references. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”

The Bancorp’s subsidiaries provide a wide range of financial products and services to the commercial, financial, retail, governmental, educational, energy and healthcare sectors. This includes a variety of checking, savings and money market accounts, wealth management solutions, payments and commerce solutions, insurance services and credit products such as commercial loans and leases, mortgage loans, credit cards, installment loans and auto loans. These products and services are delivered through a variety of channels including the Bancorp’s banking centers, other offices, telephone sales, the internet and mobile applications. The Bank has deposit insurance provided by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund (the “DIF”). Refer to Exhibit 21 filed as an attachment to this Annual Report on Form 10-K for a list of subsidiaries of the Bancorp as of February 15, 2024.

Additional information regarding the Bancorp’s businesses is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Availability of Financial Information
The Bancorp files reports with the SEC. Those reports include the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and annual proxy statement, as well as any amendments to those reports. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Bancorp’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, annual proxy statement and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are accessible at no cost on the Bancorp’s Investor Relations website at ir.53.com on a same day basis after they are electronically filed with or furnished to the SEC.

Information about the Bancorp’s Code of Business Conduct and Ethics (as amended from time to time), is available on Fifth Third’s corporate website at www.53.com. In addition, any future waivers from a provision of the Fifth Third Code of Business Conduct and Ethics covering any of Fifth Third’s directors or executive officers (including Fifth Third’s principal executive officer, principal financial officer, and principal accounting officer or controller) will be posted at this internet address.

Competition
The Bancorp, primarily through the Bank, competes for deposits, loans and other banking services in its principal geographic markets as well as in selected national markets as opportunities arise. In addition to traditional financial institutions, the Bancorp competes with securities dealers, brokers, mortgage bankers, investment advisors, specialty finance, telecommunications, technology and insurance companies as well as large retailers. These companies compete across geographic boundaries and provide customers with meaningful alternatives to traditional banking services in nearly all significant products. The increasingly competitive environment is a result primarily of changes in regulation, changes in technology, product delivery systems and the accelerating pace of consolidation among financial service providers. These competitive trends are likely to continue.

Human Capital Resources
The Bancorp’s human capital strategy is designed to attract, develop and retain talent. This strategy ensures that Fifth Third has the talent, capabilities, and organizational structure to support business needs now and in the future. As of December 31, 2023, the Bancorp had 18,724 full-time equivalent employees, compared to 19,319 as of December 31, 2022. These employees support the organization’s vision to be the One Bank people most value and trust by upholding its four Core Values: Be Respectful & Inclusive, Take Accountability, Work as One Bank and Act with Integrity.

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Equality, Equity and Inclusion
Fifth Third believes that an inclusive culture is essential to living its Core Values, serving its customers, delivering financial performance and being recognized as a leader in building an engaging workplace. As of December 31, 2023, the Bancorp’s employees were approximately 57% female and approximately 29% persons of color: 71% White, 13% Black/African American, 8% Hispanic/Latino, 6% Asian, and 2% Other.

The Bancorp has embedded approaches that continue to drive strategies across several key workstreams that focus on employees, customers, and the community. To support its commitment, the Bancorp has invested in the ongoing growth and expansion of its nine employee Business Resource Groups (“BRGs”). All employees regardless of background may join any BRG. Each BRG focuses on three pillars: employee development, community involvement/volunteerism and business innovation. BRGs across the footprint share best practices, embedding specific actions and activities to progress a culture of belonging and engagement.

Engagement and Development
Fifth Third believes that an engaged workforce is one of its most valuable assets in sustaining its success. The Bancorp’s continuous listening strategy is an important component of its inclusive culture. The Bancorp’s holistic approach to collecting, measuring and responding to employee feedback enhances the employee experience at critical points during times of change in business or work environments. Feedback is collected through a variety of methods, including the Employee Viewpoints Survey which includes questions related to culture, engagement, inclusion, employee well-being, expectations and intent to stay.

The Bancorp’s learning, development and career mobility strategy delivers personalized and accessible experiences that fuel career growth and help retain talent. In 2023, employees completed over 779,000 training hours. In addition, the Bancorp requires all employees and contingent workers to complete compliance courses that support strong risk management behaviors and accountability.

Total Rewards – Compensation and Benefits
The Bancorp is committed to providing competitive compensation programs that attract and retain top talent, while driving its business strategy and effectively managing risk. Compensation programs are designed to pay for performance and consider applicable regulatory expectations, corporate values and behavioral expectations. The Bancorp’s Compensation Philosophy aligns with the creation of long-term shareholder value.

The Bancorp continuously analyzes its compensation and benefits programs and practices with the objective of providing all employees with an equal opportunity to maximize their potential. Although not a nationwide requirement, Fifth Third recognizes a footprint-wide salary history ban and does not ask for a candidate’s current salary to use as a factor in determining an employment offer.

The Bancorp offers a holistic suite of benefits that demonstrates its commitment to its employees’ physical, financial and personal health and well-being. In addition to traditional benefit offerings, the Bancorp offers a 401(k) retirement program that pays a match up to 7% of an employee’s eligible compensation, parental bonding leave, telemedicine services and tools that help find the highest quality and lowest cost treatment options. These services assist employees in maintaining a healthy work-life balance. In 2023, the Bancorp transitioned to a new paid time off structure that provides employees more control and flexibility to manage their time away, which includes paid time off for volunteering. In addition, the Bancorp enhanced its wellness offerings and resources to support employees and their families.

Recruitment and Retention
The Bancorp continues to navigate the changing talent landscape by monitoring the external environment and adapting talent strategies to meet internal needs. The Bancorp’s focus on the Employee Value Proposition demonstrates a continued commitment to employees by developing great leaders, evolving the employee experience, and focusing on equality, equity and inclusion. Full year turnover significantly improved, decreasing from 21.0% in 2022 to 16.9% in 2023.

The Bancorp’s focus on multicultural recruitment strengthens the organization by fostering an inclusive culture. To attract the most talented employees, the Bancorp continues to enhance relationships with universities and partner organizations to attract top talent from various backgrounds including women, minorities, individuals with disabilities, veterans and LGBTQ+ individuals. Creating and developing an inclusive workforce is important for the Bancorp’s business growth, leading to enhanced innovation while focusing on the needs of our customers.

Acquisitions and Investments
The Bancorp’s strategy for growth includes strengthening its presence in core markets and broadening its product offerings while taking into account the integration and other risks of growth. The Bancorp evaluates strategic acquisition and investment opportunities and conducts due diligence activities in connection with possible transactions. As a result, discussions, and in some cases, negotiations regarding acquisitions and investments may take place and future transactions involving cash, debt or equity securities may occur. These typically involve the payment of a premium over book value and current market price, and therefore, some dilution of tangible book value and net income per share may occur with any future transactions.

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Regulation and Supervision
In addition to the generally applicable state and federal laws governing businesses and employers, the Bancorp and the Bank are subject to extensive regulation and supervision under federal and state laws and regulations applicable to financial institutions and their parent companies. Virtually all aspects of the business of the Bancorp and the Bank are subject to specific requirements or restrictions and general regulatory oversight. The principal objectives of state and federal banking laws and regulations and the supervision, regulation and examination of banks and their parent companies (such as the Bank and the Bancorp) by bank regulatory agencies are the maintenance of the safety and soundness of financial institutions, the maintenance of the federal deposit insurance system and the protection of consumers or classes of consumers, rather than the protection of shareholders or debtholders of a bank or the parent company of a bank. The Bancorp and its subsidiaries are subject to an extensive regulatory framework of complex and comprehensive federal and state laws and regulations addressing the provision of banking and other financial services and other aspects of the Bancorp’s businesses and operations. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and legislation modifying Dodd-Frank, the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (“EGRRCPA”), will continue to impact the Bancorp and the Bank. To the extent the following material describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statute or regulation.

Both the scope of the laws and regulations and the intensity of the supervision to which the Bancorp and its subsidiaries are subject increased in response to the financial crisis, as well as other factors, such as technological and market changes. Regulatory enforcement and fines have also increased across the banking and financial services sector. Many of these changes have occurred as a result of Dodd-Frank and its implementing regulations, most of which are now in place. While the regulatory environment has recently been in a period of rebalancing the post financial crisis framework, the Bancorp expects that its business will remain subject to extensive regulation and supervision.

The EGRRCPA amended various sections of Dodd-Frank, including section 165, which was revised to raise the asset thresholds for determining the application of enhanced prudential standards for BHCs. The EGRRCPA’s increased asset thresholds took effect immediately for BHCs with total consolidated assets less than $100 billion, with the exception of risk committee requirements, which now apply to publicly-traded BHCs with $50 billion or more of consolidated assets. BHCs with consolidated assets between $100 billion and $250 billion, including the Bancorp, were subject to the enhanced prudential standards that applied to them before enactment of EGRRCPA until December 31, 2019, when rules adopted by the FRB that tailor the applicability of enhanced prudential standards and capital and liquidity requirements for BHCs with $100 billion or more in total consolidated assets became effective, as described in detail below.

Subsequent to the EGRRCPA, the FRB adopted a rule that adjusts the thresholds at which certain enhanced prudential standards (“EPS”) apply to BHCs with $100 billion or more in total consolidated assets (the “EPS Tailoring Rule”) and the FRB, the Office of the Comptroller of the Currency (the “OCC”) and FDIC adopted a rule that similarly adjusts the thresholds at which certain other capital and liquidity standards apply to BHCs and banks with $100 billion or more in total consolidated assets (the “Capital and Liquidity Tailoring Rule” and, together with the EPS Tailoring Rule, the “Tailoring Rules”). The Tailoring Rules establish four risk-based categories of institutions, and the extent to which enhanced prudential standards and certain other capital and liquidity standards apply to these BHCs and banks depends on the banking organization’s category. Under the Tailoring Rules, the Bancorp and the Bank each qualify as a Category IV banking organization subject to the least restrictive of the requirements applicable to firms with $100 billion or more in total consolidated assets.

Regulators
The Bancorp and/or the Bank are subject to regulation and supervision primarily by the FRB, the Consumer Financial Protection Bureau (the “CFPB”) and the OCC and additionally by certain other functional regulators and self-regulatory organizations. The Bancorp is also subject to regulation by the SEC by virtue of its status as a public company and due to the nature of some of its businesses. The Bank is also subject to regulation by the FDIC, which insures the Bank’s deposits as permitted by law.

The federal and state laws and regulations that are applicable to banks and to BHCs regulate, among other matters, the scope of the Bancorp’s and the Bank’s businesses, their activities, their investments, their capital and liquidity levels, their ability to make capital distributions (such as share repurchases and dividends), their reserves against deposits, the timing of the availability of deposited funds, the amount of loans to individual and related borrowers and the nature, the amount of and collateral for certain loans, and the amount of interest that may be charged on loans, as applicable. Various federal and state consumer laws and regulations also affect the services provided to consumers.

The Bancorp and the Bank are required to file various reports with and are subject to examination by various regulators, including the FRB, the OCC and the CFPB. The FRB, the OCC and the CFPB have the authority to issue orders for BHCs and banks to cease and desist from certain banking practices and violations of conditions imposed by, or violations of agreements with, the FRB, the OCC and the CFPB. Some of the Bancorp’s and the Bank’s regulators are also empowered to assess civil money penalties against companies or individuals in certain situations, such as when there is a violation of a law or regulation. Applicable state and federal laws also grant the Bancorp’s regulators the authority to impose additional requirements and restrictions on the activities of the Bancorp and the Bank and, in some situations, the imposition of such additional requirements and restrictions will not be publicly available information.

The following discussion describes certain elements of the comprehensive regulatory framework applicable to the Bancorp and its subsidiaries. This discussion is not intended to describe all laws and regulations applicable to the Bancorp, the Bank and the Bancorp’s other subsidiaries.

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Acquisitions
The BHCA requires the prior approval of the FRB for a BHC to acquire substantially all the assets of a bank or to acquire direct or indirect ownership or control of more than 5% of any class of the voting shares of any bank, BHC or savings association, or to merge or consolidate with any BHC.

The BHCA generally prohibits a BHC from engaging in, or acquiring a direct or indirect interest in or control of more than 5% of any class of the voting shares of a company that is not a bank or a BHC that engages directly or indirectly in activities other than those of banking, managing or controlling banks or furnishing services to its banking subsidiaries, except that it may engage in and may own shares of companies engaged in certain activities the FRB has determined to be so closely related to banking or managing or controlling banks as to be proper incident thereto.

Financial Holding Companies
The Bancorp is registered as a BHC with the FRB under the BHCA and qualifies for and has elected to become an FHC. An FHC is permitted to engage directly or indirectly in a broader range of activities than those permitted for a BHC under the BHCA. Permitted activities for an FHC include securities underwriting and dealing, insurance underwriting and brokerage, merchant banking and other activities that are declared by the FRB, in cooperation with the Treasury Department, to be “financial in nature or incidental thereto” or are declared by the FRB unilaterally to be “complementary” to financial activities. In addition, an FHC is allowed to conduct permissible new financial activities or acquire permissible non-bank financial companies with after-the-fact notice to the FRB. A BHC may elect to become an FHC if the BHC is well-capitalized and is well managed and each of its banking subsidiaries is well-capitalized, is well managed and has at least a “Satisfactory” rating under the Community Reinvestment Act (“CRA”). To maintain FHC status, a BHC must continue to meet these requirements. The failure to meet such requirements could result in material restrictions on the activities of the FHC and may also adversely affect the FHC’s ability to enter into certain transactions (including mergers and acquisitions) or obtain necessary approvals in connection therewith, as well as loss of FHC status. If restrictions are imposed on the activities of an FHC, such information may not necessarily be available to the public.

Dividends
The Bancorp is a legal entity separate and distinct from its subsidiaries and depends in part upon dividends received from its direct and indirect subsidiaries, including the Bank, to fund its activities, including its ability to make capital distributions, such as paying dividends or repurchasing shares. Under federal law, there are various limitations on the extent to which the Bank can declare and pay dividends to the Bancorp, including those related to regulatory capital requirements, general regulatory oversight to prevent unsafe or unsound practices, and federal banking law requirements concerning the payment of dividends out of net profits, surplus, and available earnings. Certain contractual restrictions also may limit the ability of the Bank to pay dividends to the Bancorp. No assurances can be given that the Bank will, in any circumstances, pay dividends to the Bancorp.

The Bancorp’s ability to declare and pay dividends is similarly limited by federal banking law and FRB regulations and policy. The FRB has authority to prohibit BHCs from making capital distributions if they would be deemed to be an unsafe or unsound practice. The FRB has indicated generally that it may be an unsafe or unsound practice for BHCs to pay dividends unless a BHC’s net income is sufficient to fund the dividends and the expected rate of earnings retention is consistent with the organization’s capital needs, asset quality and overall financial condition. In addition, the Bancorp’s ability to make capital distributions, including paying dividends and repurchasing shares, is subject to the Bancorp complying with the automatic restrictions on capital distributions under the FRBs “Capital Rules” process discussed below (see Regulatory Capital Requirements below).

Source of Strength
A BHC, including the Bancorp, is expected to act as a source of financial and managerial strength to each of its banking subsidiaries and to commit resources to their support. This support may be required at times when the BHC may not have the resources to provide it or when doing so is not otherwise in the interests of the Bancorp or its shareholders or creditors. U.S. banking regulators may require a BHC to make capital injections into a troubled subsidiary bank and may charge the BHC with engaging in unsafe and unsound practices if the BHC fails to commit resources to such a subsidiary bank or if it undertakes actions that the FRB believes might jeopardize the BHC’s ability to commit resources to such subsidiary bank.

Under these requirements, the Bancorp may in the future be required to provide financial assistance to the Bank should it experience financial distress. Capital loans by the Bancorp to the Bank would be subordinate in right of payment to deposits and certain other debts of the Bank. In the event of the Bancorp’s bankruptcy, any commitment by the Bancorp to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee and entitled to a priority of payment.

FDIC Assessments
The DIF provides insurance coverage for certain deposits, up to a standard maximum deposit insurance amount of $250,000 per depositor per account ownership category per bank and is funded through assessments on insured depository institutions, based on the risk each institution poses to the DIF. The Bank accepts customer deposits that are insured by the DIF and, therefore, must pay insurance premiums. The FDIC may increase the Bank’s insurance premiums based on various factors, including the FDIC’s assessment of its risk profile.

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As of June 30, 2020, the DIF reserve ratio fell to 1.30%, below the statutory minimum of 1.35%. The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years. On October 18, 2022, the FDIC adopted an amended restoration plan to increase the likelihood that the reserve ratio would be restored to at least 1.35% by September 30, 2028. The FDIC’s amended restoration plan increases the initial base deposit insurance assessment rate schedules uniformly by 2 basis points, which began with the first quarterly assessment period of 2023.

In November 2023, the FDIC issued a final rule for a special deposit insurance assessment on banking organizations with greater than $5 billion in assets to recover the costs associated with protecting uninsured depositors following the bank failures that occurred in 2023. The estimate of the Bancorp’s special assessment under the provisions of the final rule was $224 million, which was recognized in earnings upon issuance of the final rule and will be paid to the FDIC over an anticipated total of eight quarterly assessment periods beginning with the first quarter of 2024. The FDIC could further increase the deposit insurance assessments for certain insured depository institutions, including the Bank, if the DIF reserve ratio is not restored as projected.

Transactions with Affiliates
Federal banking laws restrict transactions between a bank and its affiliates, including a parent BHC. The Bank is subject to these restrictions, which include quantitative and qualitative limits on the amounts and types of transactions that may take place, including extensions of credit to affiliates, investments in the stock or securities of affiliates, purchases of assets from affiliates and certain other transactions with affiliates. These restrictions also require that credit transactions with affiliates be collateralized and that transactions with affiliates be on market terms or better for the bank. Generally, a bank’s covered transactions with any affiliate are limited to 10% of the bank’s capital stock and surplus and covered transactions with all affiliates are limited to 20% of the bank’s capital stock and surplus. Dodd-Frank expanded the scope of these regulations, including by applying them to the credit exposure arising under derivative transactions, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions. Federal banking laws also place similar restrictions on loans and other extensions of credit by FDIC-insured banks, such as the Bank, and their subsidiaries to their directors, executive officers, and principal shareholders.

Community Reinvestment Act
The CRA generally requires insured depository institutions, including the Bank, to identify the communities they serve and to make loans and investments and provide services that meet the credit needs of those communities. The CRA requires the OCC to evaluate the performance of national banks (including the Bank) with respect to these CRA obligations. Depository institutions must maintain comprehensive records of their CRA activities for purposes of these examinations. The OCC must take into account the institution’s record of performance in meeting the credit needs of the entire community served, including low-and moderate-income neighborhoods. For purposes of CRA examinations, the OCC rates each institution’s compliance with the CRA as “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial Noncompliance.” The Bank received an “Outstanding” rating on its most recent CRA performance examination from the OCC.

The CRA requires the relevant federal bank regulatory agency to consider a bank’s CRA assessment when considering the bank’s application to conduct certain mergers or acquisitions or to open or relocate a branch office. The FRB also must consider the CRA record of each subsidiary bank of a BHC in connection with any acquisition or merger application filed by the BHC. An unsatisfactory CRA record could substantially delay or result in the denial of an approval or application by the Bancorp or the Bank.

On October 24, 2023, the OCC, FRB, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027. Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities.

Regulatory Capital Requirements
The Bancorp and the Bank are subject to certain risk-based capital and leverage ratio requirements under the capital adequacy rules (the “Capital Rules”) adopted by the FRB, for the Bancorp, and by the OCC, for the Bank. These quantitative calculations are minimums, and the FRB and OCC may determine that a banking organization, based on its size, complexity, or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on the Bancorp’s operations or financial condition. Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Bancorp’s or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications. Under the Capital Rules, the Bancorp’s and the Bank’s assets, exposures, and certain off-balance sheet items are subject to risk weights used to determine the institutions’ risk-weighted assets pursuant to the federal banking agencies’ Standardized Approach to risk-weighting of assets. These risk-weighted assets are used to calculate the following minimum capital ratios for the Bancorp and the Bank:
•Common Equity Tier 1 (“CET1”) Capital Ratio, equal to the ratio of CET1 capital to risk-weighted assets. CET1 capital primarily includes common shareholders’ equity subject to certain regulatory adjustments and deductions, including with respect to goodwill, intangible assets, certain deferred tax assets, and accumulated other comprehensive income (“AOCI”). The Bancorp has elected to exclude certain AOCI components, with the result that those components are not recognized in the Bancorp’s CET1. The FDIC, FRB and OCC have jointly issued rules for institutions that do not apply advanced approaches to regulatory capital, including the Bancorp and the Bank. These rules simplified the capital treatment of certain items (including mortgage servicing assets, deferred tax assets and investments in the capital of unconsolidated financial institutions) and simplified the recognition and calculation of minority interests that are includable in regulatory capital. The advanced approaches to regulatory capital are generally required for large, internationally active banking organizations including those designated as global systemically important bank holding companies and those with total assets or cross-jurisdictional activity in excess of certain thresholds.
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•Tier 1 Risk-Based Capital Ratio, equal to the ratio of Tier 1 capital to risk-weighted assets. Tier 1 capital is primarily comprised of CET1 capital, perpetual preferred stock and certain qualifying capital instruments.
•Total Risk-Based Capital Ratio, equal to the ratio of total capital, including CET1 capital, Tier 1 capital, and Tier 2 capital, to risk-weighted assets. Tier 2 capital primarily includes qualifying subordinated debt and qualifying allowance for loan and lease losses (“ALLL”). Tier 2 capital also includes, among other things, certain trust preferred securities.
•Leverage Ratio, equal to the ratio of Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible assets, and certain other deductions).

In August 2020, the U.S. federal banking agencies adopted a final rule altering the definition of eligible retained income in their respective capital rules. Under the new rule, eligible retained income is the greater of a firm’s (i) net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (ii) average net income over the preceding four quarters. An institution’s eligible retained income, when considered in conjunction with capital ratios and the stress capital buffer, provides limitations on capital distributions (including dividends and share repurchases) and certain executive compensation arrangements for the quarter following the calculation. As of December 31, 2023, the Bancorp was permitted to use 100% of its eligible retained income for these purposes in the first quarter of 2024. In addition, in December 2018, the U.S. federal banking agencies finalized rules that would permit BHCs and banks to phase-in, for regulatory capital purposes, the day-one impact of ASU 2016-13 (“CECL”) on retained earnings over a period of three years. As part of their response to the COVID-19 pandemic, the U.S. federal banking agencies issued another final rule for additional transitional relief to regulatory capital related to the impact of the adoption of CECL. The final rule provides banking organizations that adopted CECL in the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by the aforementioned three-year transition period to phase out the aggregate amount of benefit during the initial two-year delay for a total five-year transition. The estimated impact of CECL on regulatory capital (modified CECL transitional amount) is calculated as the sum of the day-one impact on retained earnings upon adoption of CECL (CECL transitional amount) and the calculated change in the ACL relative to the day-one ACL upon adoption of CECL multiplied by a scaling factor of 25%. The scaling factor is used to approximate the difference in the ACL under CECL relative to the incurred loss methodology. The modified CECL transitional amount was calculated each quarter for the first two years of the five-year transition. The amount of the modified CECL transition amount was then fixed as of December 31, 2021 and that amount is subject to the three-year phase out. Refer to the Capital Management section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information.

The Capital Rules also require banking organizations to maintain a stress capital buffer to avoid becoming subject to certain limitations on capital distributions and discretionary bonuses to executive officers (see Stress Buffer Requirements below). For more information related to the stress capital buffer, refer to Note 29 of the Notes to Consolidated Financial Statements.

The total minimum regulatory capital ratios and well-capitalized minimum ratios are reflected in the table below. The FRB has not yet revised the well-capitalized standard for BHCs to reflect the higher capital requirements imposed under the Capital Rules. For purposes of the FRB’s Regulation Y, including determining whether a BHC meets the requirements to be an FHC, BHCs, such as the Bancorp, must maintain a Tier 1 Risk-Based Capital Ratio of 6.0% or greater and a Total Risk-Based Capital Ratio of 10.0% or greater. If the FRB were to apply the same or a very similar well-capitalized standard to BHCs as that applicable to the Bank, the Bancorp’s capital ratios as of December 31, 2023, would exceed such revised well-capitalized standard. The FRB may require BHCs, including the Bancorp, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a BHC’s particular condition, risk profile, and growth plans.

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The following table presents the minimum regulatory capital ratios, minimum ratio plus stress capital buffer, and well-capitalized minimums compared with the Bancorp’s and the Bank’s regulatory capital ratios as of December 31, 2023, calculated using the regulatory capital methodology applicable during 2023:
Regulatory Capital Ratios:
Minimum Regulatory Capital Ratio
Minimum Ratio + Stress Capital Buffer(a)
Well-Capitalized Minimums(b)
Actual at
December 31, 2023
CET1 risk-based capital ratio:
Fifth Third Bancorp 4.50  % 7.00  N/A 10.29 
Fifth Third Bank, National Association 4.50  7.00  6.50  12.42 
Tier 1 risk-based capital ratio:
Fifth Third Bancorp 6.00  8.50  6.00  11.59 
Fifth Third Bank, National Association 6.00  8.50  8.00  12.42 
Total risk-based capital ratio:
Fifth Third Bancorp 8.00  10.50  10.00  13.72 
Fifth Third Bank, National Association 8.00  10.50  10.00  13.85 
Leverage ratio:
Fifth Third Bancorp 4.00  N/A N/A 8.73 
Fifth Third Bank, National Association 4.00  N/A 5.00  9.38 
(a)Reflects the stress capital buffer of 2.5% applicable during 2023.
(b)Reflects the well-capitalized standard applicable to the Bancorp under FRB Regulation Y and the well-capitalized standard applicable to the Bank.

Proposed Updates to Regulatory Requirements for Capital
On July 27, 2023, the U.S. banking agencies released a notice of proposed rulemaking to revise the Basel III Capital Rules, which would modify its existing risk-based capital framework for large banks and introduce a new framework that implements international capital standards. The proposed rulemaking would increase capital requirements applicable to banking organizations with total assets of $100 billion or more, including Fifth Third, and would align the calculation of regulatory capital and the calculation of risk-weighted assets across large banking organizations. As proposed, the rules would be effective for the Bancorp on July 1, 2025 and phased in over a three-year transition period. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact.

Liquidity Regulation
As a result of the Tailoring Rules, the Bancorp, as a Category IV banking organization, is exempt from the liquidity coverage ratio requirement but remains subject to internal liquidity stress tests and standards.

Capital Planning and Stress Testing
BHCs with $100 billion or more in consolidated assets, including the Bancorp, generally must submit capital plans to the FRB on an annual basis. In March 2020, the FRB adopted a final rule to integrate the annual capital planning and stress testing requirements with certain ongoing regulatory capital requirements for large BHCs. As a result, the FRB’s annual CCAR process is now used to calibrate the Bancorp’s stress capital buffer requirement. Among other changes, the revised capital plan rule also eliminated the assumption that the Bancorp’s balance sheet assets would increase over the planning horizon. In addition, provided that the Bancorp is otherwise in compliance with automatic restrictions on distributions under the Capital Rules, the Bancorp is no longer required to seek prior approval to make capital distributions in excess of those included in its capital plan. The Bancorp is required to provide the FRB notice within 15 days after making any capital distributions in excess of those included in its capital plan.

Under its CCAR process, the FRB annually evaluates capital adequacy, internal capital adequacy assessment processes and capital distribution plans of BHCs with $100 billion or more in total consolidated assets. The CCAR process is intended to help ensure that those BHCs have robust, forward-looking capital planning processes that account for each company’s unique risks and that permit continued operations during times of economic and financial stress. The mandatory elements of the capital plan are an assessment of the expected uses and sources of capital over a nine-quarter planning horizon, a description of all planned capital actions over the planning horizon, a discussion of any expected changes to the BHC’s business plan that are likely to have a material impact on its capital adequacy or liquidity, a detailed description of the BHC’s process for assessing capital adequacy and the BHC’s capital policy.

As a result of the EPS Tailoring Rule, the Bancorp is subject to a quantitative assessment of capital through supervisory stress tests every two years, with the next required assessment in 2024. These supervisory stress tests are forward-looking quantitative evaluations of the impact of stressful economic and financial market conditions on the Bancorp's capital. Additionally, under the EPS Tailoring Rule, the Bancorp is no longer required to file semi-annual, company-run stress tests with the FRB and publicly disclose the results.

Stress Buffer Requirements
In March 2020, the FRB issued a final rule amending regulatory capital rules, capital plan rules and stress test rules. Under the final rule, the capital conservation buffer was replaced with a stress capital buffer requirement. During each supervisory stress testing cycle, the FRB will use the Bancorp’s supervisory stress test to determine its stress capital buffer, subject to a floor of 2.5%.
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Similar to the capital conservation buffer, the Bancorp must maintain capital ratios above the sum of its minimum risk-based capital ratios and the stress capital buffer to avoid certain limitations on capital distributions and discretionary bonuses to executive officers. The final rule is applicable to BHCs with $100 billion or more in total consolidated assets and was effective on October 1, 2020. 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 Fifth Third’s 2023 Capital Plan submission with an effective date of October 1, 2023. The Bancorp’s capital ratios have exceeded the stress capital buffer requirement for all periods presented.

Enhanced Prudential Standards
Pursuant to Title I of Dodd-Frank, certain U.S. BHCs are subject to enhanced prudential standards and early remediation requirements. As a result, the Bancorp is subject to more stringent standards, including liquidity and capital requirements, leverage limits, stress testing, resolution planning, and risk management standards, than those applicable to smaller institutions. Certain larger banking organizations are subject to additional enhanced prudential standards.

As discussed above, under the EPS Tailoring Rule, the Bancorp, as a Category IV banking organization, is subject to the least restrictive enhanced prudential standards applicable to firms with $100 billion or more in total consolidated assets. As compared to enhanced prudential standards that were applicable to the Bancorp, under the EPS Tailoring Rule, the Bancorp is no longer subject to company-run stress testing requirements and is subject to less frequent supervisory stress tests, less frequent internal liquidity stress tests, and reduced liquidity risk management requirements.

On August 29, 2023, the U.S. banking agencies issued a notice of proposed rulemaking to require that certain banking organizations with $100 billion or more in consolidated assets, including Fifth Third, comply with certain long-term debt requirements at the holding company and insured depository institution levels. These proposed requirements are intended to absorb losses and recapitalize the insured depository institution in the event of the failure of a banking organization. As proposed, the rules would be phased in over a three-year period after their effective date. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact.

Heightened Governance and Risk Management Standards
The OCC has published guidelines documenting expectations for the governance and risk management practices of certain large financial institutions, including the Bank. The guidelines require covered institutions to establish and adhere to a written governance framework in order to manage and control their risk-taking activities. In addition, the guidelines provide standards for the institutions’ boards of directors to oversee the risk governance framework. The Bank currently has a written governance framework and associated controls.

Privacy and Data Security
The OCC, FRB, FDIC and other bank regulatory agencies have adopted guidelines for safeguarding confidential, personal customer information. The guidelines require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to create, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, protect against any anticipated threats or hazards to the security or integrity of such information and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. In addition, various U.S. regulators, including the OCC, FRB and the SEC, have increased their focus on cybersecurity through guidance, examinations and regulations. The Bancorp has adopted a customer information security program that has been approved by the Bancorp’s Board of Directors.

The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers. In general, the statute requires explanations to consumers on policies and procedures regarding the disclosure of such nonpublic personal information and, except as otherwise required by law, prohibits disclosing such information except as provided in the banking subsidiary’s policies and procedures. The Bancorp’s banking subsidiary has implemented a privacy policy.

States are also increasingly proposing or enacting legislation that relates to data privacy and data protection such as the California Consumer Privacy Act. The Bancorp continues to assess the requirements of such laws and proposed legislation and their applicability to the Bancorp. Moreover, these laws, and proposed legislation, are still subject to revision or formal guidance and they may be interpreted or applied in a manner inconsistent with our understanding.

Like other lenders, the Bank and other of the Bancorp’s subsidiaries use credit bureau data in their underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act (“FCRA”), and the FCRA also regulates reporting information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on the Bancorp and its subsidiaries.

Anti-Money Laundering and Economic Sanctions
The Bancorp is subject to federal laws that are designed to counter money laundering and terrorist financing, and transactions with certain persons, companies or foreign governments sanctioned by the United States. These include the Bank Secrecy Act, the Money Laundering Control Act, the USA PATRIOT Act and regulations for the International Emergency Economic Powers Act and the Trading with the Enemy Act, as administered by the United States Treasury Department’s Office of Foreign Assets Control. These laws obligate depository institutions and broker-dealers to verify their customers’ identity, conduct customer due diligence, report on suspicious activity, file reports of transactions in currency and conduct enhanced due diligence on certain accounts.
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They also prohibit U.S. persons from engaging in transactions with certain designated restricted countries and persons. Depository institutions and broker-dealers are required by their federal regulators to maintain robust policies and procedures in order to ensure compliance with these obligations.

Failure to comply with these laws or maintain an adequate compliance program can lead to significant monetary penalties and reputational damage and federal regulators evaluate the effectiveness of an applicant in combating money laundering when determining whether to approve a proposed bank merger, acquisition, restructuring, or other expansionary activity. There have been a number of significant enforcement actions by regulators, as well as state attorneys general and the Department of Justice, against banks, broker-dealers and non-bank financial institutions with respect to these laws and some have resulted in substantial penalties, including criminal pleas. The Bancorp’s Board has approved policies and procedures that the Bancorp believes comply with these laws.

Executive Compensation
Pursuant to Dodd-Frank, each public company must give its shareholders the opportunity to vote on the compensation of its executives at least once every three years. The SEC also adopted rules on disclosure and voting requirements for golden parachute compensation that is payable to named executive officers in connection with sale transactions. The rules implementing the pay ratio provisions of Dodd-Frank require companies to disclose the ratio of the compensation of its chief executive officer to the median compensation of its employees.

The SEC’s rules also direct the stock exchanges to prohibit listing classes of equity securities of a company if a company’s compensation committee members are not independent. The rules also provide that a company’s compensation committee may only select a compensation consultant, legal counsel or other advisor after taking into consideration factors to be identified by the SEC that affect the independence of a compensation consultant, legal counsel or other advisor.

Dodd-Frank required the SEC to issue rules directing the stock exchanges to prohibit listing any security of a company unless the company develops and implements a policy providing for disclosure of the policy of the company on incentive-based compensation that is based on financial information required to be reported under the securities laws. These rules became effective for the Bancorp on December 1, 2023. In the event the company is required to prepare an accounting restatement due to the material noncompliance of the company with any financial reporting requirement under the securities laws, the company will recover from any current or former executive officer of the company who received incentive-based compensation during the three-year period preceding the date on which the company is required to prepare the restatement based on the erroneous data, any exceptional compensation above what would have been paid under the restatement.

On August 25, 2022, the SEC finalized rules implementing the pay versus performance disclosure requirement mandated by Dodd–Frank. Under the new rules, reporting companies are required to include a tabular and narrative disclosure of specified executive compensation and financial performance measures for the five most recently completed fiscal years in proxy statements for fiscal years ending on or after December 16, 2022. Additionally, companies are required to use the company information in the table to give a clear description of the relationships between compensation actually paid to specified executive officers to the cumulative total shareholder return, net income, and company-selected financial measures.

The SEC has issued rules (as required by Dodd-Frank) requiring that each company disclose in the proxy materials for its annual meetings whether an employee or board member is permitted to purchase financial instruments designed to hedge or offset decreases in the market value of equity securities granted as compensation or otherwise held by the employee or board member.

The Bancorp’s compensation practices are also subject to oversight by the FRB. The scope and content of compensation regulation in the financial industry are continuing to develop, and the regulations and resulting market practices are expected to continue to evolve over a number of years. In June 2016, the SEC and the federal banking agencies issued a proposed rule to implement the incentive-based compensation provisions of section 956 of Dodd-Frank. The proposal would establish new requirements for incentive-based compensation at institutions with assets of at least $1 billion. No final rule has been issued, but the Biden Administration may revisit this proposal.

Debit Card Interchange Fees
Dodd-Frank includes a set of rules requiring that interchange transaction fees for electronic debit transactions be reasonable and proportional to certain costs associated with processing the transactions. Interchange fees for electronic debit transactions are limited to 21 cents plus 0.05% of the transaction, plus an additional one cent per transaction fraud adjustment. These rules impose requirements regarding routing and exclusivity of electronic debit transactions, and generally require that debit cards be usable in at least two unaffiliated networks. On October 25, 2023, the FRB proposed to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward. Fifth Third continues to monitor the development of these proposed rule revisions.

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Resolution Planning
In past years, the Bancorp was required to submit annually to the FRB and the FDIC a resolution plan for the orderly resolution of the Bancorp and its significant legal entities under the U.S. Bankruptcy Code or other applicable insolvency laws in a rapid and orderly fashion in the event of future material financial distress or failure. In October 2019, the FRB and the FDIC adopted amendments to their resolution planning rule to adjust the thresholds at which certain resolution planning requirements apply to BHCs with $100 billion or more in total consolidated assets, including the Bancorp. As a result of these amendments, the Bancorp is no longer required to submit an annual resolution plan to the FRB and the FDIC.

In addition, the Bank is required to periodically file a separate resolution plan with the FDIC. EGRRCPA did not change the FDIC’s rules that require the Bank to periodically file a separate resolution plan. In April 2019, the FDIC released an advanced notice of proposed rulemaking with respect to the FDIC’s bank resolution plan requirements that requested comments on how to better tailor bank resolution plans to a firm’s size, complexity, and risk profile. Until the FDIC’s revisions to its bank resolution plan requirement are finalized, no bank resolution plans will be required to be filed.

In June 2021, the FDIC issued a public policy statement describing how the FDIC will implement certain aspects of the FDIC’s resolution plan rule with respect to banks with $100 billion or more in total assets. Further, in August 2021, the FDIC informed the Bank of certain requirements applicable to the resolution plan submission required under the FDIC’s rule with a submission due date of on or before December 1, 2022. The Bank submitted the resolution plan as required.

On August 29, 2023, the FDIC issued a proposed rule to modify its resolution planning requirements for institutions with at least $50 billion in total assets. The proposal would establish two tiers of covered institutions based on asset size with different content and submission requirements. For institutions with at least $100 billion in total assets, such as the Bank, the proposal enhances content requirements and requires full resolution plan submissions every two years and interim supplement submissions in the intervening years. Fifth Third continues to monitor the development of the resolution planning rules and the implications to the Bank.

Proprietary Trading and Investing in Certain Funds
Dodd-Frank sets forth restrictions on banking organizations’ ability to engage in proprietary trading and to have certain ownership interests in and relationships with certain covered funds, such as private equity and hedge funds (the “Volcker Rule”). The Volcker Rule generally prohibits any banking entity from engaging in short-term proprietary trading for its own account, but permits transactions in certain securities (such as securities of the U.S. government), transactions on behalf of customers and activities such as market making, underwriting and risk-mitigating hedging. In addition, the Volcker Rule limits the sponsorship of or investment in a covered fund by any banking entity. The Volcker Rule also prohibits certain types of transactions between a banking entity and any covered fund that is sponsored by the banking entity or for which it serves as investment manager or investment advisor, similar to those transactions between banks and their affiliates that are limited as described above. The FRB granted extensions to banking entities, including the Bancorp, to conform to the requirements of the Volcker Rule with respect to “illiquid funds,” as defined in the Volcker Rule. The Bancorp is also required to maintain a satisfactory Volcker Rule compliance program.

As of October 2019, the FRB, OCC, FDIC, Commodity Futures Trading Commission (“CFTC”) and SEC finalized amendments to the Volcker Rule. These amendments tailor the Volcker Rule’s compliance requirements to the amount of a firm’s trading activity, revise the definition of trading account, clarify certain key provisions in the Volcker Rule, and modify the information companies are required to provide to federal agencies. These amendments to the Volcker Rule are not material to our investing and trading activities.

In June 2020, the five federal agencies finalized amendments to the Volcker Rule’s restrictions on ownership interests in and relationships with covered funds. Among other things, these amendments permit banking entities to have relationships with and offer additional financial services to additional types of funds and investment vehicles. These requirements do not currently have a material impact and are not expected to have a future material impact on the Bancorp’s investing and trading activities.

Regulatory Regime for Derivatives
Title VII of Dodd-Frank imposes a registration regime and regulatory structure on the over-the-counter derivatives market, including requirements for clearing, exchange trading, capital margin, segregation trade reporting, position limits, business conduct standards, and recordkeeping. Title VII also requires certain persons to register as a swap dealer or a security-based swap dealer. The Bank is registered with the CFTC as a swap dealer. With the finalization of the position limits and capital requirements, CFTC and U.S. banking regulators have finalized the rules implementing Title VII applicable to the over-the-counter derivatives markets and swap dealers, and the SEC has finalized most of its rules related to security-based swaps. As a registered swap dealer, the Bank is subject to the requirements of Title VII, including rules related to internal and external business conduct standards, reporting, recordkeeping, mandatory clearing for certain swaps, and trade documentation and confirmation requirements. In addition, the U.S. banking regulators have finalized regulations applicable to the Bank regarding mandatory posting, collection, and segregation of margin by certain swap counterparties, and capital requirements. The Bank is not registered as a security-based swap dealer.

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Broker-Dealer and Investment Adviser Regulation
Fifth Third’s broker-dealer and investment adviser subsidiaries are subject to regulation by the SEC. Financial Industry Regulation Authority (“FINRA”) is the primary self-regulatory organization for Fifth Third’s registered broker-dealer subsidiaries. Fifth Third’s broker-dealer and investment adviser subsidiaries also are subject to additional regulation by states or local jurisdictions. The SEC and FINRA have active enforcement functions that oversee broker-dealers and investment advisers and can bring actions that result in fines, restitution, limitation on permitted activities, disqualification to continue to conduct certain activities and an inability to rely on certain favorable exemptions. In addition, certain changes in the activities of a broker-dealer require approval from FINRA, and FINRA considers a variety of factors in acting upon applications for such approval, including internal controls, capital levels, management experience and quality, prior enforcement and disciplinary history, and supervisory concerns.

Consumer Protection Regulation and Supervision
The Bancorp is subject to supervision and regulation by the CFPB with respect to federal consumer protection laws. The Bancorp is also subject to certain state consumer protection laws, and under Dodd-Frank, state attorneys general and other state officials are empowered to enforce certain federal consumer protection laws and regulations. State authorities have increased their focus on and enforcement of consumer protection rules. These federal and state consumer protection laws apply to a broad range of our activities and to various aspects of our business and include laws relating to interest rates, fair lending, disclosures of credit terms and estimated transaction costs to consumer borrowers, debt collection practices, the use of and the provision of information to consumer reporting agencies, and the prohibition of unfair, deceptive, or abusive acts or practices in connection with the offer, sale, or provision of consumer financial products and services.

The CFPB has promulgated many mortgage-related final rules since it was established under Dodd-Frank, including rules related to the ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, high-cost mortgage requirements, Home Mortgage Disclosure Act requirements, and appraisal and escrow standards for higher priced mortgages. The mortgage-related final rules issued by the CFPB have materially restructured the origination, servicing, and securitization of residential mortgages in the United States. These rules have impacted, and will continue to impact, the business practices of mortgage lenders, including the Bancorp.

Future Legislative and Regulatory Initiatives
Federal and state legislators as well as regulatory agencies may introduce or enact new laws and rules, or amend existing laws and rules, that may affect the regulation of financial institutions and their holding companies. The regulatory agencies may seek to apply higher standards to the Bancorp and the Bank than as required by law, through supervision. The impact of any future legislative or regulatory changes, or supervisory direction, cannot be predicted. However, such changes could affect the Bancorp’s business, financial condition and results of operations.
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ITEM 1A. RISK FACTORS
The risks and uncertainties listed below present risks that could have a material impact on the Bancorp’s financial condition, the results of its operations or its business. Some of these risks and uncertainties are interrelated and the occurrence of one or more of them may exacerbate the effect of others. The risks and uncertainties described below are not the only ones Fifth Third faces. Additional risks and uncertainties not presently known to Fifth Third or that Fifth Third currently believes to be immaterial may also adversely affect its business. See “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K for more information.

CREDIT RISKS

Deteriorating credit quality has adversely impacted Fifth Third in the past and may adversely impact Fifth Third in the future.
When Fifth Third lends money or commits to lend money, the Bancorp incurs credit risk or the risk of loss if borrowers do not repay their loans, leases, credit cards, derivative obligations, or other credit obligations. The performance of these credit portfolios significantly affects the Bancorp’s financial results and condition. If the current economic environment were to deteriorate, more customers may have difficulty in repaying their credit obligations which could result in a higher level of credit losses and reserves for credit losses. Fifth Third reserves for credit losses by establishing reserves through a charge to earnings. The amount of these reserves is based on Fifth Third’s assessment of credit losses expected to be incurred in the credit portfolios including unfunded credit commitments. The process for determining the amount of the ALLL and the reserve for unfunded commitments is critical to Fifth Third’s financial results and condition. Such determination requires difficult, subjective and complex judgments about the environment, including analysis of economic or market conditions that may impair the ability of borrowers to repay their loans.

Fifth Third may underestimate the credit losses expected to be incurred in its portfolios and have credit losses in excess of the amount reserved. Fifth Third may increase the reserve because of changing economic or market conditions, including falling home prices or higher unemployment, or other factors such as changes in borrower’s behavior or changing protections in credit agreements. As an example, borrowers may “strategically default,” or discontinue making payments on their real estate-secured loans if the value of the real estate is less than what they owe, even if they are still financially able to make the payments.

Fifth Third believes that both the ALLL and the reserve for unfunded commitments are adequate to cover expected losses at December 31, 2023; however, there is no assurance that they will be sufficient to cover future credit losses associated with exposures existing at December 31, 2023, especially if economic conditions decline, including but not limited to housing and employment conditions. In the event of significant deterioration in economic or market conditions, Fifth Third may be required to increase reserves in future periods, which would reduce earnings.

For more information, refer to the Credit Risk Management subsection of the Risk Management section and the ALLL and Reserve for Unfunded Commitments subsections of the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Fifth Third may have more credit risk and higher credit losses to the extent loans are concentrated by exposure to individual borrowers, location or industry of the borrowers or collateral.
Fifth Third’s credit risk and credit losses can increase if its loans are concentrated among individual borrowers, borrowers engaged in the same or similar activities, industries or geographies or to borrowers who as a group may be uniquely or disproportionately affected by economic or market conditions. Deterioration in economic conditions, including housing conditions or commodity and real estate values in certain states or locations could result in materially higher credit losses if loans are concentrated in those locations or by other factors. Fifth Third has significant exposure to businesses in certain economic sectors such as manufacturing, real estate, financial services, insurance and healthcare, and weaknesses in those businesses may adversely impact Fifth Third’s business, results of operations or financial condition. Additionally, Fifth Third has a substantial portfolio of commercial and residential real estate loans and weaknesses in residential or commercial real estate markets may adversely impact Fifth Third’s business, results of operations or financial condition.

Problems encountered by other financial institutions could adversely affect financial markets generally and have direct and indirect adverse effects on Fifth Third.
Fifth Third has exposure to counterparties in the financial services industry and other industries and routinely executes transactions with such counterparties, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients. Many of Fifth Third’s transactions with other financial institutions expose Fifth Third to credit risk in the event of default of a counterparty or client. In addition, Fifth Third’s credit risk may be affected when the collateral it holds cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure. The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which the Bancorp interacts on a daily basis, and therefore could adversely affect Fifth Third.

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Inability to refinance in capital markets could cause a default that impacts Fifth Third borrowers.
Some Fifth Third customers rely on additional sources of capital from outside the Bancorp. If capital markets are disrupted or unavailable to these borrowers such that they cannot obtain funds for refinancing, those borrowers may experience a shortfall that would leave them unable to honor short-term and/or long-term obligations to the Bancorp.

LIQUIDITY RISKS

Fifth Third must maintain adequate sources of funding and liquidity.
Fifth Third must maintain adequate funding sources in the normal course of business to support its operations and fund outstanding liabilities, as well as meet regulatory expectations. Fifth Third primarily relies on bank deposits to be a low cost and stable source of funding for the loans it makes and the operation of its business. Core deposits, which include transaction deposits and certificates of deposit $250,000 or less, have historically provided Fifth Third with a sizeable source of relatively stable and low-cost funds (average core deposits funded 76% of average total assets for the year ending December 31, 2023). In addition to customer deposits, sources of liquidity include investments in the securities portfolio, Fifth Third’s sale or securitization of loans in secondary markets, the pledging of loans and investment securities to access secured borrowing facilities through the FHLB and the FRB, and Fifth Third’s ability to raise funds in money and capital markets.

Fifth Third’s liquidity and ability to fund and operate its business could be materially adversely affected by a variety of conditions and factors, including financial and credit market disruptions and volatility or a lack of market or customer confidence in financial markets in general similar to what occurred during the financial crisis in 2008 and early 2009, which may result in a loss of customer deposits or outflows of cash or collateral and/or ability to access capital markets on favorable terms.

Other conditions and factors that could materially adversely affect Fifth Third’s liquidity and funding include:
•a lack of market or customer confidence in Fifth Third or negative news about Fifth Third, regional banks or the financial services industry generally, which also may result in a loss of customer deposits and/or negatively affect Fifth Third’s ability to access the capital markets;
•the loss of customer deposits due to competition from other banks or due to alternative investments;
•inability to sell or securitize loans or other assets;
•increased collateral requirements;
•increased regulatory requirements;
•reductions in one or more of Fifth Third’s credit ratings;
•increased utilization of revolving lines of credit by customers; and
•systematic failure of financial market utilities relied upon by Fifth Third to settle intrabank payment activity.

A reduction in Fifth Third’s credit rating could adversely affect its ability to retain deposits, borrow funds (including by raising the cost of borrowings substantially) and could cause creditors and business counterparties to raise collateral requirements or take other actions that could adversely affect Fifth Third’s ability to raise liquidity or capital. Many of the above conditions and factors may be caused by events over which Fifth Third has little or no control such as what occurred during the financial crisis. There can be no assurance that significant disruption and volatility in the financial markets will not occur again in the future.

Regulatory changes relating to liquidity and risk management may also negatively impact Fifth Third’s results of operations and competitive position. Various regulations have been adopted to impose more stringent liquidity requirements for large financial institutions, including Fifth Third. These regulations address, among other matters, liquidity stress testing and minimum liquidity requirements. The application of certain of these regulations to banking organizations, such as Fifth Third, have been modified, including in connection with the implementation of the Tailoring Rules in the EGRRCPA.

If Fifth Third is unable to continue to fund assets through customer bank deposits or access capital markets on favorable terms or if Fifth Third suffers an increase in borrowing costs or otherwise fails to manage liquidity effectively, Fifth Third’s liquidity, operating margins and financial results and condition may be materially adversely affected. Fifth Third may also need to raise additional capital and liquidity through the issuance of stock, which could dilute the ownership of existing stockholders, or reduce or even eliminate common stock dividends or share repurchases to preserve capital and liquidity.

Fifth Third and/or the holders of its securities could be adversely affected by unfavorable ratings from rating agencies.
Fifth Third’s ability to access the capital markets is important to its overall funding profile. This access is affected by the ratings assigned by rating agencies to Fifth Third, certain of its subsidiaries and particular classes of securities they issue. The interest rates that Fifth Third pays on its securities are also influenced by, among other things, the credit ratings that it, its subsidiaries and/or its securities receive from recognized rating agencies. A downgrade to Fifth Third or its subsidiaries’ credit rating could affect its ability to access the capital markets, increase its borrowing costs and negatively impact its profitability. A ratings downgrade to Fifth Third, its subsidiaries or their securities could also create obligations or liabilities of Fifth Third under the terms of its outstanding securities that could increase Fifth Third’s costs or otherwise have a negative effect on its results of operations or financial condition.

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Additionally, a downgrade of the credit rating of any particular security issued by Fifth Third or its subsidiaries could negatively affect the ability of the holders of that security to sell the securities and the prices at which any such securities may be sold.

Other rating agencies may also take actions to downgrade their ratings of the securities issued by Fifth Third or its subsidiaries. There can be no assurances that Fifth Third or its subsidiaries will retain any specific rating from any specific rating agency.

If Fifth Third is unable to maintain or grow its deposits, it may be subject to paying higher funding costs.
The total amount that Fifth Third pays for funding costs is dependent, in part, on Fifth Third’s ability to maintain or grow its deposits. If Fifth Third is unable to sufficiently maintain or grow its deposits to meet liquidity objectives, it may be subject to paying higher funding costs. Fifth Third competes with banks and other financial services companies for deposits. If competitors raise the rates they pay on deposits, Fifth Third’s funding costs may increase, either because Fifth Third raises rates to avoid losing deposits or because Fifth Third loses deposits and must rely on more expensive sources of funding. Also, customers typically move money from bank deposits to alternative investments during rising interest rate environments. Customers may also move noninterest-bearing deposits to interest-bearing accounts increasing the cost of those deposits. Checking and savings account balances and other forms of customer deposits may decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return trade-off. Fifth Third’s bank customers could take their money out of the Bank and put it in alternative investments, causing Fifth Third to lose a lower-cost source of funding. Higher funding costs reduce Fifth Third’s net interest margin and net interest income.

The Bancorp’s ability to receive dividends from its subsidiaries accounts for most of its revenue and could affect its liquidity and ability to pay dividends.
Fifth Third Bancorp is a separate and distinct legal entity from its subsidiaries. Fifth Third Bancorp typically receives substantially all of its revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on Fifth Third Bancorp’s stock and interest and principal on its debt. The ability of Fifth Third Bancorp’s subsidiaries to pay dividends or make other payments or distributions depends on their respective operating results and may be restricted by, among other things, regulatory constraints, prevailing economic conditions (including interest rates), and financial, business and other factors, many of which are beyond the control of Fifth Third Bancorp. Various federal and/or state laws and regulations, as well as regulatory expectations, limit the amount of dividends that the Bancorp’s banking subsidiary and certain nonbank subsidiaries may pay to the Bancorp. Regulatory scrutiny of liquidity and capital levels at bank holding companies and insured depository institutions has resulted in increased regulatory focus on all aspects of capital planning, including dividends and other distributions to shareholders of banks such as the parent bank holding companies. In addition, Fifth Third Bancorp’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors.

Regulatory limitations on the Bancorp’s ability to receive dividends from its subsidiaries, economic conditions and other financial or business factors could have a material adverse effect on its liquidity and ability to pay dividends on stock or interest and principal on its debt and to engage in share repurchases. For further information, refer to Regulation and Supervision in Item 1 of this Annual Report on Form 10-K and Note 3 of the Notes to Consolidated Financial Statements.

OPERATIONAL RISKS

Fifth Third is exposed to cybersecurity risks that create both operational and reputational risk for the Bank and its customers across all lines of business.
In today’s digital world, more and more of Fifth Third’s business is conducted primarily via digital and mobile technology and information management systems. This includes the use of cloud computing, digital applications and third-party providers that host and store sensitive employee and customer information. Failures, interruptions of service or breaches in the security of these environments occur across the financial services industry with some frequency, including at Fifth Third and its third-party providers. If an event of this nature occurred at Fifth Third or one of its third-party providers and such event proved to be material, this could result in disruptions to Fifth Third’s accounting, deposit, lending and other systems, and adversely affect its customer relationships. While Fifth Third heavily invests in information security, technical resiliency, business continuity and disaster recovery planning, and has policies and procedures designed to detect, limit, and prevent the impact of these possible events, there can be no assurance that any such failure, interruption or security breach will not occur or, if any does occur, that it can be remediated in such a way to eliminate the risk.

There will always be efforts on the part of threat actors to breach information security at financial institutions or with respect to financial transactions. There have been several recent instances involving financial services, credit bureaus and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of corporate data, by both private individuals and foreign governments. In addition, because the techniques used to cause such security breaches change frequently, often are not recognized until launched against a target and may originate from remote and less regulated areas around the world, Fifth Third may be unable to proactively address these techniques or to implement adequate preventative measures. Despite Fifth Third’s efforts to prevent a cyber-attack, a successful cyber-attack could persist for an extended period of time before being detected, and, following detection, it could take considerable time for Fifth Third to obtain full and reliable information about the cybersecurity incident and the extent, amount and type of information compromised. During the course of an investigation, Fifth Third may not necessarily know the full effects of the incident or how to remediate it, and actions and decisions that are taken or made in an effort to mitigate risk may further increase the costs and other negative consequences of the incident.
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Furthermore, financial services companies are regularly the target of cyber-attacks such as distributed denial of service, social engineering and ransomware attacks. The unintentional or willful acts or omissions of employees also remains the primary avenue through which threat actors attempt to gain access to company networks, information systems, data and credentials.

An additional risk is the use of third- and fourth-party providers to host critical data and platforms for Fifth Third, or in some cases provide IT services to Fifth Third domestically and internationally. Fifth Third must make investments in its ability to oversee third- and fourth-party providers and its failure to do so could result in customer losses, operational issues, litigation, regulatory actions and reputational loss. Industry trends are moving more to cloud providers, Software as a Service partners and hosted platforms that traditionally resided inside Fifth Third’s firewall and data centers. These additional risks are further heightened through the increasing use of near real-time money movement solutions such as Zelle, and increase the difficulty to detect, prevent and recover fraudulent transactions. These additional risks are increasing the costs of Fifth Third’s investment in technology and cybersecurity and require further investment in cyber-related and data loss event insurance which Fifth Third has in place. Though Fifth Third has insurance against some cybersecurity risks and attacks, it may not be sufficient to offset the impact of a material loss event. Future investment in these areas could have higher than expected costs and/or result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations.

If personal, confidential or proprietary information of customers or clients in the Bancorp’s or such vendors’ or other third-parties’ possession were to be mishandled or misused, the Bancorp could suffer significant regulatory consequences, reputational damage and financial loss.

Fifth Third relies on its systems and certain third-party service providers and certain failures (including those related to cybersecurity or weather events exacerbated by climate change) could materially adversely affect operations.
Fifth Third’s operations, including its financial and accounting systems, use computer systems and telecommunications networks operated by both Fifth Third and third-party service providers. Fifth Third may not be sufficiently resilient and may not recover from significant operational events in a timely manner which could create operational and reputational risks. Additionally, Fifth Third collects, processes and stores sensitive consumer data by utilizing those and other systems and networks. Fifth Third has security, backup and recovery systems in place, as well as a business continuity plan to ensure the systems will not be inoperable. Fifth Third also has security to prevent unauthorized access to the systems. In addition, Fifth Third requires its third-party service providers to maintain similar controls. However, Fifth Third cannot be certain that the measures will be successful.

A security breach in these systems or the loss or corruption of confidential information such as business results, transaction records and related information could adversely impact Fifth Third’s ability to provide timely and accurate financial information in compliance with legal and regulatory requirements, which could result in sanctions from regulatory authorities, significant reputational harm and the loss of customer confidence in Fifth Third. Additionally, security breaches or the loss, theft or corruption of customer information such as social security numbers, credit card numbers, account balances or other information could result in losses by Fifth Third's customers, litigation, regulatory sanctions, lost customers and revenue, increased costs and significant reputational harm.

Fifth Third’s necessary dependence upon automated systems to record and process its transaction volume poses the risk that technical system flaws or employee errors, tampering or manipulation of those systems will result in losses and may be difficult to detect. Fifth Third may also be subject to disruptions of its operating systems arising from events that are beyond its control (for example, computer viruses or electrical or telecommunications outages).

Third-party service providers with which the Bancorp does business both domestically and offshore, as well as vendors and other third parties with which the Bancorp’s customers do business, can also be sources of operational risk to the Bancorp, particularly where processes are highly concentrated or activities of customers are beyond the Bancorp’s security and control systems, such as through the use of the internet, personal computers, tablets, smart phones and other mobile services. Security breaches affecting the Bancorp’s customers, or systems breakdowns or failures, security breaches or employee misconduct affecting such other third-party service providers, may require the Bancorp to take steps to protect the integrity of its own operational systems or to safeguard confidential information of the Bancorp or its customers, thereby increasing the Bancorp’s operational costs and potentially diminishing customer satisfaction. If personal, confidential or proprietary information of customers or clients in the Bancorp’s or such vendors’ or other third parties’ possession were to be mishandled or misused, the Bancorp could suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could include circumstances where, for example, such information was erroneously provided to parties who are not permitted to have the information, either through the fault of the Bancorp’s systems, employees or counterparties, or where such information was intercepted or otherwise compromised by threat actors. The Bancorp may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond the Bancorp’s control, which may include, for example, security breaches; electrical or telecommunications outages; failures of computer components or servers or other damage to the Bancorp’s property or assets; natural disasters or severe weather conditions; health emergencies; or events arising from local or larger-scale political events, including outbreaks of hostilities or terrorist acts. While the Bancorp believes that its current business continuity plans are both sufficient and adequate, there can be no assurance that such plans will fully mitigate all potential business continuity risks to the Bancorp or its customers and clients.

Any failures or disruptions of the Bancorp’s systems or operations could give rise to losses in service to customers and clients, adversely affect the Bancorp’s business and results of operations by subjecting the Bancorp to losses or liability, or require the Bancorp to expend significant resources to correct the failure or disruption, as well as by exposing the Bancorp to reputational harm, litigation, regulatory fines or penalties or losses not covered by insurance.
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The Bancorp could also be adversely affected if it loses access to information or services from a third-party service provider as a result of a security breach or system or operational failure, or disruption affecting the third-party service provider. Fifth Third’s insurance may be inadequate to compensate for failures by, or affecting, third-party service providers upon which Fifth Third relies.

Fifth Third may not be able to effectively manage organizational changes and implement key initiatives in a timely fashion, or at all, due to competing priorities which could adversely affect its business, results of operations, financial condition and reputation.
Fifth Third is subject to rapid changes in technology, regulation and product innovation, and faces intense competition for customers, sources of revenue, capital, services, qualified employees and other essential business resources. In order to meet these challenges, Fifth Third is or may be engaged in numerous critical strategic initiatives at the same time. Accomplishing these initiatives may be complex, time intensive and require significant financial, technological, management and other resources. These initiatives may consume management’s attention and may compete for limited resources. In addition, organizational changes may need to be implemented throughout Fifth Third as a result of the new products, services, partnerships and processes that arise from the execution of these various strategic initiatives. Fifth Third may have difficulty managing these organizational changes and executing these initiatives effectively in a timely fashion, or at all. Fifth Third’s failure to do so could expose it to litigation or regulatory action and may damage Fifth Third’s business, results of operations, financial condition and reputation.

Fifth Third may not be able to successfully implement future information technology system enhancements, which could adversely affect Fifth Third’s business operations and profitability.
Fifth Third invests significant resources in information technology system enhancements in order to provide functionality and security at an appropriate level for ongoing product development and process re-engineering. Fifth Third may not be able to successfully implement and integrate future system enhancements, which could adversely impact the ability to provide timely and accurate financial information in compliance with legal and regulatory requirements, which could result in sanctions from regulatory authorities. Such sanctions could include fines and result in reputational harm and have other negative effects. Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact Fifth Third’s financial condition and results of operations and could result in significant costs to remediate or replace the defective components. In addition, Fifth Third may incur significant training, licensing, maintenance, consulting and amortization expenses during and after systems implementations, and any such costs may continue for an extended period of time. A failure to maintain or enhance Fifth Third’s competitive position with respect to technology, whether because of a failure to anticipate client expectations or other necessary changes, a failure in the performance of technological developments or an untimely roll out of developments, may cause Fifth Third to lose market share or incur additional expense.

Fifth Third may experience losses related to fraud, theft or violence.
Fifth Third has experienced, and may experience again in the future, losses incurred due to customer or employee fraud, theft or physical violence. Additionally, physical violence may negatively affect Fifth Third’s key personnel, facilities or systems. These losses may be material and negatively affect Fifth Third’s results of operations, financial condition or prospects. These losses could also lead to significant reputational risks and other effects. The industry fraud threat continues to evolve, including but not limited to, card fraud, check fraud, electronic fraud, wire fraud, social engineering and phishing attacks for identity theft and account takeover. Nationally, reported incidents of fraud and other financial crimes have increased. Increased use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and operations, coupled with the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others increases Fifth Third’s security risks. Fifth Third continues to invest in fraud prevention in the forms of people and systems designed to prevent, detect and mitigate the customer and financial impacts.

Fifth Third could suffer if it fails to attract and retain skilled personnel.
Fifth Third’s success depends, in large part, on its ability to attract and retain key individuals. Competition for qualified candidates in the activities and markets that Fifth Third serves is intense, which may increase Fifth Third’s expenses and may result in Fifth Third not being able to hire candidates or retain them. If Fifth Third is not able to hire qualified candidates or retain its key personnel, Fifth Third may be unable to execute its business strategies and may suffer adverse consequences to its business, operations and financial condition.

Compensation paid by financial institutions such as Fifth Third is heavily regulated, particularly under Dodd-Frank, which affects the amount and form of compensation Fifth Third pays to hire and retain talented employees. If Fifth Third is unable to attract and retain qualified employees, or do so at rates necessary to maintain its competitive position, or if compensation costs required to attract and retain employees become more expensive, Fifth Third’s performance, including its competitive position, could be materially adversely affected.

Fifth Third may experience operational disruption from the effects of climate change.
Fifth Third faces operational risk from the effects of climate change as an increase in severe weather may cause closures, damage to infrastructure, or damage to Fifth Third’s physical locations that may disrupt the physical operation of the Bancorp. These interruptions may impair Fifth Third’s ability to operate and may interfere with its ability to carry out business and serve clients and customers.

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LEGAL AND REGULATORY COMPLIANCE RISKS

Fifth Third and/or its affiliates are or may become involved from time to time in information-gathering requests, investigations and litigation, regulatory or other enforcement proceedings by various governmental regulatory agencies and law enforcement authorities, as well as self-regulatory agencies which may lead to adverse consequences.
Fifth Third and/or its affiliates are or may become involved from time to time in information-gathering requests, reviews, investigations and proceedings (both formal and informal) by 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 customers and businesses. Also, a violation of law or regulation by another financial institution may give rise to an inquiry or investigation by regulators or other authorities of the same or similar practices by Fifth Third. In addition, the complexity of the federal and state regulatory and enforcement regimes in the U.S. means that a single event or topic may give rise to numerous and overlapping investigations and regulatory proceedings. Furthermore, Fifth Third and certain of its directors and officers have been named from time to time as defendants in various class actions and other litigation relating to Fifth Third’s business and activities, as well as regulatory or other enforcement proceedings. Past, present and future litigation have included or could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Investigations by regulatory authorities may from time to time result in civil or criminal referrals to law enforcement. Enforcement authorities may seek admissions of wrongdoing and, in some cases, criminal pleas as part of the resolutions of matters and any such resolution of a matter involving Fifth Third which could lead to increased exposure to private litigation, could adversely affect Fifth Third’s reputation and could result in limitations on Fifth Third’s ability to do business in certain jurisdictions. Additionally, in some cases, regulatory authorities may take supervisory actions that are considered to be confidential supervisory information which may not be publicly disclosed.

Each of the matters described above may result in material adverse consequences, including without limitation, adverse judgments, settlements, fines, penalties, injunctions or other actions, amendments and/or restatements of Fifth Third’s SEC filings and/or financial statements, as applicable, and/or determinations of material weaknesses in its disclosure controls and procedures. In addition, responding to information-gathering requests, reviews, investigations and proceedings, regardless of the ultimate outcome of the matter, could be time-consuming and expensive.

Like other large financial institutions and companies, Fifth Third is also subject to risk from potential employee misconduct, including non-compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or significant regulatory or other enforcement action against Fifth Third could materially adversely affect its business, financial condition or results of operations and/or cause significant reputational harm to its business. The outcome of lawsuits and regulatory proceedings may be difficult to predict or estimate. Although Fifth Third establishes accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, Fifth Third does not have accruals for all legal proceedings where it faces a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal proceedings, amounts accrued may not represent the ultimate loss to Fifth Third from the legal proceedings in question. Thus, Fifth Third’s ultimate losses may be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies, which could adversely affect Fifth Third’s results of operations.

In addition, there has been a trend of public settlements with governmental agencies that may adversely affect other financial institutions, to the extent such settlements are used as a template for future settlements. The uncertain regulatory enforcement environment makes it difficult to estimate probable losses, which can lead to substantial disparities between legal reserves and actual settlements or penalties.

For further information on specific legal and regulatory proceedings, refer to Note 19 of the Notes to Consolidated Financial Statements.

Fifth Third may be required to repurchase residential mortgage loans or reimburse investors and others as a result of breaches in contractual representations and warranties.
Fifth Third sells residential mortgage loans to various parties, including government-sponsored enterprises (“GSE”) and other financial institutions that purchase residential mortgage loans for investment or private label securitization. Fifth Third may be required to repurchase residential mortgage loans, indemnify the securitization trust, investor or insurer, or reimburse the securitization trust, investor or insurer, for credit losses incurred on loans in the event of a breach of contractual representations or warranties that is not remedied within a specified period (usually 60 days or less) after Fifth Third receives notice of the breach. Contracts for residential mortgage loan sales to the GSEs include various types of specific remedies and penalties that could be applied to inadequate responses to repurchase requests. As a result, Fifth Third has established reserves in its consolidated financial statements for probable losses related to the residential mortgage loans it has sold. If economic conditions or the housing market deteriorate or future investor repurchase demand and Fifth Third’s success at appealing such repurchase requests differ from expectations, Fifth Third could have increased repurchase obligations and increased loss severity on repurchases, requiring material additions to the repurchase reserve. Due to uncertainties relating to these factors, there can be no assurance that the reserves Fifth Third establishes will be adequate or that the total amount of losses incurred will not have a material adverse effect on Fifth Third’s financial condition or results of operations.

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Fifth Third is subject to extensive governmental regulation which could adversely impact Fifth Third or the businesses in which Fifth Third is engaged.
Government regulation and legislation subject Fifth Third and other financial institutions to restrictions, oversight and/or costs that may have an impact on Fifth Third’s business, financial condition, results of operations or the price of its common stock.

Fifth Third is subject to extensive federal and state regulation, supervision and legislation that govern almost all aspects of its operations and limit the businesses in which Fifth Third may engage. These laws and regulations may change from time to time and are primarily intended for the protection of consumers, borrowers and depositors and are not designed to protect security-holders. In the past decade, the scope of the laws and regulations and the intensity of the supervision to which Fifth Third is subject increased in response to the 2008-2009 financial crisis as well as other factors such as technological and market changes. Compliance with these laws and regulations has resulted in and will continue to result in additional costs, which could be significant, and may have a material and adverse effect on Fifth Third’s results of operations. In addition, if Fifth Third does not appropriately comply with current or future legislation and regulations, especially those that apply to its consumer operations, which has been an area of heightened focus, Fifth Third may be subject to fines, penalties or judgments, or material regulatory restrictions on its businesses, which could adversely affect operations and, in turn, financial results. Additionally, actions by regulatory agencies or significant litigation against Fifth Third could cause it to devote significant time and resources to defending itself and may lead to penalties that materially affect Fifth Third and its shareholders. Future changes in laws or regulations (including tax laws and regulations such as the Inflation Reduction Act) or their interpretations or enforcement may also be materially adverse to Fifth Third and its shareholders or may require Fifth Third to expend significant time and resources to comply with such requirements. In addition, as climate change issues become more prevalent, the U.S. and foreign governments are beginning to respond to these issues. The increasing government focus on climate change may result in new environmental regulations, including disclosure required by the SEC, that could result in additional compliance costs. Similarly, the impact of domestic and international events related to financial crime such as fraud, money laundering, and economic sanctions will continue to be an area of constant change, risk, and regulatory focus which pose ongoing regulatory, compliance, operational and financial risks.

The Biden Administration has sought to implement a regulatory agenda that has included, or could include, a heightened focus on the risks arising from climate change, fair lending, consumer protection, Bank Secrecy Act and anti-money laundering requirements, topics related to social equity, executive compensation, and increased capital and liquidity, as well as limits on share buybacks and dividends. In addition, mergers and acquisitions may be hindered by increased antitrust and other regulatory scrutiny. Reform proposals are also expected for the short-term wholesale markets. It is uncertain if the implementation of any of these policies would impact Fifth Third, and if so, what the impact would be.

Fifth Third cannot predict whether any pending or future legislation will be adopted or the substance and impact of any such new legislation on Fifth Third. Changes in regulation and supervisory and enforcement focus could affect Fifth Third in a substantial way and could have an adverse effect on its business, financial condition and results of operations. Additionally, legislation or regulatory reform could affect the behaviors of third parties that Fifth Third deals within the course of business, such as rating agencies, insurance companies and investors.

In addition, changes in laws or regulations that affect Fifth Third’s customers and business partners could negatively affect Fifth Third’s revenues and expenses. Certain changes in laws such as tax law reforms that impose limitations on the deductibility of interest may decrease the demand for Fifth Third’s products or services and could negatively affect its revenues and results of operations. Other changes in laws or regulations could cause Fifth Third’s third-party service providers and other vendors to increase the prices they charge to Fifth Third and negatively affect Fifth Third’s expenses and financial results.

Fifth Third could suffer from unauthorized use of intellectual property.
Fifth Third develops for itself, and licenses from others, intellectual property for use in conducting its business. This intellectual property has been, and may be, subject to misappropriation or infringement by third parties as well as claims that Fifth Third’s use of certain technology or other intellectual property infringes on rights owned by others. Fifth Third has been, and may be, subject to disputes and/or litigation concerning these claims and could be held responsible for significant damages covering past activities and substantial fees to continue to engage in these activities in the future. Fifth Third may also be unable to acquire rights to use certain intellectual property that is important for its business and may be unable to effectively engage in critical business activities. If Fifth Third is unable to protect or acquire rights to use intellectual property it owns or licenses, it may lose certain competitive advantages, incur expenses and/or lose revenue and may suffer harm to its business results and financial condition.

Fifth Third is subject to various regulatory requirements that may limit its operations and potential growth.
Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions and their holding companies, the FRB, the FDIC, the CFPB and the OCC have the authority to compel or restrict certain actions by the Bancorp and the Bank. The Bancorp and the Bank are subject to such supervisory authority and, more generally, must, in certain instances, obtain prior regulatory approval before engaging in certain activities or corporate decisions. There can be no assurance that such approvals, if required, would be forthcoming or that such approvals would be granted in a timely manner. Failure to receive any such approval, if required, could limit or impair the Bancorp’s operations, restrict its growth, ability to compete, innovate or participate in industry consolidation and/or affect its dividend policy. Such actions and activities that may be subject to prior approval include, but are not limited to, increasing dividends or other capital distributions by the Bancorp or the Bank, entering into a merger or acquisition transaction, acquiring or establishing new branches, and entering into certain new businesses.
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Failure by the Bancorp or the Bank to meet the applicable eligibility requirements for FHC status (including capital and management requirements and that the Bank maintain at least a “Satisfactory” CRA rating) may result in restrictions on certain activities of the Bancorp, including the commencement of new activities and mergers with or acquisitions of other financial institutions and could ultimately result in the loss of FHC status.

Fifth Third and other financial institutions are highly regulated and subject to extensive oversight, supervision and examination by regulators, including the FRB, OCC, FDIC, CFPB, SEC, CFTC, FINRA, the National Futures Association and other state, federal and self-regulatory entities. Fifth Third is also subject to certain regulatory requirements as a result of its banking activity including with respect to stress testing, liquidity and capital levels, asset quality, provisioning, AML/BSA, fair lending, consumer compliance and other prudential matters and efforts to ensure that financial institutions take steps to improve their risk management and prevent future crises. For more information, refer to Regulation and Supervision—Regulatory Regime for Derivatives in Item 1 of this Annual Report on Form 10-K.

In this regard, government authorities, including the bank regulatory agencies and law enforcement, are also pursuing aggressive enforcement actions with respect to compliance and other legal matters involving financial activities, which heightens the risks associated with actual and perceived compliance failures and may also adversely affect Fifth Third’s ability to enter into certain transactions or engage in certain activities, or obtain necessary regulatory approvals in connection therewith. The government enforcement authority includes, among other things, the ability to assess significant civil or criminal monetary penalties, fines, or restitution; to issue cease and desist or removal orders; and to initiate injunctive actions against banking organizations and institution-affiliated parties. These enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.

In some cases, regulatory agencies may take supervisory actions that may not be publicly disclosed, which restrict or limit a financial institution. Finally, as part of Fifth Third’s regular examination process, the Bancorp and the Bank’s respective regulators may advise it and its banking subsidiary to operate under various restrictions as a prudential matter. Such supervisory actions or restrictions, if and in whatever manner imposed, could negatively affect Fifth Third’s ability to engage in new activities and certain transactions, as well as have a material adverse effect on Fifth Third’s business and results of operations and may not be publicly disclosed.

Fifth Third could face serious negative consequences if its third-party service providers, business partners or investments fail to comply with applicable laws, rules or regulations.
Fifth Third is expected to oversee the legal and regulatory compliance of its business endeavors, including those performed by third-party service providers, business partners, other vendors and certain companies in which Fifth Third has invested. Legal authorities and regulators could hold Fifth Third responsible for failures by these parties to comply with applicable laws, rules or regulations. These failures could expose Fifth Third to significant litigation or regulatory action that could limit its activities or impose significant fines or other financial losses. Additionally, Fifth Third could be subject to significant litigation from consumers or other parties harmed by these failures and could suffer significant losses of business and revenue, as well as reputational harm as a result of these failures.

As a regulated entity, the Bancorp is subject to certain capital requirements that may limit its operations, potential growth and ability to pay or increase dividends on its common stock or to repurchase its capital stock.
As a BHC and an FHC, the Bancorp is subject to the comprehensive, consolidated supervision and regulation of the FRB, including risk-based and leverage capital requirements, investment practices, dividend policy and growth. The Bancorp must maintain certain risk-based and leverage capital ratios as required by the FRB which can change depending upon general economic conditions and the Bancorp’s particular condition, risk profile and growth plans. Compliance with the capital requirements, including leverage ratios, may limit operations that require the intensive use of capital and could adversely affect the Bancorp’s ability to expand or maintain present business levels.

Failure by the Bank to meet applicable capital requirements could subject it to a variety of enforcement actions available to the federal regulatory authorities. These include limitations on the ability of the Bancorp to pay dividends and/or repurchase shares, the issuance by the regulatory authority of a capital directive to increase capital, loss of FHC status and the termination of deposit insurance by the FDIC.

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 Fifth Third’s 2023 Capital Plan submission with an effective date of October 1, 2023. Further changes to applicable capital and liquidity requirements could result in unexpected or new limitations on the Bancorp’s ability to pay dividends and engage in share repurchases.
 
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Deposit insurance premiums levied against the Bank could increase further if the number of bank failures increase or the cost of resolving failed banks increases.
The FDIC maintains a Deposit Insurance Fund (“DIF”) to protect insured depositors in the event of bank failures. The DIF is funded by fees assessed on insured depository institutions including the Bank. Future deposit premiums paid by the Bank depend on FDIC rules, which are subject to change, the level of the DIF and the magnitude and cost of future bank failures. As of June 30, 2020, the DIF reserve ratio fell to 1.30%, below the statutory minimum of 1.35%. In order to restore the DIF to its statutorily mandated minimums, the FDIC significantly increased deposit insurance premium rates, including the Bank’s, resulting in increased expenses. The revised assessment rate schedules became effective January 1, 2023, and are applicable to the first quarterly assessment period of 2023. Additionally, on November 16, 2023, the FDIC finalized a special assessment to recover the loss to the DIF caused by the bank failures that occurred in 2023 to be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods, beginning the first quarterly assessment period of 2024. The FDIC may further increase the assessment rates or impose additional special assessments in the future, which may require the Bank to pay significantly higher FDIC premiums.

If an orderly liquidation of a systemically important BHC or non-bank financial company were triggered, Fifth Third could face assessments for the Orderly Liquidation Fund.
Dodd-Frank created authority for the orderly liquidation of systemically important BHCs and non-bank financial companies and is based on the FDIC’s bank resolution model. The Secretary of the U.S. Treasury may trigger liquidation under this authority only after consultation with the President of the United States and after receiving a recommendation from the board of the FDIC and the FRB upon a two-thirds vote. Liquidation proceedings will be funded by the Orderly Liquidation Fund established under Dodd-Frank, which will borrow from the U.S. Treasury and impose risk-based assessments on covered financial companies. Risk-based assessments would be made, first, on entities that received more in the resolution than they would have received in the liquidation to the extent of such excess and second, if necessary, on, among others, bank holding companies with total consolidated assets of $50 billion or more, such as Fifth Third. Any such assessments may adversely affect Fifth Third’s business, financial condition or results of operations.

MARKET RISKS: INTEREST RATE RISKS AND PRICE RISKS

Weakness in the U.S. economy, including within Fifth Third’s geographic footprint, has adversely affected Fifth Third in the past and may adversely affect Fifth Third in the future.
Fifth Third has been, and will continue to be, impacted by general business and economic conditions in the United States. These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and the strength of the U.S. economy and the local economies in which Fifth Third operates, all of which are beyond Fifth Third’s control. Deterioration or continued weakness in any of these conditions could result in a decrease in demand for Fifth Third’s products and services.

Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, which have been driven by factors such as the COVID-19 pandemic, the Russia/Ukraine conflict and the evolving conflict in Israel and Gaza, resulting in heightened credit risk, reduced valuation of investments, decreased economic activity, heightened risk of cyber-attacks, and inflation. Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of market disruption and volatility. In the event that these conditions recur or result in a prolonged economic downturn, Fifth Third’s results of operations, financial position and/or liquidity could be materially and adversely affected. These market conditions may affect the Bancorp’s ability to access debt and equity capital markets. In addition, as a result of recent financial and political events, Fifth Third may face increased regulation. Many of the other risk factors discussed in this Risk Factors section identify risks that result from, or are impacted by, a financial economic downturn. These include risks related to Fifth Third’s investments portfolio, the competitive environment and regulatory developments.

Global and domestic political, social and economic uncertainties and changes may adversely affect Fifth Third.
Global financial markets, including the United States, face political and economic uncertainties (such as recent budget deficit concerns and political conflict over legislation to raise the U.S. government’s debt limit) that may delay investment and hamper economic activity. International events such as trade disputes, separatist movements, leadership changes and political and military conflicts (such as the ongoing military tension between Russia and Ukraine and the evolving conflict in Israel and Gaza) could adversely affect global financial activity and markets and could negatively affect the U.S. economy. The United States is also facing a potentially contentious Presidential election as well as elections to determine the control of Congress and State governments. Additionally, the FRB and other major central banks have removed or reduced monetary accommodation and raised interest rates, increasing the risk of recession and may also negatively impact asset values and credit spreads that were impacted by extraordinary monetary stimulus. These potential negative effects on financial markets and economic activity could lead to reduced revenues, increased costs, increased credit risks and volatile markets, could adversely impact Fifth Third’s ability to raise liquidity via money and capital markets, and could negatively impact Fifth Third’s businesses, results of operations and financial condition.

Changes in interest rates could affect Fifth Third’s income and cash flows.
Fifth Third’s income and cash flows depend to a great extent on the difference between the interest rates earned on interest-earning assets such as loans and investment securities and the interest rates paid on interest-bearing liabilities such as deposits and borrowings. These rates are highly sensitive to many factors that are beyond Fifth Third’s control, including general economic conditions in the U.S. or abroad and the policies of various governmental and regulatory agencies (in particular, the FRB).
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Changes in monetary policy, including changes in interest rates and inflation, could influence the origination of loans, the prepayment speed of loans, the purchase of investments, the generation of deposits and the rates received on loans and investment securities and paid on deposits or other sources of funding as well as customers’ ability to repay loans. For example, a tightening of the money supply by the FRB could reduce the demand for a borrower’s products and services. This could adversely affect the borrower’s earnings and ability to repay a loan, which could have a material adverse effect on Fifth Third’s financial condition and results of operations. The impact of these changes may be magnified if Fifth Third does not effectively manage the relative sensitivity of its assets and liabilities to changes in market interest rates. Fluctuations in these areas may adversely affect Fifth Third, its customers and its shareholders. Throughout 2022 and 2023, the Federal Reserve raised the federal funds rate to its current targeted rate between 5.25% and 5.5% in an effort to curb inflation. As inflation increases and market interest rates rise, the value of Fifth Third’s investment securities, particularly those that have fixed rates or longer maturities, could decrease. Increasing rates would also increase debt service requirements for some of Fifth Third’s borrowers and may adversely affect those borrowers’ ability to pay as contractually obligated and could result in additional delinquencies or charge-offs. Further, the increase in market interest rates is likely to reduce Fifth Third’s loan origination volume, particularly refinance volume, and/or reduce its interest rate spread, which could have an adverse effect on Fifth Third’s profitability and results of operations. Fifth Third cannot predict the nature or timing of future changes in monetary policies or the precise effects that they may have on Fifth Third’s activities and financial results.

Changes and trends in the capital markets may affect Fifth Third’s income and cash flows.
Fifth Third enters into and maintains trading and investment positions in the capital markets on its own behalf and manages investment positions on behalf of its customers. These investment positions include derivative financial instruments. The revenues and profits Fifth Third derives from managing proprietary and customer trading and investment positions are dependent on market prices. Market changes and trends may result in a decline in wealth and asset management revenue or investment or trading losses that may impact Fifth Third. Losses on behalf of its customers could expose Fifth Third to reputational issues, litigation, credit risks or loss of revenue from those clients and customers. Additionally, losses in Fifth Third’s trading and investment positions could lead to a loss with respect to those investments and may adversely affect Fifth Third’s income, cash flows and funding costs.

Fifth Third’s stock price is volatile.
Fifth Third’s stock price has been volatile in the past and several factors could cause the price to fluctuate substantially in the future. These factors include, without limitation:
•actual or anticipated variations in earnings;
•changes in analysts’ recommendations or projections;
•Fifth Third’s announcements of developments related to its businesses;
•operating and stock performance of other companies deemed to be peers;
•actions by government regulators and changes in the regulatory regime;
•new technology used or services offered by traditional and non-traditional competitors;
•news reports of trends, concerns and other issues related to the financial services industry;
•U.S. and global economic conditions;
•natural disasters;
•geopolitical conditions such as acts or threats of terrorism, military conflicts and withdrawal from the EU by EU member countries.

The price for shares of Fifth Third’s common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to Fifth Third’s performance. General market price declines or market volatility in the future could adversely affect the price for shares of Fifth Third’s common stock and the current market price of such shares may not be indicative of future market prices.

Fifth Third’s mortgage banking net revenue can be volatile from quarter to quarter.
Fifth Third earns revenue from the fees it receives for originating mortgage loans and for servicing mortgage loans. When rates rise, the demand for mortgage loans tends to fall, reducing the revenue Fifth Third receives from loan originations. At the same time, revenue from mortgage servicing rights (“MSR”) can increase through increases in fair value. When rates fall, mortgage originations tend to increase and the value of MSRs tends to decline, also with some offsetting revenue effect. Even though the origination of mortgage loans can act as a “natural hedge,” the hedge is not perfect, either in amount or timing. For example, the negative effect on revenue from a decrease in the fair value of residential MSRs is immediate, but any offsetting revenue benefit from more originations and the MSRs relating to the new loans would accrue over time. It is also possible that even if interest rates were to fall, mortgage originations may also fall or any increase in mortgage originations may not be enough to offset the decrease in the MSRs value caused by the lower rates.

Fifth Third typically uses derivatives and other instruments to hedge its mortgage banking interest rate and price risks. Fifth Third generally does not hedge all of its risks and the fact that Fifth Third attempts to hedge any of the risks does not mean Fifth Third will be successful. Hedging is a complex process, requiring sophisticated models and constant monitoring. Fifth Third may use hedging instruments tied to U.S. Treasury rates, SOFR or other benchmarks that may not perfectly correlate with the value or income being hedged. Fifth Third could incur significant losses from its hedging activities. There may be periods where Fifth Third elects not to use derivatives and other instruments to hedge mortgage banking interest rate and price risks.

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STRATEGIC RISKS

If Fifth Third does not respond to intense competition and rapid changes in the financial services industry or otherwise adapt to changing customer preferences, its financial performance may suffer.
Fifth Third’s ability to deliver strong financial performance and returns on investment to shareholders will depend in part on its ability to expand the scope of available financial services to meet the needs and demands of its customers. In addition to the challenge of competing against other banks in attracting and retaining customers for traditional banking services, Fifth Third’s competitors also include securities dealers, brokers, mortgage bankers, investment advisors and specialty finance, telecommunications, technology and insurance companies as well as large retailers who seek to offer one-stop financial services in addition to other products and services desired by consumers that may include services that banks have not been able or allowed to offer to their customers in the past or may not be currently able or allowed to offer. Many of these other firms may be significantly larger than Fifth Third and may have access to customers and financial resources that are beyond Fifth Third’s capability. Fifth Third competes with these firms with respect to capital, access to capital, revenue generation, products, services, transaction execution, innovation, reputation, talent and price.

This increasingly competitive environment is primarily a result of changes in customer preferences, regulation, changes in technology and product delivery systems, as well as the accelerating pace of consolidation among financial service providers. Rapidly changing technology and consumer preferences may require Fifth Third to effectively implement new technology-driven products and services in order to compete and meet customer demands. Fifth Third may not be able to do so or be successful in marketing these products and services to its customers. As a result, Fifth Third’s ability to effectively compete to retain or acquire new business may be impaired, and its business, financial condition or results of operations, may be adversely affected.

Fifth Third may make strategic investments and may expand an existing line of business or enter into new lines of business to remain competitive. If Fifth Third’s chosen strategies are not appropriate to allow Fifth Third to effectively compete or Fifth Third does not execute them in an appropriate or timely manner, Fifth Third’s business and results may suffer. Additionally, these strategies, products and lines of business may bring with them unforeseeable or unforeseen risks and may not generate the expected results or returns, which could adversely affect Fifth Third’s results of operations or future growth prospects and cause Fifth Third to fail to meet its stated goals and expectations.

Industry adoption of real-time payments networks could negatively impact financial performance through reductions in product profitability, increased liquidity reserves and the potential for increased fraud losses, among other risks.
With the launch of real-time payments networks, such as RTP® from The Clearing House and FedNow® from the Federal Reserve, instantaneous cash settlement capabilities are available 24 hours a day and 7 days a week. The implications of the new settlement capabilities are far reaching and have not yet significantly affected the banking industry. As market adoption increases, Fifth Third may be required to hold more liquidity reserves in cash to facilitate cash settlement activity outside of traditional business hours. Additionally, instantaneous settlement will likely reduce float benefits associated with providing deposit and banking services, as well as pose incremental fraud risk due to a reduced ability to reverse fraudulent transactions due to the speed of money movement.

Changes in retail distribution strategies and consumer behavior may adversely impact Fifth Third’s investments in its bank premises and equipment and other assets and may lead to increased expenditures to change its retail distribution channel.
Fifth Third has significant investments in bank premises and equipment for its branch network including its 1,088 full-service banking centers, 5 parcels of land held for the development of future banking centers and 49 properties that are developed or in the process of being developed as branches, as well as its retail work force and other branch banking assets. Advances in technology such as e-commerce, telephone, internet and mobile banking, and in-branch self-service technologies including automatic teller machines and other equipment, as well as changing work arrangements and customer preferences for these other methods of accessing Fifth Third’s products and services, could affect the value of Fifth Third’s branch network or other retail distribution assets and may cause it to change its retail distribution strategy, close and/or sell certain branches or parcels of land held for development and restructure or reduce its remaining branches and work force. Further advances in technology and/or changes in customer preferences could have additional changes in Fifth Third’s retail distribution strategy and/or branch network. These actions could lead to losses on these assets or could adversely impact the carrying value of other long-lived assets and may lead to increased expenditures to renovate and reconfigure remaining branches or to otherwise reform its retail distribution channel.

Difficulties in identifying suitable opportunities or combining the operations of acquired entities or assets with Fifth Third’s own operations or assessing the effectiveness of businesses in which Fifth Third makes strategic investments or with which Fifth Third enters into strategic contractual relationships may prevent Fifth Third from achieving the expected benefits from these acquisitions, investments or relationships.
Inherent uncertainties exist when assessing, acquiring or integrating the operations of another business or investment or relationship opportunity. Fifth Third may not be able to fully achieve its strategic objectives and planned operating efficiencies relevant to an acquisition or strategic relationship. In addition, the markets and industries in which Fifth Third and its potential acquisition and investment targets operate are highly competitive. Acquisition or investment targets may lose customers or otherwise perform poorly or unprofitably, or in the case of an acquired business or strategic relationship, cause Fifth Third to lose customers or perform poorly or unprofitably. Future acquisition and investment activities and efforts to monitor newly acquired businesses or reap the benefits of a new strategic relationship may require Fifth Third to devote substantial time and resources and may cause these acquisitions, investments and relationships to be unprofitable or cause Fifth Third to be unable to pursue other business opportunities.
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After completing an acquisition, Fifth Third may find that certain material information was not adequately disclosed during the due diligence process or that certain items were not accounted for properly in accordance with financial accounting and reporting standards. Fifth Third may also not realize the expected benefits of the acquisition due to lower financial results pertaining to the acquired entity or assets. For example, Fifth Third could experience higher charge-offs than originally anticipated related to the acquired loan portfolio. Additionally, acquired companies or businesses may increase Fifth Third’s risk of regulatory action or restrictions related to the operations of the acquired business.

Future acquisitions may dilute current shareholders’ ownership of Fifth Third and may cause Fifth Third to become more susceptible to adverse economic events.
Future business acquisitions could be material to Fifth Third and it may issue additional shares of stock to pay for those acquisitions, which would dilute current shareholders’ ownership interests. Acquisitions also could require Fifth Third to use substantial cash or other liquid assets or to incur debt. In those events, Fifth Third could become more susceptible to economic downturns, dislocations in capital markets and competitive pressures.

Fifth Third may sell or consider selling one or more of its businesses or investments. Should it determine to sell such a business or investment, it may not be able to generate gains on sale or related increases in shareholders’ equity commensurate with desirable levels. Moreover, if Fifth Third sold such businesses or investments, the loss of income could have an adverse effect on its earnings and future growth.
Fifth Third owns, or owns a minority stake in, as applicable, several non-strategic businesses, investments and other assets that are not significantly synergistic with its core financial services businesses or, in the future, may no longer be aligned with Fifth Third’s strategic plans or regulatory expectations. If Fifth Third were to sell one or more of its businesses or investments, it would be subject to market forces that may affect the timing or pricing of such sale or result in an unsuccessful sale. If Fifth Third were to complete the sale of any of its businesses, investments and/or interests in third parties, it would lose the income from the sold businesses and/or interests, including those accounted for under the equity method of accounting, and such loss of income could have an adverse effect on its future earnings and growth. Additionally, Fifth Third may encounter difficulties in separating the operations of any businesses it sells, which may affect its business or results of operations.

Fifth Third has businesses other than banking that are subject to a variety of risks.
Fifth Third is a diversified financial services company. As a result, the Bancorp is subject to additional risks and uncertainties. Other businesses that the Bancorp operates include investment banking, securities underwriting and market making, investment management, and retail and institutional brokerage services offered through the Bancorp’s subsidiaries. These business activities are subject to rigorous regulatory oversight by federal, state and self-regulatory entities, and may incur substantial market, operational, credit, regulatory, legal and other risks that could adversely impact the Bancorp’s results of operations. For more information, refer to Regulation and Supervision—Regulatory Regime for Derivatives in Item 1 of this Annual Report on Form 10-K.

REPUTATION RISKS

Damage to Fifth Third’s reputation could harm its business.
Fifth Third’s actual or alleged conduct in activities, such as certain sales and lending practices, data security, operational resiliency, corporate governance and acquisitions, inappropriate behavior or misconduct of employees, failure to deliver minimum or required standards of service or quality, association with particular customers, business partners, investments or vendors, as well as developments from any of the other risks described above, may result in negative public opinion at large (or with certain segments of the public) and may damage Fifth Third’s reputation. Because Fifth Third conducts most of its businesses under the “Fifth Third” brand, negative public opinion about one business could affect its other businesses. Actions taken by government regulators, shareholder activists and community organizations may also damage Fifth Third’s reputation. Additionally, whereas negative public opinion once was primarily driven by adverse news coverage in traditional media, the advent and expansion of social media facilitates the rapid dissemination of information or misinformation. Though Fifth Third monitors social media channels, the potential remains for rapid and widespread dissemination of inaccurate, misleading or false information or other negative information that could damage Fifth Third’s reputation. Negative public opinion can adversely affect Fifth Third’s ability to attract and keep customers and can increase the risk that it will be a target of litigation and regulatory action.

Fifth Third is subject to environmental, social and governance (“ESG”) risks that could adversely affect its reputation, the trading price of its common stock and/or its business, operations, and earnings.
Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed scores and ratings to evaluate companies based upon ESG metrics. Currently, there are no universal standards for such scores or ratings, but ESG evaluations are becoming more important to the reputation and success of many businesses, including financial institutions. Views about ESG-related issues are diverse, dynamic and rapidly changing, and if Fifth Third were to fail to maintain appropriate ESG practices and disclosures or be subject to certain ESG scores or ratings, Fifth Third could face potential negative ESG-related publicity in traditional and social media, including based on the identity of those Fifth Third chooses to do business with and the public’s view of those customers. If Fifth Third or its relationships with customers, vendors and suppliers were to become the subject of such negative publicity, Fifth Third’s ability to attract and retain customers and employees may be negatively impacted and its stock price may also be impacted.
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Companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their ESG practices and disclosures. For Fifth Third and others in the financial services industry, this focus extends to the practices and disclosures of the customers, counterparties and service providers with whom Fifth Third chooses to do business. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights, and certain investors are beginning to incorporate the business risks and opportunities of climate change and the adequacy of companies’ responses to climate change and other ESG matters as part of their investment theses. New government regulations could also result in new or more stringent forms of ESG oversight and expand mandatory and voluntary reporting, diligence and disclosure. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact Fifth Third’s reputation, ability to do business with certain partners, access to capital and its stock price. While Fifth Third has sustainability and corporate responsibility initiatives, there can be no assurance that regulators, customers, investors and employees will determine that these programs are sufficiently robust. In addition, there can be no assurance that Fifth Third will be able to attain its announced goals related to its sustainability and corporate responsibility programs, as statements regarding its goals reflect Fifth Third’s current plans and aspirations and are not guarantees that it will be able to achieve them within the timelines it announces or at all. Actual or perceived shortcomings with respect to these ESG initiatives and reporting can impact Fifth Third’s ability to hire and retain employees, increase its customer base or attract and retain certain types of investors. In addition, certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed scores and ratings to evaluate companies based upon ESG metrics. Collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and other risks, any of which could have a material impact, including on Fifth Third’s reputation and stock price. Inadequate processes to collect and review this information prior to disclosure could be subject to potential liability related to such information.

Activists are increasingly targeting financial firms with public criticism for their relationships with clients that are engaged in certain industries (such as those which are carbon intensive), including businesses whose products are or are perceived to be harmful to health, the environment, the global climate, or the social good. Activist criticism of Fifth Third’s relationships with clients in sensitive industries could potentially engender dissatisfaction among stakeholders with how Fifth Third addresses environmental or social concerns through business activities which could negatively affect its business or reputation.

Conversely, states throughout the Bank’s footprint have taken actions or proposed measures to limit the state’s ability to do business with financial institutions or other businesses identified as discriminating against certain industries (such as those which are carbon intensive) or practices based on environmental or social criteria. Additionally, other activist groups have begun to target firms with public criticism for engaging in ESG practices or adhering to certain ESG principles. Although Fifth Third has a defined risk management approach for client selection, Fifth Third could be inherently exposed to reputational, financial and legal risk, and its ability to retain and attract customers and employees may be negatively impacted as a result of these contrasting arguments in how a financial institution should address these issues.

GENERAL BUSINESS RISKS

Changes in accounting standards or interpretations could impact Fifth Third’s reported earnings and financial condition.
The accounting standard setters, including the FASB, the SEC and other regulatory agencies, periodically change the financial accounting and reporting standards that govern the preparation of Fifth Third’s consolidated financial statements. These changes can be hard to predict and can materially impact how Fifth Third records and reports its financial condition and results of operations. In some cases, Fifth Third could be required to apply a new or revised standard retroactively, which would result in the recasting of Fifth Third’s prior period financial statements.

Fifth Third uses models for business planning purposes that may not adequately predict future results.
Fifth Third uses financial models to aid in its planning for various purposes including its capital and liquidity needs and other purposes. The models used may not accurately account for all variables, may fail to predict outcomes accurately, and/or may overstate or understate certain effects. As a result of these potential failures, Fifth Third may not adequately prepare for future events and may suffer losses or other setbacks due to these failures.

Also, information Fifth Third provides to the public or to its regulators based on models could be inaccurate or misleading due to inadequate design or implementation, for example. Decisions that its regulators make, including those related to capital distributions to its shareholders, could be affected adversely due to the perception that the models used to generate the relevant information are unreliable or inadequate.

Fifth Third’s framework for managing risks may not be effective in mitigating its risk and loss.
Fifth Third’s risk management framework seeks to mitigate risk and loss. Fifth Third has established processes and procedures intended to identify, measure, monitor, report and manage the types of risk to which it is exposed, including liquidity risk, credit risk, interest rate risk, price risk, legal and regulatory compliance risk, strategic risk, reputational risk and operational risk related to its employees, systems and vendors, among others. Fifth Third also considers the physical and transition risks arising from climate change to be transverse risk drivers that impact all of these material risks and has therefore integrated climate change considerations into its risk management framework.
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Any system of control and any system to reduce risk exposure, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. A failure in Fifth Third’s internal controls could have a significant negative impact not only on its earnings, but also on the perception that customers, regulators and investors may have of Fifth Third. Fifth Third continues to devote a significant amount of effort, time and resources to improving its controls and ensuring compliance with complex regulations, and overall safety and soundness.

Additionally, instruments, systems and strategies used to hedge or otherwise manage exposure to various types of interest rate, price, legal and regulatory compliance, credit, liquidity, operational and business risks and enterprise-wide risk could be less effective than anticipated. As a result, Fifth Third may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk. If Fifth Third’s risk management framework proves ineffective, Fifth Third could incur litigation costs, negative regulatory consequences, reputational damages among other adverse consequences and Fifth Third could suffer unexpected losses that may affect its financial condition or results of operations.

The preparation of financial statements requires Fifth Third to make subjective determinations and use estimates that may vary from actual results and materially impact its results of operations or financial position.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make significant estimates that affect the financial statements. If new information arises that results in a material change to a reserve amount, such a change could result in a change to previously announced financial results. Refer to the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information regarding management’s significant estimates.

The effects of global climate change, natural disasters or health emergencies may have an effect on the performance of Fifth Third’s loan portfolios, thereby adversely impacting its results of operations.
Fifth Third’s footprint stretches from the upper Midwestern to lower Southeastern regions of the United States and it has offices in many other areas of the country. Some of these regions have experienced weather events including hurricanes, tornadoes, fires and other natural disasters. The nature and level of these events and the impact of global climate change upon their frequency and severity cannot be predicted. If large scale events occur, they may significantly impact Fifth Third’s loan portfolios by damaging properties pledged as collateral as well as impairing its borrowers’ ability to repay their loans.

Additionally, the impact of widespread health emergencies may adversely impact Fifth Third’s results of operations, such as the impacts previously experienced from the COVID-19 pandemic. If its borrowers are adversely affected due to a widespread health emergency that impacts Fifth Third employees, vendors or economic growth generally, Fifth Third’s financial condition and results of operations could be adversely affected.

Societal responses to climate change could adversely affect Fifth Third’s business and performance, including indirectly through impacts on Fifth Third’s customers.
Concerns over the long-term impacts of climate change have led and may continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns. Fifth Third and its customers will need to respond to new laws and regulations, as well as consumer and business preferences resulting from climate change concerns. Fifth Third and its customers may face cost increases, asset value reductions, operating process changes, and the like. The impact on Fifth Third’s customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities that may be negatively affected by economic transition towards a lower-carbon economy. Fifth Third could experience a drop in demand for its products and services, particularly in certain sectors. In addition, Fifth Third could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. Fifth Third’s efforts to take these risks into account in making lending and other decisions, including by increasing business relationships with climate-resilient companies, may not be effective in protecting Fifth Third from the negative impact of new laws and regulations or changes in consumer or business behavior.

Potential noncompliance with evolving federal and state laws governing cannabis-related businesses (“CRBs”) could subject Fifth Third to liabilities.
While a significant majority of states have legalized some form of marijuana, it remains a Schedule I controlled substance under federal law. Hemp is no longer classified as a Schedule I controlled substance under federal law; however, the regulatory scheme governing hemp has not been fully developed. Further, the “naked eye” cannot distinguish between legal hemp and illegal marijuana under federal law. There are a number of states where Fifth Third operates with laws permitting medicinal or recreational marijuana, which increases the probability of individuals or entities using bank products or services to sell, distribute, cultivate, manufacture or profit from marijuana. This, and the divergence and continued changes in laws governing CRBs results in challenges to Fifth Third to maintain compliance with them, particularly in connection with Fifth Third’s commercial and consumer lending and capital markets businesses. While Fifth Third monitors regulatory developments in this area to avoid noncompliance, Fifth Third cannot assure that it will be at all times fully compliant with CRB-related laws, which could result in significant fines, penalties or other losses.

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Recent bank failures have created significant market volatility and regulatory uncertainty which could have a material adverse effect on Fifth Third’s business and financial condition.
In response to bank failures in the first half of 2023, the United States government, particularly the U.S. Treasury, FRB, OCC, FDIC and/or U.S. Congress, is expected to adopt a variety of measures and new regulations designed to strengthen capital and liquidity standards and otherwise restore confidence in financial institutions. These reforms are expected to modify liquidity, long-term debt and capital requirements and enhance existing stress testing frameworks and may include additional special assessments to recover losses to the Deposit Insurance Fund. While depositors of affected banks were largely protected, there can be no guarantee that the United States government, particularly the U.S. Treasury, FRB, OCC, FDIC and/or U.S. Congress, will respond to any future bank failures in the same manner.

Even without revisions to the regulatory framework, the financial services industry has faced an enhanced level of scrutiny and escalation from its regulators, which could negatively impact Fifth Third’s business activities as its regulators perform reviews of, among other things, its liquidity, capital, stress testing and risk management programs and may require Fifth Third to enhance its liquidity position and take other steps regarding risk management. Under applicable banking laws, such regulatory actions may not be disclosed to the public.

These actions could limit Fifth Third’s business activities (including lending) and its ability to expand organically or through acquisitions. They could also result in Fifth Third taking steps to increase its capital that may be dilutive to shareholders or limit its ability to pay dividends or otherwise return capital to shareholders.

In the current environment, Fifth Third may also experience deposit volatility as customers react to adverse events impacting the banking industry in general or other specific institutions. As deposits remain Fifth Third’s primary source of funding, it may be unable to maintain sufficient liquidity to meet its commitments, including commitments to depositors withdrawing funds, or be required to raise deposit interest rates which would adversely impact its net interest margin. Fifth Third’s failure to effectively manage and maintain adequate liquidity to satisfy its commitments could have a material adverse effect on its business, results of operations or financial condition.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no SEC staff comments regarding the Bancorp’s periodic or current reports under the Exchange Act that are pending resolution.

ITEM 1C. CYBERSECURITY
The Bancorp recognizes the importance of maintaining a cybersecurity risk management system designed to reduce the risks that cybersecurity threats pose to financial institutions. As such, the Bancorp has adopted proactive and defensive safeguards intended to better protect the Bancorp’s information assets and supporting infrastructures from technology-related attacks. The Bancorp’s Board of Directors and management oversee its information security and cybersecurity risk management programs. As further discussed below, the Bancorp has established various programs, policies and procedures which are designed to proactively protect information assets. However, not all incidents can be prevented. As a result, the Bancorp has also established various policies and procedures governing how to respond to security incidents, with the objective of minimizing any potential impacts. As of December 31, 2023, the Bancorp is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect Fifth Third, including its business strategies, results of operations or financial condition.

Risk Assessment and Management
The Bancorp maintains a variety of programs and policies to support the management of cybersecurity risk within the organization with a focus on prevention, detection and recovery processes. These programs and policies leverage frameworks and controls from the National Institute of Standards and Technology as well as various other regulatory requirements and industry-specific standards. The Bancorp also participates in the federally recognized Financial Services Information Sharing and Analysis Center and requires its employees and contractors to complete various education and training programs related to information security.

The Bancorp’s Information Technology (IT) and Information Security (IS) teams have the primary responsibility for establishing appropriate policies and procedures that are responsive to cybersecurity threats and other information security risks. The Bancorp’s Information Technology and Cybersecurity Risk Management (IT CSRM) team, as part of the Bancorp’s Risk Management division, provides independent risk management oversight to those IT and IS teams. In addition to the Board oversight discussed below, the Bancorp’s Internal Audit function independently oversees, reviews and validates these activities and reports to the Board of Directors on the effectiveness of governance, risk management and internal controls.

The Bancorp has established an Enterprise Risk Management Framework which informs the Bancorp’s risk management programs. As part of this framework, the IT CSRM team maintains the Bancorp’s IT CSRM Program, which is designed to identify, assess, manage, monitor, and report cybersecurity risks as part of the Bancorp’s independent risk management function. The IT CSRM team is responsible for defining the risk management practices set forth in the IT CSRM Program. Refer to the Risk Management – Overview section of Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this Annual Report for additional information on the Bancorp’s Enterprise Risk Management Framework and related risk management processes.

In light of the complexity and evolving nature of the cybersecurity landscape, the Bancorp periodically re-assesses the maturity of its cybersecurity programs, policies and procedures, including in some instances by engaging the assistance of external experts. The Bancorp also conducts exercises to test its incident response plans and threat assessments, some of which also involve assistance from external consultants.

The Bancorp also maintains a Third Party Risk Management Program to perform similar functions related to risks associated with the Bancorp’s relationships with third parties. This assists the Bancorp in its management of its relationships with third parties, which includes considerations for identifying, analyzing and monitoring the cybersecurity risks that third parties may present to Fifth Third. The Bancorp also maintains a third-party incident response program to govern its response in the event of third-party cybersecurity events.

Board of Directors Oversight
The Technology Committee of the Bancorp’s Board of Directors takes primary responsibility for overseeing the Bancorp’s information security programs at the Board level. The Technology Committee’s primary purpose is to assist the Board of Directors in its oversight of plans and operations related to information technology, cybersecurity, data privacy and third-party technology strategy.

The Bancorp’s Risk and Compliance Committee of the Board of Directors oversees the Bancorp’s Enterprise Risk Management Framework and policies, including oversight of risks related to information security. The Risk and Compliance Committee receives periodic reports from the Technology Committee and these committees meet jointly at least once per year to discuss the Company’s programs and risks.

The full Board of Directors receives reports from the Technology Committee and the Risk and Compliance Committee about the Bancorp’s cybersecurity programs as a result of the above-described oversight. In the event of a material cybersecurity incident, the Bancorp’s incident response procedures include notifications to the Technology Committee, Risk and Compliance Committee and full Board of Directors, when appropriate and necessary.


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Management Oversight
The Bancorp’s Information Security Governance Committee (ISGC) is a management committee that reviews and discusses critical information security risks that impact the Bancorp, identifies solutions to address these risks and has oversight of the Bancorp’s information technology and information security policies. The ISGC provides cybersecurity reports periodically to the Risk and Compliance Committee and is comprised of the Bancorp’s senior information security, information technology and enterprise risk management leaders, including the Chief Information Security Officer (CISO), Chief Information Officer, Chief Technology Officer, Chief Data Officer and Chief Operational Risk Officer.

The Bancorp’s CISO is responsible for information security policies and the coordination of information security efforts across the organization. The CISO has over 35 years of diverse experience in information technology management and cybersecurity leadership at Fifth Third and at other large, complex organizations. This prior experience includes leadership of functions for cybersecurity threat management, intelligence, risk mitigation and incident response. The CISO has a Bachelor of Science degree in Computer and Information Science and is a certified Six Sigma Black Belt. The Bancorp’s CISO reports to the Chief Information Officer. The CISO also reports directly to the Technology Committee and participates in various management councils and committees. The Bancorp’s IT CSRM team monitors that the CISO has appropriate authority to carry out the duties and responsibilities necessary of that position.

The CISO remains informed about developments in cybersecurity, including potential threats and emerging risk management techniques, reporting such information to the Chief Information Officer and Technology Committee periodically. The CISO implements and oversees processes for the regular monitoring of information systems. This includes the deployment of advanced security measures and system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, the CISO is equipped with a well-defined incident response plan. This plan includes immediate actions designed to mitigate the impact of any incident, and long-term strategies for remediation and prevention of future incidents.

ITEM 2. PROPERTIES
The Bancorp’s executive offices and the main office of the Bank are located on Fountain Square Plaza in downtown Cincinnati, Ohio in a 32-story office tower and a five-story office building with an attached parking garage known as the Fifth Third Center and the William S. Rowe Building, respectively. The Bancorp’s main operations campus is located in Cincinnati, Ohio, and is comprised of a three-story building with an attached parking garage known as the George A. Schaefer, Jr. Operations Center, and a two-story building with surface parking known as the Madisonville Office Building. The Bank owns 100% of these buildings.

At December 31, 2023, the Bancorp, through its banking and non-banking subsidiaries, operated 1,088 banking centers, of which 727 were owned, 192 were leased and 169 were in owned buildings but on leased land. The banking centers are located in the states of Ohio, Florida, Michigan, Illinois, Indiana, North Carolina, Kentucky, Tennessee, Georgia, South Carolina and West Virginia. The Bancorp’s significant owned properties are owned free from mortgages and major encumbrances.

ITEM 3. LEGAL PROCEEDINGS
Refer to Note 19 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for information regarding legal proceedings, which is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Officers are appointed annually by the Board of Directors at the meeting of Directors immediately following the Annual Meeting of Shareholders. The names, ages and positions of the Executive Officers of the Bancorp as of February 27, 2024 are listed below along with their business experience during the past five years:

Timothy N. Spence, 45. Chairman, Chief Executive Officer and President. Mr. Spence has been Chairman since January 2024, Chief Executive Officer since July 2022 and President since October 2020. Previously, Mr. Spence was Executive Vice President and Head of Consumer Bank, Payments, and Strategy of the Bancorp from August 2018 to October 2020, Head of Payments, Strategy and Digital Solutions from 2017 to 2020, and Chief Strategy Officer of the Bancorp from September 2015 to October 2020. He also previously served as a senior partner in the Financial Services practice at Oliver Wyman, a global strategy and risk management consulting firm, from 2006 to 2015.

Kristine R. Garrett, 65. Executive Vice President, Group Regional President and Head of Wealth & Asset Management since July 2022. Ms. Garrett has been Executive Vice President and Head of Wealth & Asset Management since November 2020. Previously, she was Senior Vice President and Head of Wealth & Asset Management from July 2019 to November 2020 and Head of Fifth Third Private Bank from October 2017 until July 2019. Previously, she was President of Private Wealth in Chicago at CIBC U.S. from 2009 to 2017.

Kala J. Gibson, 52. Executive Vice President and Chief Corporate Responsibility Officer since February 2022. Mr. Gibson has been an Executive Vice President of the Bancorp since June 2019. Previously, Mr. Gibson served as Head of Business Banking and Chief Enterprise Corporate Responsibility Officer from December 2020 to February 2022, Head of Business Banking from September 2013 to December 2020, Senior Vice President from September 2011 to June 2019, and Business Banking Executive for Fifth Third’s East Michigan Region from July 2011 to September 2013.

Mark D. Hazel, 58. Executive Vice President and Controller of the Bancorp since February 2010. Mr. Hazel has been an Executive Vice President of the Bancorp since September 2021. Previously, Mr. Hazel was the Assistant Bancorp Controller from 2006 to 2010 and was the Controller of Nonbank entities from 2003 to 2006.

Kevin P. Lavender, 62. Executive Vice President and Head of Commercial Bank of the Bancorp since January 2020. Mr. Lavender has been Executive Vice President of the Bank since 2016 and was the Head of Corporate Banking from 2016 to January 2020. Previously, Mr. Lavender was Senior Vice President and Managing Director of Large Corporate and Specialized Lending from January 2009 to 2016 and the Senior Vice President and Head of National Healthcare Lending from December 2005 to January 2009.

James C. Leonard, 54. Executive Vice President and Chief Operating Officer since January 2024. Mr. Leonard has been an Executive Vice President of the Bancorp since September 2015. Previously, Mr. Leonard was Chief Financial Officer from November 2020 to December 2023, Chief Risk Officer from February 2020 to November 2020, Treasurer of the Bancorp from October 2013 to January 2020, Senior Vice President from October 2013 to September 2015, the Director of Business Planning and Analysis from 2006 to 2013 and the Chief Financial Officer of the Commercial Banking Division from 2001 to 2006.

Nancy C. Pinckney, 60. Executive Vice President and Chief Human Resources Officer since September 2021. Previously, Ms. Pinckney was Senior Vice President and Director of Human Capital Business Consulting from February 2012 through September 2021 and Director of Employee Relations from March 2010 to February 2012. Prior to that, she held various positions within Fifth Third’s human resources division.

Bryan D. Preston, 47. Executive Vice President and Chief Financial Officer since January 2024. Mr. Preston has been an Executive Vice President of the Bancorp since October 2022. Previously, Mr. Preston served as the Treasurer of the Bancorp from February 2020 to January 2024, Consumer Line of Business Chief Financial Officer from September 2017 to February 2020, Assistant Treasurer from March 2014 to September 2017 and in various other roles in finance and accounting within Fifth Third from 2008 to 2014.

Jude A. Schramm, 51. Executive Vice President and Chief Information Officer since March 2018. Previously, Mr. Schramm served as Chief Information Officer for GE Aviation and held various positions at GE beginning in 2001.

Robert P. Shaffer, 54. Executive Vice President and Chief Risk Officer since November 2020. Previously, Mr. Shaffer was Chief Human Resource Officer from February 2017 to November 2020 and Chief Auditor from August 2007 to February 2017. He was named Executive Vice President in 2010 and Senior Vice President in 2004. Prior to that, he held various positions within Fifth Third’s audit division.

Melissa S. Stevens, 49. Executive Vice President and Chief Marketing Officer since February 2023. Previously, Ms. Stevens was Chief Digital Officer and Head of Digital, Marketing, Design and Innovation from November 2020 to February 2023. She also served as Senior Vice President, Chief Digital Officer and Head of Omnichannel Banking Experiences, Design, and Innovation from May 2016 through November 2020. Prior to joining Fifth Third, she served in several senior management positions at Citigroup, including Chief Operating Officer and Managing Director of Citi FinTech from November 2015 through April 2016.

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Susan B. Zaunbrecher, 64. Executive Vice President, Chief Legal Officer and Corporate Secretary. Ms. Zaunbrecher has been Executive Vice President and Chief Legal Officer since May 2018. Ms. Zaunbrecher has been Corporate Secretary since March 2023 and was previously Corporate Secretary from May 2018 to November 2020. Prior to Fifth Third, Ms. Zaunbrecher was a partner at the law firm Dinsmore and Shohl LLP, where she practiced for 28 years and served as the Chair of the Corporate Department and a member of the firm’s board of directors and executive committee.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Bancorp’s common stock is traded in the over-the-counter market and is listed under the symbol “FITB” on the NASDAQ® Global Select Market System.

See a discussion of dividend limitations that the subsidiaries can pay to the Bancorp discussed in Note 3 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference. Additionally, as of December 31, 2023, the Bancorp had 32,995 common shareholders of record.
Issuer Purchases of Equity Securities
Period
Total Number
of Shares
Purchased(a)
 Average Price Paid
Per Share		 Total Number of Shares
Purchased as Part of Publicly
Announced Plans or  
Programs
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs(b)
October 1 - October 31, 2023
 75,992  $ 24.48  —  32,115,811 
November 1 - November 30, 2023
 17,203  25.78  —  32,115,811 
December 1 - December 31, 2023
 37,496  33.77  —  32,115,811 
Total 130,691  $ 27.32  —  32,115,811 
(a)Shares repurchased during the periods presented were 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.

See further discussion on share repurchase transactions and stock-based compensation in Note 24 and Note 25 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference.
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The following performance graphs do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Bancorp specifically incorporates the performance graphs by reference therein.

Total Return Analysis
The graphs below summarize the cumulative return experienced by the Bancorp’s shareholders over the five and ten year periods ended December 31, 2023, respectively, compared to the S&P 500 Stock, the S&P Banks and the KBW Banks indices.

FIFTH THIRD BANCORP VS. MARKET INDICES


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logo.jpg
2023 ANNUAL REPORT
FINANCIAL CONTENTS
Financial Statements
Notes to Consolidated Financial Statements
Corporate Information
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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 Consolidated Financial Statements and the Notes to Consolidated Financial Statements.
ACL: Allowance for Credit Losses
GSE: United States Government Sponsored Enterprise
AFS: Available-For-Sale
HTM: Held-To-Maturity
ALCO: Asset Liability Management Committee
IPO: Initial Public Offering
ALLL: Allowance for Loan and Lease Losses
IRC: Internal Revenue Code
AOCI: Accumulated Other Comprehensive Income (Loss)
IRLC: Interest Rate Lock Commitment
APR: Annual Percentage Rate
ISDA: International Swaps and Derivatives Association, Inc.
ARM: Adjustable Rate Mortgage
LCR: Liquidity Coverage Ratio
ASC: Accounting Standards Codification
LIBOR: London Interbank Offered Rate
ASU: Accounting Standards Update
LIHTC: Low-Income Housing Tax Credit
ATM: Automated Teller Machine
LLC: Limited Liability Company
BHC: Bank Holding Company
LTV: Loan-to-Value Ratio
BOLI: Bank Owned Life Insurance
MD&A: Management’s Discussion and Analysis of Financial
bps: Basis Points
 Condition and Results of Operations
CCAR: Comprehensive Capital Analysis and Review
MSR: Mortgage Servicing Right
CD: Certificate of Deposit
N/A: Not Applicable
CDC: Fifth Third Community Development Corporation and Fifth Third
NII: Net Interest Income
Community Development Company, LLC
NM: Not Meaningful
CECL: Current Expected Credit Loss
OAS: Option-Adjusted Spread
CET1: Common Equity Tier 1
OCC: Office of the Comptroller of the Currency
CFPB: United States Consumer Financial Protection Bureau
OCI: Other Comprehensive Income (Loss)
CME: Chicago Mercantile Exchange
OREO: Other Real Estate Owned
C&I: Commercial and Industrial
PPP: Paycheck Protection Program
DCF: Discounted Cash Flow
PSA: Performance Share Award
DTCC: Depository Trust & Clearing Corporation
RCC: Risk and Compliance Committee
DTI: Debt-to-Income Ratio
ROU: Right-of-Use
ERM: Enterprise Risk Management
RSA: Restricted Stock Award
ERMC: Enterprise Risk Management Committee
RSU: Restricted Stock Unit
EVE: Economic Value of Equity
SAR: Stock Appreciation Right
FASB: Financial Accounting Standards Board
SBA: Small Business Administration
FDIC: Federal Deposit Insurance Corporation
SEC: United States Securities and Exchange Commission
FHA: Federal Housing Administration
SOFR: Secured Overnight Financing Rate
FHLB: Federal Home Loan Bank
TBA: To Be Announced
FHLMC: Federal Home Loan Mortgage Corporation
TDR: Troubled Debt Restructuring
FICO: Fair Isaac Corporation (credit rating)
TILA: Truth in Lending Act
FINRA: Financial Industry Regulatory Authority
TRA: Tax Receivable Agreement
FNMA: Federal National Mortgage Association
TruPS: Trust Preferred Securities
FOMC: Federal Open Market Committee
U.S.: United States of America
FRB: Federal Reserve Bank
U.S. GAAP: United States Generally Accepted Accounting
FTE: Fully Taxable Equivalent
 Principles
FTP: Funds Transfer Pricing
VA: United States Department of Veterans Affairs
FTS: Fifth Third Securities, Inc.
VIE: Variable Interest Entity
GDP: Gross Domestic Product
VRDN: Variable Rate Demand Note
GNMA: Government National Mortgage Association
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 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
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. 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 Annual Report on Form 10-K. The abbreviations and acronyms identified therein are used throughout this MD&A, as well as the Consolidated Financial Statements and Notes to 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 year ended December 31, 2023, net interest income on an FTE basis and noninterest income provided 67% and 33% 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 Consolidated Financial Statements for the year ended December 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, marketing expense, leasing business expense, card and processing expense and other noninterest expense.

Current Economic Conditions
Economic growth was resilient in 2023 but managing inflation remained a top priority for FRB officials. In response to inflationary pressures, FRB officials raised benchmark interest rates aggressively during 2022 and 2023 and have signaled that 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 pace of interest rate increases, several financial markets have experienced heightened volatility. While interest rates may remain elevated for a sustained period of time, the FRB moved to a more balanced monetary policy stance in the later months of 2023 in response to easing inflationary pressures.

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, in addition to the value 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 bank failures that have occurred since March 2023 generated significant market volatility and increased regulatory and market focus on the liquidity, asset-liability management and unrealized securities losses of banks. In response to these failures, the U.S.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
banking agencies have proposed a number of regulatory amendments to improve the stability of U.S. banking institutions. Among these amendments, in November 2023, the FDIC issued a final rule for a special deposit insurance assessment on banking organizations with greater than $5 billion in assets to recover the costs associated with protecting uninsured depositors following these closures. The Bancorp’s estimate of its allocated share of the special assessment under the provisions of the final rule was $224 million, which was recognized in earnings upon issuance of the final rule in November 2023 and will be paid to the FDIC over an anticipated total of eight quarterly assessment periods beginning with the first quarter of 2024. The estimate of the cost associated with protecting the uninsured depositors will continue to be subject to periodic adjustment until the final loss is determined upon the termination of the receiverships by the FDIC.

For more information 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 and Liquidity Risk Management subsections of the Risk Management section of MD&A for additional information about the Bancorp’s interest rate risk management and liquidity risk management activities.

Proposed Updates to Regulatory Requirements for Capital and Long-Term Debt
On July 27, 2023, the U.S. banking agencies released a notice of proposed rulemaking to revise the Basel III Capital Rules, which would modify its existing risk-based capital framework for large banks and introduce a new framework that implements international capital standards. The proposed rulemaking would increase capital requirements applicable to banking organizations with total assets of $100 billion or more, including Fifth Third, and would align the calculation of regulatory capital and the calculation of risk-weighted assets across large banking organizations. As proposed, the rules would be effective for the Bancorp on July 1, 2025 and phased in over a three-year transition period. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact.

On August 29, 2023, the U.S. banking agencies issued a notice of proposed rulemaking to require that certain banking organizations with $100 billion or more in consolidated assets, including Fifth Third, comply with certain long-term debt requirements at the holding company and insured depository institution levels. These proposed requirements are intended to absorb losses and recapitalize the insured depository institution in the event of the failure of a banking organization. As proposed, the rules would be phased in over a three-year period after their effective date. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact.

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.

In the United States, SOFR was identified as the 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. As a secured borrowing rate, SOFR may not exhibit similar behavior in response to market and economic volatility as LIBOR, which was an unsecured rate.

As of December 31, 2023, substantially all contracts have transitioned to alternative reference rates. Refer to Note 17 and Note 24 of the Notes to Consolidated Financial Statements for additional information about certain exposures which were transitioned to an alternative reference rate.

Senior Notes Offering
On July 27, 2023, the Bancorp issued and sold $1.25 billion of fixed-rate/floating-rate senior notes which will mature on July 27, 2029. The senior notes bear interest at a rate of 6.339% per annum to, but excluding, July 27, 2028. From, and including, July 27, 2028 until, but excluding, July 27, 2029, the senior notes will bear interest at a rate of compounded SOFR plus 2.340%. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days prior to maturity. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue date and prior to July 27, 2028, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the discounted present value of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on July 27, 2028. Refer to Note 32 of the Notes to Consolidated Statements for information on a subsequent event related to long-term debt.

Automobile Loan Securitization
In a securitization transaction that occurred in August of 2023, the Bancorp transferred $1.74 billion in aggregate automobile loans to a bankruptcy remote trust which subsequently issued approximately $1.58 billion of asset-backed notes, of which approximately $79 million were retained by the Bancorp, resulting in approximately $1.5 billion of outstanding notes included in long-term debt in the Consolidated Balance Sheets. As discussed in Note 12, the bankruptcy remote trust was deemed to be a VIE and the Bancorp, as the primary beneficiary, consolidated the VIE. The third-party holders of the asset-backed notes do not have recourse to the general assets of the Bancorp.

Accelerated Share Repurchase Transaction
During the first quarter of 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.
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Refer to Note 24 of the Notes to Consolidated Financial Statements for additional information on share repurchase activity.

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.

TABLE 1: Earnings Summary
For the years ended December 31 ($ in millions, except per share data) 2023 2022 2021
Income Statement Data
Net interest income (U.S. GAAP) $ 5,827  5,609  4,770 
Net interest income (FTE)(a)(b)
 5,852  5,625  4,782 
Noninterest income 2,881  2,766  3,118 
Total revenue (FTE)(a)(b)
 8,733  8,391  7,900 
Provision for (benefit from) credit losses 515  563  (377)
Noninterest expense 5,205  4,719  4,748 
Net income 2,349  2,446  2,770 
Net income available to common shareholders 2,212  2,330  2,659 
Common Share Data
Earnings per share - basic $ 3.23  3.38  3.78 
Earnings per share - diluted
 3.22  3.35  3.73 
Cash dividends declared per common share 1.36  1.26  1.14 
Book value per share 25.04  22.26  29.43 
Market value per share 34.49  32.81  43.55 
Financial Ratios
Return on average assets 1.13  % 1.18  1.34 
Return on average common equity 14.2  13.7  12.8 
Return on average tangible common equity(b)
 21.3  19.7  16.6 
Dividend payout 42.1  37.3  30.2
(a)Amounts presented on an FTE basis. The FTE adjustments were $25, $16 and $12 for the years ended December 31, 2023, 2022 and 2021, respectively.
(b)These are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of MD&A.

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Earnings Summary
The Bancorp’s net income available to common shareholders for the year ended December 31, 2023 was $2.2 billion, or $3.22 per diluted share, which was net of $137 million in preferred stock dividends. The Bancorp’s net income available to common shareholders for the year ended December 31, 2022 was $2.3 billion, or $3.35 per diluted share, which was net of $116 million in preferred stock dividends.

Net interest income on an FTE basis (non-GAAP) was $5.9 billion for the year ended December 31, 2023, an increase of $227 million compared to the prior year. Net interest income benefited from increases in market interest rates, resulting in increases in yields on average loans and leases, average other short-term investments and average taxable securities for the year ended December 31, 2023 compared to the prior year. Net interest income also benefited from increases in average other consumer loans and average taxable securities for the year ended December 31, 2023 compared to the prior year. These positive impacts were partially offset by increases in rates paid on average interest-bearing core deposits, average long-term debt and average FHLB advances for the year ended December 31, 2023 compared to the prior year. Net interest income was also negatively impacted by deposit balance migration into higher yielding products, resulting in a decrease in the average balances of demand deposits and an increase in the average balances of interest-bearing core deposits for the year ended December 31, 2023 compared to the prior year. Additionally, net interest income was negatively impacted by increases in the average balances of CDs over $250,000 and long-term debt for the year ended December 31, 2023 compared to the prior year. Net interest margin on an FTE basis (non-GAAP) was 3.05% for the year ended December 31, 2023 compared to 3.02% for the year ended December 31, 2022.

The provision for credit losses was $515 million for the year ended December 31, 2023 compared to $563 million in the prior year. The provision for credit losses for the year ended December 31, 2023 was primarily driven by factors which resulted in an increase to the ACL during the year, including changes in product mix, the impacts of qualitative factors and increases in reserves for individually evaluated loans, partially offset by the impact of a decrease in the end-of-period loan and lease balances. The provision for credit losses for the year ended December 31, 2022 was primarily driven by factors which resulted in an increase to the ACL during the year, including growth in loan and lease balances and deterioration in the macroeconomic forecast, partially offset by the impacts of qualitative factors. The provision for credit losses for the year ended December 31, 2022 also included the initial recognition of provision for credit losses on loans acquired as part of a business acquisition completed in the second quarter of 2022. Net losses charged-off as a percent of average portfolio loans and leases were 0.32% and 0.19% for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, nonperforming portfolio assets as a percent of portfolio loans and leases and OREO increased to 0.59% compared to 0.44% at December 31, 2022. 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 Consolidated Financial Statements.

Noninterest income increased $115 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the recognition of net securities gains in the current year compared to net securities losses in the prior year, as well as increases in commercial banking revenue and mortgage banking net revenue, partially offset by decreases in other noninterest income and leasing business revenue.

Noninterest expense increased $486 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to increases in other noninterest expense, compensation and benefits expense, technology and communications expense, net occupancy expense and marketing expense, partially offset by a decrease in leasing business expense.

For more information on net interest income, provision for credit losses, 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 December 31, 2023. As of December 31, 2023, the Bancorp’s capital ratios, as defined by the U.S. banking agencies, were:

•CET1 capital ratio: 10.29%;
•Tier 1 risk-based capital ratio: 11.59%;
•Total risk-based capital ratio: 13.72%;
•Leverage ratio: 8.73%


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NON-GAAP FINANCIAL MEASURES
The following are non-GAAP financial measures which provide useful insight to the reader of the 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 its 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 years ended December 31 ($ in millions) 2023 2022 2021
Net interest income (U.S. GAAP) $ 5,827  5,609  4,770 
Add: FTE adjustment 25  16  12 
Net interest income on an FTE basis (1) $ 5,852  5,625  4,782 
Interest income (U.S. GAAP) $ 9,760  6,587  5,211 
Add: FTE adjustment 25  16  12 
Interest income on an FTE basis (2) $ 9,785  6,603  5,223 
Interest expense (3) $ 3,933  978  441 
Noninterest income (4) 2,881  2,766  3,118 
Noninterest expense (5) 5,205  4,719  4,748 
Average interest-earning assets (6) 191,743  186,326  184,378 
Average interest-bearing liabilities (7) 137,592  119,624  115,469 
Ratios:
Net interest margin on an FTE basis (1) / (6) 3.05  % 3.02  2.59 
Net interest rate spread on an FTE basis ((2) / (6)) - ((3) / (7)) 2.24  2.72  2.45 
Efficiency ratio on an FTE basis (5) / ((1) + (4)) 59.6  56.2  60.1 

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.

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 years ended December 31 ($ in millions) 2023 2022 2021
Net income available to common shareholders (U.S. GAAP) $ 2,212  2,330  2,659 
Add: Intangible amortization, net of tax 34  37  34 
Tangible net income available to common shareholders (1) $ 2,246  2,367  2,693 
Average Bancorp shareholders’ equity (U.S. GAAP) $ 17,704  19,080  22,812 
Less: Average preferred stock 2,116  2,116  2,116 
Average goodwill 4,918  4,779  4,366 
Average intangible assets 146  168  142 
Average tangible common equity (2) $ 10,524  12,017  16,188 
Return on average tangible common equity (1) / (2) 21.3  % 19.7  16.6 

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.
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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 December 31 ($ in millions) 2023 2022
Total Bancorp Shareholders’ Equity (U.S. GAAP) $ 19,172  17,327 
Less: Preferred stock 2,116  2,116 
Goodwill 4,919  4,915 
Intangible assets 125  169 
AOCI (4,487) (5,110)
Tangible common equity, excluding AOCI (1) 16,499  15,237 
Add: Preferred stock 2,116  2,116 
Tangible equity (2) $ 18,615  17,353 
Total Assets (U.S. GAAP) $ 214,574  207,452 
Less: Goodwill 4,919  4,915 
Intangible assets 125  169 
AOCI, before tax (5,680) (6,468)
Tangible assets, excluding AOCI (3) $ 215,210  208,836 
Ratios:
Tangible equity as a percentage of tangible assets (2) / (3) 8.65  % 8.31 
Tangible common equity as a percentage of tangible assets (1) / (3) 7.67  7.30 
    

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RECENT ACCOUNTING STANDARDS
Note 1 of the Notes to Consolidated Financial Statements provides a discussion of the significant new accounting standards applicable to the Bancorp during 2023 and the expected impact of significant accounting standards issued, but not yet required to be adopted.

CRITICAL ACCOUNTING POLICIES
The Bancorp’s 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.

As further discussed in Note 1 of the Notes to 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. The accounting policy for the ALLL for periods prior to January 1, 2023 is provided in the Critical Accounting Policies Applicable Prior to January 1, 2023 section below. There have been no other material changes to the valuation techniques or models described below during the year ended December 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 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 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 1 of the Notes to 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 subsection of the 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 value of the underlying collateral, less expected costs to sell where applicable. Allowances for individually evaluated loans and leases that are not collateral-dependent are typically measured based on the present value of expected cash flows of the loan or lease, discounted at its effective interest rate.
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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 ratings, 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 ratings 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.

Reserve for Unfunded Commitments
The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities and is included in other liabilities in the Consolidated Balance Sheets. The determination of the adequacy of the reserve is based upon expected credit losses over the remaining contractual life of the commitments, taking into consideration the current funded balance and estimated exposure over the reasonable and supportable forecast period. This process takes into consideration the same risk elements that are analyzed in the determination of the adequacy of the Bancorp’s ALLL, as previously discussed. Net adjustments to the reserve for unfunded commitments are included in the provision for credit losses in the Consolidated Statements of Income.

Valuation of Servicing Rights
When the Bancorp sells loans through either securitizations or individual loan sales in accordance with its investment policies, it often obtains servicing rights. The Bancorp may also purchase servicing rights. The Bancorp has elected to measure all existing classes of its residential mortgage servicing rights at fair value at each reporting date with changes in the fair value of servicing rights reported in earnings in the period in which the changes occur. Servicing rights are valued using internal OAS models. Significant management judgment is necessary to identify key economic assumptions used in estimating the fair value of the servicing rights including the prepayment speeds of the underlying loans, the weighted-average life, the OAS and the weighted-average coupon rate, as applicable.
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The primary risk of material changes to the value of the servicing rights resides in the potential volatility in the economic assumptions used, particularly the prepayment speeds. In order to assist in the assessment of the fair value of servicing rights, the Bancorp obtains external valuations of the servicing rights portfolio from third parties and participates in peer surveys that provide additional confirmation of the reasonableness of the key assumptions utilized in the internal OAS model. For additional information on servicing rights, refer to Note 13 of the Notes to Consolidated Financial Statements.

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. The Bancorp employs various valuation approaches to measure fair value including the market, income and cost approaches. The market approach uses prices or relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach involves discounting future amounts to a single present amount and is based on current market expectations about those future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of the asset.

U.S. GAAP 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 additional information on the fair value hierarchy and fair value measurements, refer to Note 1 of the Notes to Consolidated Financial Statements.

The Bancorp’s fair value measurements involve various valuation techniques and models, which involve inputs that are observable, when available. Valuation techniques and parameters used for measuring assets and liabilities are reviewed and validated by the Bancorp on a quarterly basis. Additionally, the Bancorp monitors the fair values of significant assets and liabilities using a variety of methods including the evaluation of pricing runs and exception reports based on certain analytical criteria, comparison to previous trades and overall review and assessments for reasonableness. The level of management judgment necessary to determine fair value varies based upon the methods used in the determination of fair value. Financial instruments that are measured at fair value using quoted prices in active markets (Level 1) require minimal judgment. The valuation of financial instruments when quoted market prices are not available (Levels 2 and 3) may require significant management judgment to assess whether quoted prices for similar instruments exist, the impact of changing market conditions including reducing liquidity in the capital markets and the use of estimates surrounding significant unobservable inputs. Table 5 provides a summary of the fair value of financial instruments carried at fair value on a recurring basis and the amounts of financial instruments valued using Level 3 inputs.

TABLE 5: Fair Value Summary
As of ($ in millions) December 31, 2023 December 31, 2022
Balance Level 3 Balance Level 3
Assets carried at fair value $ 56,073  1,859  57,002  1,876 
As a percent of total assets 26  % 1  27  1 
Liabilities carried at fair value $ 3,106  174  4,130  203 
As a percent of total liabilities 2  % —  2  — 

Refer to Note 28 of the Notes to Consolidated Financial Statements for further information on fair value measurements including a description of the valuation methodologies used for significant financial instruments.

Goodwill
Business combinations entered into by the Bancorp typically include the recognition of goodwill. U.S. GAAP requires goodwill to be tested for impairment at the reporting unit level on an annual basis, which the Bancorp performs as of September 30 each year, and more frequently if events or circumstances indicate that there may be impairment.

Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for impairment, U.S. GAAP permits the Bancorp to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In this qualitative assessment, the Bancorp evaluates events and circumstances which may include, but are not limited to, the general economic environment, banking industry and market conditions, the overall financial performance of the Bancorp, the performance of the Bancorp’s common stock, the key financial performance metrics of the Bancorp’s reporting units and events affecting the reporting units to determine if it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Bancorp performs the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. A recognized impairment loss cannot be reversed in future periods even if the fair value of the reporting unit subsequently recovers.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. As none of the Bancorp’s reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to the Bancorp’s stock price. The determination of the fair value of a reporting unit is a subjective process that involves the use of estimates and judgments, particularly related to cash flows, the appropriate discount rates and an applicable control premium. The determination of the fair value of the Bancorp’s reporting units includes both an income-based approach and a market-based approach. The income-based approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach to estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate. Significant management judgment is necessary in the preparation of each reporting unit’s forecasted cash flows surrounding expectations for earnings projections, growth and credit loss expectations and actual results may differ from forecasted results. Additionally, the Bancorp determines its market capitalization based on the average of the closing price of the Bancorp’s stock during the month including the measurement date, incorporating an additional control premium, and compares this market-based fair value measurement to the aggregate fair value of the Bancorp’s reporting units in order to corroborate the results of the income approach. Refer to Note 10 of the Notes to Consolidated Financial Statements for further information regarding the Bancorp’s goodwill.

Legal Contingencies
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 and significant judgment may be required in the determination of both the probability of loss and whether the amount of the loss is reasonably estimable. The Bancorp’s estimates are subjective and are based on the status of legal and regulatory proceedings, the merit of the Bancorp’s defenses and consultation with internal and external legal counsel. 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. Refer to Note 19 of the Notes to Consolidated Financial Statements for further information regarding the Bancorp’s legal proceedings.

Critical Accounting Policies Applicable Prior to January 1, 2023
The following paragraphs describe the portions of the Bancorp’s critical accounting policies that were applicable prior to January 1, 2023 but were updated in conjunction with the adoption of ASU 2022-02 on January 1, 2023. The following paragraphs do not include the portions of the respective policies that were not affected by the adoption of this new accounting standard. Refer to Note 1 of the Notes to Consolidated Financial Statements for additional information.

ALLL
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 the Bancorp reasonably expects to execute a TDR with the borrower or where certain 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 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.

Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million that exhibit probable or observed credit weaknesses, as well as loans that have been modified in a TDR, 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 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 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 present value of expected future cash flows discounted at the loan’s effective interest rate. The Bancorp evaluates the collectability of both principal and interest when assessing the need for a loss accrual. Specific allowances on individually evaluated commercial loans and leases, including TDRs, are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

Consumer and residential mortgage loans that have been modified in a TDR are individually evaluated for an ALLL. Allowances for individually evaluated loans that are collateral-dependent are typically measured based on the fair value of the underlying collateral, less expected costs to sell where applicable. Individually evaluated loans that are not collateral-dependent are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate and a modeled expected credit loss amount. The Bancorp evaluates the collectability of both principal and interest when assessing the need for a loss accrual.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. These include commercial loans and leases that do not meet the criteria for individual evaluation as well as homogeneous loans in the residential mortgage and consumer portfolio segments. 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.

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.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 (including CDs over $250,000, federal funds purchased, other short-term borrowings and long-term debt). 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.

Tables 6 and 7 present the components of net interest income, net interest margin and net interest rate spread for the years ended December 31, 2023, 2022 and 2021, 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 $5.9 billion for the year ended December 31, 2023, an increase of $227 million compared to the prior year. Net interest income benefited from increases in market interest rates, resulting in increases in yields of 189 bps on average loans and leases, 456 bps on average other short-term investments and 23 bps on average taxable securities for the year ended December 31, 2023 compared to the prior year. Net interest income also benefited from increases in average other consumer loans and average taxable securities of $2.5 billion and $3.8 billion, respectively, for the year ended December 31, 2023 compared to the prior year. These positive impacts were partially offset by increases in rates paid on average interest-bearing core deposits of 198 bps, average long-term debt of 170 bps and average FHLB advances of 248 bps for the year ended December 31, 2023 compared to the prior year. Net interest income was also negatively impacted by deposit balance migration into higher yielding products, resulting in a decrease in the average balances of demand deposits of $14.0 billion and an increase in the average balances of interest-bearing core deposits of $11.5 billion for the year ended December 31, 2023 compared to the prior year. Additionally, net interest income was negatively impacted by increases in the average balances of CDs over $250,000 of $3.6 billion and long-term debt of $2.4 billion for the year ended December 31, 2023 compared to the prior year. Interest income recognized from PPP loans decreased to $3 million for the year ended December 31, 2023 compared to $43 million for the prior year.

Net interest rate spread on an FTE basis (non-GAAP) was 2.24% during the year ended December 31, 2023 compared to 2.72% during the year ended December 31, 2022. Rates paid on average interest-bearing liabilities increased 204 bps, partially offset by a 156 bps increase in yields on average interest-earning assets for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Net interest margin on an FTE basis (non-GAAP) was 3.05% for the year ended December 31, 2023 compared to 3.02% for the year ended December 31, 2022. Net interest margin for the year ended December 31, 2023 was positively impacted by the benefit of higher market interest rates on interest-earning assets, growth in average balances of loans and leases and average investment portfolio balances, partially offset by the migration of average balances of deposits from demand deposits to interest-bearing deposits and increases in rates paid on and balances of average wholesale funding. Net interest margin results are expected to modestly decrease over the next quarter driven by increasing levels of cash and continued liability repricing, partially offset by the impact of rising rates on the repricing of the Bancorp’s asset portfolios.

Interest income on an FTE basis (non-GAAP) from loans and leases increased $2.4 billion from the year ended December 31, 2022 primarily driven by the previously mentioned increases in market interest rates and average balances of 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 $796 million from the year ended December 31, 2022 primarily due to the previously mentioned increases in yields on average other short-term investments and average taxable securities as well as an increase in the average balances of taxable securities.

Interest expense on average core deposits increased $2.3 billion from the year ended December 31, 2022 primarily due to the previously mentioned increase in the cost of average interest-bearing core deposits to 238 bps for the year ended December 31, 2023 from 40 bps for the year ended December 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 $685 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the previously mentioned increases in rates paid on average long-term debt and FHLB advances as well as increases in the average balances of CDs over $250,000 and long-term debt. Refer to the Borrowings subsection of the Balance Sheet Analysis section of MD&A for additional information on the Bancorp’s borrowings. During the year ended December 31, 2023, average wholesale funding represented 18% of average interest-bearing liabilities compared to 15% for the year ended December 31, 2022. For more information on the Bancorp’s interest rate risk management, including estimated earnings sensitivity to changes in market interest rates, refer to the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 6: Consolidated Average Balance Sheets and Analysis of Net Interest Income on an FTE Basis
 For the years ended December 31 2023 2022 2021
($ in millions) Average
Balance		 Interest Earned/Paid Average
Yield/
Rate		 Average
Balance		 Interest Earned/Paid Average
Yield/
Rate		 Average
Balance		 Interest Earned/Paid Average
Yield/
Rate
Assets:
Interest-earning assets:
Loans and leases:(a)
Commercial and industrial loans $ 57,005  3,887  6.82  % $ 55,618  2,401  4.32  % $ 48,966  1,735  3.54  %
Commercial mortgage loans 11,262  672  5.97  10,723  415  3.87  10,396  313  3.01 
Commercial construction loans 5,582  380  6.80  5,458  239  4.38  5,783  181  3.13 
Commercial leases 2,629  95  3.63  2,828  85  3.02  3,130  92  2.94 
Total commercial loans and leases 76,478  5,034  6.58  74,627  3,140  4.21  68,275  2,321  3.40 
Residential mortgage loans 18,002  621  3.45  19,731  645  3.27  21,359  695  3.26 
Home equity 3,936  298  7.58  3,971  177  4.46  4,565  164  3.59 
Indirect secured consumer loans 15,944  687  4.31  16,914  560  3.31  15,156  508  3.35 
Credit card 1,800  252  14.00  1,737  221  12.73  1,783  219  12.28 
Other consumer loans 6,122  457  7.46  3,581  220  6.16  2,979  180  6.03 
Total consumer loans 45,804  2,315  5.05  45,934  1,823  3.97  45,842  1,766  3.85 
Total loans and leases $ 122,282  7,349  6.01  % $ 120,561  4,963  4.12  % $ 114,117  4,087  3.58  %
Securities:
Taxable $ 56,066  1,733  3.09  % $ 52,218  1,493  2.86  % $ 36,164  1,074  2.97  %
Exempt from income taxes(a)
 1,461  47  3.20  1,128  31  2.72  854  20  2.33 
Other short-term investments 11,934  656  5.50  12,419  116  0.94  33,243  42  0.13 
Total interest-earning assets $ 191,743  9,785  5.10  % $ 186,326  6,603  3.54  % $ 184,378  5,223  2.83  %
Cash and due from banks 2,772  3,093  3,055 
Other assets 16,169  19,490  21,050 
Allowance for loan and lease losses (2,258) (1,980) (2,159)
Total assets $ 208,426  $ 206,929  $ 206,324 
Liabilities and Equity:
Interest-bearing liabilities:
Interest checking deposits $ 52,378  1,552  2.96  % $ 45,835  297  0.65  % $ 45,850  26  0.06  %
Savings deposits 20,872  147  0.71  23,445  32  0.14  20,531  4  0.02 
Money market deposits 30,943  666  2.15  29,326  67  0.23  30,631  12  0.04 
Foreign office deposits 158  3  1.82  170  1  0.74  164  —  0.04 
CDs $250,000 or less 8,298  308  3.71  2,342  9  0.40  3,214  10  0.31 
Total interest-bearing core deposits 112,649  2,676  2.38  101,118  406  0.40  100,390  52  0.05 
CDs over $250,000 5,332  253  4.74  1,688  41  2.45  530  7  1.30 
Federal funds purchased 307  15  4.96  381  6  1.69  333  —  0.12 
Securities sold under repurchase agreements 348  4  1.22  482  1  0.17  594  —  0.02 
FHLB advances 4,596  235  5.11  3,733  98  2.63  —  —  — 
Derivative collateral and other borrowed money 100  8  8.24  329  9  2.94  513  2  0.30 
Long-term debt 14,260  742  5.20  11,893  417  3.50  13,109  380  2.89 
Total interest-bearing liabilities $ 137,592  3,933  2.86  % $ 119,624  978  0.82  % $ 115,469  441  0.38  %
Demand deposits 46,195  60,185  62,028 
Other liabilities 6,935  8,040  6,015 
Total liabilities $ 190,722  $ 187,849  $ 183,512 
Total equity $ 17,704  $ 19,080  $ 22,812 
Total liabilities and equity $ 208,426  $ 206,929  $ 206,324 
Net interest income (FTE)(b)
 $ 5,852  $ 5,625  $ 4,782 
Net interest margin (FTE)(b)
 3.05  % 3.02  % 2.59  %
Net interest rate spread (FTE)(b)
 2.24  2.72  2.45 
Interest-bearing liabilities to interest-earning assets 71.76  64.20  62.63 
(a)The FTE adjustments included in the above table were $25, $16 and $12 for the years ended December 31, 2023, 2022 and 2021, respectively.
(b)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
TABLE 7: Changes in Net Interest Income Attributable to Volume and Yield/Rate on an FTE Basis(a)
For the years ended December 31
2023 Compared to 2022
2022 Compared to 2021
($ in millions) Volume Yield/Rate Total Volume Yield/Rate Total
Assets:
Interest-earning assets:
Loans and leases:
Commercial and industrial loans $ 61  1,425  1,486  255  411  666 
Commercial mortgage loans 22  235  257  10  92  102 
Commercial construction loans 6  135  141  (11) 69  58 
Commercial leases (6) 16  10  (9) 2  (7)
Total commercial loans and leases 83  1,811  1,894  245  574  819 
Residential mortgage loans (58) 34  (24) (53) 3  (50)
Home equity (2) 123  121  (23) 36  13 
Indirect secured consumer loans (34) 161  127  58  (6) 52 
Credit card 8  23  31  (6) 8  2 
Other consumer loans 182  55  237  37  3  40 
Total consumer loans 96  396  492  13  44  57 
Total loans and leases $ 179  2,207  2,386  258  618  876 
Securities:
Taxable $ 114  126  240  461  (42) 419 
Exempt from income taxes 10  6  16  7  4  11 
Other short-term investments (5) 545  540  (42) 116  74 
Total change in interest income $ 298  2,884  3,182  684  696  1,380 
Liabilities:
Interest-bearing liabilities:
Interest checking deposits $ 48  1,207  1,255  —  271  271 
Savings deposits (4) 119  115  1  27  28 
Money market deposits 4  595  599  (1) 56  55 
Foreign office deposits —  2  2  —  1  1 
CDs $250,000 or less 71  228  299  (3) 2  (1)
Total interest-bearing core deposits 119  2,151  2,270  (3) 357  354 
CDs over $250,000 148  64  212  24  10  34 
Federal funds purchased (1) 10  9  —  6  6 
Securities sold under repurchase agreements —  3  3  —  1  1 
FHLB advances 27  110  137  98  —  98 
Derivative collateral and other borrowed money (10) 9  (1) (1) 8  7 
Long-term debt 94  231  325  (37) 74  37 
Total change in interest expense $ 377  2,578  2,955  81  456  537 
Total change in net interest income $ (79) 306  227  603  240  843 
(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.

Provision for Credit Losses
The Bancorp provides, as an expense, an amount for expected credit losses within the loan and lease portfolio and the portfolio of unfunded commitments and letters of credit that is based on factors previously discussed in the Critical Accounting Policies section of MD&A. 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 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 $515 million for the year ended December 31, 2023 compared to $563 million in the prior year. The provision for credit losses for the year ended December 31, 2023 was primarily driven by factors which resulted in an increase to the ACL during the year, including changes in product mix, the impacts of qualitative factors and increases in reserves for individually evaluated loans, partially offset by the impact of a decrease in end-of-period loan and lease balances. The provision for credit losses for the year ended December 31, 2022 was primarily driven by factors which resulted in an increase to the ACL during the year, including growth in loan and lease balances and deterioration in the macroeconomic forecast, partially offset by the impacts of qualitative factors. The provision for credit losses for the year ended December 31, 2022 also included the initial recognition of provision for credit losses on loans acquired as part of a business acquisition completed in the second quarter of 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ALLL increased $128 million from December 31, 2022 to $2.3 billion at December 31, 2023 inclusive of a $49 million reduction from the impact of the adoption of ASU 2022-02 on January 1, 2023, as further discussed in Note 1 of the Notes to Consolidated Financial Statements. At December 31, 2023, the ALLL as a percent of portfolio loans and leases increased to 1.98%, compared to 1.81% at December 31, 2022. The reserve for unfunded commitments decreased $50 million from December 31, 2022 to $166 million at December 31, 2023. At December 31, 2023, the ACL as a percent of portfolio loans and leases increased to 2.12%, 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 Consolidated Financial Statements for more 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 $115 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The following table presents the components of noninterest income:
TABLE 8: Components of Noninterest Income
For the years ended December 31 ($ in millions) 2023 2022 2021
Commercial banking revenue $ 624  565  637 
Wealth and asset management revenue 581  570  586 
Service charges on deposits 577  589  600 
Card and processing revenue 416  409  402 
Mortgage banking net revenue 250  215  270 
Leasing business revenue 208  237  300 
Other noninterest income 207  265  332 
Securities gains (losses), net 18  (82) (7)
Securities losses, net - non-qualifying hedges on mortgage servicing rights —  (2) (2)
Total noninterest income $ 2,881  2,766  3,118 

Commercial banking revenue
Commercial banking revenue increased $59 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by increases in loan syndication fees, institutional brokerage revenue and foreign exchange fees, partially offset by decreases in revenue from commercial customer interest rate derivatives and merger and acquisition fees.

Wealth and asset management revenue
Wealth and asset management revenue increased $11 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to increases in broker income and private client service fees. The Bancorp’s trust and registered investment advisory businesses had approximately $574 billion and $510 billion in total assets under care as of December 31, 2023 and 2022, respectively, and managed $59 billion and $55 billion in assets for individuals, corporations and not-for-profit organizations as of December 31, 2023 and 2022, respectively.

Service charges on deposits
Service charges on deposits decreased $12 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 due to a decrease in service charges on both commercial and consumer deposits. Service charges on commercial deposits were $424 million for the year ended December 31, 2023, a decrease of $10 million from 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. Service charges on consumer deposits were $153 million for the year ended December 31, 2023, a decrease of $2 million from the prior year primarily due to a decrease in consumer checking fees driven by the elimination of non-sufficient funds fees during the third quarter of 2022.

Card and processing revenue
Card and processing revenue increased $7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to increases in credit and debit card interchange and electronic funds transfer income, partially offset by increased reward costs.

Mortgage banking net revenue
Mortgage banking net revenue increased $35 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table presents the components of mortgage banking net revenue:
TABLE 9: Components of Mortgage Banking Net Revenue
For the years ended December 31 ($ in millions) 2023 2022 2021
Origination fees and gains on loan sales $ 79  91  285 
Net mortgage servicing revenue:
Gross mortgage servicing fees 319  310  247 
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs
 (148) (186) (262)
Net mortgage servicing revenue 171  124  (15)
Total mortgage banking net revenue $ 250  215  270 
Origination fees and gains on loan sales decreased $12 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by lower volumes of residential mortgage loan originations as well as a decrease in gains from sales of government-guaranteed loans that were previously in forbearance programs. Residential mortgage loan originations decreased to $5.6 billion for the year ended December 31, 2023 from $14.0 billion for the year ended December 31, 2022 primarily due to the impact of higher market interest rates on originations.

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 10: Components of Net Valuation Adjustments on MSRs
For the years ended December 31 ($ in millions) 2023 2022 2021
Changes in fair value and settlement of free-standing derivatives purchased to economically hedge the MSR portfolio $ (43) (363) (123)
Changes in fair value:
Due to changes in inputs or assumptions(a)
 43  355  142 
Other changes in fair value(b)
 (148) (178) (281)
Net valuation adjustments on MSRs and free-standing derivatives purchased to economically hedge MSRs $ (148) (186) (262)
(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.

For the years ended December 31, 2023 and 2022, the Bancorp recognized losses of $105 million and income of $177 million, respectively, in mortgage banking net revenue for valuation adjustments on the MSR portfolio. The valuation adjustments on the MSR portfolio included increases of $43 million and $355 million for the years ended December 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 increased slightly during the year ended December 31, 2023, which caused a decrease in prepayment speeds. The fair value of the MSR portfolio also decreased $148 million and $178 million for the years ended December 31, 2023 and 2022, respectively, as a result of contractual principal payments and actual prepayment activity.

Further detail on the valuation of MSRs can be found in Note 13 of the Notes to 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 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. Gains and losses on these securities are recorded in securities losses, net - non-qualifying hedges on mortgage servicing rights in the Bancorp’s Consolidated Statements of Income.

The Bancorp’s total residential mortgage loans serviced at December 31, 2023 and 2022 were $117.0 billion and $120.2 billion, respectively, with $100.8 billion and $103.2 billion, respectively, of residential mortgage loans serviced for others.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Leasing business revenue
Leasing business revenue decreased $29 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by decreases in operating lease income, lease remarketing fees and leasing business solutions revenue. The decrease in leasing business solutions revenue was 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 11: Components of Other Noninterest Income
For the years ended December 31 ($ in millions) 2023 2022 2021
BOLI income $ 61  64  61 
Cardholder fees 56  54  50 
Equity method investment income 52  22  30 
Private equity investment income 44  70  81 
Banking center income 25  24  23 
Income from the TRA associated with Worldpay, Inc. 22  46  46 
Consumer loan fees 20  19  17 
Gains on contract sales 2  3  62 
Loss on swap associated with the sale of Visa, Inc. Class B Shares (94) (84) (86)
Other, net 19  47  48 
Total other noninterest income $ 207  265  332 

Other noninterest income decreased $58 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to decreases in private equity investment income and income from the TRA associated with Worldpay, Inc., partially offset by an increase in equity method investment income.

Private equity investment income decreased $26 million for the year ended December 31, 2023 compared to the prior year primarily driven by gains realized on certain private equity investments during the prior year. Income from the TRA associated with Worldpay, Inc. was $22 million for the year ended December 31, 2023 compared to $46 million for the year ended December 31, 2022. For more information, refer to Note 15 of the Notes to Consolidated Financial Statements. Equity method investment income increased $30 million for the year ended December 31, 2023 compared to the prior year primarily due to a gain on the partial disposition of an equity method investment during the second quarter of 2023.

Securities gains (losses), net
Net securities gains were $18 million for the year ended December 31, 2023 compared with losses of $82 million for the year ended December 31, 2022. For more information, refer to Note 4 of the Notes to Consolidated Financial Statements.

Noninterest Expense
Noninterest expense increased $486 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The following table presents the components of noninterest expense:
TABLE 12: Components of Noninterest Expense
For the years ended December 31 ($ in millions) 2023 2022 2021
Compensation and benefits $ 2,694  2,554  2,626 
Technology and communications 464  416  388 
Net occupancy expense 331  307  312 
Equipment expense 148  145  138 
Marketing expense 126  118  107 
Leasing business expense 121  131  137 
Card and processing expense 84  80  89 
Other noninterest expense 1,237  968  951 
Total noninterest expense $ 5,205  4,719  4,748 
Efficiency ratio on an FTE basis(a)
 59.6  % 56.2  60.1 
(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 $140 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by an increase in base compensation, which includes the impact of merit increases, the additional personnel costs of an acquired business, the impact of raising the Bancorp’s minimum wage in the third quarter of 2022 and an increase in severance expense. The increase for the year ended December 31, 2023 compared to the year ended December 31, 2022 also included an increase in non-qualified deferred compensation expense.
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These increases were partially offset by a decrease in performance-based compensation. Full-time equivalent employees totaled 18,724 at December 31, 2023 compared to 19,319 at December 31, 2022.

Technology and communications expense increased $48 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by increased investments in strategic initiatives and technology modernization.

Net occupancy expense increased $24 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by fluctuations in energy prices, higher expenses associated with the maintenance and renovation of banking centers and the impacts of exiting mortgage warehouse lending.

Marketing expense increased $8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase in deposit campaigns.

Leasing business expense decreased $10 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by a decrease in depreciation expense associated with operating lease equipment.

The following table presents the components of other noninterest expense:
TABLE 13: Components of Other Noninterest Expense
For the years ended December 31 ($ in millions) 2023 2022 2021
FDIC insurance and other taxes $ 385  132  114 
Loan and lease 133  167  217 
Losses and adjustments 91  91  69 
Data processing 87  82  79 
Dues and subscriptions 61  58  55 
Travel 56  60  34 
Professional service fees 53  54  63 
Securities recordkeeping 50  48  52 
Cash and coin processing 48  44  39 
Postal and courier 46  40  37 
Intangible amortization 43  47  44 
Other, net 184  145  148 
Total other noninterest expense $ 1,237  968  951 
Other noninterest expense increased $269 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase in FDIC insurance and other taxes, partially offset by a decrease in loan and lease expense.

FDIC insurance and other taxes increased $253 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily as a result of a $224 million FDIC special assessment, as further discussed in the Overview section of MD&A, as well as an increase in the FDIC insurance initial base deposit insurance assessment rate.

Loan and lease expense decreased $34 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 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. The decrease for the year ended December 31, 2023 compared to the year ended December 31, 2022 also included a decrease in loan closing expense related to lower origination volumes for residential mortgage loans.


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Applicable Income Taxes
Applicable income tax expense for all periods presented includes the benefits 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, the Credit for Increasing Research Activities program established under Section 41 of the IRC and the Qualified Zone Academy Bond program established under Section 1397E of the IRC.

The effective tax rates for the years ended December 31, 2023 and 2022 were primarily impacted by $230 million and $219 million, respectively, of low-income housing tax credits and other tax benefits and $25 million and $26 million, respectively, of tax benefits from tax-exempt income, which were partially offset by $200 million and $189 million, respectively, of proportional amortization related to qualifying LIHTC investments.

The Bancorp’s income before income taxes, applicable income tax expense and effective tax rate are as follows:
TABLE 14: Applicable Income Taxes
For the years ended December 31 ($ in millions) 2023 2022 2021
Income before income taxes $ 2,988  3,093  3,517 
Applicable income tax expense 639  647  747 
Effective tax rate 21.4  % 21.0  21.2 
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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 31 of the Notes to 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’s FTP methodology was not adjusted during the years ended December 31, 2023, 2022 and 2021.

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 year ended December 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 15: Net Income (Loss) by Business Segment
For the years ended December 31 ($ in millions) 2023 2022 2021
Income Statement Data
Commercial Banking $ 2,559  1,649  1,554 
Consumer and Small Business Banking 2,761  1,309  220 
Wealth and Asset Management 279  198  94 
General Corporate and Other (3,250) (710) 902 
Net income $ 2,349  2,446  2,770 

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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 16: Commercial Banking
For the years ended December 31 ($ in millions) 2023 2022 2021
Income Statement Data
Net interest income (FTE)(a)
 $ 3,828  2,552  1,604 
Provision for (benefit from) credit losses 12  33  (597)
Noninterest income:         
Commercial banking revenue 619  563  633 
Service charges on deposits 371  372  385 
Leasing business revenue 208  237  300 
Other noninterest income 158  168  179 
Noninterest expense:
Compensation and benefits 654  639  644 
Leasing business expense 121  131  137 
Other noninterest expense 1,228  1,053  992 
Income before income taxes (FTE) 3,169  2,036  1,925 
Applicable income tax expense(a)(b)
 610  387  371 
Net income $ 2,559  1,649  1,554 
Average Balance Sheet Data
Commercial loans and leases, including held for sale $ 72,293  70,904  62,571 
Demand deposits 23,170  35,147  38,220 
Interest checking deposits 32,319  21,341  22,452 
Savings and money market deposits 5,246  6,019  7,825 
Certificates of deposit 62  108  117 
Foreign office deposits 158  170  164 
(a)Includes FTE adjustments of $16, $10 and $8 for the years ended December 31, 2023, 2022 and 2021, 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 $2.6 billion for the year ended December 31, 2023 compared to $1.6 billion for the year ended December 31, 2022. The increase in net income was primarily driven by an increase in net interest income on an FTE basis, a decrease in provision for credit losses and an increase in noninterest income, partially offset by an increase in noninterest expense.

Net interest income on an FTE basis increased $1.3 billion from the year ended December 31, 2022 primarily driven by increases in yields on average commercial loans and leases as well as increases in FTP credit rates on deposits. These positive impacts were partially offset by increases in FTP charge rates on commercial loans and leases as well as increases in rates paid on and average balances of interest checking deposits and increases in rates paid on average savings and money market deposits.

Provision for credit losses decreased $21 million from the year ended December 31, 2022 primarily driven by an increase in the allocated benefit from credit losses related to commercial criticized assets as well as a decrease in net charge-offs related to commercial leases. Net charge-offs as a percent of average portfolio loans and leases were 12 bps for both the years ended December 31, 2023 and 2022.

Noninterest income increased $16 million from the year ended December 31, 2022 driven by an increase in commercial banking revenue, partially offset by decreases in leasing business revenue and other noninterest income. Commercial banking revenue increased $56 million from the year ended December 31, 2022 primarily driven by increases in loan syndication fees, institutional brokerage revenue and foreign exchange fees, partially offset by decreases in contract revenue from commercial customer derivatives and merger and acquisition fees. Leasing business revenue decreased $29 million from the year ended December 31, 2022 primarily driven by decreases in operating lease income, lease remarketing fees and leasing business solutions revenue. The decrease in leasing business solutions revenue was related to the disposition of LaSalle Solutions during the second quarter of 2022. Other noninterest income decreased $10 million from the year ended December 31, 2022 primarily due to a decrease in private equity investment income, partially offset by a decrease in net securities losses.

Noninterest expense increased $180 million from the year ended December 31, 2022 driven by increases in other noninterest expense and compensation and benefits, partially offset by a decrease in leasing business expense. Other noninterest expense increased $175 million from the year ended December 31, 2022 primarily driven by increases in allocated expenses and FDIC insurance and other taxes.
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The increase in allocated expenses was primarily related to cash management services and information technology support services. Compensation and benefits increased $15 million from the year ended December 31, 2022 primarily driven by an increase in base compensation, partially offset by a decrease in performance-based compensation. Leasing business expense decreased $10 million from the year ended December 31, 2022 primarily driven by a decrease in depreciation expense associated with operating lease equipment.

Average commercial loans and leases increased $1.4 billion from the year ended December 31, 2022 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 from the year ended December 31, 2022 primarily as a result of higher loan balances in the first half of 2023 driven by production exceeding paydowns, partially offset by a planned reduction in balances in the second half of 2023. Average commercial mortgage loans increased from the year ended December 31, 2022 as loan originations exceeded payoffs. Average commercial construction loans increased from the year ended December 31, 2022 as loan originations exceeded payoffs. Average commercial leases decreased from the year ended December 31, 2022 primarily as a result of a planned reduction in indirect non-relationship-based lease originations.

Average deposits decreased $1.8 billion from the year ended December 31, 2022 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 $12.0 billion from the year ended December 31, 2022 primarily as a result of balance migration into interest checking deposits and lower average balances per customer account. Average savings and money market deposits decreased $773 million from the year ended December 31, 2022 primarily due to lower average balances per customer account and balance migration into interest checking deposits. Average interest checking deposits increased $11.0 billion from the year ended December 31, 2022 primarily as a result of balance migration from demand deposits and savings and money market deposits as well as average balance growth.



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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 17: Consumer and Small Business Banking
For the years ended December 31 ($ in millions) 2023 2022 2021
Income Statement Data
Net interest income $ 5,207  3,131  1,685 
Provision for credit losses 303  139  120 
Noninterest income:     
Card and processing revenue 312  308  312 
Mortgage banking net revenue 250  214  267 
Wealth and asset management revenue 216  204  206 
Service charges on deposits 208  216  214 
Other noninterest income 119  111  108 
Noninterest expense:
Compensation and benefits 878  828  833 
Net occupancy and equipment expense 253  234  235 
Card and processing expense 76  72  85 
Other noninterest expense 1,308  1,255  1,242 
Income before income taxes 3,494  1,656  277 
Applicable income tax expense 733  347  57 
Net income $ 2,761  1,309  220 
Average Balance Sheet Data
Consumer loans, including held for sale $ 42,933  43,049  43,072 
Commercial loans 2,829  1,727  928 
Demand deposits 21,891  23,600  22,932 
Interest checking deposits 12,325  15,191  14,633 
Savings and money market deposits 42,305  43,054  40,647 
Certificates of deposit 8,809  2,543  3,292 

Net income was $2.8 billion for the year ended December 31, 2023 compared to $1.3 billion for the year ended December 31, 2022. The increase was primarily driven by increases in net interest income and noninterest income, partially offset by increases in provision for credit losses and noninterest expense.

Net interest income increased $2.1 billion from the year ended December 31, 2022 primarily due to increases in FTP credit rates on deposits as well as increases in yields on and average balances of loans. These positive impacts were partially offset by increases in rates paid on deposits as well as FTP charge rates on loans.

Provision for credit losses increased $164 million from the year ended December 31, 2022 primarily due to increases in net charge-offs on other consumer loans, commercial and industrial loans, indirect secured consumer loans and credit card. Net charge-offs as a percent of average portfolio loans and leases increased to 68 bps for the year ended December 31, 2023 compared to 33 bps for the year ended December 31, 2022.

Noninterest income increased $52 million from the year ended December 31, 2022 primarily driven by increases in mortgage banking net revenue and wealth and asset management revenue. Refer to the Noninterest Income subsection of the Statements of Income Analysis section of MD&A for additional information on the fluctuation in mortgage banking net revenue. Wealth and asset management revenue increased $12 million from the year ended December 31, 2022 primarily driven by an increase in broker income.

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Noninterest expense increased $126 million from the year ended December 31, 2022 primarily due to increases in other noninterest expense, compensation and benefits and net occupancy and equipment expense. Other noninterest expense increased $53 million from the year ended December 31, 2022 primarily due to increases in allocated expenses, FDIC insurance and other taxes and marketing expense. The increase in allocated expenses was primarily related to information technology support services. 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 increased $50 million from the year ended December 31, 2022 primarily driven by an increase in base compensation, which includes the incremental impact of a business acquired in the second quarter of 2022 and the impact of raising the Bancorp’s minimum wage in the third quarter of 2022. Net occupancy and equipment expense increased $19 million from the year ended December 31, 2022 primarily due to an increase in allocated occupancy costs.

Average consumer loans decreased $116 million from the year ended December 31, 2022 primarily driven by decreases in average residential mortgage loans and average indirect secured consumer loans, partially offset by increases in average other consumer loans and average credit card. Average residential mortgage loans decreased from the year ended December 31, 2022 primarily due to decreases in average residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs and also had lower origination volumes. Average indirect secured consumer loans decreased from the year ended December 31, 2022 primarily driven by paydowns exceeding loan originations and a planned reduction in balances. Average other consumer loans increased from the year ended December 31, 2022 primarily driven by originations of point-of-sale solar energy installation loans. Average credit card increased from the year ended December 31, 2022 primarily due to increases in balance-active customers and average balances per balance-active account. Average commercial loans increased $1.1 billion from the year ended December 31, 2022 primarily driven by increases in average commercial and industrial loans and average commercial mortgage loans as loan originations exceeded payoffs.

Average deposits increased $942 million from the year ended December 31, 2022 primarily driven by an increase in average certificates of deposit, partially offset by decreases in average interest checking deposits, average demand deposits and average savings and money market deposits. Average certificates of deposit increased $6.3 billion from the year ended December 31, 2022 primarily due to higher offering rates. Average interest checking deposits decreased $2.9 billion, average demand deposits decreased $1.7 billion and average savings and money market deposits decreased $749 million from the year ended December 31, 2022 primarily as a result of lower average balances per customer account due to increased consumer spending and balance migration into certificates of deposit. In response to the higher interest rate environment, deposit balances have migrated from noninterest-bearing products to higher interest-bearing products.

Wealth and Asset Management
Wealth and Asset Management provides a full range of wealth management solutions for individuals, companies and not-for-profit organizations, including wealth planning, investment management, banking, insurance, trust and estate services. These offerings include retail brokerage services for individual clients, advisory services for institutional clients including middle market businesses, non-profits, states and municipalities, and wealth management strategies and products for high net worth and ultra-high net worth clients.

The following table contains selected financial data for the Wealth and Asset Management segment:
TABLE 18: Wealth and Asset Management
For the years ended December 31 ($ in millions) 2023 2022 2021
Income Statement Data
Net interest income $ 360  262  88 
Provision for (benefit from) credit losses 1  —  (1)
Noninterest income:
Wealth and asset management revenue 549  540  558 
Other noninterest income 6  5  12 
Noninterest expense:
Compensation and benefits 220  218  205 
Other noninterest expense 341  338  335 
Income before income taxes 353  251  119 
Applicable income tax expense 74  53  25 
Net income $ 279  198  94 
Average Balance Sheet Data
Loans and leases, including held for sale $ 4,386  4,413  3,852 
Deposits 11,122  12,725  11,480 

Net income was $279 million for the year ended December 31, 2023 compared to $198 million for the year ended December 31, 2022. The increase in net income was primarily driven by increases in net interest income and noninterest income, partially offset by an increase in noninterest expense.

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Net interest income increased $98 million from the year ended December 31, 2022 primarily driven by an increase in FTP credit rates on deposits as well as increases in yields on average loans and leases. These positive impacts were partially offset by increases in rates paid on average deposits as well as an increase in FTP charge rates on loans and leases for the year ended December 31, 2023 compared to the prior year.
Noninterest income increased $10 million from the year ended December 31, 2022 primarily due to an increase in wealth and asset management revenue driven by increases in broker income and private client service fees.

Noninterest expense increased $5 million from the year ended December 31, 2022 due to increases in other noninterest expense and compensation and benefits. Other noninterest expense increased $3 million from the year ended December 31, 2022 primarily as a result of an increase in allocated expenses related to operational support and settlement services. Compensation and benefits increased $2 million from the year ended December 31, 2022 primarily as a result of an increase in base compensation.

Average loans and leases decreased $27 million from the year ended December 31, 2022 primarily driven by decreases in average commercial and industrial loans and average home equity loans as payoffs exceeded loan production, partially offset by an increase in average commercial mortgage loans as a result of higher loan production.

Average deposits decreased $1.6 billion from the year ended December 31, 2022 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.

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 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 $3.2 billion from the year ended December 31, 2022 primarily driven by increases in FTP credits on deposits allocated to the business segments, increases in interest expense on long-term debt and deposits and decreases in interest income on loans and leases. These negative impacts were partially offset by increases in FTP charges to the business segments on loans and leases as well as increases in interest income on investment securities and other short-term investments. The increases in both FTP credits and FTP charges allocated to the business segments were driven by increases in market interest rates. Under the Bancorp’s internal reporting methodology, the Bancorp insulates the business segments from interest rate risk associated with fixed-rate lending by transferring this risk to General Corporate and Other through the FTP methodology. As a result, the amount of FTP credits on deposits earned by the business segments has increased at a faster pace than the amount of allocated FTP charges on loans and leases. If market interest rates remain at current levels, the FTP charges to the business segments for loans and leases will increase over time as fixed-rate loans mature and are replaced with new originations.

Provision for credit losses decreased $192 million from the year ended December 31, 2022 primarily driven by the impact of allocations to the business segments.

Noninterest income increased $46 million from the year ended December 31, 2022 primarily driven by the recognition of net securities gains compared to net securities losses during the prior year, partially offset by a decrease in income from the TRA associated with Worldpay, Inc.

Noninterest expense increased $184 million from the year ended December 31, 2022 primarily driven by increases in FDIC insurance and other taxes due to the FDIC special assessment, compensation and benefits due to higher non-qualified deferred compensation expense and severance expense and an increase in technology and communications expense, partially offset by the impact of increases in corporate overhead allocations from General Corporate and Other to the other business segments. Refer to the Overview section of MD&A for additional information on the special deposit insurance assessment.


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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 19 summarizes end of period loans and leases, including loans and leases held for sale, and Table 20 summarizes average total loans and leases, including average loans and leases held for sale.
TABLE 19: Components of Total Loans and Leases (including loans and leases held for sale)
As of December 31 ($ in millions) 2023 2022
Commercial loans and leases:
Commercial and industrial loans $ 53,311  57,305 
Commercial mortgage loans 11,276  11,020 
Commercial construction loans 5,621  5,433 
Commercial leases 2,582  2,704 
Total commercial loans and leases $ 72,790  76,462 
Consumer loans:
Residential mortgage loans 17,360  18,562 
Home equity 3,916  4,039 
Indirect secured consumer loans 14,965  16,552 
Credit card 1,865  1,874 
Other consumer loans 6,716  4,998 
Total consumer loans $ 44,822  46,025 
Total loans and leases $ 117,612  122,487 
Total portfolio loans and leases (excluding loans and leases held for sale) $ 117,234  121,480 

Total loans and leases, including loans and leases held for sale, decreased $4.9 billion, or 4%, from December 31, 2022 driven by decreases in both commercial loans and leases and consumer loans.

Commercial loans and leases decreased $3.7 billion, or 5%, from December 31, 2022 due to decreases in commercial and industrial loans and commercial leases, partially offset by increases in commercial mortgage loans and commercial construction loans. Commercial and industrial loans decreased $4.0 billion, or 7%, from December 31, 2022 primarily as a result of payoffs, decreased revolving line of credit utilization and a planned reduction in balances in the second half of 2023. Commercial leases decreased $122 million, or 5%, from December 31, 2022 primarily as a result of a planned reduction in indirect non-relationship-based lease originations. Commercial mortgage loans increased $256 million, or 2%, from December 31, 2022 as loan originations exceeded payoffs. Commercial construction loans increased $188 million, or 3%, from December 31, 2022 as draws on existing commitments and loan originations exceeded payoffs.

Consumer loans decreased $1.2 billion, or 3%, from December 31, 2022 primarily due to decreases in indirect secured consumer loans, residential mortgage loans and home equity, partially offset by an increase in other consumer loans. Indirect secured consumer loans decreased $1.6 billion, or 10%, from December 31, 2022 primarily driven by paydowns exceeding loan originations and a planned reduction in balances. Residential mortgage loans decreased $1.2 billion, or 6%, from December 31, 2022 primarily due to decreases in residential mortgage loans related to lower origination volumes as well as a decrease in residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs. Home equity decreased $123 million, or 3%, as payoffs exceeded loan originations and new advances. Other consumer loans increased $1.7 billion, or 34%, from December 31, 2022 primarily driven by originations of point-of-sale solar energy installation loans.

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TABLE 20: Components of Average Loans and Leases (including average loans and leases held for sale)
For the years ended December 31 ($ in millions) 2023 2022
Commercial loans and leases:
Commercial and industrial loans $ 57,005  55,618 
Commercial mortgage loans 11,262  10,723 
Commercial construction loans 5,582  5,458 
Commercial leases 2,629  2,828 
Total commercial loans and leases $ 76,478  74,627 
Consumer loans:
Residential mortgage loans 18,002  19,731 
Home equity 3,936  3,971 
Indirect secured consumer loans 15,944  16,914 
Credit card 1,800  1,737 
Other consumer loans 6,122  3,581 
Total consumer loans $ 45,804  45,934 
Total average loans and leases $ 122,282  120,561 
Total average portfolio loans and leases (excluding loans and leases held for sale) $ 121,645  118,069 

Average loans and leases, including average loans and leases held for sale, increased $1.7 billion, or 1%, from December 31, 2022 driven by an increase in average commercial loans and leases, partially offset by a decrease in average consumer loans.

Average commercial loans and leases increased $1.9 billion, or 2%, from December 31, 2022 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 $1.4 billion, or 2%, from December 31, 2022 primarily as a result of higher loan balances in the first half of 2023 driven by production exceeding paydowns, partially offset by a planned reduction in balances in the second half of 2023. Average commercial mortgage loans increased $539 million, or 5%, from December 31, 2022 as loan originations exceeded payoffs. Average commercial construction loans increased $124 million, or 2%, from December 31, 2022 as loan originations exceeded payoffs. Average commercial leases decreased $199 million, or 7%, from December 31, 2022 primarily as a result of a planned reduction in indirect non-relationship-based lease originations.

Average consumer loans decreased $130 million from December 31, 2022 primarily due to decreases in average residential mortgage loans and average indirect secured consumer loans, partially offset by increases in average other consumer loans and average credit card. Average residential mortgage loans decreased $1.7 billion, or 9%, from December 31, 2022 primarily due to a decrease in residential mortgage loans held for sale as the Bancorp sold government-guaranteed loans that were previously in forbearance programs and also had lower origination volumes. Average indirect secured consumer loans decreased $970 million, or 6%, from December 31, 2022 primarily driven by paydowns exceeding loan originations and a planned reduction in balances. Average other consumer loans increased $2.5 billion, or 71%, from December 31, 2022 primarily driven by originations of point-of-sale solar energy installation loans. Average credit card increased $63 million, or 4%, from December 31, 2022 primarily due to increases in balance-active customers and average balances per balance-active account.

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 $51.9 billion and $52.2 billion at December 31, 2023 and 2022, respectively. The taxable available-for-sale debt and other investment securities portfolio had an effective duration of 4.8 at December 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 December 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 December 31, 2023 and 2022.

During the years ended December 31, 2023, 2022 and 2021, the Bancorp recognized $5 million, $1 million and $19 million, respectively, of impairment losses on available-for-sale debt and other securities, included in securities gains (losses), net, in the Consolidated Statements of Income. These losses related to certain securities in unrealized loss positions where the Bancorp has determined that it no longer intends to hold the securities until the recovery of their amortized cost bases.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
At both December 31, 2023 and 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 during the years ended December 31, 2023, 2022 and 2021 related to available-for-sale debt and other securities in an unrealized loss position.

The following table summarizes the end of period components of investment securities:
TABLE 21: Components of Investment Securities
As of December 31 ($ in millions) 2023 2022
Available-for-sale debt and other securities (amortized cost basis):
U.S. Treasury and federal agencies securities $ 4,477  2,683 
Obligations of states and political subdivisions securities 2  18 
Mortgage-backed securities:
Agency residential mortgage-backed securities 11,564  12,604 
Agency commercial mortgage-backed securities 28,945  29,824 
Non-agency commercial mortgage-backed securities 4,872  5,235 
Asset-backed securities and other debt securities 5,207  6,292 
Other securities(a)
 722  874 
Total available-for-sale debt and other securities $ 55,789  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 $ 647  45 
Obligations of states and political subdivisions securities 39  14 
Agency residential mortgage-backed securities 6  8 
Asset-backed securities and other debt securities 207  347 
Total trading debt securities $ 899  414 
Total equity securities (fair value) $ 613  317 
(a)Other securities consist of FHLB, FRB and DTCC restricted stock holdings that are carried at cost.

In January 2024, the Bancorp transferred $12.6 billion (amortized cost basis) of securities from available-for-sale to held-to-maturity to reflect the Bancorp’s change in intent to hold these securities to maturity in order to reduce potential capital volatility associated with investment security market price fluctuations. AOCI included pretax unrealized losses of $994 million on these securities at the date of transfer. The unrealized losses that existed on the date of transfer will continue to be reported as a component of AOCI and will be amortized into income over the remaining life of the securities as an adjustment to yield, offsetting the amortization of the discount resulting from the transfer recorded at fair value.

On an amortized cost basis, available-for-sale debt and other securities decreased $1.7 billion from December 31, 2022 primarily due to decreases in asset-backed securities and other debt securities, agency residential mortgage-backed securities and agency commercial mortgage-backed securities, partially offset by increases in U.S. Treasury and federal agencies securities. Trading debt securities increased $485 million from December 31, 2022 primarily due to purchases of U.S. Treasury securities during the year ended December 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 28% and 30% of total interest-earning assets at December 31, 2023 and 2022, respectively. The estimated weighted-average life of the debt securities in the available-for-sale debt and other securities portfolio was 6.2 years and 6.8 years at December 31, 2023 and 2022, respectively. In addition, at December 31, 2023 and 2022, the debt securities in the available-for-sale debt and other securities portfolio had a weighted-average yield of 3.06% and 2.97%, respectively.

Information presented in Table 22 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 $5.4 billion and $6.0 billion at December 31, 2023 and 2022, respectively. The fair values of investment securities are impacted by interest rates, credit spreads, market volatility and liquidity conditions. The fair value of the Bancorp’s investment securities portfolio generally decreases when interest rates increase or when credit spreads widen.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 22: Characteristics of Available-for-Sale Debt and Other Securities
As of December 31, 2023 ($ in millions) Amortized Cost Fair Value Weighted-Average
Life (in years)		 Weighted-Average
Yield
U.S. Treasury and federal agencies securities:
Average life within one year $ 350  350  0.8 5.46  %
Average life after one year through five years 3,901  3,763  2.9 3.62 
Average life after five years through ten years 226  223  5.2 3.60 
Total $ 4,477  4,336  2.9  3.76  %
Obligations of states and political subdivisions securities:
Average life within one year 2  2  0.7  — 
Total $ 2  2  0.7  —  %
Agency residential mortgage-backed securities:
Average life within one year 5  5  0.6  2.29 
Average life after one year through five years 881  815  3.5  2.84 
Average life after five years through ten years 9,682  8,672  8.0  3.00 
Average life after ten years 996  790  11.3  2.93 
Total $ 11,564  10,282  8.0  2.98  %
Agency commercial mortgage-backed securities:(a)
Average life within one year 59  57  0.8  2.98 
Average life after one year through five years 10,205  9,508  3.6  2.71 
Average life after five years through ten years 13,945  12,234  7.4  2.88 
Average life after ten years 4,736  3,921  12.0  2.93 
Total $ 28,945  25,720  6.8  2.83  %
Non-agency commercial mortgage-backed securities:
Average life within one year 340  332  0.8  3.30 
Average life after one year through five years 2,442  2,323  2.2  3.24 
Average life after five years through ten years 2,090  1,790  7.5  2.81 
Total $ 4,872  4,445  4.3  3.06  %
Asset-backed securities and other debt securities:
Average life within one year 634  618  0.7  3.95 
Average life after one year through five years 3,488  3,279  3.1  3.74 
Average life after five years through ten years 1,048  979  6.1  4.42 
Average life after ten years 37  36  13.5  5.23 
Total $ 5,207  4,912  3.5  3.91  %
Other securities 722  722 
Total available-for-sale debt and other securities $ 55,789  50,419  6.2  3.06  %
(a)Taxable-equivalent yield adjustments included in the above table are 0.01%, 0.19% and 0.03% for securities with an average life between 5 and 10 years, average life greater than 10 years and in total, respectively.

Other Short-Term Investments
Other short-term investments have original maturities less than one year and primarily include interest-bearing balances that are funds on deposit at other depository institutions or the FRB. The Bancorp uses other short-term investments as part of its liquidity risk management tools. Other short-term investments were $22.1 billion at December 31, 2023, an increase of $13.7 billion from December 31, 2022. This increase was primarily attributable to the Bancorp’s decision to increase its liquidity position in response to conditions in the operating environment as of December 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 78% of average total assets for the years ended December 31, 2023 and 2022, respectively.

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The following table presents the end of period components of deposits:
TABLE 23: Components of Deposits
As of December 31 ($ in millions) 2023 2022
Demand $ 43,146  53,125 
Interest checking 57,257  51,653 
Savings 18,215  23,469 
Money market 34,374  28,220 
Foreign office 162  182 
Total transaction deposits 153,154  156,649 
CDs $250,000 or less 10,552  3,809 
Total core deposits 163,706  160,458 
CDs over $250,000(a)
 5,206  3,232 
Total deposits $ 168,912  163,690 
(a)Includes $4.4 billion and $3.1 billion of retail brokered certificates of deposit which are fully covered by FDIC insurance as of December 31, 2023 and 2022, respectively.

Core deposits increased $3.2 billion, or 2%, from December 31, 2022 due to an increase in CDs $250,000 or less, partially offset by a decrease in transaction deposits. In response to the higher interest rate environment, deposit balances have migrated from noninterest-bearing products such as demand deposits into higher interest-bearing products such as CDs, money market accounts and interest checking accounts. CDs $250,000 or less increased $6.7 billion from December 31, 2022 primarily due to higher offering rates. Transaction deposits decreased $3.5 billion, or 2%, from December 31, 2022 as decreases in demand deposits and savings deposits were partially offset by increases in money market deposits and interest checking deposits. Demand deposits decreased $10.0 billion, or 19%, from December 31, 2022 primarily as a result of the aforementioned balance migration and lower balances per customer account. Savings deposits decreased $5.3 billion, or 22%, from December 31, 2022 primarily as a result of balance migration into CDs and lower balances per consumer customer account due to increased consumer spending. Money market deposits increased $6.2 billion, or 22%, from December 31, 2022 primarily as a result of higher balances per consumer customer account due to higher offering rates. Interest checking deposits increased $5.6 billion, or 11%, from December 31, 2022 primarily as a result of balance migration from demand deposits and commercial balance growth, partially offset by lower balances per consumer customer account.

CDs over $250,000 increased $2.0 billion, or 61%, 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 years ended December 31:
TABLE 24: Components of Average Deposits
($ in millions) 2023 2022
Demand $ 46,195  60,185 
Interest checking 52,378  45,835 
Savings 20,872  23,445 
Money market 30,943  29,326 
Foreign office 158  170 
Total transaction deposits 150,546  158,961 
CDs $250,000 or less 8,298  2,342 
Total core deposits 158,844  161,303 
CDs over $250,000(a)
 5,332  1,688 
Total average deposits $ 164,176  162,991 
(a)Includes $4.7 billion and $1.5 billion of retail brokered certificates of deposit which are fully covered by FDIC insurance for the years ended December 31, 2023 and 2022, respectively.

On an average basis, core deposits decreased $2.5 billion, or 2%, from December 31, 2022 due to a decrease in average transaction deposits, partially offset by an increase in average CDs $250,000 or less. In response to the higher interest rate environment, average deposit balances have migrated from noninterest-bearing products such as demand deposits into higher interest-bearing products such as interest checking accounts, CDs and money market accounts. Average transaction deposits decreased $8.4 billion, or 5%, from December 31, 2022, primarily driven by decreases in average demand deposits and average savings deposits, partially offset by increases in average interest checking deposits and average money market deposits. Average demand deposits decreased $14.0 billion, or 23%, from December 31, 2022 primarily as a result of the aforementioned balance migration and lower average balances per customer account. Average savings deposits decreased $2.6 billion, or 11%, from December 31, 2022 primarily due to balance migration into CDs and lower average balances per consumer customer account due to increased consumer spending. Average interest checking deposits increased $6.5 billion, or 14%, from December 31, 2022 primarily as a result of balance migration from demand deposits and money market deposits as well as average commercial balance growth, partially offset by lower average balances per consumer customer account.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Average money market deposits increased $1.6 billion, or 6%, from December 31, 2022 primarily as a result of higher average balances per consumer customer account due to higher offering rates, partially offset by balance migration into interest checking deposits. Average CDs $250,000 or less increased $6.0 billion from December 31, 2022 primarily due to higher offering rates.

Average CDs over $250,000 increased $3.6 billion from December 31, 2022 primarily due to an increase in retail brokered CDs issued.

Contractual maturities
The contractual maturities of CDs as of December 31, 2023 are summarized in the following table:
TABLE 25: Contractual Maturities of CDs(a)
($ in millions)
Next 12 months $ 15,541 
13-24 months 150 
25-36 months 49 
37-48 months 8 
49-60 months 7 
After 60 months 3 
Total CDs
 $ 15,758 
(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 December 31, 2023 and 2022, approximately $97.6 billion, or 58%, and $94.1 billion, or 58%, respectively, of the Bancorp’s domestic deposits were estimated to be insured. As of December 31, 2023 and 2022, approximately $71.1 billion and $69.4 billion, respectively, of the Bancorp’s domestic deposits were estimated to be uninsured. At December 31, 2023 and 2022, approximately $3.4 billion and $727 million, respectively, of the Bancorp’s time deposits were estimated to be not fully insured. The estimated uninsured portions of those time deposits were $1.9 billion and $306 million at December 31, 2023 and 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 14% at both December 31, 2023 and 2022.

The following table summarizes the end of period components of borrowings:
TABLE 26: Components of Borrowings
As of December 31 ($ in millions) 2023 2022
Federal funds purchased $ 193  180 
Other short-term borrowings 2,861  4,838 
Long-term debt 16,380  13,714 
Total borrowings $ 19,434  18,732 

Total borrowings increased $702 million, or 4%, from December 31, 2022 primarily due to an increase in long-term debt partially offset by a decrease in other short-term borrowings. Long-term debt increased $2.7 billion from December 31, 2022 primarily driven by the issuance of senior fixed-rate/floating-rate notes in July of 2023 totaling $1.25 billion and the issuance of asset-backed securities in August of 2023 totaling $1.5 billion related to an automobile loan securitization. Additionally, in September of 2023 the Bancorp obtained $1.5 billion in new FHLB advances that will mature in 2024, utilizing its existing borrowing capacity. These increases were partially offset by the redemptions or maturities of $1.3 billion of notes and $272 million of paydowns associated with loan securitizations during the year ended December 31, 2023. For additional information regarding the long-term debt issuances, refer to Note 17 of the Notes to Consolidated Financial Statements. Other short-term borrowings decreased $2.0 billion from December 31, 2022 primarily due to core deposit growth, including seasonal inflows during the fourth quarter of 2023, and increased long-term debt which reduced the need for short-term funding at period-end. 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 16 of the Notes to Consolidated Financial Statements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table summarizes the components of average borrowings:
TABLE 27: Components of Average Borrowings
For the years ended December 31 ($ in millions) 2023 2022
Federal funds purchased $ 307  381 
Other short-term borrowings 5,044  4,544 
Long-term debt 14,260  11,893 
Total average borrowings $ 19,611  16,818 

Total average borrowings increased $2.8 billion, or 17%, compared to December 31, 2022 primarily due to increases in average long-term debt and average other short-term borrowings. Average long-term debt increased $2.4 billion compared to December 31, 2022 primarily driven by the aforementioned issuances in 2023 totaling $2.75 billion and the aforementioned $1.5 billion in new FHLB advances the Bancorp obtained in 2023. These increases were partially offset by redemptions or maturities of $1.3 billion of notes and $272 million of paydowns associated with loan securitizations during the year ended December 31, 2023. Average other short-term borrowings increased $500 million compared to December 31, 2022 primarily due to maintaining higher levels of liquidity in response to the conditions in the current operating environment, including regulatory uncertainty. 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
RISK MANAGEMENT – OVERVIEW
Effective risk management is critical to the Bancorp’s ongoing success and ensures that the Bancorp operates in a safe and sound manner, complies with applicable laws and regulations and safeguards the Bancorp’s brand and reputation. Risks are inherent in the Bancorp’s business and are influenced by both internal and external factors. The Bancorp is responsible for managing these risks effectively to deliver through-the-cycle value and performance for the Bancorp’s shareholders, customers, employees and communities.

Fifth Third’s Enterprise Risk Management Framework, which is approved annually by the Capital Committee, ERMC, RCC and the Board of Directors, includes the following key elements:
•The Bancorp ensures transparency of risk through defined risk policies, governance and a reporting structure that includes the RCC, ERMC and other risk-specific management committees and councils.
•The Bancorp establishes a risk appetite in alignment with its strategic, financial and capital plans at the enterprise level and the line of business level. Risk appetite is defined using quantitative metrics and qualitative measures to ensure prudent risk taking, driving balanced decision making. The Bancorp’s goal is to ensure that aggregate residual risks do not exceed the Bancorp’s risk appetite, and that risks taken are supportive of the Bancorp’s portfolio diversification and profitability objectives. The Board and executive management approve the risk appetite, which is considered in the development of business strategies and forms the basis for enterprise risk management.
•The core principles that define the Bancorp’s risk appetite are as follows:
◦Act with integrity in all activities.
◦Understand the risks taken and ensure that they are in alignment with the Bancorp’s business strategies and risk appetite.
◦Avoid risks that cannot be understood, managed or monitored.
◦Provide transparency of risk to the Bancorp’s management and Board by escalating risks and issues as necessary.
◦Ensure Fifth Third’s products and services are aligned to the Bancorp’s core customer base and are designed, delivered and maintained to provide value and benefit to the Bancorp’s customers and to Fifth Third.
◦Only offer products or services that are appropriate or suitable for the Bancorp’s customers.
◦Focus on providing operational excellence by providing reliable, accurate and efficient services to meet customers’ needs.
◦Maintain a strong financial position to ensure the Bancorp meets its strategic objectives through all economic cycles and is able to access the capital markets at all times, even under stressed conditions.
◦Protect the Bancorp’s reputation by thoroughly understanding the consequences of business strategies, products and processes.
◦Conduct the Bancorp’s business in compliance with all applicable laws, rules and regulations and in alignment with internal policies and procedures.
•Fifth Third’s core values and culture provide the foundation for supporting sound risk management practices by setting expectations for appropriate conduct and accountability across the organization. All employees are expected to conduct themselves in alignment with Fifth Third’s Code of Business Conduct and Ethics, which may be found on www.53.com, while carrying out their responsibilities. Fifth Third’s Management Compliance Committee provides oversight of business conduct policies, programs and strategies, and monitors reporting of potential misconduct, trends or themes across the enterprise. Prudent risk management is a responsibility that is expected from all employees and is a foundational element of Fifth Third’s culture.
•The Bancorp manages eight defined risk types to a prescribed appetite. The risk types are credit risk, liquidity risk, interest rate risk, price risk, legal and regulatory compliance risk, operational risk, reputation risk and strategic risk.
•The Bancorp identifies and monitors existing and potential risks that may impact the company’s risk profile, including emerging risks that create uncertainties and/or would have broad implications if materialized (e.g., global pandemics, climate change, etc.). Enhanced monitoring and action plans are implemented as necessary to proactively mitigate risk.
•Fifth Third’s Risk Management Process provides a consistent and integrated approach for managing risks. The five components of the Risk Management Process are: identify, assess, manage, monitor and report. The Bancorp has also established processes and programs to manage and report concentration risks, to ensure robust talent, performance and compensation management, and to aggregate risks across the enterprise.

Fifth Third drives accountability for managing risk through its Three Lines of Defense structure:
•The first line of defense is comprised of front-line units (and enterprise-wide functions that support front-line units) that create risk or are involved in risk-taking activities and are accountable for managing risk. These groups are the Bancorp’s primary risk takers and are responsible for implementing effective internal controls and maintaining processes for identifying, assessing, managing, monitoring and reporting on the risks associated with their activities consistent with established risk appetite and limits.
•The second line of defense, or Independent Risk Management, consists of Enterprise and Non-Financial Risk Management, Capital Markets Risk Management, Compliance, Financial Crimes, Model Risk Management, Credit Risk Management and Credit Risk Review. The second line is responsible for developing enterprise frameworks and policies to govern risk-taking activities, providing challenge and oversight of those activities, advising on controlling risk, assessing risks and issues independent of the first line of defense, and providing input on key risk decisions. Risk Management complements the front line’s management of risk-taking activities through its monitoring and reporting responsibilities, including adherence to the Bancorp Risk Appetite. Additionally, the second line of defense is responsible for identifying, assessing, managing, monitoring and reporting on aggregate risks enterprise-wide.
•The third line of defense is Internal Audit, which provides oversight of the first and second lines of defense, and independent assurance to the Board on the effectiveness of governance, risk management and internal controls.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CREDIT RISK MANAGEMENT
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 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, product 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 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 ratings 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. Certain 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 Consolidated Financial Statements for further information on the Bancorp’s credit rating 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 rating systems. The first of these risk rating systems is based on regulatory guidance for credit risk rating 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 categories for estimating probabilities of default and an additional eleven 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 1 of the Notes to Consolidated Financial Statements for additional information about the Bancorp’s processes for developing these models, for 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 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 various scoring systems, analytical tools and portfolio performance monitoring processes to assess the credit risk of the consumer and residential mortgage portfolios.

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Overview
During 2023, economic growth remained resilient as fiscal deficit spending, solid job growth and gains in household wealth supported demand while tighter monetary policy and lower commodity prices led to an easing of inflation. The path to a “soft landing” continued to improve as the easing of inflationary pressures allowed the FOMC to pivot to a more balanced stance where both the inflation and unemployment mandates are equally important. As inflation gradually moves down towards its 2% target, the FOMC focus has shifted to balancing the risk associated with keeping rates too high for too long as it seeks a soft landing for the economy.

It remains to be seen whether inflation can return sustainably to 2% without a period of below-potential growth and a softer labor market. The recent easing in financial conditions has supported growth and employment and the risk remains that inflation is more persistent than expected by the FOMC and financial markets. Heightened geopolitical tensions may also lead to increased economic uncertainty and volatility as well as higher commodity prices, potentially reversing 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 may adversely impact business investment, job growth and consumer spending which could lead to a recession.

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 1 and Note 6 of the Notes to 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 factors and their impacts on commercial borrowers, including, but not limited to, the level of inflation, higher-for-longer interest rates, labor and supply chain issues, volatility and changes in consumer discretionary spending patterns, including debt and default levels. The Bancorp maintains focus on disciplined client selection, adherence to underwriting policy and attention to 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:
TABLE 28: Commercial Loan and Lease Portfolio (excluding loans and leases held for sale)
2023 2022
As of December 31 ($ in millions) Outstanding Exposure Nonaccrual Outstanding Exposure Nonaccrual
By Industry:
Real estate $ 12,558  19,679  4  11,275  17,938  25 
Financial services and insurance 9,998  21,022  —  9,927  20,674  — 
Manufacturing 9,010  19,101  54  11,024  21,174  88 
Business services 5,917  10,339  50  5,971  10,240  4 
Healthcare 5,485  7,831  13  5,576  7,838  28 
Wholesale trade 5,259  10,414  6  5,538  10,620  4 
Accommodation and food 4,326  6,946  25  4,340  7,028  10 
Retail trade 3,953  9,847  85  4,495  10,570  9 
Communication and information 3,191  6,482  60  3,428  6,944  — 
Mining 2,813  5,940  —  3,634  6,811  — 
Construction 2,656  6,391  10  2,945  6,265  15 
Transportation and warehousing 2,382  4,326  5  2,621  4,664  2 
Utilities 1,850  3,493  —  1,862  4,172  — 
Entertainment and recreation 1,687  2,964  8  1,729  3,053  67 
Other services 1,181  1,680  6  1,088  1,484  9 
Agribusiness 300  614  —  456  651  — 
Public administration 151  240  —  343  451  1 
Individuals 29  77  —  76  117  — 
Other —  —  —  61  62  1 
Total $ 72,746  137,386  326  76,389  140,756  263 
By Loan Size:
Less than $1 million 4  % 4  19  4  3  17 
$1 million to $5 million 7  6  11  7  6  12 
$5 million to $10 million 5  4  5  5  4  17 
$10 million to $25 million 14  11  23  14  12  28 
$25 million to $50 million 24  23  —  23  22  26 
Greater than $50 million 46  52  42  47  53  — 
Total 100  % 100  100  100  100  100 
By State:
California 10  % 8  5  9  8  3 
Illinois 9  8  5  9  9  30 
Texas 9  9  1  9  9  9 
Ohio 8  11  6  9  11  8 
Florida 7  7  35  7  7  6 
New York 7  6  —  6  6  — 
Michigan 5  5  3  5  5  5 
Georgia 4  4  21  4  4  1 
Indiana 3  3  1  3  3  — 
Tennessee 3  3  1  3  3  2 
North Carolina 3  3  2  3  2  2 
South Carolina 2  2  1  2  2  — 
Other 30  31  19  31  31  34 
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. Nonaccrual assets with relationships exceeding $1 million are reviewed quarterly to assess the appropriateness of the value ascribed in the assessment of charge-offs and specific reserves. Additionally, collateral values are also reviewed at least annually for all criticized assets.
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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 29: Commercial Mortgage Loans Outstanding by LTV, Loans Greater Than $1 Million
As of December 31, 2023 ($ in millions)
 LTV > 100% LTV 80-100% LTV < 80%
Commercial mortgage owner-occupied loans $ 53  258  3,257 
Commercial mortgage nonowner-occupied loans 1  29  5,121 
Total $ 54  287  8,378 
TABLE 30: 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 31: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of December 31, 2023 ($ in millions)
For the Year Ended
December 31, 2023
Outstanding Exposure 90 Days Past Due Nonaccrual Net (Recoveries) Charge-offs
By State:
Illinois $ 1,524  1,808  —  2  — 
Florida 1,242  2,160  —  —  (2)
Ohio 972  1,377  —  —  — 
South Carolina 927  1,135  —  —  — 
Michigan 778  1,100  —  —  — 
California 730  1,189  —  —  — 
Texas 696  1,375  —  —  — 
New York 490  545  —  —  — 
Georgia 441  809  —  —  — 
All other states 2,932  4,718  —  1  (1)
Total $ 10,732  16,216  —  3  (3)
(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 32: Nonowner-Occupied Commercial Real Estate (excluding loans held for sale)(a)
As of December 31, 2022 ($ in millions)
For the Year Ended
December 31, 2022
Outstanding Exposure 90 Days Past Due Nonaccrual Net Charge-offs
By State:
Illinois $ 1,401  1,695  —  22  — 
Florida 1,127  1,864  —  —  — 
Ohio 1,061  1,462  —  —  — 
South Carolina 739  996  —  —  — 
Michigan 837  1,145  —  1  — 
California 608  953  —  —  — 
Texas 788  1,356  —  —  — 
New York 381  550  —  —  — 
Georgia 382  920  —  —  — 
All other states 2,972  4,808  —  1  3 
Total $ 10,296  15,749  —  24  3 
(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
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 are 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 make payments that are less than the accruing interest. The Bancorp originates both fixed-rate and ARM loans. Within the ARM portfolio, approximately $545 million of ARM loans will have rate resets during the next twelve months. Of these resets, 90% are expected to experience an increase in rate, with an average increase of approximately 1.65%. Underlying characteristics of these borrowers are relatively strong with a weighted-average origination DTI of 35% 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 33: Residential Mortgage Portfolio Loans by LTV at Origination
2023 2022
As of December 31 ($ in millions) Outstanding Weighted-Average LTV Outstanding Weighted-Average LTV
LTV ≤ 80% $ 11,718  62.7  % $ 12,395  61.9  %
LTV > 80%, with mortgage insurance(a)
 2,996  95.1  3,092  94.7 
LTV > 80%, no mortgage insurance 2,312  91.1  2,141  90.5 
Total $ 17,026  72.4  % $ 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 34: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of December 31, 2023 ($ in millions)
For the Year Ended
December 31, 2023
Outstanding 90 Days Past Due and Accruing Nonaccrual Net (Recoveries) Charge-offs
By State:
Ohio $ 512  —  8  — 
Illinois 462  1  4  — 
Florida 407  —  1  (1)
Michigan 167  —  1  — 
Indiana 166  —  2  — 
North Carolina 163  —  1  — 
Kentucky 123  —  1  — 
All other states 312  —  5  — 
Total $ 2,312  1  23  (1)

TABLE 35: Residential Mortgage Portfolio Loans, LTV Greater Than 80% at Origination, No Mortgage Insurance
As of December 31, 2022 ($ in millions)
For the Year Ended
December 31, 2022
Outstanding 90 Days Past Due and Accruing Nonaccrual Net Charge-offs
By State:
Ohio $ 500  1  9  — 
Illinois 430  —  5  — 
Florida 347  —  3  — 
Michigan 163  —  2  — 
Indiana 157  —  2  — 
North Carolina 147  —  —  — 
Kentucky 112  —  1  — 
All other states 285  —  7  — 
Total $ 2,141  1  29  — 

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 28% 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 8% of the balances mature before 2025.

The ACL 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 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.
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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 37 and Table 38. Of the total $3.9 billion of outstanding home equity loans:
•76% reside within the Bancorp’s Midwest footprint of Ohio, Michigan, Illinois, Indiana and Kentucky as of December 31, 2023;
•34% are in senior lien positions and 66% are in junior lien positions at December 31, 2023;
•75% of non-delinquent borrowers made at least one payment greater than the minimum payment during the year ended December 31, 2023; and
•The portfolio had a weighted-average refreshed FICO score of 748 at December 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 and Note 1 of the Notes to Consolidated Financial Statements for more information.

The following table provides an analysis of home equity portfolio loans outstanding disaggregated based upon refreshed FICO score:
TABLE 36: Home Equity Portfolio Loans Outstanding by Refreshed FICO Score
2023 2022
As of December 31 ($ in millions) Outstanding % of Total     Outstanding % of Total    
Senior Liens:
FICO ≤ 659 $ 109  2  % $ 122  3  %
FICO 660-719 187  5  205  5 
FICO ≥ 720 1,052  27  1,262  31 
Total senior liens $ 1,348  34  % $ 1,589  39  %
Junior Liens:
FICO ≤ 659 218  6  211  5 
FICO 660-719 460  12  433  11 
FICO ≥ 720 1,890  48  1,806  45 
Total junior liens $ 2,568  66  % $ 2,450  61  %
Total $ 3,916  100  % $ 4,039  100  %

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:
TABLE 37: Home Equity Portfolio Loans Outstanding by LTV at Origination
2023 2022
As of December 31 ($ in millions) Outstanding Weighted-Average LTV Outstanding Weighted-Average LTV
Senior Liens:
LTV ≤ 80% $ 1,194  50.8  % $ 1,395  52.1  %
LTV > 80% 154  88.9  194  88.8 
Total senior liens $ 1,348  55.4  % $ 1,589  56.8  %
Junior Liens:
LTV ≤ 80% 1,768  64.9  1,628  65.6 
LTV > 80% 800  88.7  822  89.2 
Total junior liens $ 2,568  72.7  % $ 2,450  74.1  %
Total $ 3,916  66.7  % $ 4,039  67.2  %

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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 38: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2023 ($ in millions)
For the Year Ended
December 31, 2023
Outstanding Exposure 90 Days
Past Due and Accruing		 Nonaccrual Net (Recoveries) Charge-offs
By State:
Ohio $ 290  808  —  6  — 
Illinois 145  346  1  4  (1)
Michigan 140  394  —  2  — 
Indiana 96  252  —  2  — 
Florida 86  206  —  2  — 
Kentucky 81  211  —  1  — 
All other states 116  304  —  3  — 
Total $ 954  2,521  1  20  (1)

TABLE 39: Home Equity Portfolio Loans Outstanding with an LTV Greater than 80% at Origination
As of December 31, 2022 ($ in millions)
For the Year Ended
December 31, 2022
Outstanding Exposure 90 Days Past Due and Accruing Nonaccrual Net (Recoveries) Charge-offs
By State:
Ohio $ 315  859  —  8  (1)
Illinois 165  367  1  4  (1)
Michigan 160  432  —  3  (1)
Indiana 99  260  —  2  — 
Florida 77  191  —  2  — 
Kentucky 84  219  —  1  — 
All other states 116  295  —  3  (1)
Total $ 1,016  2,623  1  23  (4)

Indirect secured consumer portfolio
The indirect secured consumer portfolio is comprised of $11.9 billion of automobile loans and $3.1 billion of indirect motorcycle, powersport, recreational vehicle and marine loans as of December 31, 2023. All concentration and guideline changes are monitored monthly to ensure alignment with original credit performance and return projections.

The following table provides an analysis of indirect secured consumer portfolio loans outstanding disaggregated based upon FICO score at
origination:
TABLE 40: Indirect Secured Consumer Portfolio Loans Outstanding by FICO Score at Origination
2023 2022
As of December 31 ($ in millions)  
Outstanding		 % of Total Outstanding % of Total
FICO ≤ 659 $ 189  1  % $ 248  1  %
FICO 660-719 3,075  21  3,564  22 
FICO ≥ 720 11,701  78  12,740  77 
Total $ 14,965  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.

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The following table provides an analysis of indirect secured consumer portfolio loans outstanding by LTV at origination:
TABLE 41: Indirect Secured Consumer Portfolio Loans Outstanding by LTV at Origination
2023 2022
As of December 31 ($ in millions) Outstanding Weighted-Average LTV Outstanding Weighted-Average LTV
LTV ≤ 100% $ 10,976  79.6  % $ 12,087  79.6  %
LTV > 100% 3,989  110.2  4,465  110.5 
Total $ 14,965  87.7  % $ 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 as of and for the years ended:
TABLE 42: Indirect Secured Consumer Portfolio Loans Outstanding with an LTV Greater than 100% at Origination
($ in millions) Outstanding 90 Days Past Due and Accruing Nonaccrual Net Charge-offs    
December 31, 2023 $ 3,989  —  18  40 
December 31, 2022 4,465  —  16  23 

Credit card portfolio
The credit card portfolio consists of predominantly prime accounts with 98% of balances existing within the Bancorp’s footprint at both December 31, 2023 and 2022. At December 31, 2023 and 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:
TABLE 43: Credit Card Portfolio Loans Outstanding by FICO Score at Origination
  2023 2022
As of December 31 ($ in millions) Outstanding % of Total Outstanding % of Total
FICO ≤ 659 $ 75  4  % $ 80  4  %
FICO 660-719 503  27  528  28 
FICO ≥ 720 1,287  69  1,266  68 
Total $ 1,865  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, point-of-sale solar energy installation and home improvement loans originated through a network of contractors and installers, and other point-of-sale loans originated or purchased in connection with third-party companies. Loans originated in connection with one third-party point-of-sale 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.

The following table provides an analysis of other consumer portfolio loans outstanding by product type:
TABLE 44: Other Consumer Portfolio Loans Outstanding by Product Type
  2023 2022
As of December 31 ($ in millions) Outstanding % of Total Outstanding % of Total
Point-of-sale, primarily solar energy installation $ 4,537  68  % $ 2,297  46  %
Third-party point-of-sale 825  12  1,262  25 
Other secured 892  13  909  18 
Unsecured 462  7  530  11 
Total $ 6,716  100  % $ 4,998  100  %

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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 45. 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 1 of the Notes to Consolidated Financial Statements.

Nonperforming assets were $689 million at December 31, 2023 compared to $539 million at December 31, 2022. Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO were 0.59% and 0.44% at December 31, 2023 and 2022, respectively. Nonaccrual loans and leases secured by real estate were 32% of nonaccrual loans and leases as of December 31, 2023 compared to 42% as of December 31, 2022.

Portfolio commercial nonaccrual loans and leases were $326 million at December 31, 2023, an increase of $63 million from December 31, 2022. Portfolio consumer nonaccrual loans were $323 million at December 31, 2023, an increase of $71 million from December 31, 2022. Refer to Table 46 for a rollforward of portfolio nonaccrual loans and leases.

OREO and other repossessed property was $39 million and $24 million at December 31, 2023 and 2022, respectively. The Bancorp recognized $8 million and an immaterial amount in losses on the transfer, sale or write-down of OREO properties during the years ended December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, approximately $54 million and $34 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.

TABLE 45: Summary of Nonperforming Assets and Delinquent Loans and Leases
As of December 31 ($ in millions) 2023 2022
Nonaccrual portfolio loans and leases:
Commercial and industrial loans $ 304  215 
Commercial mortgage loans 20  40 
Commercial construction loans 1  8 
Commercial leases 1  — 
Residential mortgage loans 124  124 
Home equity 57  67 
Indirect secured consumer loans 36  29 
Credit card 34  27 
Other consumer loans 72  5 
Total nonaccrual portfolio loans and leases(a)
 649  515 
OREO and other repossessed property(c)
 39  24 
Total nonperforming portfolio loans and leases and OREO 688  539 
Nonaccrual loans held for sale 1  — 
Total nonperforming assets $ 689  539 
Total portfolio loans and leases 90 days past due and still accruing:
Commercial and industrial loans $ 8  11 
Commercial leases —  2 
Residential mortgage loans(b)
 7  7 
Home equity —  1 
Credit card 21  18 
Other consumer loans —  1 
Total portfolio loans and leases 90 days past due and still accruing $ 36  40 
Nonperforming portfolio assets as a percent of portfolio loans and leases and OREO 0.59  % 0.44 
Nonperforming portfolio loans and leases as a percent of portfolio loans and leases 0.55  0.42 
ACL as a percent of nonperforming portfolio loans and leases 383  468 
ACL as a percent of nonperforming portfolio assets 362  447 
(a)Includes $19 and $15 of nonaccrual government-insured commercial loans whose repayments are insured by the SBA as of December 31, 2023 and 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 $141 and $212 as of December 31, 2023 and 2022, respectively. The Bancorp recognized losses of $2 for both the years ended December 31, 2023 and 2022 due to claim denials and curtailments associated with these insured or guaranteed loans.
(c)Includes $20 and $10 of branch-related real estate no longer intended to be used for banking purposes as of December 31, 2023 and 2022, respectively.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables provide a rollforward of portfolio nonaccrual loans and leases, by portfolio segment:
TABLE 46: Rollforward of Portfolio Nonaccrual Loans and Leases
For the year ended December 31, 2023 ($ in millions)
 Commercial Residential 
Mortgage 		 Consumer Total  
Balance, beginning of period $ 263  124  128  515 
Transfers to nonaccrual status 452  68  401  921 
Transfers to accrual status (59) (29) (85) (173)
Transfers to held for sale (10) —  —  (10)
Loan paydowns/payoffs (158) (34) (65) (257)
Transfers to OREO —  (9) (12) (21)
Charge-offs (170) —  (169) (339)
Draws/other extensions of credit 8  4  1  13 
Balance, end of period $ 326  124  199  649 

TABLE 47: Rollforward of Portfolio Nonaccrual Loans and Leases
For the year ended December 31, 2022 ($ in millions)
 Commercial Residential 
Mortgage		 Consumer Total
Balance, beginning of period $ 337  33  128  498 
Transfers to nonaccrual status 262  146  154  562 
Transfers to accrual status (7) (28) (65) (100)
Transfers to held for sale (23) —  —  (23)
Loan paydowns/payoffs (180) (23) (52) (255)
Transfers to OREO —  (6) —  (6)
Charge-offs (131) (1) (37) (169)
Draws/other extensions of credit 5  3  —  8 
Balance, end of period $ 263  124  128  515 

Analysis of Net Loan Charge-offs
Net charge-offs were 32 bps and 19 bps of average portfolio loans and leases for the years ended December 31, 2023 and 2022, respectively. Table 48 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 20 bps during the year ended December 31, 2023, compared to 13 bps during 2022 primarily due to an increase in net charge-offs on commercial and industrial loans of $59 million.

The ratio of consumer loan net charge-offs as a percent of average portfolio consumer loans increased to 52 bps during the year ended December 31, 2023, compared to 29 bps during 2022 primarily due to increases in net charge-offs on other consumer loans, indirect secured consumer loans and credit card of $56 million, $36 million and $12 million, respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TABLE 48: Summary of Credit Loss Experience
For the years ended December 31 ($ in millions) 2023 2022 2021
Losses charged-off:
Commercial and industrial loans $ (168) (121) (103)
Commercial mortgage loans (1) —  (13)
Commercial construction loans (1) (3) — 
Commercial leases —  (7) (3)
Residential mortgage loans (4) (3) (3)
Home equity (8) (9) (7)
Indirect secured consumer loans (110) (68) (51)
Credit card (82) (68) (91)
Other consumer loans(a)
 (148) (83) (73)
Total losses charged-off $ (522) (362) (344)
Recoveries of losses previously charged-off:
Commercial and industrial loans $ 13  25  43 
Commercial mortgage loans 3  1  5 
Commercial construction loans —  1  — 
Commercial leases 1  3  4 
Residential mortgage loans 4  5  7 
Home equity 7  11  11 
Indirect secured consumer loans 38  32  37 
Credit card 18  16  21 
Other consumer loans(a)
 50  41  42 
Total recoveries of losses previously charged-off $ 134  135  170 
Net losses charged-off:
Commercial and industrial loans $ (155) (96) (60)
Commercial mortgage loans 2  1  (8)
Commercial construction loans (1) (2) — 
Commercial leases 1  (4) 1 
Residential mortgage loans —  2  4 
Home equity (1) 2  4 
Indirect secured consumer loans (72) (36) (14)
Credit card (64) (52) (70)
Other consumer loans (98) (42) (31)
Total net losses charged-off $ (388) (227) (174)
Net losses charged-off as a percent of average portfolio loans and leases:
Commercial and industrial loans 0.27  % 0.17  0.12 
Commercial mortgage loans (0.02) (0.01) 0.08 
Commercial construction loans 0.02  0.04  — 
Commercial leases (0.04) 0.13  (0.02)
Total commercial loans and leases 0.20  % 0.13  0.10 
Residential mortgage loans —  (0.01) (0.03)
Home equity 0.03  (0.05) (0.09)
Indirect secured consumer loans 0.45  0.21  0.09 
Credit card 3.55  2.98  3.93 
Other consumer loans 1.63  1.15  1.06 
Total consumer loans 0.52  % 0.29  0.26 
Total net losses charged-off as a percent of average portfolio loans and leases 0.32  % 0.19  0.16 
(a)For the years ended December 31, 2023, 2022 and 2021, the Bancorp recorded $35, $32 and $33, 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.

Allowance for Credit Losses
The allowance for credit losses is comprised of the ALLL and the reserve for unfunded commitments. As described in Note 1 of the Notes to 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.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 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 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 December 31, 2023 and 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.

December 31, 2023 ACL
The ACL as of December 31, 2023 was impacted by lower portfolio loan and lease balances, primarily concentrated in the commercial portfolio segment, and a shift in product mix from lower rate products to higher rate products compared to December 31, 2022. As a result of these factors, the Bancorp incorporated a combination of quantitative model-based estimates and qualitative adjustments. As of December 31, 2023, the Bancorp’s economic scenarios included estimates of the expected impacts of the changes in economic conditions caused by high interest rate pressures and the ongoing Russia-Ukraine conflict. At December 31, 2023, the Bancorp assigned an 80% probability weighting to the Baseline scenario and 10% to each of the Upside and Downside scenarios.

The Baseline scenario assumed average annualized real GDP growth of 1.7% in both 2024 and 2025 and increasing to an average of 2.2% in 2026. The Baseline scenario also assumed an average unemployment rate of 4.0% in the forecast for 2024, 4.1% in 2025 and 4.0% in 2026. Relative to the target federal funds rate, the Baseline scenario assumed that it has reached its terminal range with cuts beginning in 2024. The average federal funds rate assumed was 5.1% in 2024 then decreasing to 4.2% and 3.2% in 2025 and 2026, respectively. Lastly, the Baseline scenario included a moderately cautious outlook for corporate profits with the average percentage year-over-year change increasing to 1.6% in 2024, followed by some contraction at (1.4%) in 2025 and a subsequent recovery to 2.9% in 2026. The Upside scenario assumed that, on an average annual basis, the change in real GDP would be 3.2% in 2024, decreasing to an average of 2.7% and 2.4% in 2025 and 2026, respectively. The Upside scenario assumed a slightly better unemployment rate forecast at an annual average of 3.1%, 3.3% and 3.4% in 2024, 2025 and 2026, respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In the Upside scenario, the forecast for the federal funds rate was generally consistent with the Baseline scenario. The Upside scenario assumed a notable improvement in corporate profits for 2024 at an average percentage change from 2023 of 4.6%, contracting to an average of 1.9% in 2025 and recovering to an average of 2.7% in 2026. The Downside scenario assumed that the U.S. economy falls into a recession in the first quarter of 2024. The Downside scenario assumed average annualized real GDP growth for 2024 at (0.9%), improving to an average of 0.3% in 2025 and further recovering to an average of 2.8% in 2026. The Downside scenario unemployment rate peaks at an average of 7.7% in the first quarter of 2025 and decreases to an average of 6.1% in 2026. In the Downside scenario, the forecast for the federal funds rate included more favorable assumptions than the Baseline at an average target rate of 4.4% in 2024, rapidly decreasing to an average target rate of 1.8% and 1.3% in 2025 and 2026, respectively. Lastly, the Downside scenario assumed a significant decrease in corporate profits at an average percentage change from a year ago of (20.0%) for 2024, followed by another contraction at a rate of (2.7%) in 2025 and recovering to an average of 9.5% in 2026.

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 $2.1 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.

The following table provides a rollforward of the Bancorp’s ACL:
TABLE 49: Changes in Allowance for Credit Losses
For the years ended December 31 ($ in millions)
2023
2022
2021
ALLL:
Balance, beginning of period $ 2,194  1,892  2,453 
Impact of adoption of ASU 2022-02(b)
 (49) —  — 
Losses charged-off(a)
 (522) (362) (344)
Recoveries of losses previously charged-off(a)
 134  135  170 
Provision for (benefit from) loan and lease losses 565  529  (387)
Balance, end of period $ 2,322  2,194  1,892 
Reserve for unfunded commitments:
Balance, beginning of period $ 216  182  172 
(Benefit from) provision for the reserve for unfunded commitments (50) 34  10 
Balance, end of period $ 166  216  182 
(a)For the years ended December 31, 2023, 2022 and 2021, the Bancorp recorded $35, $32 and $33, 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 1 of the Notes to Consolidated Financial Statements for further information.



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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides an attribution of the Bancorp’s ALLL to portfolio loans and leases:
TABLE 50: Attribution of Allowance for Loan and Lease Losses to Portfolio Loans and Leases
As of December 31 ($ in millions)
2023
2022
Attributed ALLL:
Commercial and industrial loans $ 767  776 
Commercial mortgage loans 284  246 
Commercial construction loans 66  90 
Commercial leases 13  15 
Residential mortgage loans 145  245 
Home equity 102  133 
Indirect secured consumer loans 271  187 
Credit card 227  254 
Other consumer loans 447  248 
Total ALLL $ 2,322  2,194 
Portfolio loans and leases:
Commercial and industrial loans $ 53,270  57,232 
Commercial mortgage loans 11,276  11,020 
Commercial construction loans 5,621  5,433 
Commercial leases 2,579  2,704 
Residential mortgage loans(a)
 17,026  17,628 
Home equity 3,916  4,039 
Indirect secured consumer loans 14,965  16,552 
Credit card 1,865  1,874 
Other consumer loans 6,716  4,998 
Total portfolio loans and leases $ 117,234  121,480 
Attributed ALLL as a percent of respective portfolio loans and leases:
Commercial and industrial loans 1.44  % 1.36 
Commercial mortgage loans 2.52  2.23 
Commercial construction loans 1.17  1.66 
Commercial leases 0.50  0.55 
Residential mortgage loans 0.85  1.39 
Home equity 2.60  3.29 
Indirect secured consumer loans 1.81  1.13 
Credit card 12.17  13.55 
Other consumer loans 6.66  4.96 
Total ALLL as a percent of portfolio loans and leases 1.98  % 1.81 
Total ACL as a percent of portfolio loans and leases 2.12  1.98 
(a) Includes $116 and $123 of residential mortgage loans measured at fair value at December 31, 2023 and 2022, respectively.

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 ACL, refer to Note 1 of the Notes to Consolidated Financial Statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.

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 December 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, and employs policy limits and/or key risk indicators to monitor and manage exposures under these types of scenarios. 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-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.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. Since the beginning of the current tightening cycle, the Bancorp’s actual cumulative interest-bearing deposit beta through December 31, 2023 was slightly above 50% as repricing has been similar to what was experienced in prior interest rate cycles. 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 78% for both a 100 bps and 200 bps increase in rates. 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 68% and 67% for a 100 bps and 200 bps decrease 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 results in an additional beta of 5%-15% in the rising-rate scenarios, and a reduction in beta of 5%-10% in the falling-rate scenarios 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 52 and 53 for key assumptions related to its deposit modeling, including beta and demand deposit 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 December 31:
TABLE 51: Estimated NII Sensitivity Profile and ALCO Policy Limits
2023 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 (2.55) % (4.89) (5.00) (6.00) (2.93) % (3.17) (4.00) (6.00)
+100 Ramp over 12 months (1.26) (2.30) N/A N/A (1.31) (1.14) N/A N/A
-100 Ramp over 12 months 0.28 0.32 N/A N/A N/A N/A N/A N/A
-200 Ramp over 12 months 0.17 (0.19) (5.00) (6.00) (0.68) (4.69) (8.00) (12.00)

Table 51 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 December 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 NII in year one and a decrease in NII in year two under the parallel 200 bps ramp decrease in interest rates. The NII increase in year one is driven by deposits repricing faster than earning assets. However, in year two, some deposits have reached their floors but assets continue to reprice down generating less NII. The changes in the estimated NII sensitivity profile compared to December 31, 2022 were primarily attributable to higher market interest rates driving higher expected betas combined with a shift in deposit mix to higher-beta products.

Tables 52 and 53 provide the sensitivity of the Bancorp’s estimated NII profile at December 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
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 December 31, 2023:
TABLE 52: Estimated NII Sensitivity Profile at December 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 (3.64) % (6.02) (1.45) (3.77)
+100 Ramp over 12 months (2.26) (3.28) (0.26) (1.33)
-100 Ramp over 12 months (0.53) (0.36) 1.10  0.99 
-200 Ramp over 12 months (0.56) (0.71) 0.90  0.33 

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 December 31, 2023:
TABLE 53: Estimated NII Sensitivity Profile at December 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 (4.14) % (7.77) (0.96) (2.02)
+100 Ramp over 12 months (2.05) (3.73) (0.47) (0.88)
-100 Ramp over 12 months 0.97  1.52  (0.40) (0.89)
-200 Ramp over 12 months 1.52  2.17  (1.18) (2.55)
(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. The exposure is governed by a risk framework that uses policy limits for scenarios assuming an instantaneous 200 bps increase and a 200 bps decrease in interest rates. The Bancorp routinely analyzes exposures to other interest rate scenarios and employs policy limits and/or key risk indicators to monitor and manage exposures. 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 December 31:
TABLE 54: Estimated EVE Sensitivity Profile
2023 2022
Change in Interest Rates (bps) % Change in  EVE ALCO  Policy Limit % Change in  EVE ALCO  Policy Limit
+200 Shock (3.68) % (12.00) (7.53) (12.00)
+100 Shock (1.49) N/A (2.72) N/A
-100 Shock 0.65  N/A N/A N/A
-200 Shock (1.67) (12.00) 1.24  (12.00)
The EVE sensitivity is negative in both a +200 bps rising-rate scenario and a -200 bps falling-rate scenario at December 31, 2023. The changes in the estimated EVE sensitivity profile from December 31, 2022 were primarily related to higher modeled dynamic betas in both rising and falling rate scenarios, which was largely offset by the shortening of the investment portfolio duration and increased levels of cash and other short-term investments.

While an instantaneous shift in spot interest rates 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 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).
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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, basis risks relative to the Prime Rate and various SOFR terms, 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 55 and 56 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 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 55: Weighted-Average Maturity, Receive Rate and Pay Rate on Qualifying Hedging Instruments
As of December 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  (9) 4.4 3.02  % SOFR
Interest rate swaps related to C&I loans – cash flow – receive-fixed – forward starting(a)
 6,000  5  7.8 3.11  SOFR
Interest rate swaps related to commercial mortgage and commercial construction loans – cash flow – receive-fixed – forward starting(a)
 4,000  —  8.1 3.50  SOFR
Interest rate swaps related to long-term debt – fair value – receive-fixed 5,955  (32) 4.9 5.18  SOFR
Total interest rate swaps $ 23,955  (36)
Interest rate floors related to C&I loans– cash flow – receive-fixed $ 3,000  1  1.0 2.25  SOFR
(a)Forward starting swaps will become effective on various dates between June 2024 and February 2025.

TABLE 56: 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.

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. Refer to the Residential Mortgage Servicing Rights and Price Risk section for the discussion of the use of derivatives to economically hedge this exposure.
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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 Consolidated Financial Statements.

Portfolio Loans and Leases and Interest Rate Risk
Although the Bancorp’s portfolio loans and leases contain both fixed and floating/adjustable-rate products, the rates of interest earned by the Bancorp on the outstanding balances are generally established for a period of time. The interest rate sensitivity of loans and leases is directly related to the length of time the rate earned is established.

The following table summarizes the carrying value of the Bancorp’s portfolio loans and leases, excluding interest receivable, disaggregated by scheduled principal repayment, as of December 31, 2023:
TABLE 57: Cash Flows from Portfolio Loans and Leases
($ in millions) Due in 1 year or less Due after 1 year through 5 years Due after 5 years through 15 years Due after 15 years Total
Commercial and industrial loans $ 11,492  39,142  2,634  2  53,270 
Commercial mortgage loans 3,185  6,805  1,211  75  11,276 
Commercial construction loans 1,791  3,507  308  15  5,621 
Commercial leases 610  1,611  279  79  2,579 
Total commercial loans and leases 17,078  51,065  4,432  171  72,746 
Residential mortgage loans 756  2,992  6,671  6,607  17,026 
Home equity 140  786  402  2,588  3,916 
Indirect secured consumer loans 3,160  8,933  2,338  534  14,965 
Credit card 1,865  —  —  —  1,865 
Other consumer loans 1,504  2,784  2,106  322  6,716 
Total consumer loans 7,425  15,495  11,517  10,051  44,488 
Total portfolio loans and leases $ 24,503  66,560  15,949  10,222  117,234 

The following table displays a summary of cash flows, excluding interest receivable, occurring after one year for both fixed and floating/adjustable-rate loans and leases as of December 31, 2023:

TABLE 58: Cash Flows from Portfolio Loans and Leases Occurring After One Year
Interest Rate
($ in millions) Fixed Floating or Adjustable
Commercial and industrial loans $ 5,105  36,673 
Commercial mortgage loans 1,804  6,287 
Commercial construction loans 148  3,682 
Commercial leases 1,969  — 
Total commercial loans and leases 9,026  46,642 
Residential mortgage loans 13,102  3,168 
Home equity 242  3,534 
Indirect secured consumer loans 11,795  10 
Other consumer loans 4,937  275 
Total consumer loans 30,076  6,987 
Total portfolio loans and leases $ 39,102  53,629 

Residential Mortgage Servicing Rights and Price Risk
The fair value of the residential MSR portfolio was $1.7 billion at both December 31, 2023 and 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.
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Refer to Note 13 of the Notes to Consolidated Financial Statements for more information 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 Consolidated Statements of Income. The balance of the Bancorp’s foreign denominated loans at both December 31, 2023 and 2022 was $1.0 billion. 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 18 of the Notes to 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 (parent company) 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 include revenue from noninterest income as well as 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.

Table 57 of the Interest Rate and Price Risk Management subsection of the Risk Management section of MD&A presents information about the timing of cash flows from loan and lease repayments. Of the $50.4 billion of securities in the Bancorp’s available-for-sale debt and other securities portfolio at December 31, 2023, $4.9 billion in principal and interest is expected to be received in the next 12 months and an additional $7.7 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. The Bancorp sold or securitized loans and leases totaling $7.1 billion during the year ended December 31, 2023 compared to $13.5 billion during the year ended December 31, 2022. For further information, refer to Note 13 of the Notes to 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 87% of its average total assets for the years ended December 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 2023, the Board of Directors authorized $10.0 billion of debt or other securities for issuance, of which $8.75 billion of debt or other securities were available for issuance as of December 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. The Bancorp issued and sold fixed-rate/floating-rate senior notes of $1.25 billion in July of 2023 as further discussed in Note 17 of the Notes to Consolidated Financial Statements.

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As of December 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 December 31, 2023, the Bank had approximately $60.2 billion of borrowing capacity available through secured borrowing sources, including the FRB and the FHLB.

In a securitization transaction that occurred in August of 2023, the Bancorp transferred $1.74 billion in aggregate automobile loans to a bankruptcy remote trust which subsequently issued approximately $1.58 billion of asset-backed notes, of which approximately $79 million were retained by the Bancorp, resulting in approximately $1.5 billion of outstanding notes included in long-term debt in the Consolidated Balance Sheets. The third-party holders of the asset-backed notes do not have recourse to the general assets of the Bancorp. Refer to Note 12 and Note 17 of the Notes to Consolidated Financial Statements for additional information.

Current Liquidity Position
The Bancorp maintains a strong liquidity profile driven by strong core deposit funding and over $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.

As of December 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 33 months.

The Bancorp and its subsidiaries, on a consolidated basis, have certain obligations and commitments to make future payments under various types of contracts. In addition to commitments to extend credit and letters of credit (which are further discussed in Note 18 of the Notes to Consolidated Financial Statements), these include deposits, lease obligations, partnership investment commitments, derivative contracts, borrowings, and pension benefit payments. Refer to the Deposits subsection of the Balance Sheet Analysis section of MD&A and Notes 9, 12, 14, 16, 17 and 22 of the Notes to Consolidated Financial Statements for additional information on these contractual obligations.

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 59. 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 59: Agency Ratings
As of February 27, 2024
   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:   Negative   Stable   Stable Stable

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OPERATIONAL RISK MANAGEMENT
Operational risk is the risk to current or projected financial condition and resilience arising from inadequate or failed internal processes or systems, human errors or misconduct or adverse external events that are neither market- nor credit-related. Operational risk is inherent in the Bancorp’s activities and can manifest itself in various ways, including fraudulent acts, business interruptions, inappropriate behavior of employees, unintentional failure to comply with applicable laws and regulations, poor design or delivery of products and services, cybersecurity or physical security incidents and privacy breaches or failure of third parties to perform in accordance with their arrangements. These events could result in financial losses, reputational damage, litigation and regulatory fines or other damage to the Bancorp. The Bancorp’s risk management goal is to keep operational risk at appropriate levels consistent with the Bancorp’s risk appetite, financial strength, the characteristics of its businesses, the markets in which it operates and the competitive and regulatory environment to which it is subject.

To control, monitor and govern operational risk, the Bancorp maintains an overall Enterprise Risk Management Framework which comprises governance oversight, risk assessment, capital measurement, monitoring and reporting as well as a formal three lines of defense approach. ERM is responsible for prescribing the framework to the lines of business and corporate functions and providing independent oversight of its implementation (second line of defense). Business Controls groups are in place in each of the lines of business to ensure consistent implementation and execution of managing day-to-day operational risk (first line of defense).

The Bancorp’s enterprise risk management framework consists of five integrated components, including identifying, assessing, managing, monitoring and independent governance reporting of risk. The corporate Operational Risk Management function within Enterprise Risk is responsible for developing and overseeing the implementation of the Bancorp’s approach to managing operational risk. This includes providing governance, awareness and training, tools, guidance and oversight to support implementation of key risk programs and systems as they relate to operational risk management. These include programs, such as risk and control self-assessments, product delivery risk assessments, scenario analysis, new product/initiative risk reviews, key risk indicators, Third-Party Risk Management, cybersecurity risk management, review of operational losses and monitoring of significant organizational or process changes. The function is also responsible for developing reports that support the proactive management of operational risk across the enterprise. The lines of business and corporate functions are responsible for managing the operational risks associated with their areas in accordance with the enterprise risk management framework. The framework is intended to enable the Bancorp to function with a sound and well-controlled operational environment. These processes support the Bancorp’s goals to minimize future operational losses and strengthen the Bancorp’s performance by maintaining sufficient capital to absorb operational losses that are incurred.

The Bancorp also maintains a robust information security program to support the management of cybersecurity risk within the organization with a focus on prevention, detection and recovery processes. Refer to Part I, Item 1C of this report for more information, which is incorporated herein by reference.

External threats remain elevated which may result in increased fraud and cybersecurity risks. The Bancorp’s strategic initiatives also have the potential to increase operational risk as changes to process and technology are implemented. Other factors such as increased reliance on third parties and increased use of cloud-based technologies as well as the use of emerging technologies such as generative models and artificial intelligence may introduce additional operational risk considerations. These risks continue to be carefully managed and monitored to ensure effective controls are in place, with appropriate oversight and governance by the second line of defense.

Fifth Third also focuses on the reporting and escalation of operational control issues to senior management and the Board of Directors. The Operational Risk Committee is the key committee that oversees and supports Fifth Third in the management of operational risk across the enterprise. The Information Security Governance Committee and Model Risk Committee report to the Operational Risk Committee and are responsible for governance of information security and model risks. The Operational Risk Committee reports to the ERMC, which reports to the RCC of the Board of Directors of Fifth Third Bancorp and Fifth Third Bank, National Association.

The Bancorp is aware of and actively monitoring climate-related risks. Climate-related risks could impact the Bancorp in the form of physical risks due to acute or chronic weather-related events that could disrupt the operations of the Bancorp or could impair the ability of clients to meet financial obligations. The Bancorp also faces transition risk resulting from economic transition towards a lower-carbon future which may negatively impact some clients or present credit, strategic or reputational risks to the Bancorp.

Climate risk is a priority for management and accordingly the Board oversees both the RCC and the Nominating and Corporate Governance Committee. The RCC is responsible for overseeing the development and implementation of Fifth Third’s Enterprise Risk Management Framework including climate risks. In the course of business, the Bancorp’s Environmental Risk Group works with partners to manage or mitigate environmental risks including climate-related risks. As part of its larger environmental, social and governance responsibilities the Nominating and Corporate Governance Committee is responsible for overseeing climate strategy and climate-related issues in the context of stakeholder concerns.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LEGAL AND REGULATORY COMPLIANCE RISK MANAGEMENT
Legal and regulatory compliance risk is the risk of legal or regulatory sanctions, financial loss or damage to reputation as a result of noncompliance with (i) applicable laws, regulations, rules and other regulatory requirements (including but not limited to the risk of consumers experiencing economic loss or other legal harm as a result of noncompliance with consumer protection laws, regulations and requirements); (ii) internal policies and procedures, standards of best practice or codes of conduct; and (iii) principles of integrity and fair dealing applicable to Fifth Third’s activities and functions. Legal risks include the risk of actions against the institution that result in unenforceable contracts, lawsuits, legal sanctions, or adverse judgments, which disrupt or otherwise negatively affect the operations or condition of the institution. Failure to effectively manage such risks can elevate the risk level or manifest itself as other types of key risks, including reputational or operational risk. Fifth Third focuses on managing legal and regulatory compliance risk in accordance with the Bancorp’s integrated enterprise risk management framework, which ensures consistent processes for identifying, assessing, managing, monitoring and reporting risks. The Bancorp’s risk management goal is to keep compliance risk at appropriate levels, consistent with the Bancorp’s risk appetite.

To mitigate such risks, Compliance Risk Management provides independent oversight to foster consistency and sufficiency in the execution of the program, and ensures that lines of business and support functions are adequately identifying, assessing and monitoring legal and regulatory compliance risks and adopting proper mitigation strategies. Moreover, such strategies are modified from time to time to respond to new or emerging risks in the environment. Compliance Risk Management and the Legal Division provide guidance to the lines of business and enterprise functions, which are ultimately responsible for managing such risks associated with their areas. The Chief Compliance Officer is responsible for formulating and directing the strategy, development, implementation, communication and maintenance of the Compliance Risk Management program, which implements key compliance processes, including but not limited to, executive- and board-level governance and reporting routines, compliance-related policies, risk assessments, key risk indicators, issues tracking, regulatory change management and regulatory compliance testing and monitoring. In partnership with Compliance Risk Management, the Financial Crimes Division conducts and oversees anti-money laundering and economic sanctions processes. Compliance Risk Management also partners with the Community and Economic Development team to oversee the Bancorp’s compliance with the Community Reinvestment Act.

Fifth Third also reports and escalates legal and regulatory compliance risks to senior management and the Board of Directors. The Management Compliance Committee, which is chaired by the Chief Compliance Officer, is the key committee that oversees and supports Fifth Third in the management of compliance risk across the enterprise. The Management Compliance Committee oversees Bancorp-wide compliance issues, industry best practices, legislative developments, regulatory concerns and other leading indicators of legal and regulatory compliance risk. The Management Compliance Committee reports to the ERMC, which reports to the RCC of the Board of Directors of Fifth Third Bancorp and Fifth Third Bank, National Association.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. For additional information regarding the prescribed capital ratios, refer to Note 29 of the Notes to Consolidated Financial Statements.

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 Fifth Third’s 2023 Capital Plan submission with an effective date of October 1, 2023. 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 began phasing out 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 December 31, 2023 was an increase in capital of approximately $249 million. On a fully phased-in basis, the Bancorp’s CET1 capital ratio would be reduced by 13 bps as of December 31, 2023.

On July 27, 2023, the U.S. banking agencies released a notice of proposed rulemaking to revise the Basel III Capital Rules, which would modify its existing risk-based capital framework for large banks and introduce a new framework that implements international capital standards. The proposed rulemaking would increase capital requirements applicable to banking organizations with total assets of $100 billion or more, including Fifth Third, and would align the calculation of regulatory capital and the calculation of risk-weighted assets across large banking organizations. As proposed, the rules would be effective for the Bancorp on July 1, 2025 and phased in over a three-year transition period. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact.

On August 29, 2023, the U.S. banking agencies issued a notice of proposed rulemaking to require that certain banking organizations with $100 billion or more in consolidated assets, including Fifth Third, comply with certain long-term debt requirements at the holding company and insured depository institution levels. These proposed requirements are intended to absorb losses and recapitalize the insured depository institution in the event of the failure of a banking organization. As proposed, the rules would be phased in over a three-year period after their effective date. The Bancorp is in the process of evaluating this proposed rulemaking and assessing its potential impact, which is dependent on the finalization of the aforementioned proposed capital rule.

The following table summarizes the Bancorp’s capital ratios as of December 31:
TABLE 60: Capital Ratios
($ in millions) 2023 2022 2021
Average total Bancorp shareholders’ equity as a percent of average assets 8.49  % 9.22  11.06 
Tangible equity as a percent of tangible assets(a)(b)
 8.65  8.31  7.97 
Tangible common equity as a percent of tangible assets(a)(b)
 7.67  7.30  6.94 
Regulatory capital:(c)
CET1 capital $ 16,800  15,670  14,781 
Tier 1 capital 18,916  17,786  16,897 
Total regulatory capital 22,400  21,606  20,789 
Risk-weighted assets 163,223  168,909  154,860 
Regulatory capital ratios:(c)
CET1 capital 10.29  % 9.28  9.54 
Tier 1 risk-based capital 11.59  10.53  10.91 
Total risk-based capital 13.72  12.79  13.42 
Leverage 8.73  8.56  8.27 
(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 December 31, 2023, 2022 and 2021 are calculated pursuant to the five-year transition provision option to phase in the effects of CECL on regulatory capital.


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

The Bancorp maintains a comprehensive process for managing capital that considers the current and forward-looking macroeconomic and regulatory environments and makes capital distributions that are consistent with the requirements in the FRB’s capital plan rule, inclusive of the Bancorp’s stress capital buffer requirement.

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 $1.36 and $1.26 during the years ended December 31, 2023 and 2022, respectively.

In June of 2019, the Board of Directors authorized the Bancorp to repurchase up to 100 million common shares in the open market or in privately negotiated transactions and to utilize any derivative or similar instrument to effect share repurchase transactions. Under this authorization, the Bancorp entered into and settled accelerated share repurchase transactions during the years ended December 31, 2023 and 2022. Refer to Note 24 of the Notes to Consolidated Financial Statements for additional information on the accelerated share repurchase activity.

The following table summarizes shares authorized for repurchase as part of publicly announced plans or programs:
TABLE 61: Share Repurchases
For the years ended December 31 2023 2022
Shares authorized for repurchase at January 1 37,705,807  40,785,269 
Additional authorizations —  — 
Share repurchases(a)
 (5,589,996) (3,079,462)
Shares authorized for repurchase at December 31 32,115,811  37,705,807 
Average price paid per share(a)
 $ 35.78  32.47 
(a)Excludes 1,649,542 and 1,891,160 shares repurchased during the years ended December 31, 2023 and 2022, respectively, in connection with various employee compensation plans. These purchases are not included in the calculation for average price paid per share and do not count against the maximum number of shares that may yet be repurchased under the Board of Directors’ authorization.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is set forth in the Interest Rate and Price Risk Management section of Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this Report and is incorporated herein by reference. This information contains certain statements that we believe are forward-looking statements. Refer to page 15 for cautionary information regarding forward-looking statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Fifth Third Bancorp:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bancorp as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Bancorp’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2024 expressed an unqualified opinion on the Bancorp’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Bancorp’s management. Our responsibility is to express an opinion on the Bancorp’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Loan and Lease Losses (“ALLL”) — Qualitative Factors - Commercial Loans — Refer to Note 1 and Note 6 of the Notes to Consolidated Financial Statements

Critical Audit Matter Description

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. 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 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 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. When evaluating the adequacy of allowances, consideration is given to the effect that changing economic conditions may have on the Bancorp’s customers.

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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.

At December 31, 2023, the key qualitative factors included adjustments to the expected credit losses on the commercial loan portfolio associated with the current economic environment.

The ALLL for the commercial portfolio segment was $1.1 billion at December 31, 2023, which includes adjustments for the qualitative factors noted above.

Considering the estimation and judgment in determining adjustments for such qualitative factors, our audit of the ALLL and the related disclosures involved subjective judgment about the qualitative adjustments to the commercial portfolio segment ALLL.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the qualitative adjustments for the commercial portfolio segment ALLL included the following, among others:

•We tested the effectiveness of the Bancorp’s controls over the qualitative adjustments to the ALLL.
•We assessed the reasonableness of, and evaluated support for, key qualitative adjustments based on market conditions, external market data and commercial portfolio performance metrics.
•We tested the completeness and accuracy and evaluated the relevance of the key data used as inputs to the qualitative adjustment estimation process, including:
◦Portfolio segment loan balances and other borrower-specific data
◦Relevant macroeconomic indicators and data
•With the assistance of our credit specialists, we tested the mathematical accuracy of the underlying support used as a basis for the qualitative adjustments.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio
February 27, 2024


We have served as the Company’s auditor since 1970.
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CONSOLIDATED BALANCE SHEETS

As of December 31 ($ in millions, except share data) 2023 2022
Assets
Cash and due from banks $ 3,142  3,466 
Other short-term investments(a)
 22,082  8,351 
Available-for-sale debt and other securities(b)
 50,419  51,503 
Held-to-maturity securities(c)
 2  5 
Trading debt securities 899  414 
Equity securities 613  317 
Loans and leases held for sale(d)
 378  1,007 
Portfolio loans and leases(a)(e)
 117,234  121,480 
Allowance for loan and lease losses(a)
 (2,322) (2,194)
Portfolio loans and leases, net 114,912  119,286 
Bank premises and equipment(f)
 2,349  2,187 
Operating lease equipment 459  627 
Goodwill 4,919  4,915 
Intangible assets 125  169 
Servicing rights 1,737  1,746 
Other assets(a)
 12,538  13,459 
Total Assets $ 214,574  207,452 
Liabilities
Deposits:
Noninterest-bearing deposits $ 43,146  53,125 
Interest-bearing deposits 125,766  110,565 
Total deposits 168,912  163,690 
Federal funds purchased 193  180 
Other short-term borrowings 2,861  4,838 
Accrued taxes, interest and expenses 2,195  1,822 
Other liabilities(a)
 4,861  5,881 
Long-term debt(a)
 16,380  13,714 
Total Liabilities $ 195,402  190,125 
Equity
Common stock(g)
 $ 2,051  2,051 
Preferred stock(h)
 2,116  2,116 
Capital surplus 3,757  3,684 
Retained earnings 22,997  21,689 
Accumulated other comprehensive loss (4,487) (5,110)
Treasury stock(g)
 (7,262) (7,103)
Total Equity $ 19,172  17,327 
Total Liabilities and Equity $ 214,574  207,452 
(a)Includes $55 and $17 of other short-term investments, $1,573 and $185 of portfolio loans and leases, $(28) and $(2) of ALLL, $10 and $2 of other assets, $14 and $9 of other liabilities and $1,409 and $118 of long-term debt from consolidated VIEs that are included in their respective captions above at December 31, 2023 and 2022, respectively. For further information, refer to Note 12.
(b)Amortized cost of $55,789 and $57,530 at December 31, 2023 and 2022, respectively.
(c)Fair value of $2 and $5 at December 31, 2023 and 2022, respectively.
(d)Includes $334 and $600 of residential mortgage loans held for sale measured at fair value at December 31, 2023 and 2022, respectively.
(e)Includes $116 and $123 of residential mortgage loans measured at fair value at December 31, 2023 and 2022, respectively.
(f)Includes $19 and $24 of bank premises and equipment held for sale at both December 31, 2023 and 2022. For further information, refer to Note 7.
(g)Common shares: Stated value $2.22 per share; authorized 2,000,000,000; outstanding at December 31, 2023 – 681,124,810 (excludes 242,767,771 treasury shares), 2022 – 683,385,880 (excludes 240,506,701 treasury shares).
(h)500,000 shares of no par value preferred stock were authorized at both December 31, 2023 and 2022. There were 422,000 unissued shares of undesignated no par value preferred stock at both December 31, 2023 and 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 December 31, 2023 and 2022. There were 300,000 unissued shares of undesignated no par value Class B preferred stock at both December 31, 2023 and 2022. Each issued share of no par value Class B preferred stock has a liquidation preference of $1,000.

Refer to the Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31 ($ in millions, except share data) 2023 2022 2021
Interest Income
Interest and fees on loans and leases $ 7,334  4,954  4,079 
Interest on securities 1,770  1,517  1,090 
Interest on other short-term investments 656  116  42 
Total interest income 9,760  6,587  5,211 
Interest Expense
Interest on deposits 2,929  447  59 
Interest on federal funds purchased 15  6  — 
Interest on other short-term borrowings 247  108  2 
Interest on long-term debt 742  417  380 
Total interest expense 3,933  978  441 
Net Interest Income 5,827  5,609  4,770 
Provision for (benefit from) credit losses 515  563  (377)
Net Interest Income After Provision for (Benefit from) Credit Losses 5,312  5,046  5,147 
Noninterest Income
Commercial banking revenue 624  565  637 
Wealth and asset management revenue 581  570  586 
Service charges on deposits 577  589  600 
Card and processing revenue 416  409  402 
Mortgage banking net revenue 250  215  270 
Leasing business revenue 208  237  300 
Other noninterest income 207  265  332 
Securities gains (losses), net 18  (82) (7)
Securities losses, net - non-qualifying hedges on mortgage servicing rights —  (2) (2)
Total noninterest income 2,881  2,766  3,118 
Noninterest Expense
Compensation and benefits 2,694  2,554  2,626 
Technology and communications 464  416  388 
Net occupancy expense 331  307  312 
Equipment expense 148  145  138 
Marketing expense 126  118  107 
Leasing business expense 121  131  137 
Card and processing expense 84  80  89 
Other noninterest expense 1,237  968  951 
Total noninterest expense 5,205  4,719  4,748 
Income Before Income Taxes 2,988  3,093  3,517 
Applicable income tax expense 639  647  747 
Net Income 2,349  2,446  2,770 
Dividends on preferred stock 137  116  111 
Net Income Available to Common Shareholders $ 2,212  2,330  2,659 
Earnings per share - basic $ 3.23  3.38  3.78 
Earnings per share - diluted $ 3.22  3.35  3.73 
Average common shares outstanding - basic 684,172,079  688,633,659  702,188,552 
Average common shares outstanding - diluted 687,678,291  694,952,038  711,197,805 

Refer to the Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31 ($ in millions) 2023 2022 2021
Net Income $ 2,349  2,446  2,770 
Other Comprehensive Income (Loss), Net of Tax:
Net unrealized (losses) gains on available-for-sale debt securities:
Unrealized holding gains (losses) arising during the year 494  (5,478) (1,043)
Reclassification adjustment for net losses (gains) included in net income 1  (2) 3 
Net unrealized (losses) gains on cash flow hedge derivatives:
Unrealized holding losses arising during the year (131) (774) (142)
Reclassification adjustment for net losses (gains) included in net income 257  (77) (223)
Defined benefit pension plans, net:
Net actuarial (loss) gain arising during the year (1) 9  4 
Reclassification of amounts to net periodic benefit costs 3  5  7 
Other comprehensive income (loss), net of tax 623  (6,317) (1,394)
Comprehensive Income (Loss) $ 2,972  (3,871) 1,376 

Refer to the Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

($ 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, 2020 $ 2,051  2,116  3,635  18,384  2,601  (5,676) 23,111 
Net income 2,770  2,770 
Other comprehensive loss, net of tax (1,394) (1,394)
Cash dividends declared:
Common stock ($1.14 per share)
 (805) (805)
Preferred stock:(a)
         Series H ($1,275.00 per share)
 (31) (31)
         Series I ($1,656.24 per share)
 (30) (30)
         Series J ($839.62 per share)
 (10) (10)
         Series K ($1,237.50 per share)
 (12) (12)
         Series L ($1,125.00 per share)
 (16) (16)
         Class B, Series A ($60.00 per share)
 (12) (12)
Shares acquired for treasury (1,393) (1,393)
Impact of stock transactions under stock compensation plans, net (11) 44  33 
Other (2) 1  (1)
Balance at December 31, 2021 $ 2,051  2,116  3,624  20,236  1,207  (7,024) 22,210 
Net income 2,446  2,446 
Other comprehensive loss, net of tax (6,317) (6,317)
Cash dividends declared:
Common stock ($1.26 per share)
 (877) (877)
Preferred stock:(a)
         Series H ($1,275.00 per share)
 (31) (31)
         Series I ($1,656.24 per share)
 (30) (30)
         Series J ($1,249.19 per share)
 (15) (15)
         Series K ($1,237.50 per share)
 (12) (12)
         Series L ($1,125.00 per share)
 (16) (16)
         Class B, Series A ($60.00 per share)
 (12) (12)
Shares acquired for treasury (100) (100)
Impact of stock transactions under stock compensation plans, net 60  21  81 
Balance at December 31, 2022 $ 2,051  2,116  3,684  21,689  (5,110) (7,103) 17,327 




















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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)
($ in millions, except per share data) Common
Stock		 Preferred
Stock		 Capital
Surplus		 Retained
Earnings		 Accumulated
Other
Comprehensive Loss		 Treasury
Stock		 Total Equity
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(b)
 37  37 
Balance at January 1, 2023 $ 2,051  2,116  3,684  21,726  (5,110) (7,103) 17,364 
Net income 2,349  2,349 
Other comprehensive income, net of tax 623  623 
Cash dividends declared:
Common stock ($1.36 per share)
 (941) (941)
Preferred stock:(a)
         Series H ($1,740.35 per share)
 (42) (42)
         Series I ($1,656.24 per share)
 (30) (30)
         Series J ($2,131.27 per share)
 (25) (25)
         Series K ($1,237.50 per share)
 (12) (12)
         Series L ($1,125.00 per share)
 (16) (16)
         Class B, Series A ($60.00 per share)
 (12) (12)
Shares acquired for treasury (201) (201)
Impact of stock transactions under stock compensation plans, net 73  42  115 
Balance at December 31, 2023 $ 2,051  2,116  3,757  22,997  (4,487) (7,262) 19,172 
(a)Refer to Note 24 for further information on dividends declared for preferred stock.
(b)Related to the adoption of ASU 2022-02 as of January 1, 2023. Refer to Note 1 for additional information.

Refer to the Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31 ($ in millions) 2023 2022 2021
Operating Activities
Net income $ 2,349  2,446  2,770 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (benefit from) credit losses 515  563  (377)
Depreciation, amortization and accretion 462  436  349 
Stock-based compensation expense 169  165  120 
Benefit from deferred income taxes (106) (60) (14)
Securities (gains) losses, net (31) 84  16 
MSR fair value adjustment 105  (177) 139 
Net gains on sales of loans and fair value adjustments on loans held for sale (27) (126) (335)
Net (gains) losses on disposition and impairment of bank premises and equipment and operating lease equipment (7) (1) 10 
Gain on sale of HSA deposit portfolio —  —  (60)
     Gain on the TRA associated with Worldpay, Inc. (22) (46) (46)
Proceeds from sales of loans held for sale 4,938  13,123  17,204 
Loans originated or purchased for sale, net of repayments (4,242) (10,239) (16,888)
Dividends representing return on equity method investments 46  50  55 
Net change in:
Equity and trading debt securities (128) 70  15 
Other assets 326  646  (37)
Accrued taxes, interest and expenses and other liabilities 162  (506) (217)
Net Cash Provided by Operating Activities 4,509  6,428  2,704 
Investing Activities
Proceeds from sales:
AFS securities and other investments 2,813  4,359  3,125 
Loans and leases 444  155  718 
Bank premises and equipment 7  2  19 
Proceeds from repayments / maturities of AFS and HTM securities and other investments 4,235  4,495  6,079 
Purchases:
AFS securities, equity method investments and other investments (6,244) (29,714) (11,713)
Bank premises and equipment (491) (348) (309)
MSRs (25) (213) (381)
Proceeds from settlement of BOLI 14  49  24 
Proceeds from sales and dividends representing return of equity method investments 69  87  63 
Net cash received for divestitures —  66  — 
Net cash paid on acquisitions —  (917) (297)
Net cash paid on sale of HSA deposit portfolio —  —  (431)
Net change in:
Other short-term investments (13,731) 26,224  (1,172)
Portfolio loans and leases 3,358  (8,992) (3,721)
Operating lease equipment 63  (124) 28 
Net Cash Used in Investing Activities (9,488) (4,871) (7,968)
Financing Activities
Net change in deposits 5,222  (5,994) 10,734 
Net change in other short-term borrowings and federal funds purchased (1,881) 3,757  (193)
Dividends paid on common and preferred stock (1,060) (927) (897)
Proceeds from long-term debt issuances/advances 4,286  4,026  562 
Repayment of long-term debt (1,657) (1,762) (3,603)
Repurchases of treasury stock and related forward contract (200) (100) (1,393)
Other (55) (85) (99)
Net Cash Provided by (Used in) Financing Activities 4,655  (1,085) 5,111 
(Decrease) Increase in Cash and Due from Banks (324) 472  (153)
Cash and Due from Banks at Beginning of Period 3,466  2,994  3,147 
Cash and Due from Banks at End of Period $ 3,142  3,466  2,994 
Refer to the Notes to 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting and Reporting Policies

Nature of Operations
Fifth Third Bancorp, an Ohio corporation, conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern regions of the United States as well as through other offices, telephone sales, the internet and mobile applications.

Basis of Presentation
The 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.

Use of Estimates
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.

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, restructured loans and leases and the ALLL as described below. The accounting and reporting policies for these sections for periods prior to January 1, 2023 are provided in the Significant Accounting and Reporting Policies Applicable Prior to January 1, 2023 section below. Refer to the Accounting and Reporting Developments section for additional information.

Cash and Due from Banks
Cash and due from banks consist of currency and coin, cash items in the process of collection and due from banks. Currency and coin includes both U.S. and foreign currency owned and held at Fifth Third offices and that is in-transit to the FRB. Cash items in the process of collection include checks and drafts that are drawn on another depository institution or the FRB that are payable immediately upon presentation in the U.S. Balances due from banks include noninterest-bearing balances that are funds on deposit at other depository institutions or the FRB.

Investment Securities
Debt securities are classified as held-to-maturity, available-for-sale or trading on the date of purchase. Only those securities which 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 available-for-sale when, in management’s judgment, they may be sold in response to, or in anticipation of, changes in market conditions. Debt securities are classified as trading typically when bought and held principally for the purpose of selling them in the near term. Trading debt securities are reported at fair value with unrealized gains and losses included in noninterest income. Available-for-sale debt securities are reported at fair value with unrealized gains and losses, net of related deferred income taxes, included in OCI. For available-for-sale debt securities hedged in a fair value hedge, the amortized cost basis of the hedged items (excluding unrealized gains and losses) includes the cumulative fair value hedging basis adjustments. Changes in the fair value of these securities which are attributable to changes in the hedged risk are recognized in earnings instead of OCI. Accrued interest receivable on investment securities is presented in the Consolidated Balance Sheets as a component of other assets.

Available-for-sale debt securities with unrealized losses are reviewed quarterly to determine if the decline in fair value is the result of a credit loss or other factors. An allowance for credit losses is recorded against available-for-sale debt securities to reflect the amount of the unrealized loss attributable to credit; however, this impairment is limited by the amount that the fair value is less than the amortized cost basis. Any remaining unrealized loss is recognized through OCI. Changes in the allowance for credit losses are recognized in earnings.

The determination of whether or not a credit loss exists is based on consideration of the cash flows expected to be collected from the debt security. The Bancorp develops these expectations after considering various factors such as agency ratings, the financial condition of the issuer or underlying obligors, payment history, payment structure of the security, industry and market conditions, underlying collateral and other factors which may be relevant based on the facts and circumstances pertaining to individual securities.

If the Bancorp intends to sell the debt security or will more likely than not be required to sell the debt security before recovery of its amortized cost basis, then the allowance for credit losses, if previously recorded, is written off and the security’s amortized cost is written down to the security’s fair value at the reporting date, with any incremental impairment recorded as a charge to noninterest income.
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Held-to-maturity debt securities are assessed periodically to determine if an allowance is necessary to absorb credit losses expected to occur over the remaining contractual life of the securities. The carrying amount of held-to-maturity debt securities is presented net of the allowance for credit losses when such an allowance is deemed necessary.

Debt securities classified as available-for-sale may be transferred to the held-to-maturity classification if the Bancorp determines that it has the positive intent and ability to hold the securities until their maturity. Upon transfer to held-to-maturity, the transferred securities are reported at amortized cost plus or minus the pre-tax amount of the remaining unrealized gains or losses reported in AOCI at the transfer date. The resulting premium or discount is amortized into income over the remaining life of the securities as an adjustment of yield. Any unrealized gains or losses that exist on the date of transfer continue to be reported as a component of AOCI and are amortized into income over the remaining life of the securities as an adjustment to yield, offsetting the amortization of the premium or discount that was recognized at the transfer date. Any allowance for credit losses that was previously recorded when the securities were classified as available-for-sale is reversed into earnings on the date of transfer. After the transfer to held-to-maturity, the securities would be re-assessed for any necessary allowance for credit losses, as previously discussed.

Equity securities with readily determinable fair values not accounted for under the equity method are reported at fair value with unrealized gains and losses included in noninterest income in the Consolidated Statements of Income. Equity securities without readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes as a result of an observable price change for the identical or similar investment of the same issuer. At each quarterly reporting period, the Bancorp performs a qualitative assessment to evaluate whether impairment indicators are present. If qualitative indicators are identified, the investment is measured at fair value with the impairment loss included in noninterest income in the Consolidated Statements of Income.

The fair value of a security is determined based on quoted market prices. If quoted market prices are not available, fair value is determined based on quoted prices of similar instruments.

Premiums on purchased callable debt securities are amortized to the earliest call date if the call feature meets certain criteria. Otherwise, premiums are amortized to maturity similar to discounts on callable debt securities.

Realized securities gains or losses are reported within noninterest income in the Consolidated Statements of Income. The cost of securities sold is based on the specific identification method.

Portfolio Loans and Leases
Basis of accounting
Portfolio loans and leases are generally reported at the principal amount outstanding, net of unearned income, deferred direct loan origination fees and costs and any direct principal charge-offs. Direct loan origination fees and costs are deferred and the net amount is amortized over the contractual life or estimated life, if prepayments are estimated, of the related loans as a yield adjustment. Interest income is recognized based on the principal balance outstanding computed using the effective interest method.

Loans and leases acquired by the Bancorp through a purchase business combination are recorded at fair value as of the acquisition date. Purchased loans and finance leases (including both sales-type leases and direct financing leases) are evaluated for evidence of credit deterioration at acquisition and recorded at their initial fair value. For loans and finance leases that do not exhibit evidence of more-than-insignificant credit deterioration since origination, the Bancorp does not carry over the acquired company’s ALLL, but upon acquisition will record an ALLL and provision for credit losses reflective of credit losses expected to be incurred over the remaining contractual life of the acquired loans. Premiums and discounts reflected in the initial fair value are amortized over the contractual life of the loan as an adjustment to yield.

For loans and finance leases that exhibit evidence of more-than-insignificant credit quality deterioration since origination, the Bancorp’s estimate of expected credit losses is added to the ALLL upon acquisition and to the initial purchase price of the loans and leases to determine the initial amortized cost basis for the purchased financial assets with credit deterioration. Any resulting difference between the initial amortized cost basis (as adjusted for expected credit losses) and the par value of the loans and leases at the acquisition date represents the non-credit premium or discount, which is amortized over the contractual life of the loan or lease as an adjustment to yield. This method of accounting for loans acquired with deteriorated credit quality does not apply to loans carried at fair value or residential mortgage loans held for sale.

The Bancorp’s lease portfolio consists of sales-type, direct financing and leveraged leases. Leases are classified as sales-type if the Bancorp transfers control of the underlying asset to the lessee. The Bancorp classifies leases that do not meet any of the criteria for a sales-type lease as a direct financing lease if the present value of the sum of the lease payments and any residual value guaranteed by the lessee and/or any other third party equals or exceeds substantially all of the fair value of the underlying asset and the collection of the lease payments and residual value guarantee is probable. Sales-type and direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, less unearned income. Interest income on sales-type and direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment.
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Leveraged leases, entered into before January 1, 2019, are carried at the aggregate of lease payments (less nonrecourse debt payments) plus estimated residual value of the leased property, less unearned income. Interest income on leveraged leases is recognized over the term of the lease to achieve a constant rate of return on the outstanding investment in the lease, net of the related deferred income tax liability, in the years in which the net investment is positive. Leveraged lease accounting is no longer applied for leases entered into or modified after the Bancorp’s adoption of ASU 2016-02, Leases, on January 1, 2019.

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. Commercial loans where the principal or interest has been in default for a period of 90 days or more are generally maintained on nonaccrual status unless the loan is fully or partially guaranteed by a government agency or otherwise considered to be well secured and in the process of collection.
•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 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 placed on nonaccrual status and considered collateral-dependent loans at the time of discharge, regardless of the borrower’s payment history or capacity to repay in the future.
•Consumer loans subject to a bankruptcy proceeding are placed on nonaccrual status when principal or interest becomes past due 60 days or more.

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 twelve months or more after discharge provided there is a sustained payment history 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.
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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.

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.

Loans and Leases Held for Sale
Loans and leases held for sale primarily represent conforming fixed-rate residential mortgage loans originated or acquired with the intent to sell in the secondary market and jumbo residential mortgage loans, commercial loans, other residential mortgage loans and other consumer loans that management has the intent to sell. Loans and leases held for sale may be carried at the lower of cost or fair value, or carried at fair value where the Bancorp has elected the fair value option of accounting under U.S. GAAP. The Bancorp has elected to measure certain groups of loans held for sale under the fair value option, including certain residential mortgage loans originated as held for sale and certain purchased commercial loans designated as held for sale at acquisition. For loans in which the Bancorp has not elected the fair value option, the lower of cost or fair value is determined at the individual loan level.

The fair value of residential mortgage loans held for sale for which the fair value election has been made 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 effects 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. These fair value marks are recorded as a component of noninterest income in mortgage banking net revenue in the Consolidated Statements of Income. For residential mortgage loans that it has originated as held for sale, the Bancorp generally has commitments to sell these loans in the secondary market. Gains or losses on sales are recognized in mortgage banking net revenue in the Consolidated Statements of Income.

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, thereafter, reported within the Bancorp’s residential mortgage class of portfolio loans and leases. In such cases, if the fair value option was elected, the residential mortgage loans will continue to be measured at fair value, which is based on mortgage-backed securities prices, interest rate risk and an internally developed credit component.

Loans and leases held for sale are placed on nonaccrual status consistent with the Bancorp’s nonaccrual policies for portfolio loans and leases.

Other Real Estate Owned
OREO, which is included in other assets in the Consolidated Balance Sheets, represents property acquired through foreclosure or other proceedings and branch-related real estate no longer intended to be used for banking purposes. OREO is carried at the lower of cost or fair value, less costs to sell. All OREO property is periodically evaluated for impairment and decreases in carrying value are recognized as reductions in other noninterest income in the Consolidated Statements of Income. For government-guaranteed mortgage loans, upon foreclosure, a separate other receivable is recognized if certain conditions are met for the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. This receivable is also included in other assets, separate from OREO, in the Consolidated Balance Sheets.



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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. For an analysis of the Bancorp’s ALLL by portfolio segment and credit quality information by class, refer to Note 6.

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 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. Refer to the Portfolio Loans and Leases section of this footnote for additional information.

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. Allowances for individually evaluated loans and leases that are not collateral-dependent are typically measured based on the present value of expected cash flows of the loan or lease, discounted at its 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 ratings, 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.
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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 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.

Reserve for Unfunded Commitments
The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities and is included in other liabilities in the Consolidated Balance Sheets. The determination of the adequacy of the reserve is based upon expected credit losses over the remaining contractual life of the commitments, taking into consideration the current funded balance and estimated exposure over the reasonable and supportable forecast period. This process takes into consideration the same risk elements that are analyzed in the determination of the adequacy of the Bancorp’s ALLL, as previously discussed. Net adjustments to the reserve for unfunded commitments are included in the provision for credit losses in the Consolidated Statements of Income.

Loan Sales and Securitizations
The Bancorp periodically sells loans through either securitizations or individual loan sales in accordance with its investment policies. The sold loans are removed from the Consolidated Balance Sheet and a net gain or loss is recognized in the Consolidated Financial Statements at the time of sale. The Bancorp typically isolates the loans through the use of a VIE and thus is required to assess whether the entity holding the sold or securitized loans is a VIE and whether the Bancorp is the primary beneficiary and therefore consolidator of that VIE. If the Bancorp holds the power to direct activities most significant to the economic performance of the VIE and has the obligation to absorb losses or right to receive benefits that could potentially be significant to the VIE, then the Bancorp will generally be deemed the primary beneficiary of the VIE. 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. Refer to Note 12 for further information on consolidated and non-consolidated VIEs.

The Bancorp’s loan sales and securitizations are generally structured with servicing retained, which often results in the recording of servicing rights. The Bancorp may also purchase servicing rights. The Bancorp has elected to measure all existing classes of its residential mortgage servicing rights portfolio at fair value with changes in the fair value of servicing rights reported in mortgage banking net revenue in the Consolidated Statements of Income in the period in which the changes occur.

Servicing rights are valued using internal OAS models. Key economic assumptions used in estimating the fair value of the servicing rights include the prepayment speeds of the underlying loans, the weighted-average life, the OAS and the weighted-average coupon rate, as applicable. The primary risk of material changes to the value of the servicing rights resides in the potential volatility in the economic assumptions used, particularly the prepayment speeds. In order to assist in the assessment of the fair value of servicing rights, the Bancorp obtains external valuations of the servicing rights portfolio from third parties and participates in peer surveys that provide additional confirmation of the reasonableness of the key assumptions utilized in the internal OAS model.

Fees received for servicing loans owned by investors are based on a percentage of the outstanding monthly principal balance of such loans and are included in noninterest income in the Consolidated Statements of Income as loan payments are received. Costs of servicing loans are charged to expense as incurred.

Reserve for 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 (make whole) the investor or insurer for which the representation or warranty of the Bancorp proves to be inaccurate, incomplete or misleading. The Bancorp establishes a residential mortgage repurchase reserve related to various representations and warranties that reflects management’s estimate of losses based on a combination of factors.

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The Bancorp’s estimation process requires management to make subjective and complex judgments about matters that are inherently uncertain, such as future demand expectations, economic factors and the specific characteristics of the loans subject to repurchase. Such factors incorporate historical investor audit and repurchase demand rates, appeals success rates, historical loss severity and any additional information obtained from the GSEs regarding future mortgage repurchase and file request criteria. At the time of a loan sale, the Bancorp records a representation and warranty reserve at the estimated fair value of the Bancorp’s guarantee and continually updates the reserve during the life of the loan as losses in excess of the reserve become probable and reasonably estimable. The provision for the estimated fair value of the representation and warranty guarantee arising from the loan sales is recorded as an adjustment to the gain on sale, which is included in other noninterest income in the Consolidated Statements of Income at the time of sale. Updates to the reserve are recorded in other noninterest expense in the Consolidated Statements of Income.

Legal Contingencies
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 and significant judgment may be required in the determination of both the probability of loss and whether the amount of the loss is reasonably estimable. The Bancorp’s estimates are subjective and are based on the status of legal and regulatory proceedings, the merit of the Bancorp’s defenses and consultation with internal and external legal counsel. 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. This accrual is included in other liabilities in the Consolidated Balance Sheets and is adjusted from time to time as appropriate to reflect changes in circumstances. Legal expenses are recorded in other noninterest expense in the Consolidated Statements of Income.

Bank Premises and Equipment and Other Long-Lived Assets
Bank premises and equipment, including leasehold improvements, and operating lease equipment are carried at cost less accumulated depreciation and amortization. Generally, depreciation is calculated using the straight-line method based on estimated useful lives of the assets for book purposes, while accelerated depreciation is used for income tax purposes. Amortization of leasehold improvements is generally computed using the straight-line method over the lives of the related leases or useful lives of the related assets, whichever is shorter. Whenever events or changes in circumstances dictate, the Bancorp tests its long-lived assets for impairment by determining whether the sum of the estimated undiscounted future cash flows attributable to a long-lived asset or asset group is less than the carrying amount of the long-lived asset or asset group through a probability-weighted approach. In the event the carrying amount of the long-lived asset or asset group is not recoverable, an impairment loss is measured as the amount by which the carrying amount of the long-lived asset or asset group exceeds its fair value. Maintenance, repairs and minor improvements are charged to noninterest expense in the Consolidated Statements of Income as incurred. Lease payments received for operating lease equipment are recognized in leasing business revenue in the Consolidated Statements of Income over the lease term on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from use of the underlying equipment.

Lessee Accounting
ROU assets and lease liabilities are recognized for all leases unless the initial term of the lease is twelve months or less. Lease costs for operating leases are recognized on a straight-line basis over the lease term unless another systematic basis is more representative of the pattern of consumption. The lease term includes any renewal period that the Bancorp is reasonably certain to exercise. The Bancorp uses its incremental borrowing rate to discount the lease payments if the rate implicit in the lease is not readily determinable. Variable lease payments associated with operating leases are recognized in the period in which the obligation for payments is incurred.

For finance leases, the lease liability is measured using the effective interest method such that the liability is increased for interest based on the discount rate that is implicit in the lease or the Bancorp’s incremental borrowing rate if the implicit rate cannot be readily determined, offset by a decrease in the liability resulting from the periodic lease payments. The ROU asset associated with the finance lease is amortized on a straight-line basis unless there is another systematic and rational basis that better reflects how the benefits of the underlying assets are consumed over the lease term. The period over which the ROU asset is amortized is generally the lesser of the remaining lease term or the remaining useful life of the leased asset. Variable lease payments associated with finance leases are recognized in the period in which the obligation for those payments is incurred.

When the lease liability is remeasured to reflect changes to the lease payments as a result of a lease modification, the ROU asset is adjusted for the amount of the lease liability remeasurement. If a lease modification reduces the scope of a lease, the ROU asset would be reduced proportionately based on the change in the lease liability and the difference between the lease liability adjustment and the resulting ROU asset adjustment would be recognized as a gain or loss in the Consolidated Statements of Income. Additionally, the amortization of the ROU asset is adjusted prospectively from the date of remeasurement.

The Bancorp performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values may not be recoverable. Any impairment loss is recognized in net occupancy expense in the Consolidated Statements of Income. Refer to the Bank Premises and Equipment and Other Long-Lived Assets section of this note for further information.

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Derivative Financial Instruments and Hedge Accounting
The Bancorp accounts for its derivatives as either assets or liabilities measured at fair value through adjustments to AOCI and/or current earnings, as appropriate. The related cash flows are classified as operating activities in the Consolidated Statements of Cash Flows. On the date the Bancorp enters into a derivative contract, the Bancorp designates the derivative instrument as either a fair value hedge, cash flow hedge or as a free-standing derivative instrument. For a fair value hedge, 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 are recorded in current period net income. For a cash flow hedge, changes in the fair value of the derivative instrument are recorded in AOCI and subsequently reclassified to net income in the same period(s) that the hedged transaction impacts net income. For free-standing derivative instruments, changes in fair values are reported in current period net income.

When entering into a hedge transaction, the Bancorp formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for undertaking the hedge transaction before the end of the quarter in which the transaction is consummated. This process includes linking the derivative instrument designated as a fair value or cash flow hedge to a specific asset or liability on the balance sheet or to specific forecasted transactions and the risk being hedged, along with a formal assessment at the inception of the hedge as to the effectiveness of the derivative instrument in offsetting changes in fair values or cash flows of the hedged item. The Bancorp continues to assess hedge effectiveness on an ongoing basis using either a qualitative or a quantitative assessment (regression analysis). Additionally, the Bancorp may also utilize the shortcut method to evaluate hedge effectiveness for certain qualifying hedges with matched terms that permit the assumption of perfect offset. If the shortcut method is no longer appropriate, the Bancorp would apply the long-haul method identified at inception of the hedging transaction for assessing hedge effectiveness as long as the hedge is highly effective. If it is determined that the derivative instrument is not highly effective as a hedge, hedge accounting is discontinued. For fair value hedges, if hedge accounting is discontinued, the cumulative basis adjustments related to the hedged asset or liability are amortized to earnings in the same manner as other components of the carrying amount of that asset or liability. For cash flow hedges, upon discontinuation of hedge accounting, any amounts in AOCI related to that relationship should affect earnings at the same time and in the same manner in which the hedged transaction affects earnings. However, if it becomes probable that the forecasted transaction will not occur, any related amounts in AOCI are reclassified to earnings immediately.

Investments in Qualified Affordable Housing Projects
The Bancorp invests in projects to create affordable housing and revitalize business and residential areas. These investments are classified as other assets on the Bancorp’s Consolidated Balance Sheets. Investments in affordable housing projects that qualify for LIHTC are accounted for using the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the tax credits and other benefits received and recognized as a component of applicable income tax expense in the Consolidated Statements of Income. Investments which do not meet the qualification criteria for the proportional amortization method are accounted for using the equity method of accounting with impairment associated with the investments recognized in other noninterest expense in the Consolidated Statements of Income.

Deposits
Deposits generally include the unpaid balance of cash or its equivalent received or held by the Bank for its commercial and consumer customers. Deposits are classified as either transactional or non-transactional and include both interest-bearing and noninterest-bearing balances. Interest expense incurred on interest-bearing deposits is recognized in accordance with applicable guidance in U.S. GAAP for these liabilities and includes certain ongoing deposit placement fees paid on custodial accounts.

Income Taxes
The Bancorp accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for expected future tax consequences. Under the asset and liability method, deferred tax assets and liabilities are determined by applying the federal and state tax rates to the differences between financial statement carrying amounts and the corresponding tax bases of assets and liabilities. Deferred tax assets are also recorded for any tax attributes, such as tax credits and net operating loss carryforwards. The net balances of deferred tax assets and liabilities are reported in other assets and accrued taxes, interest and expenses in the Consolidated Balance Sheets. Any effect of a change in federal or state tax rates on deferred tax assets and liabilities is recognized in income tax expense in the period that includes the enactment date. The Bancorp reflects the expected amount of income tax to be paid or refunded during the year as current income tax expense or benefit. Accrued taxes represent the net expected amount due to and/or from taxing jurisdictions and are reported in accrued taxes, interest and expenses in the Consolidated Balance Sheets. The Bancorp uses the deferral method of accounting on investments that generate investment tax credits. Under this method, the investment tax credits are recognized as a reduction to the related asset.

The Bancorp evaluates the realization of deferred tax assets based on all positive and negative evidence available at the balance sheet date. Realization of deferred tax assets is based on the Bancorp’s judgment about relevant factors affecting their realization, including the taxable income within any applicable carry back periods, future projected taxable income, the reversal of taxable temporary differences and tax planning strategies. The Bancorp records a valuation allowance for deferred tax assets where the Bancorp does not believe that it is more likely than not that the deferred tax assets will be realized.

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Income tax benefits from uncertain tax positions are recognized in the financial statements only if the Bancorp believes that it is more likely than not that the uncertain tax position will be sustained based solely on the technical merits of the tax position and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. If the Bancorp does not believe that it is more likely than not that an uncertain tax position will be sustained, the Bancorp records a liability for the uncertain tax position. If the Bancorp believes that it is more likely than not that an uncertain tax position will be sustained, the Bancorp only records a tax benefit for the portion of the uncertain tax position where the likelihood of realization is greater than 50% upon settlement with the relevant taxing authority that has full knowledge of all relevant information. The Bancorp recognizes interest expense, interest income and penalties related to unrecognized tax benefits within applicable income tax expense in the Consolidated Statements of Income. Refer to Note 21 for further discussion regarding income taxes.

Earnings Per Share
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Earnings per diluted share is computed by dividing adjusted net income available to common shareholders by the weighted-average number of shares of common stock outstanding, adjusted for the impact of potentially dilutive common shares arising from the exercise or settlement of stock-based awards and the settlement of outstanding forward contracts.

The Bancorp calculates earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share separately for common stock and participating securities according to dividends declared and participation rights in undistributed earnings. For purposes of calculating earnings per share under the two-class method, restricted shares that contain nonforfeitable rights to dividends are considered participating securities until vested. While the dividends declared per share on such restricted shares are the same as dividends declared per common share outstanding, the dividends recognized on such restricted shares may be less because dividends paid on restricted shares that are expected to be forfeited are reclassified to compensation expense during the period when forfeiture is expected.

Goodwill
Business combinations entered into by the Bancorp typically include the recognition of goodwill. U.S. GAAP requires goodwill to be tested for impairment at the reporting unit level on an annual basis, which the Bancorp performs as of September 30 each year, and more frequently if events or circumstances indicate that there may be impairment.

Impairment exists when a reporting unit’s carrying amount of goodwill exceeds its implied fair value. In testing goodwill for impairment, U.S. GAAP permits the Bancorp to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In this qualitative assessment, the Bancorp evaluates events and circumstances which may include, but are not limited to, the general economic environment, banking industry and market conditions, the overall financial performance of the Bancorp, the performance of the Bancorp’s common stock, the key financial performance metrics of the Bancorp’s reporting units and events affecting the reporting units to determine if it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Bancorp performs the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. A recognized impairment loss cannot be reversed in future periods even if the fair value of the reporting unit subsequently recovers.

The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. As none of the Bancorp’s reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to the Bancorp’s stock price. The determination of the fair value of a reporting unit is a subjective process that involves the use of estimates and judgments, particularly related to cash flows, the appropriate discount rates and an applicable control premium. The determination of the fair value of the Bancorp’s reporting units includes both an income-based approach and a market-based approach. The income-based approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach to estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate. Significant management judgment is necessary in the preparation of each reporting unit’s forecasted cash flows surrounding expectations for earnings projections, growth and credit loss expectations and actual results may differ from forecasted results. Additionally, the Bancorp determines its market capitalization based on the average of the closing price of the Bancorp’s stock during the month including the measurement date, incorporating an additional control premium, and compares this market-based fair value measurement to the aggregate fair value of the Bancorp’s reporting units in order to corroborate the results of the income approach. Refer to Note 10 for further information regarding the Bancorp’s goodwill.

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. The Bancorp employs various valuation approaches to measure fair value including the market, income and cost approaches. The market approach uses prices or relevant information generated by market transactions involving identical or comparable assets or liabilities.
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The income approach involves discounting future amounts to a single present amount and is based on current market expectations about those future amounts. The cost approach is based on the amount that currently would be required to replace the service capacity of the asset.

U.S. GAAP 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. The three levels within the fair value hierarchy are described as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Bancorp has the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect the Bancorp’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include the Bancorp’s own financial data such as internally developed pricing models and DCF methodologies, as well as instruments for which the fair value determination requires significant management judgment.

The Bancorp’s fair value measurements involve various valuation techniques and models, which involve inputs that are observable, when available. Valuation techniques and parameters used for measuring assets and liabilities are reviewed and validated by the Bancorp on a quarterly basis. Additionally, the Bancorp monitors the fair values of significant assets and liabilities using a variety of methods including the evaluation of pricing runs and exception reports based on certain analytical criteria, comparison to previous trades and overall review and assessments for reasonableness. The Bancorp may, as a practical expedient, measure the fair value of certain investments on the basis of the net asset value per share of the investment, or its equivalent. Any investments which are valued using this practical expedient are not classified in the fair value hierarchy. Refer to Note 28 for further information on fair value measurements.

Stock-Based Compensation
The Bancorp recognizes compensation expense for the grant-date fair value of stock-based awards that are expected to vest over the requisite service period. All awards, both those with cliff vesting and graded vesting, are expensed on a straight-line basis over the requisite service period. Awards to employees that meet eligible retirement status are expensed immediately. As compensation expense is recognized, a deferred tax asset is recorded that represents an estimate of the future tax deduction from exercise or release of restrictions. At the time awards are exercised, cancelled, expire or restrictions are released, the Bancorp recognizes an adjustment to income tax expense for the difference between the previously estimated tax deduction and the actual tax deduction realized. For further information on the Bancorp’s stock-based compensation plans, refer to Note 25.

Pension Plans
The Bancorp uses an expected long-term rate of return applied to the fair market value of assets as of the beginning of the year and the expected cash flow during the year for calculating the expected investment return on all pension plan assets. Amortization of the net gain or loss resulting from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in market-related value) is included as a component of net periodic benefit cost. If, as of the beginning of the year, that net gain or loss exceeds 10% of the greater of the projected benefit obligation and the market-related value of plan assets, the amortization is that excess divided by the average remaining service period of participating employees expected to receive benefits under the plan. The Bancorp uses a third-party actuary to compute the remaining service period of participating employees. This period reflects expected turnover, pre-retirement mortality and other applicable employee demographics.

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Revenue Recognition
The Bancorp’s interest income is derived from loans and leases, investment securities and other short-term investments. The Bancorp recognizes interest income in accordance with the applicable guidance in U.S. GAAP for these assets. Refer to the Portfolio Loans and Leases and Investment Securities sections of this footnote for further information.

The Bancorp generally measures noninterest income revenue based on the amount of consideration the Bancorp expects to be entitled for the transfer of goods or services to a customer, then recognizes this revenue when or as the Bancorp satisfies its performance obligations under the contract, except in transactions where U.S. GAAP provides other applicable guidance. When the amount of consideration is variable, the Bancorp will only recognize revenue to the extent that it is probable that the cumulative amount recognized will not be subject to a significant reversal in the future. Substantially all of the Bancorp’s contracts with customers have expected durations of one year or less and payments are typically due when or as the services are rendered or shortly thereafter. When third parties are involved in providing goods or services to customers, the Bancorp recognizes revenue on a gross basis when it has control over those goods or services prior to transfer to the customer; otherwise, revenue is recognized for the net amount of any fee or commission. The Bancorp excludes sales taxes from the recognition of revenue and recognizes the incremental costs of obtaining contracts as an expense if the period of amortization for those costs would be one year or less. The following provides additional information about the components of noninterest income:
•Commercial banking revenue consists primarily of service fees and other income related to loans to commercial clients, underwriting revenue recognized by the Bancorp’s broker-dealer subsidiary and fees for other services provided to commercial clients. Revenue related to loans is recognized in accordance with the Bancorp’s policies for portfolio loans and leases. Underwriting revenue is generally recognized on the trade date, which is when the Bancorp’s performance obligations are satisfied.
•Wealth and asset management revenue consists primarily of service fees for investment management, custody, and trust administration services provided to commercial and consumer clients. The Bancorp’s performance obligations for these services are generally satisfied over time and revenues are recognized monthly based on the fee structure outlined in individual contracts. Transaction prices are most commonly based on the market value of assets under management or care and/or a fee per transaction processed. The Bancorp also offers certain services for which the performance obligations are satisfied and revenue is recognized at a point in time, when the services are performed. Wealth and asset management revenue also includes trailing commissions received from investments and annuities held in customer accounts, which are recognized in revenue when the Bancorp determines that it has satisfied its performance obligations and has sufficient information to estimate the amount of the commissions to which it expects to be entitled.
•Service charges on deposits consist primarily of treasury management fees for commercial clients, monthly service charges on consumer deposit accounts, transaction-based fees (such as overdraft fees and wire transfer fees), and other deposit account-related charges. The Bancorp’s performance obligations for treasury management fees and consumer deposit account service charges are typically satisfied over time while performance obligations for transaction-based fees are typically satisfied at a point in time. Revenues are recognized on an accrual basis when or as the services are provided to the customer, net of applicable discounts, waivers and reversals. Payments are typically collected from customers directly from the related deposit account at the time the transaction is processed and/or at the end of the customer’s statement cycle (typically monthly).
•Card and processing revenue consists primarily of ATM fees and interchange fees earned when the Bancorp’s credit and debit cards are processed through card association networks. The Bancorp’s performance obligations are generally complete when the transactions generating the fees are processed. Revenue is recognized on an accrual basis as such services are performed, net of certain costs not controlled by the Bancorp (primarily interchange fees charged by credit card associations and expenses of certain transaction-based rewards programs offered to customers).
•Mortgage banking net revenue consists primarily of origination fees and gains on loan sales, mortgage servicing fees and the impact of MSRs. Refer to the Loans and Leases Held for Sale and Loan Sales and Securitizations sections of this footnote for further information.
•Leasing business revenue consists primarily of operating lease income, leasing business solutions revenue, lease remarketing fees and lease syndication fees from lease arrangements to commercial clients. Revenue related to leases is recognized either in accordance with the Bancorp’s policies for portfolio loans and leases or when the Bancorp’s performance obligations are satisfied.
•Other noninterest income includes certain fees derived from loans, BOLI income, gains and losses on other assets, and other miscellaneous revenues and gains.

Other
Securities and other property held in a trust or fiduciary capacity by divisions of the Bancorp’s banking subsidiary are not included in the Consolidated Balance Sheets because such items are not assets of the subsidiaries.

Other short-term investments have original maturities less than one year and primarily include interest-bearing balances that are funds on deposit at other depository institutions or the FRB. The Bancorp uses other short-term investments as part of its liquidity risk management activities.

The Bancorp purchases life insurance policies on the lives of certain directors, officers and employees and is the owner and beneficiary of the policies. The Bancorp invests in these policies, known as BOLI, to provide an efficient form of funding for long-term retirement and other employee benefits costs. Certain BOLI policies have a stable value agreement through either a large, well-rated bank or multi-national insurance carrier that provides limited cash surrender value protection from declines in the value of each policy’s underlying investments.
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The Bancorp records these BOLI policies within other assets in the Consolidated Balance Sheets at each policy’s respective cash surrender value, with changes recorded in other noninterest income in the Consolidated Statements of Income.

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 Consolidated Statements of Income. The Bancorp reviews intangible assets for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.

Securities sold under repurchase agreements are accounted for as secured borrowings and included in other short-term borrowings in the Consolidated Balance Sheets at the amounts at which the securities were sold plus accrued interest.

Acquisitions of treasury stock are carried at cost. Reissuance of shares in treasury for acquisitions, exercises of stock-based awards or other corporate purposes is recorded based on the specific identification method.

Advertising costs are generally expensed as incurred.

Significant Accounting and Reporting Policies Applicable Prior to January 1, 2023
The following paragraphs describe the portions of the Bancorp’s accounting and reporting policies that were applicable prior to January 1, 2023 but were updated in conjunction with the adoption of ASU 2022-02 on January 1, 2023. The following paragraphs do not include the portions of the respective policies that were not affected by the adoption of this new accounting standard. Refer to the Accounting and Reporting Developments section for additional information.

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 Consolidated Balance Sheets, consistent with the classification of the related accrued interest receivable.
•Residential mortgage loans that have been modified in a TDR and subsequently become past due 90 days or more are placed on nonaccrual status unless the loan is fully or partially guaranteed by a government agency.
•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 accounts that have been modified in a TDR 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.
•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 classified as collateral-dependent TDRs and placed on nonaccrual status regardless of the borrower’s payment history or capacity to repay in the 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 in a TDR 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 restructured 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 as part of a TDR 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 as part of a TDR 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.
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TDRs of commercial loans and credit card loans 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.

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, including those modified in a TDR, as well as 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 - restructured loans and leases
A loan is accounted for as a TDR if the Bancorp, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDRs include concessions granted under reorganization, arrangement or other provisions of the Federal Bankruptcy Act. A TDR typically involves a modification of terms such as a reduction of the stated interest rate or remaining principal amount of the loan, a reduction of accrued interest or an extension of the maturity date at a stated interest rate lower than the current market rate for a new loan with similar risk.

Upon modification of a loan, the Bancorp measures the expected credit loss as either the difference between the amortized cost of the loan and the fair value of collateral less cost to sell or the difference between the estimated future cash flows expected to be collected on the modified loan, discounted at the original effective yield of the loan, and the carrying value of the loan.

ALLL
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 the Bancorp reasonably expects to execute a TDR with the borrower or where certain extension or renewal options are embedded in the original contract and not unconditionally cancellable by the Bancorp.

Larger commercial loans and leases included within aggregate borrower relationship balances exceeding $1 million that exhibit probable or observed credit weaknesses, as well as loans that have been modified in a TDR, 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 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 present value of expected future cash flows discounted at the loan’s effective interest rate. The Bancorp evaluates the collectability of both principal and interest when assessing the need for a loss accrual. Specific allowances on individually evaluated commercial loans and leases, including TDRs, are reviewed quarterly and adjusted as necessary based on changing borrower and/or collateral conditions and actual collection and charge-off experience.

Consumer and residential mortgage loans that have been modified in a TDR are individually evaluated for an ALLL. Allowances for individually evaluated loans that are collateral-dependent are typically measured based on the fair value of the underlying collateral, less expected costs to sell where applicable. Individually evaluated loans that are not collateral-dependent are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate and a modeled expected credit loss amount. The Bancorp evaluates the collectability of both principal and interest when assessing the need for a loss accrual. 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. These include commercial loans and leases that do not meet the criteria for individual evaluation as well as homogeneous loans in the residential mortgage and consumer portfolio segments. 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.

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ACCOUNTING AND REPORTING DEVELOPMENTS
Standards Adopted in 2023
The Bancorp adopted the following new accounting standards effective January 1, 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 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 clarified the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets and renamed 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 expanded 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 clarified 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 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 eliminated the accounting guidance on troubled debt restructurings for creditors in ASC 310-40, amended 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 added 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 were 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 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 December 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 Bancorp adopted the amended guidance on January 1, 2024 on a prospective basis. The adoption did not have a material impact on the Bancorp’s Consolidated Financial Statements.

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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 Bancorp adopted the amended guidance on January 1, 2024 on a modified retrospective basis, except for certain provisions affecting the measurement of existing LIHTC investments which the Bancorp adopted on a prospective basis. Upon adoption, the Bancorp recorded a cumulative-effect adjustment to decrease retained earnings by $10 million, net of tax.

ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, which amends the disclosure requirements for reportable segments. The amendments include new requirements to disclose certain significant segment expenses and other items, the title and position of the chief operating decision maker and information about how the reported measures of segment profit or loss are used in assessing segment performance. The amendments also make certain annual disclosure requirements applicable to interim periods and permit the reporting of multiple measures of segment profit or loss if appropriate. The amended guidance is effective for the Bancorp for the year ending December 31, 2024 and subsequent interim reporting periods beginning in 2025, with early adoption permitted. Upon adoption, the amendments will be applied retrospectively to all prior periods presented. The Bancorp is in the process of evaluating the impact of the amended guidance on its Consolidated Financial Statements.

ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which amends the disclosure requirements for income taxes. The amendments primarily include new requirements to disclose additional information as part of the reconciliation of the effective tax rate to statutory tax rate, provide the amount of income taxes paid, net of refunds received, and income tax expense disaggregated between federal, state and foreign jurisdictions and provide income before income taxes disaggregated between domestic and foreign jurisdictions. The amendments also discontinue certain other disclosure requirements. The amended guidance is effective for the Bancorp on January 1, 2025, with early adoption permitted, and is to be applied prospectively, with retrospective application permitted. The Bancorp is in the process of evaluating the impact of the amended guidance on its Consolidated Financial Statements.

Reference Rate Reform and LIBOR Transition
In March 2020, the FASB issued ASU 2020-04, which provided optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria were met. The FASB subsequently issued ASU 2021-01 and ASU 2022-06 which amended the original provisions in ASU 2020-04. The provisions of ASU 2020-04 (as amended) became effective for the Bancorp as of March 12, 2020 and are permitted to be applied through December 31, 2024. The Bancorp has utilized the optional expedients and exceptions in accounting for certain eligible contract modifications, existing hedging relationships and new hedging relationships as part of its LIBOR transition activities.

In March 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law. The LIBOR Act offered a federal solution for transitioning legacy instruments that lacked sufficient provisions addressing LIBOR’s cessation by outlining a uniform process to govern the transition from LIBOR to a replacement rate. The FRB issued final regulations to carry out the terms of the LIBOR Act, which became effective on February 27, 2023. Under the LIBOR Act and the related regulations, three-month CME Term SOFR plus a tenor spread adjustment of 0.26161% was designated as the replacement reference rate for instruments that previously referenced three-month U.S. dollar LIBOR.

As of December 31, 2023, substantially all contracts have transitioned to alternative reference rates, either under existing contract terms or under the provisions of the LIBOR Act. Additionally, all remaining LIBOR-based exposures, including derivative contracts, loans, preferred stock and long-term debt, will transition to appropriate alternative reference rates at the time of the next repricing event. Refer to Note 17 and Note 24 for additional information about certain exposures which were transitioned to an alternative reference rate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 years ended December 31:
($ in millions) 2023 2022 2021
Cash Payments:
Interest $ 3,776  869  465 
Income taxes 655  272  607 
Transfers:
Portfolio loans and leases to loans and leases held for sale(a)
 $ 513  105  447 
Loans and leases held for sale to portfolio loans and leases 6  409  49 
Portfolio loans and leases to OREO 12  8  8 
Bank premises and equipment to OREO 30  24  21 
Supplemental Disclosures:
Net additions to lease liabilities under operating leases
 $ 72  152  66 
Net (reductions) additions to lease liabilities under finance leases
 (6) 27  35 
(a)Includes $167 for the year ended December 31, 2021 of residential mortgage loans previously sold to GNMA which the Bancorp was initially deemed to have regained effective control over under ASC Topic 860 and which were recorded as portfolio loans. The Bancorp subsequently repurchased these loans and classified them as held for sale.

3. Restrictions on Dividends and Capital Actions

Restrictions on Cash Dividends
The principal source of income and funds for the Bancorp (parent company) are dividends from its subsidiaries. The dividends paid by the Bancorp’s banking subsidiary are subject to regulations and limitations prescribed by state and federal supervisory agencies. The Bancorp’s indirect banking subsidiary paid the Bancorp’s direct nonbank subsidiary holding company, which in turn paid the Bancorp, $1.8 billion in dividends during the year ended December 31, 2023 and did not pay dividends during the year ended December 31, 2022. The Bancorp’s nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year.

Capital Actions
The Bancorp is subject to restrictions on its capital actions, primarily as a result of supervisory policies set by the FRB. The Bancorp is required to develop and maintain a capital plan that governs its capacity to pay dividends and execute share repurchases and this plan is required to be submitted to the FRB periodically. As part of its capital plan, the Bancorp increased its quarterly common stock dividend to $0.35 per share in the third quarter of 2023. Additionally, the Bancorp entered into and settled an accelerated share repurchase transaction during the year ended December 31, 2023. For more information related to this transaction, refer to Note 24.

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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 December 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 $ 4,477  1  (142) 4,336 
Obligations of states and political subdivisions securities 2  —  —  2 
Mortgage-backed securities:
Agency residential mortgage-backed securities 11,564  —  (1,282) 10,282 
Agency commercial mortgage-backed securities 28,945  5  (3,230) 25,720 
Non-agency commercial mortgage-backed securities 4,872  —  (427) 4,445 
Asset-backed securities and other debt securities 5,207  3  (298) 4,912 
Other securities(a)
 722  —  —  722 
Total available-for-sale debt and other securities $ 55,789  9  (5,379) 50,419 
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 $224, $496 and $2, respectively, at December 31, 2023, that are carried at cost.

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 December 31:
($ in millions) 2023 2022
Trading debt securities $ 899  414 
Equity securities 613  317 

The amounts reported in the preceding tables exclude accrued interest receivable on investment securities of $146 million and $131 million at December 31, 2023 and 2022, respectively, which is presented as a component of other assets in the 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 Consolidated Statements of Income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the components of net securities gains and losses recognized in the Consolidated Statements of Income, including those recognized related to the Bancorp’s non-qualifying hedging strategy for MSRs, for the years ended December 31:
($ in millions) 2023 2022 2021
Available-for-sale debt and other securities:
Realized gains $ 34  16  34 
Realized losses (30) (13) (19)
Impairment losses (5) (1) (19)
Net realized (losses) gains on available-for-sale debt and other securities $ (1) 2  (4)
Trading debt securities:
Net realized losses —  (2) (2)
Net unrealized gains (losses) 3  11  (3)
Net trading debt securities gains (losses) $ 3  9  (5)
Equity securities:
Net realized gains 5  1  7 
Net unrealized gains (losses) 11  (96) (7)
Net equity securities gains (losses) $ 16  (95) — 
Total gains (losses) recognized in income from available-for-sale debt and other securities, trading debt securities and equity securities(a)
 $ 18  (84) (9)
(a)Excludes $13 of net securities gains for the year ended December 31, 2023 and an immaterial amount and $7 of net securities losses for the years ended December 31, 2022 and 2021, respectively, related to securities held by FTS to facilitate the timely execution of customer transactions. These gains (losses) are included in commercial banking revenue and wealth and asset management revenue in the Consolidated Statements of Income.

The Bancorp recognized impairment losses on available-for-sale debt and other securities of $5 million, $1 million and $19 million during the years ended December 31, 2023, 2022 and 2021, respectively. These losses related to certain securities in unrealized loss positions where the Bancorp had determined that it no longer intended to hold the securities until the recovery of their amortized cost bases.

At both December 31, 2023 and 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 the years ended December 31, 2023, 2022 and 2021.

At December 31, 2023 and 2022, investment securities with a fair value of $25.2 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 December 31, 2023 are shown in the following table:
Available-for-Sale Debt and Other Held-to-Maturity
($ in millions) Amortized Cost Fair Value    Amortized Cost Fair Value    
Debt securities:(a)
Due in 1 year or less $ 756  746  —  — 
Due after 1 year through 5 years 18,493  17,429  —  — 
Due after 5 years through 10 years 26,194  23,165  —  — 
Due after 10 years 9,624  8,357  2  2 
Other securities 722  722  —  — 
Total $ 55,789  50,419  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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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 December 31:
Less than 12 months 12 months or more Total
($ in millions) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
2023
U.S. Treasury and federal agencies securities $ 1,989  (3) 2,157  (139) 4,146  (142)
Agency residential mortgage-backed securities 81  (2) 10,200  (1,280) 10,281  (1,282)
Agency commercial mortgage-backed securities 5,439  (556) 19,957  (2,674) 25,396  (3,230)
Non-agency commercial mortgage-backed securities 141  (2) 4,284  (425) 4,425  (427)
Asset-backed securities and other debt securities 340  (17) 4,184  (281) 4,524  (298)
Total $ 7,990  (580) 40,782  (4,799) 48,772  (5,379)
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 December 31, 2023 and 2022, $45 million and $42 million, respectively, of unrealized losses in the available-for-sale debt and other securities portfolio were related to non-rated securities.

In January 2024, the Bancorp transferred $12.6 billion (amortized cost basis) of securities from available-for-sale to held-to-maturity to reflect the Bancorp’s change in intent to hold these securities to maturity in order to reduce potential capital volatility associated with investment security market price fluctuations. AOCI included pretax unrealized losses of $994 million on these securities at the date of transfer. The unrealized losses that existed on the date of transfer will continue to be reported as a component of AOCI and will be amortized into income over the remaining life of the securities as an adjustment to yield, offsetting the amortization of the discount resulting from the transfer recorded at fair value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 December 31:
($ in millions) 2023 2022
Loans and leases held for sale:
Commercial and industrial loans $ 41  73 
Commercial leases 3  — 
Residential mortgage loans 334  934 
Total loans and leases held for sale $ 378  1,007 
Portfolio loans and leases:
Commercial and industrial loans $ 53,270  57,232 
Commercial mortgage loans 11,276  11,020 
Commercial construction loans 5,621  5,433 
Commercial leases 2,579  2,704 
Total commercial loans and leases $ 72,746  76,389 
Residential mortgage loans $ 17,026  17,628 
Home equity 3,916  4,039 
Indirect secured consumer loans 14,965  16,552 
Credit card 1,865  1,874 
Other consumer loans 6,716  4,998 
Total consumer loans $ 44,488  45,091 
Total portfolio loans and leases $ 117,234  121,480 

Portfolio loans and leases are recorded net of unearned income, which totaled $272 million and $238 million as of December 31, 2023 and 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 $395 million and net premium of $146 million as of December 31, 2023 and 2022, respectively. The amortized cost basis of loans and leases excludes accrued interest receivable of $593 million and $518 million at December 31, 2023 and 2022, respectively, which is presented as a component of other assets in the Consolidated Balance Sheets.

The Bancorp’s FHLB and FRB borrowings are primarily secured by loans. The Bancorp had loans of $14.5 billion and $15.9 billion at December 31, 2023 and 2022, respectively, pledged to the FHLB, and loans of $49.3 billion and $57.1 billion at December 31, 2023 and 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 and net charge-offs (recoveries) as of and for the years ended December 31:
Carrying Value
90 Days Past Due and Still Accruing(a)
 Net Charge-Offs (Recoveries)
($ in millions) 2023 2022 2023 2022 2023 2022
Commercial and industrial loans $ 53,311  57,305  8  11  155  96 
Commercial mortgage loans 11,276  11,020  —  —  (2) (1)
Commercial construction loans 5,621  5,433  —  —  1  2 
Commercial leases 2,582  2,704  —  2  (1) 4 
Residential mortgage loans 17,360  18,562  7  7  —  (2)
Home equity 3,916  4,039  —  1  1  (2)
Indirect secured consumer loans 14,965  16,552  —  —  72  36 
Credit card 1,865  1,874  21  18  64  52 
Other consumer loans 6,716  4,998  —  1  98  42 
Total loans and leases $ 117,612  122,487  36  40  388  227 
Less: Loans and leases held for sale 378  1,007 
Total portfolio loans and leases $ 117,234  121,480 
(a)Excludes government guaranteed residential mortgage loans.

The following table presents the components of the net investment in portfolio leases as of December 31:
($ in millions)(a)
 2023 2022
Net investment in direct financing leases:
Lease payment receivable (present value) $ 556  570 
Unguaranteed residual assets (present value) 105  107 
Net investment in sales-type leases:
Lease payment receivable (present value) 1,585  1,704 
Unguaranteed residual assets (present value) 84  76 
(a)Excludes $249 and $247 of leveraged leases at December 31, 2023 and 2022, respectively.

Interest income recognized in the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 was $26 million, $29 million and $42 million, respectively, for direct financing leases and $63 million, $50 million and $42 million, respectively, for sales-type leases.

The following table presents undiscounted cash flows for both direct financing and sales-type leases for 2024 through 2028 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease receivables as follows:
As of December 31, 2023 ($ in millions) Direct Financing
Leases		 Sales-Type Leases
2024 $ 175  493 
2025 147  460 
2026 114  290 
2027 83  221 
2028 38  144 
Thereafter 51  115 
Total undiscounted cash flows $ 608  1,723 
Less: Difference between undiscounted cash flows and discounted cash flows 52  138 
Present value of lease payments (recognized as lease receivables) $ 556  1,585 

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 $13 million and $15 million at December 31, 2023 and 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.
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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 years ended December 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)
 (170) (4) (348) (522)
Recoveries of losses previously charged off(a)
 17  4  113  134 
Provision for (benefit from) loan and lease losses 152  (64) 477  565 
Balance, end of period $ 1,130  145  1,047  2,322 
(a)The Bancorp recorded $35 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.

2022 ($ in millions) Commercial Residential Mortgage Consumer Total    
Balance, beginning of period $ 1,102  235  555  1,892 
Losses charged off(a)
 (131) (3) (228) (362)
Recoveries of losses previously charged off(a)
 30  5  100  135 
Provision for loan and lease losses 126  8  395  529 
Balance, end of period $ 1,127  245  822  2,194 
(a)The Bancorp recorded $32 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.

2021 ($ in millions) Commercial Residential Mortgage Consumer Total    
Balance, beginning of period $ 1,456  294  703  2,453 
Losses charged off(a)
 (119) (3) (222) (344)
Recoveries of losses previously charged off(a)
 52  7  111  170 
Benefit from loan and lease losses (287) (63) (37) (387)
Balance, end of period $ 1,102  235  555  1,892 
(a)The Bancorp recorded $33 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.

The following tables provide a summary of the ALLL and related loans and leases classified by portfolio segment:
As of December 31, 2023 ($ in millions) Commercial Residential Mortgage  Consumer Total    
ALLL:(a)
Individually evaluated $ 90  —  6  96 
Collectively evaluated 1,040  145  1,041  2,226 
Total ALLL $ 1,130  145  1,047  2,322 
Portfolio loans and leases:(b)
Individually evaluated $ 281  126  69  476 
Collectively evaluated 72,465  16,784  27,393  116,642 
Total portfolio loans and leases $ 72,746  16,910  27,462  117,118 
(a)Includes $2 related to commercial leveraged leases at December 31, 2023.
(b)Excludes $116 of residential mortgage loans measured at fair value and includes $249 of commercial leveraged leases, net of unearned income, at December 31, 2023.


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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 ratings: 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 with this rating 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.

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 1.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the amortized cost basis of the Bancorp’s commercial portfolio segment, by class and vintage, disaggregated by credit risk rating:
As of December 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 $ 2,124  3,434  1,814  580  263  321  40,889  —  49,425 
Special mention 16  100  60  33  6  105  1,756  —  2,076 
Substandard 105  103  28  18  39  73  1,397  —  1,763 
Doubtful —  —  —  —  —  —  6  —  6 
Total commercial and industrial loans $ 2,245  3,637  1,902  631  308  499  44,048  —  53,270 
Commercial mortgage owner-occupied loans:

Pass $ 870  1,078  746  408  219  260  1,279  —  4,860 
Special mention 30  23  18  —  6  —  20  —  97 
Substandard 31  22  11  10  45  10  114  —  243 
Doubtful —  —  —  —  —  —  —  —  — 
Total commercial mortgage owner-occupied loans $ 931  1,123  775  418  270  270  1,413  —  5,200 
Commercial mortgage nonowner-occupied loans:

Pass $ 886  825  261  348  293  243  2,724  —  5,580 
Special mention 111  166  —  2  —  2  81  —  362 
Substandard 81  1  8  —  —  2  42  —  134 
Doubtful —  —  —  —  —  —  —  —  — 
Total commercial mortgage nonowner-occupied loans $ 1,078  992  269  350  293  247  2,847  —  6,076 
Commercial construction loans:

Pass $ 171  36  45  41  70  6  4,818  —  5,187 
Special mention —  —  —  —  —  —  199  —  199 
Substandard 61  —  33  —  —  —  141  —  235 
Doubtful —  —  —  —  —  —  —  —  — 
Total commercial construction loans $ 232  36  78  41  70  6  5,158  —  5,621 
Commercial leases:

Pass $ 598  386  462  202  145  664  —  —  2,457 
Special mention 1  9  12  3  8  14  —  —  47 
Substandard 20  14  1  5  5  30  —  —  75 
Doubtful —  —  —  —  —  —  —  —  — 
Total commercial leases $ 619  409  475  210  158  708  —  —  2,579 
Total commercial loans and leases:
Pass $ 4,649  5,759  3,328  1,579  990  1,494  49,710  —  67,509 
Special mention 158  298  90  38  20  121  2,056  —  2,781 
Substandard 298  140  81  33  89  115  1,694  —  2,450 
Doubtful —  —  —  —  —  —  6  —  6 
Total commercial loans and leases $ 5,105  6,197  3,499  1,650  1,099  1,730  53,466  —  72,746 

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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 during the year ended December 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 $ 25  7  12  1  —  11  112  —  168 
Commercial mortgage owner-occupied loans —  —  —  —  —  —  1  —  1 
Commercial construction loans —  —  —  —  —  —  1  —  1 
Total commercial loans and leases $ 25  7  12  1  —  11  114  —  170 




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 December 31, 2023 ($ in millions)
30-89 Days(a)
90 Days or More(a)
 Total Past Due  
Commercial loans and leases:
Commercial and industrial loans $ 53,107  61  102  163  53,270  8 
Commercial mortgage owner-occupied loans 5,196  1  3  4  5,200  — 
Commercial mortgage nonowner-occupied loans 6,061  14  1  15  6,076  — 
Commercial construction loans 5,621  —  —  —  5,621  — 
Commercial leases 2,562  17  —  17  2,579  — 
Total portfolio commercial loans and leases $ 72,547  93  106  199  72,746  8 
(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 1 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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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 December 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)
 $ 995  3,139  5,001  2,703  943  3,971  —  —  16,752 
30-89 days past due —  3  6  5  1  14  —  —  29 
90 days or more past due —  1  1  1  1  3  —  —  7 
Total performing 995  3,143  5,008  2,709  945  3,988  —  —  16,788 
Nonperforming —  6  6  5  4  101  —  —  122 
Total residential mortgage loans(b)
 $ 995  3,149  5,014  2,714  949  4,089  —  —  16,910 
Home equity:

Performing:

Current $ 84  41  2  6  11  92  3,549  46  3,831 
30-89 days past due —  —  —  —  —  2  25  1  28 
90 days or more past due —  —  —  —  —  —  —  —  — 
Total performing 84  41  2  6  11  94  3,574  47  3,859 
Nonperforming —  —  —  —  —  6  50  1  57 
Total home equity $ 84  41  2  6  11  100  3,624  48  3,916 
Indirect secured consumer loans:

Performing:









Current $ 4,126  4,333  3,925  1,527  597  271  —  —  14,779 
30-89 days past due 22  49  40  19  12  8  —  —  150 
90 days or more past due —  —  —  —  —  —  —  —  — 
Total performing 4,148  4,382  3,965  1,546  609  279  —  —  14,929 
Nonperforming 4  11  9  6  3  3  —  —  36 
Total indirect secured consumer loans $ 4,152  4,393  3,974  1,552  612  282  —  —  14,965 
Credit card:

Performing:
Current $ —  —  —  —  —  —  1,789  —  1,789 
30-89 days past due —  —  —  —  —  —  21  —  21 
90 days or more past due —  —  —  —  —  —  21  —  21 
Total performing —  —  —  —  —  —  1,831  —  1,831 
Nonperforming —  —  —  —  —  —  34  —  34 
Total credit card $ —  —  —  —  —  —  1,865  —  1,865 
Other consumer loans:

Performing:

Current $ 2,926  1,895  330  246  101  195  859  41  6,593 
30-89 days past due 17  21  4  2  2  2  2  1  51 
90 days or more past due —  —  —  —  —  —  —  —  — 
Total performing 2,943  1,916  334  248  103  197  861  42  6,644 
Nonperforming 31  36  1  1  1  1  —  1  72 
Total other consumer loans $ 2,974  1,952  335  249  104  198  861  43  6,716 
Total residential mortgage and consumer loans:
Performing:
Current $ 8,131  9,408  9,258  4,482  1,652  4,529  6,197  87  43,744 
30-89 days past due 39  73  50  26  15  26  48  2  279 
90 days or more past due —  1  1  1  1  3  21  —  28 
Total performing 8,170  9,482  9,309  4,509  1,668  4,558  6,266  89  44,051 
Nonperforming 35  53  16  12  8  111  84  2  321 
Total residential mortgage and
    consumer loans(b)
 $ 8,205  9,535  9,325  4,521  1,676  4,669  6,350  91  44,372 
(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, 2023, $79 of these loans were 30-89 days past due and $141 were 90 days or more past due. The Bancorp recognized $2 of losses during the year ended December 31, 2023 due to claim denials and curtailments associated with these insured or guaranteed loans.
(b)Excludes $116 of residential mortgage loans measured at fair value at December 31, 2023, including $1 of 30-89 days past due loans and $2 of nonperforming loans.
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As of December 31, 2022 ($ 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 $2 of losses during the year ended December 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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The following table summarizes the Bancorp’s gross charge-offs within the residential mortgage and consumer portfolio segments, by class and vintage during the year ended December 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 $ —  —  —  —  —  4  —  —  4 
Consumer loans:
Home equity —  —  —  —  —  1  7  —  8 
Indirect secured consumer loans 9  42  27  14  10  8  —  —  110 
Credit cards —  —  —  —  —  —  82  —  82 
Other consumer loans 15  53  15  12  7  10  34  2  148 
Total residential mortgage and consumer loans $ 24  95  42  26  17  23  123  2  352 

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) December 31,
2023		 December 31,
2022
Commercial loans and leases:
Commercial and industrial loans $ 268  433 
Commercial mortgage owner-occupied loans 8  14 
Commercial mortgage nonowner-occupied loans 2  27 
Commercial construction loans 1  56 
Commercial leases —  1 
Total commercial loans and leases $ 279  531 
Residential mortgage loans 126  57 
Consumer loans:
Home equity 54  46 
Indirect secured consumer loans 15  6 
Total consumer loans $ 69  52 
Total portfolio loans and leases $ 474  640 


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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:
December 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 $ 273  31  304  114  101  215 
Commercial mortgage owner-occupied loans 11  6  17  9  7  16 
Commercial mortgage nonowner-occupied loans —  3  3  20  4  24 
Commercial construction loans —  1  1  6  2  8 
Commercial leases —  1  1  —  —  — 
Total nonaccrual portfolio commercial loans and leases $ 284  42  326  149  114  263 
Residential mortgage loans 26  98  124  81  43  124 
Consumer loans:
Home equity 21  36  57  45  22  67 
Indirect secured consumer loans 32  4  36  26  3  29 
Credit card 34  —  34  27  —  27 
Other consumer loans 72  —  72  5  —  5 
Total nonaccrual portfolio consumer loans $ 159  40  199  103  25  128 
Total nonaccrual portfolio loans and leases(a)(b)
 $ 469  180  649  333  182  515 
OREO and other repossessed property —  39  39  —  24  24 
Total nonperforming portfolio assets(a)(b)
 $ 469  219  688  333  206  539 
(a)Excludes $1 and an immaterial amount of nonaccrual loans held for sale as of December 31, 2023 and 2022, respectively.
(b)Includes $19 and $15 of nonaccrual government insured commercial loans whose repayments are insured by the SBA as of December 31, 2023 and 2022, respectively.

The Bancorp recognized an immaterial amount of interest income on nonaccrual loans and leases for both the years ended December 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 $107 million and $154 million as of December 31, 2023 and 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 1.

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 December 31, 2023, portfolio loans with an amortized cost basis of $615 million, or 0.52% of total portfolio loans and leases, were modified during the year ended December 31, 2023 for borrowers experiencing financial difficulty, as further discussed in the following sections. This amount excludes $29 million of consumer and residential mortgage loans as of December 31, 2023 which have been granted a concession under provisions of the Federal Bankruptcy Act during the year ended December 31, 2023 and are monitored separately from loans modified under the Bancorp’s loan modification programs. As of December 31, 2023, the Bancorp had commitments of $130 million to lend additional funds to borrowers experiencing financial difficulty whose terms have been modified during the year ended December 31, 2023.
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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 delays, which may be combined with a term extension.

The following table presents the amortized cost basis as of December 31, 2023 of the Bancorp’s commercial portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification during the year ended December 31:
2023 ($ in millions) Term Extension Interest Rate Reduction Payment Delay Term Extension and Interest Rate Reduction Term Extension and Payment Delay Total % of Total Class
Commercial and industrial loans $ 155  1  56  2  31  245  0.46  %
Commercial mortgage owner-occupied loans 27  —  —  —  —  27  0.52 
Commercial mortgage nonowner-occupied loans 66  —  —  2  —  68  1.12 
Commercial construction loans 113  —  —  —  —  113  2.01 
Total commercial portfolio loans $ 361  1  56  4  31  453  0.62  %

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 may be 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 delay 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 as of December 31, 2023 of the Bancorp’s residential mortgage loans that were modified for borrowers experiencing financial difficulty, by type of modification during the year ended December 31:
2023 ($ in millions) Total % of Total Class
Payment delay $ 18  0.11  %
Term extension and payment delay 91  0.53 
Term extension, interest rate reduction and payment delay 4  0.02 
Total residential mortgage portfolio loans $ 113  0.66  %

The Bancorp had $3 million of in-process modifications to residential mortgage loans outstanding as of December 31, 2023 which are excluded from the completed modification activity in the tables 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 delay in repayment 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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The following table presents the amortized cost basis as of December 31, 2023 of the Bancorp’s consumer portfolio loans that were modified for borrowers experiencing financial difficulty, by portfolio class and type of modification during the year ended December 31:
2023 ($ in millions) Interest Rate Reduction Payment Delay Interest Rate Reduction and Payment Delay Term Extension and Payment Delay Term Extension, Interest Rate Reduction and Payment Delay Total % of Total Class
Home equity $ 4  1  1  2  8  16  0.41  %
Credit card 27  —  —  —  —  27  1.45 
Other consumer loans —  6  —  —  —  6  0.09 
Total consumer portfolio loans $ 31  7  1  2  8  49  0.18  %

Financial effects of loan modifications
The following table presents the financial effects of the Bancorp’s significant types of portfolio loan modifications to borrowers experiencing financial difficulty, by portfolio class during the year ended December 31, 2023:
Financial Effects
Commercial loans:
Commercial and industrial loans
Weighted-average length of term extensions was 11 months and the amount of payment delays represented approximately 5% of the related loan balances.
Commercial mortgage owner-occupied loans
Weighted-average length of term extensions was 15 months.
Commercial mortgage nonowner-occupied loans
Weighted-average length of term extensions was 16 months.
Commercial construction loans
Weighted-average length of term extensions was 12 months.
Residential mortgage loans
Weighted-average length of term extensions was 155 months and the amount of payment delays represented approximately 17% of the related loan balances.
Consumer loans:
Home equity
Weighted-average length of term extensions was 24.2 years, the weighted-average interest rate reduction was from 8.7% to 7.0% and the amount of payment delays represented approximately 5% of the related loan balances.
Credit card
Weighted-average interest rate reduction was from 23.7% to 3.9%.
Other consumer loans
Amount of payment delays 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, by age and portfolio class during the year ended December 31:
2023 ($ in millions) Past Due
Current 30-89 Days 90 Days or More Total
Commercial loans:
Commercial and industrial loans $ 184  9  52  245 
Commercial mortgage owner-occupied loans 26  —  1  27 
Commercial mortgage nonowner-occupied loans 68  —  —  68 
Commercial construction loans 113  —  —  113 
Residential mortgage loans 86  15  12  113 
Consumer loans:
Home equity 14  2  —  16 
Credit card(a)
 19  5  3  27 
Other consumer loans 6  —  —  6 
Total portfolio loans $ 516  31  68  615 
(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.


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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. The following table presents the amortized cost basis of the modifications to borrowers experiencing financial difficulty that subsequently defaulted during the year ended December 31, 2023 and were within twelve months of the modification date:
($ in millions)(a)
 Amortized Cost Basis
Term Extension Interest Rate Reduction Payment Delay Term Extension and Payment Delay Term Extension, Interest Rate Reduction and Payment Delay Total
Commercial loans:
Commercial and industrial loans $ 51  —  —  —  —  51 
Commercial mortgage owner-occupied loans 1  —  —  —  —  1 
Residential mortgage loans —  —  2  11  1  14 
Consumer loans:
Home equity —  1  —  —  —  1 
Credit card —  10  —  —  —  10 
Total portfolio loans $ 52  11  2  11  1  77 
(a)Excludes loans modified prior to the adoption of ASU 2022-02.

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 for additional information on the Bancorp’s accounting policies for the identification and measurement of TDRs and the related impact on the ALLL for periods prior to January 1, 2023.

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 tables provide a summary of portfolio loans, by class, modified in a TDR by the Bancorp during the years ended December 31:
2022 ($ in millions)
Number of Loans
Modified in a TDR
During the Year(a)
 Amortized Cost Basis of Loans Modified
in a TDR
During the Year		 Increase
(Decrease)
to ALLL Upon
Modification		 Charge-offs
Recognized Upon  
Modification
Commercial loans:
Commercial and industrial loans 89  $ 234  3  9 
Commercial mortgage owner-occupied loans 12  7  —  — 
Commercial mortgage nonowner-occupied loans 7  24  —  — 
Commercial construction loans 3  10  (2) — 
Residential mortgage loans 1,073  163  7  — 
Consumer loans:
Home equity 231  16  (3) — 
Indirect secured consumer loans 3,394  63  2  — 
Credit card 5,282  28  12  — 
Total portfolio loans 10,091  $ 545  19  9 
(a)Represents number of loans post-modification and excludes loans previously modified in a TDR.
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2021 ($ in millions)
Number of Loans
Modified in a TDR
During the Year(a)
 Amortized Cost Basis of Loans Modified
in a TDR
During the Year		 Increase
(Decrease)
to ALLL Upon
Modification		 Charge-offs
Recognized Upon  
Modification
Commercial loans:
Commercial and industrial loans 86  $ 150  1  — 
Commercial mortgage owner-occupied loans 10  8  —  — 
Commercial mortgage nonowner-occupied loans 5  29  —  — 
Commercial construction loans 1  34  —  — 
Residential mortgage loans 519  93  4  — 
Consumer loans:
Home equity 206  10  (3) — 
Indirect secured consumer loans 4,567  96  1  — 
Credit card 5,488  30  9  1 
Total portfolio loans 10,882  $ 450  12  1 
(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 tables provide a summary of TDRs that subsequently defaulted during the years ended December 31, 2022 and 2021 and were within 12 months of the restructuring date:
December 31, 2022 ($ in millions)(a)
 Number of
Contracts		 Amortized
Cost Basis
Commercial loans:
Commercial and industrial loans 8  $ — 
Commercial mortgage owner-occupied loans 2  — 
Commercial mortgage nonowner-occupied loans 1  — 
Commercial construction loans 1  2 
Residential mortgage loans 247  33 
Consumer loans:
Home equity 24  1 
Indirect secured consumer loans 157  3 
Credit card 356  1 
Total portfolio loans 796  $ 40 
(a)Excludes all loans held for sale and loans acquired with deteriorated credit quality which were accounted for within a pool.

December 31, 2021 ($ in millions)(a)
 Number of
Contracts		 Amortized
Cost Basis
Commercial loans:
Commercial and industrial loans 7  $ 1 
Commercial mortgage owner-occupied loans 3  1 
Commercial mortgage nonowner-occupied loans 2  25 
Residential mortgage loans 82  10 
Consumer loans:
Home equity 28  1 
Indirect secured consumer loans 130  2 
Credit card 215  1 
Total portfolio loans 467  $ 41 
(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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7. Bank Premises and Equipment
The following table provides a summary of bank premises and equipment as of December 31:
($ in millions) Estimated Useful Life 2023 2022
Equipment 1 - 20 years $ 2,578  2,492 
Buildings(a)
 1 - 30 years 1,742  1,699 
Leasehold improvements 1 - 30 years 685  568 
Land and improvements(a)
 618  640 
Construction in progress(a)
 180  124 
Bank premises and equipment held for sale:
Land and improvements 15  17 
Buildings 4  7 
Accumulated depreciation and amortization (3,473) (3,360)
Total bank premises and equipment $ 2,349  2,187 
(a)Buildings, land and improvements and construction in progress included $9 and $27 associated with parcels of undeveloped land intended for future branch expansion at December 31, 2023 and 2022, respectively.

Depreciation and amortization expense related to bank premises and equipment, including amortization of finance lease ROU assets, was $292 million, $273 million and $270 million for the years ended December 31, 2023, 2022 and 2021, 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. As a result, the Bancorp transferred certain parcels of land with a carrying value of $23 million to OREO during the year ended December 31, 2023. Impairment losses of $8 million were recorded for the year ended December 31, 2023 upon transfer to OREO. The Bancorp closed a total of 30 banking centers throughout its footprint during the year ended December 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 $2 million, $9 million and $7 million for the years ended December 31, 2023, 2022 and 2021, respectively. The recognized impairment losses were recorded in other noninterest income in the Consolidated Statements of Income.
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8. Operating Lease Equipment
Operating lease equipment was $459 million and $627 million at December 31, 2023 and 2022, respectively, net of accumulated depreciation of $355 million and $338 million at December 31, 2023 and 2022, respectively. The Bancorp recorded lease income of $135 million, $146 million and $152 million relating to lease payments for operating leases in leasing business revenue in the Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021, respectively. Depreciation expense related to operating lease equipment was $110 million, $121 million and $124 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp received payments of $140 million and $147 million related to operating leases during the years ended December 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 recognized an immaterial amount, $2 million and $25 million of impairment losses associated with operating lease assets for the years ended December 31, 2023, 2022 and 2021, respectively. The recognized impairment losses were recorded in leasing business revenue in the Consolidated Statements of Income.

The following table presents future lease payments receivable from operating leases for 2024 through 2028 and thereafter:
As of December 31, 2023 ($ in millions) Undiscounted
Cash Flows
2024 $ 104 
2025 78 
2026 51 
2027 26 
2028 11 
Thereafter 16 
Total operating lease payments $ 286 

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.

The following table provides a summary of lease assets and lease liabilities as of December 31:
($ in millions) Consolidated Balance Sheets Caption 2023 2022
Assets
Operating lease right-of-use assets Other assets $ 511  508 
Finance lease right-of-use assets Bank premises and equipment 126  150 
Total right-of-use assets(a)
 $ 637  658 
Liabilities
Operating lease liabilities Accrued taxes, interest and expenses $ 601  599 
Finance lease liabilities Long-term debt 134  156 
Total lease liabilities $ 735  755 
(a)Operating and finance lease right-of-use assets are recorded net of accumulated amortization of $292 and $77, respectively, as of December 31, 2023, and $255 and $66, respectively, as of December 31, 2022.

The following table presents the components of lease costs for the years ended December 31:
($ in millions) Consolidated Statements of Income Caption 2023 2022 2021
Lease costs:
  Amortization of ROU assets Net occupancy and equipment expense $ 19  19  18 
Interest on lease liabilities Interest on long-term debt 5  5  4 
Total finance lease costs $ 24  24  22 
Operating lease cost Net occupancy expense $ 87  84  80 
Short-term lease cost Net occupancy expense 2  1  2 
Variable lease cost Net occupancy expense 29  28  31 
Sublease income Net occupancy expense (2) (3) (3)
Total operating lease costs $ 116  110  110 
Total lease costs $ 140  134  132 

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 $2 million, $2 million and $3 million of impairment losses and termination charges for the ROU assets related to certain operating leases for the years ended December 31, 2023, 2022 and 2021, respectively.
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The recognized losses were recorded in net occupancy expense in the Consolidated Statements of Income.

The following table presents undiscounted cash flows for both operating leases and finance leases for 2024 through 2028 and thereafter as well as a reconciliation of the undiscounted cash flows to the total lease liabilities:
As of December 31, 2023 ($ in millions) Operating
Leases		 Finance
Leases		 Total
2024 $ 93  20  113 
2025 86  14  100 
2026 77  9  86 
2027 69  8  77 
2028 61  8  69 
Thereafter 369  113  482 
Total undiscounted cash flows $ 755  172  927 
Less: Difference between undiscounted cash flows and discounted cash flows 154  38  192 
Present value of lease liabilities $ 601  134  735 

The following table presents the weighted-average remaining lease term and weighted-average discount rate as of December 31:
2023 2022
Weighted-average remaining lease term (years):
Operating leases 11.07 10.80
Finance leases 15.21 15.31
Weighted-average discount rate:
Operating leases 3.72  % 3.35 
Finance leases 3.02  2.94 

The following table presents information related to lease transactions for the years ended December 31:
($ in millions) 2023 2022 2021
Cash paid for amounts included in the measurement of lease liabilities:(a)
Operating cash flows from operating leases $ 91  90  88 
Operating cash flows from finance leases 5  5  4 
Financing cash flows from finance leases 16  23  16 
Gains on sale-leaseback transactions 2  4  2 
(a)The cash flows related to short-term and variable lease payments are not included in the amounts presented as they were not included in the measurement of lease liabilities.

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10. Goodwill
Business combinations entered into by the Bancorp typically result in the recognition of goodwill. Acquisition activity includes acquisitions in the respective period in addition to purchase accounting adjustments related to previous acquisitions.

The Bancorp completed its annual goodwill impairment test as of September 30, 2023 and the estimated fair values of the Commercial Banking, Consumer and Small Business Banking and Wealth and Asset Management reporting units exceeded their carrying values, including goodwill.

Changes in the net carrying amount of goodwill, by reporting unit, for the years ended December 31, 2023 and 2022 were as follows:
($ in millions) Commercial
Banking		 Consumer and Small Business Banking Wealth and Asset
Management		 General Corporate and Other Total
Goodwill $ 2,730  2,518  231  —  5,479 
Accumulated impairment losses (750) (215) —  —  (965)
Net carrying value as of December 31, 2021 $ 1,980  2,303  231  —  4,514 
Acquisition activity —  440  —  —  440 
Reallocation of goodwill 378  (378) —  —  — 
Sale of businesses (34) —  (5) —  (39)
Net carrying value as of December 31, 2022 2,324  2,365  226  —  4,915 
Acquisition activity —  4  —  —  4 
Net carrying value as of December 31, 2023 $ 2,324  2,369  226  —  4,919 

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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 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 December 31, 2023
Core deposit intangibles $ 209  (184) 25 
Developed technology 106  (33) 73 
Customer relationships 30  (10) 20 
Other 16  (9) 7 
Total intangible assets $ 361  (236) 125 
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 December 31, 2023, all of the Bancorp’s intangible assets were being amortized. Amortization expense recognized on intangible assets was $43 million, $48 million and $47 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp’s projections of amortization expense shown in the following table are based on existing asset balances as of December 31, 2023. Future amortization expense may vary from these projections.

Estimated amortization expense for the years ending December 31, 2024 through 2028 is as follows:
($ in millions) Total
2024 $ 35 
2025 28 
2026 22 
2027 14 
2028 9 

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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 automobile loan securitizations 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 Consolidated Balance Sheets for the consolidated VIEs as of:
($ in millions) December 31,
2023		 December 31,
2022
Assets:
Other short-term investments $ 55  17 
Indirect secured consumer loans 1,535  141 
Other consumer loans 38  44 
ALLL (28) (2)
Other assets 10  2 
Total assets $ 1,610  202 
Liabilities:
Other liabilities $ 14  9 
Long-term debt 1,409  118 
Total liabilities $ 1,423  127 

In a securitization transaction that occurred in August of 2023, the Bancorp transferred $1.74 billion in aggregate automobile loans to a bankruptcy remote trust which was deemed to be a VIE. This trust then issued approximately $1.58 billion of asset-backed notes, of which approximately $79 million were retained by the Bancorp. Refer to Note 17 for more information. The Bancorp had previously completed a securitization transaction in which the Bancorp transferred certain consumer automobile loans to a bankruptcy remote trust which was also deemed to be a VIE. In the first quarter of 2023, the Bancorp exercised its cleanup call option on this automobile securitization that was outstanding as of December 31, 2022. The Bancorp acquired all remaining automobile loans plus accrued interest, and those proceeds were used by the trust to repay the outstanding securitized debt.

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.

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, over-collateralization, excess interest on the loans and the subordination of certain classes of asset-backed securities to other classes.
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Non-consolidated VIEs
The following tables provide a summary of assets and liabilities carried on the 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:
December 31, 2023 ($ in millions) Total Assets Total Liabilities Maximum Exposure
CDC investments $ 2,007  690  2,054 
Private equity investments 230  —  400 
Loans provided to VIEs 4,274  —  6,395 
Lease pool entities 42  —  42 
Solar loan securitizations 9  —  9 

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.

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 Consolidated Balance Sheets, and the liabilities related to unconditional unfunded commitments, which are included in other liabilities in the Consolidated Balance Sheets, are included in the previous tables for all periods presented. Certain CDC investments include undrawn liquidity and lending commitments which are included in the maximum exposure amount but not included in the Consolidated Balance Sheets as these commitments are contingent on future events. 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 December 31, 2023 and 2022, the Bancorp’s CDC investments included $1.6 billion of investments in affordable housing tax credits recognized in other assets in the Consolidated Balance Sheets. The unfunded commitments related to these investments were $684 million and $643 million at December 31, 2023 and 2022, respectively. The unfunded commitments as of December 31, 2023 are expected to be funded from 2024 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 Consolidated Statements of Income related to these investments for the years ended December 31:
Consolidated Statements of Income Caption(a)
 2023 2022 2021
Proportional amortization Applicable income tax expense $ 200  189  163 
Tax credits and other benefits Applicable income tax expense (230) (219) (193)
(a)The Bancorp did not recognize impairment losses resulting from the forfeiture or ineligibility of tax credits or other circumstances during the years ended December 31, 2023, 2022 and 2021.

Private equity investments
The Bancorp invests as a limited partner in private equity investment funds 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 equity investments. The funds finance primarily all of their activities from the partners’ capital contributions and investment returns.
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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 investment funds. 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 Consolidated Balance Sheets, are presented in previous tables. Also, at December 31, 2023 and 2022, the Bancorp’s unfunded commitment amounts to the private equity funds were $170 million and $163 million, respectively. As part of previous commitments, the Bancorp made capital contributions to private equity investments of $47 million and $44 million during the years ended December 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. As of both December 31, 2023 and 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 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 years ended December 31, 2023, 2022 and 2021. 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 Consolidated Statements of Income, for the years ended December 31 is as follows:
($ in millions) 2023 2022 2021
Residential mortgage loan sales(a)
 $ 4,888  13,307  16,900 
Origination fees and gains on loan sales 79  91  285 
Gross mortgage servicing fees 319  310  247 
(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 Consolidated Statements of Income.

The following table presents changes in the servicing rights related to residential mortgage loans for the years ended December 31:
($ in millions) 2023 2022
Balance, beginning of period $ 1,746  1,121 
Servicing rights originated 71  235 
Servicing rights purchased 25  213 
Changes in fair value:
Due to changes in inputs or assumptions(a)
 43  355 
Other changes in fair value(b)
 (148) (178)
Balance, end of period $ 1,737  1,746 
(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 years ended December 31:
($ in millions) 2023 2022 2021
Securities losses, net - non-qualifying hedges on mortgage servicing rights $ —  (2) (2)
Changes in fair value and settlement of free-standing derivatives purchased to economically
    hedge the MSR portfolio(a)
 (43) (363) (123)
MSR fair value adjustment due to changes in inputs or assumptions(a)
 43  355  142 
(a)Included in mortgage banking net revenue in the Consolidated Statements of Income.

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 years ended December 31 were as follows:
2023 2022
Weighted-
Average Life
(in years)		 Prepayment
Speed
(annual)		 OAS    
(bps)    		 Weighted-Average Life
(in years)		 Prepayment
Speed
(annual)		 OAS
(bps)
Fixed-rate 6.6 12.4  % 596 7.6 9.2  % 753
Adjustable-rate 3.0 27.9  774 2.8 29.0  803

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At December 31, 2023 and 2022, the Bancorp serviced $100.8 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 3.72% and 3.59% at December 31, 2023 and 2022, respectively.

At December 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)
 Fair Value Weighted-
Average Life
(in years)		 Prepayment Speed Assumption OAS Assumption
Impact of Adverse Change
on Fair Value		 OAS 
(bps)		 Impact of Adverse 
Change on Fair Value
Rate  10% 20% 50% 10% 20%
Fixed-rate $ 1,732  8.6 5.9  % $ (46) (87) (193) 569 $ (42) (83)
Adjustable-rate 5  5.5 20.3  (1) (1) (2) 1,016 —  — 
(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 Consolidated Balance Sheets while derivative instruments with a negative fair value are reported in other liabilities in the 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 contracts include certain contractual features in which either the Bancorp or the counterparties may be required to provide collateral, typically in the form of cash or securities, as initial margin and to offset changes in the fair value of the derivatives, including changes in the fair value due to credit risk, either of the Bancorp or the counterparty. In measuring the fair value of its derivative contracts, 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.

As of both December 31, 2023 and 2022, the balance of collateral held by the Bancorp for derivative assets was $1.3 billion. 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 $587 million and $1.0 billion were applied to reduce the respective derivative contracts and were also not included in the total amount of collateral held as of December 31, 2023 and 2022, respectively. The credit component negatively impacting the fair value of derivative assets associated with customer accommodation contracts was $7 million and $9 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the balance of collateral posted by the Bancorp, as either initial margin or due to changes in fair value of the related derivative contracts, was $1.1 billion and $913 million, respectively. Additionally, $721 million and $1.0 billion of variation margin payments were applied to the respective derivative contracts to reduce the Bancorp’s derivative liabilities as of December 31, 2023 and 2022, respectively, 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 December 31, 2023 and 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 Consolidated Financial Statements. The posting of collateral has been determined to remove the need for further consideration of 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 Consolidated Financial Statements.
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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 Consolidated Balance Sheets as of:
Fair Value
December 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  —  32 
Total fair value hedges —  32 
Cash flow hedges:
Interest rate floors related to C&I loans 3,000  1  — 
Interest rate swaps related to C&I loans 8,000  2  11 
Interest rate swaps related to C&I loans - forward starting(a)
 6,000  6  1 
Interest rate swaps related to commercial mortgage and commercial construction loans - forward starting(a)
 4,000  1  1 
Total cash flow hedges 10  13 
Total derivatives designated as qualifying hedging instruments 10  45 
Derivatives Not Designated as Qualifying Hedging Instruments:
Free-standing derivatives - risk management and other business purposes:
Interest rate contracts related to MSR portfolio 3,205  81  — 
Forward contracts related to residential mortgage loans measured at fair value(b)
 650  —  5 
Swap associated with the sale of Visa, Inc. Class B Shares 4,178  —  168 
Foreign exchange contracts 190  —  4 
Interest-only strips 39  1  — 
Interest rate contracts for collateral management 5,000  1  1 
Interest rate contracts for LIBOR transition 597  —  — 
Other 30  —  — 
Total free-standing derivatives - risk management and other business purposes 83  178 
Free-standing derivatives - customer accommodation:
Interest rate contracts(c)(d)
 95,079  885  1,162 
Interest rate lock commitments 252  5  — 
Commodity contracts 17,621  1,051  1,018 
TBA securities 27  —  — 
Foreign exchange contracts 37,734  643  596 
Total free-standing derivatives - customer accommodation 2,584  2,776 
Total derivatives not designated as qualifying hedging instruments 2,667  2,954 
Total $ 2,677  2,999 
(a)Forward starting swaps will become effective on various dates between June 2024 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 in addition to certain portfolio residential mortgage loans measured at fair value.
(c)Derivative assets and liabilities are presented net of variation margin of $335 and $58, respectively.
(d)Includes replacement contracts with a notional amount of approximately $675 million which were the result of certain central clearing parties replacing existing LIBOR-based contracts with multiple separate contracts as part of the LIBOR transition.

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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 December 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 December 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 Consolidated Statements of Income in which the corresponding gains or losses are recorded:
For the years ended December 31 ($ in millions) Consolidated Statements of Income Caption 2023 2022 2021
Long-term debt:
Change in fair value of interest rate swaps hedging long-term debt Interest on long-term debt $ 29  (460) (138)
Change in fair value of hedged long-term debt attributable to the risk
being hedged
 Interest on long-term debt (26) 460  138 
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  7 
Change in fair value of hedged available-for-sale debt and other
securities attributable to the risk being hedged
 Interest on securities —  (8) (7)

The following amounts were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges as of December 31:
($ in millions) Consolidated Balance 
Sheets Caption		 2023 2022
Long-term debt:
Carrying amount of the hedged items Long-term debt $ 5,899  5,865 
Cumulative amount of fair value hedging adjustments included in
the carrying amount of the hedged items
 Long-term debt (38) (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 (11) (14)

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 December 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 December 31, 2023, the maximum length of time over which the Bancorp is hedging its exposure to the variability in future cash flows is 97 months.

Reclassified gains and losses on interest rate contracts related to commercial loans are recorded within interest income in the Consolidated Statements of Income. As of December 31, 2023 and 2022, respectively, $372 million and $498 million of net deferred losses, net of tax, on cash flow hedges were recorded in AOCI in the Consolidated Balance Sheets. As of December 31, 2023, $135 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 December 31, 2023.

During both the years ended December 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 (losses) gains recorded in the Consolidated Statements of Income and in the Consolidated Statements of Comprehensive Income relating to derivative instruments designated as cash flow hedges:
For the years ended December 31 ($ in millions) 2023 2022 2021
Amount of pre-tax net losses recognized in OCI $ (171) (1,006) (185)
Amount of pre-tax net (losses) gains reclassified from OCI into net income (334) 99  293 

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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 benchmark rates 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, and certain residential mortgage portfolio loans measured at fair value, 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 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 28 for more information about 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 have moved 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 Consolidated Statements of Income relating to free-standing derivative instruments used for risk management and other business purposes are summarized in the following table:
For the years ended December 31 ($ in millions) Consolidated Statements of Income Caption 2023 2022 2021
Interest rate contracts:
Interest rate contracts related to MSR portfolio Mortgage banking net revenue $ (43) (363) (123)
Forward contracts related to residential mortgage loans measured at fair value Mortgage banking net revenue (7) 3  15 
Interest-only strips Other noninterest income (3) —  — 
Foreign exchange contracts:
Foreign exchange contracts for risk management purposes Other noninterest income (3) 12  (3)
Equity contracts:
Swap associated with sale of Visa, Inc. Class B Shares Other noninterest income (94) (84) (86)

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 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 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 typically 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2023 and 2022, the total notional amount of the risk participation agreements was $3.6 billion and $3.7 billion, respectively, and the fair value was a liability of $6 million and $7 million, respectively, which is included in other liabilities in the Consolidated Balance Sheets. As of December 31, 2023, the risk participation agreements had a weighted-average remaining life of 2.8 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 December 31:
($ in millions) 2023 2022
Pass $ 3,168  3,597 
Special mention 323  81 
Substandard 72  32 
Total $ 3,563  3,710 

The net gains (losses) recorded in the Consolidated Statements of Income relating to free-standing derivative instruments used for customer accommodation are summarized in the following table:
For the years ended December 31 ($ in millions) Consolidated Statements of Income Caption 2023 2022 2021
Interest rate contracts:
Interest rate contracts for customers (contract revenue) Commercial banking revenue $ 35  48  38 
Interest rate contracts for customers (credit portion of fair value adjustment) Other noninterest expense (2) 10  21 
Interest rate lock commitments Mortgage banking net revenue 52  16  149 
Commodity contracts:
Commodity contracts for customers (contract revenue) Commercial banking revenue 36  44  23 
Commodity contracts for customers (credit losses) Other noninterest expense —  —  (1)
Foreign exchange contracts:
Foreign exchange contracts for customers (contract revenue) Commercial banking revenue 89  70  61 
Foreign exchange contracts for customers (contract revenue) Other noninterest expense (14) 8  2 
Foreign exchange contracts for customers (credit portion of fair value adjustment) Other noninterest expense 4  (3) — 

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 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides a summary of offsetting derivative financial instruments:
Gross Amount Recognized in the Consolidated Balance Sheets(a)
 Gross Amounts Not Offset in the
Consolidated Balance Sheets
Derivatives
Collateral(b)
 Net Amount
As of December 31, 2023
Derivative assets $ 2,672  (1,031) (877) 764 
Derivative liabilities 2,999  (1,031) (159) 1,809 
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 Consolidated Balance Sheets were excluded from this table.

15. Other Assets
The following table provides the components of other assets included in the Consolidated Balance Sheets as of December 31:
($ in millions) 2023 2022
Derivative instruments $ 2,677  3,173 
Partnership investments 2,326  2,153 
Bank owned life insurance 2,103  2,056 
Accounts receivable and drafts-in-process 2,007  2,579 
Deferred tax assets 1,438  1,553 
Accrued interest and fees receivable 797  703 
Operating lease right-of-use assets 511  508 
Income tax receivable 187  74 
Prepaid expenses 143  145 
OREO and other repossessed property 39  24 
Worldpay, Inc. TRA receivable 35  183 
Other 275  308 
Total other assets $ 12,538  13,459 

In conjunction with Worldpay, Inc.’s IPO in 2012, the Bancorp entered into two TRAs with Worldpay, Inc. The TRAs provide for payments by Worldpay, Inc. to the Bancorp of 85% of the cash savings actually realized as a result of the increase in tax basis that results from the historical or future purchase of equity in Worldpay Holding, LLC from the Bancorp or from the exchange of equity units in Worldpay Holding, LLC for cash or Class A Stock, as well as any tax benefits attributable to payments made under the TRA.

During the fourth quarter of 2019, the Bancorp entered into an agreement with Fidelity National Information Services, Inc. and Worldpay, Inc. under which Worldpay, Inc. was potentially obligated to pay up to approximately $366 million to the Bancorp to terminate and settle a portion of the remaining TRA cash flows, totaling an estimated $720 million, upon the exercise of certain call options by Worldpay, Inc. or certain put options by the Bancorp. In 2019, the Bancorp recognized a gain of approximately $345 million in other noninterest income associated with these options. The Worldpay, Inc. TRA receivable associated with this transaction, recorded in other assets in the Consolidated Balance Sheets, was $35 million and $183 million as of December 31, 2023 and 2022, respectively. Subsequent to December 31, 2023, the Bancorp received cash from Worldpay, Inc. to settle the receivable that had been recorded as of December 31, 2023 for the remaining put and call options. Neither the Bancorp nor Worldpay, Inc. have any significant remaining rights or obligations under this agreement.

Separate from the impact of the TRA settlement agreement discussed above, the Bancorp recognized $22 million, $46 million and $46 million in other noninterest income in the Consolidated Statements of Income associated with the TRA during the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp expects to receive approximately $10 million of future payments through 2025 under the TRA that are not subject to the call or put options. These remaining cash flows will be recognized in future periods when the related uncertainties are resolved.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Short-Term Borrowings
Borrowings with original maturities of one year or less are classified as short-term and include federal funds purchased and other short-term borrowings. Federal funds purchased are excess balances in reserve accounts held at the FRB that the Bancorp purchased from other member banks on an overnight basis. Other short-term borrowings may include FHLB advances, securities sold under repurchase agreements, derivative collateral and other borrowings with original maturities of one year or less.

The following table summarizes short-term borrowings and weighted-average rates:
2023 2022
($ in millions) Amount Rate       Amount Rate        
As of December 31:
Federal funds purchased $ 193  5.31  % $ 180  4.22  %
Other short-term borrowings 2,861  5.21  4,838  3.75 
Average for the years ended December 31:
Federal funds purchased $ 307  4.96  % $ 381  1.69  %
Other short-term borrowings 5,044  4.90  4,544  2.39 
Maximum month-end balance for the years ended December 31:
Federal funds purchased $ 1,143  $ 1,312 
Other short-term borrowings 7,423  8,606 

The following table presents a summary of the Bancorp’s other short-term borrowings as of December 31:
($ in millions) 2023 2022
FHLB advances $ 2,500  4,300 
Securities sold under repurchase agreements 330  388 
Derivative collateral 3  124 
Other borrowed money 28  26 
Total other short-term borrowings $ 2,861  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 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 December 31, 2023 and 2022, all securities sold under repurchase agreements were secured by agency mortgage-backed securities and the repurchase agreements had an overnight remaining contractual maturity.

The Bancorp’s other borrowed money at December 31, 2023 primarily included obligations recognized by the Bancorp under ASC Topic 860 related to certain loans sold to GNMA and serviced by the Bancorp. Under ASC Topic 860, once the Bancorp has the unilateral right to repurchase the GNMA loans due to the borrower missing three consecutive payments, the Bancorp is considered to have regained effective control over the loan. As such, the Bancorp is required to recognize both the loan and the repurchase liability, regardless of the intent to repurchase the loans. 


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Long-Term Debt
The following table is a summary of the Bancorp’s long-term borrowings at December 31:
($ in millions) Maturity Interest Rate 2023 2022
Parent Company
Senior:
Fixed-rate notes 2023 1.625% $ —  500 
Fixed-rate notes 2024 3.65% 1,500  1,498 
Fixed-rate notes 2025 2.375% 749  748 
Fixed-rate notes 2027 2.55% 748  747 
Fixed-rate/floating-rate notes(c)
 2027 1.707% 461  448 
Fixed-rate notes 2028 3.95% 648  648 
Fixed-rate/floating-rate notes(c)
 2028 4.055% 386  381 
Fixed-rate/floating-rate notes(c)
 2028 6.361% 1,013  1,012 
Fixed-rate/floating-rate notes(c)
 2029 6.339% 1,245  — 
Fixed-rate/floating-rate notes(c)
 2030 4.772% 944  936 
Fixed-rate/floating-rate notes(c)
 2033 4.337% 561  556 
Subordinated:(a)
Fixed-rate notes 2024 4.30% 750  749 
Fixed-rate notes 2038 8.25% 1,103  1,108 
Subsidiaries
Senior:
Fixed-rate notes 2023 1.80% —  650 
Fixed-rate notes 2025 3.95% 727  723 
Fixed-rate/floating-rate notes(c)
 2025 5.852% 996  999 
Fixed-rate notes 2027 2.25% 599  599 
Subordinated:(a)
Fixed-rate notes 2026 3.85% 749  749 
Fixed-rate notes 2027 4.00% —  173 
Junior subordinated:
 Floating-rate debentures(a)(b)
 2035 7.07% - 7.34% 54  53 
FHLB advances(d)
 2024 - 2047 5.62% 1,510  21 
Notes associated with consolidated VIEs:
Automobile loan securitization, fixed-rate notes 2024 - 2031 5.52% - 5.87% 1,305  75 
Solar loan securitization, fixed-rate notes 2038 4.05% ‘- 7.00% 35  39 
Other 2024 - 2052 Varies 297  302 
Total $ 16,380  13,714 
(a)In aggregate, $1.5 billion and $1.9 billion qualifies as Tier 2 capital for regulatory capital purposes for the years ended December 31, 2023 and 2022, respectively.
(b)These rates reflect the floating rates as of December 31, 2023.
(c)This rate reflects the fixed rate in effect as of December 31, 2023.
(d)This rate reflects the weighted-average rate as of December 31, 2023.

The Bancorp pays down long-term debt in accordance with contractual terms over maturity periods summarized in the previous table. The aggregate annual maturities of long-term debt obligations (based on final maturity dates) as of December 31, 2023 are presented in the following table:
($ in millions) Parent Company Subsidiaries Total
2024 $ 2,250  1,576  3,826 
2025 749  1,757  2,506 
2026 —  1,352  1,352 
2027 1,209  614  1,823 
2028 2,047  587  2,634 
Thereafter 3,853  386  4,239 
Total $ 10,108  6,272  16,380 

At December 31, 2023, the Bancorp’s long-term borrowings consisted of outstanding principal balances of $16.5 billion, net discounts of $14 million, debt issuance costs of $32 million and reductions for mark-to-market adjustments on its hedged debt of $38 million. At December 31, 2022, the Bancorp’s long-term borrowings consisted of outstanding principal balances of $13.8 billion, net discounts of $19 million, debt issuance costs of $32 million and reductions for mark-to-market adjustments on its hedged debt of $64 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Bancorp was in compliance with all debt covenants at December 31, 2023 and 2022.

For further information on a subsequent event related to long-term debt, refer to Note 32.

Parent Company Long-Term Borrowings
Senior notes
On March 14, 2018, the Bancorp issued and sold $650 million of senior notes to third-party investors. The senior notes bear a fixed-rate of interest of 3.95% per annum. The notes are unsecured, senior obligations of the Bancorp. Payment of the full principal amounts of the notes is due upon maturity on March 14, 2028. These fixed-rate senior notes will be redeemable by the Bancorp, in whole or in part, on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.

On January 25, 2019, the Bancorp issued and sold $1.5 billion of senior notes to third-party investors. The senior notes bore a fixed-rate of interest of 3.65% per annum. The notes were unsecured, senior obligations of the Bancorp. These notes were outstanding at December 31, 2023 and subsequently matured on January 25, 2024.

On October 28, 2019, the Bancorp issued and sold $750 million of senior notes to third-party investors. The senior notes bear a fixed-rate of interest of 2.375% per annum. The notes are unsecured, senior obligations of the Bancorp. Payment of the full principal amounts of the notes is due upon maturity on January 28, 2025. These notes will be redeemable at the Bancorp’s option, in whole or in part, at any time or from time to time, on or after April 25, 2020, and prior to December 29, 2024, in each case at a redemption price, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date, equal to the greater of (i) 100% of the aggregate principal amount of the notes being redeemed on that redemption date; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed that would be due if the notes to be redeemed matured on December 29, 2024 discounted to the redemption date on a semi-annual basis at the applicable treasury rate plus 15 bps. Additionally, these notes will be redeemable by the Bancorp, in whole or in part, on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.

On May 5, 2020, the Bancorp issued and sold $750 million of 2.55% senior fixed-rate notes, with a maturity of seven years, due on May 5, 2027. The notes will be redeemable on or after April 5, 2027, in whole or in part, at any time and from time to time, at the Bancorp’s option at a redemption price equal to 100% of the aggregate principal amount of the senior fixed-rate notes being redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. Additionally, the notes will be redeemable at the Bancorp’s option, in whole or in part, at any time or from time to time, on or after November 2, 2020, and prior to April 5, 2027, in each case at a redemption price, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date, equal to the greater of: (a) 100% of the aggregate principal amount of the senior fixed-rate notes being redeemed on that redemption date; and (b) the sum of the present values of the remaining scheduled payments of principal and interest on the senior fixed-rate notes being redeemed that would be due if the senior fixed-rate notes to be redeemed matured on April 5, 2027 (not including any portion of such payments of interest accrued to the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus 35 bps.

On November 1, 2021, the Bancorp issued and sold $500 million of fixed-rate/floating-rate senior notes which will mature on November 1, 2027. The senior notes bear a fixed rate of interest of 1.707% per annum to, but excluding, November 1, 2026. From, and including, November 1, 2026 until, but excluding, November 1, 2027, the senior notes will have an interest rate of compounded SOFR plus 0.685%. The Bancorp entered into an interest rate swap designated as a fair value hedge to convert the fixed-rate period of the notes to a floating rate of compounded SOFR plus 69 bps, and the Bancorp paid a rate of 6.05% at December 31, 2023. The notes will be redeemable in whole, but not in part, by the Bancorp on November 1, 2026, the date that is one year prior to the maturity date, at a redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. In addition, the notes will be redeemable, in whole or in part, by the Bancorp on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date.

On April 25, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes. $400 million of the notes will bear interest at a rate of 4.055% per annum to, but excluding, April 25, 2027, followed by an interest rate of compounded SOFR plus 1.355% until maturity on April 25, 2028. The remaining $600 million of the notes will bear interest at a rate of 4.337% per annum to, but excluding, April 25, 2032, followed by an interest rate of compounded SOFR plus 1.660% until maturity on April 25, 2033. The Bancorp entered into interest rate swaps designated as fair value hedges to convert the fixed-rate periods of the notes to a floating rate of compounded SOFR plus 1.357% and a floating rate of compounded SOFR plus 1.666% for the notes due April 25, 2028 and the notes due April 25, 2033, respectively. The Bancorp paid rates on these swaps of 6.70% and 7.00%, respectively, at December 31, 2023. Each tranche of notes is redeemable in whole at par plus accrued and unpaid interest one year prior to its maturity date, or may be wholly or partially redeemed 30 days or 90 days prior to maturity for the 2028 notes and the 2033 notes, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On July 28, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on July 28, 2030. The senior notes bear interest at a rate of 4.772% per annum to, but excluding, July 28, 2029. From, and including July 28, 2029 until, but excluding July 28, 2030, the senior notes will bear interest at a rate of compounded SOFR plus 2.127%. The Bancorp entered into interest rate swaps designated as fair value hedges to convert the fixed-rate period of the notes to a floating rate of compounded SOFR plus 2.132%, and the Bancorp paid a rate of 7.47% at December 31, 2023. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed 60 days prior to maturity.

On October 27, 2022, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on October 27, 2028. The senior notes will bear interest at a rate of 6.361% per annum to, but excluding, October 27, 2027. From, and including October 27, 2027 until, but excluding October 27, 2028, the senior notes will bear interest at a rate of compounded SOFR plus 2.192%. The Bancorp entered into an interest rate swap designated as a fair value hedge to convert the fixed-rate period of the notes to a floating rate of compounded SOFR plus 2.193%, and the Bancorp paid a rate of 7.53% at December 31, 2023. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days prior to maturity. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue date and prior to October 27, 2027, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the discounted present value of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on October 27, 2027.

On July 27, 2023, the Bancorp issued and sold $1.25 billion of fixed-rate/floating-rate senior notes which will mature on July 27, 2029. The senior notes bear interest at a rate of 6.339% per annum to, but excluding, July 27, 2028. From, and including, July 27, 2028 until, but excluding, July 27, 2029, the senior notes will bear interest at a rate of compounded SOFR plus 2.340%. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days prior to maturity. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue date and prior to July 27, 2028, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the discounted present value of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on July 27, 2028.

Subordinated debt
The Bancorp has entered into interest rate swaps to convert part of its subordinated fixed-rate notes due in 2038 to a floating rate. Of the $1.0 billion in 8.25% subordinated fixed-rate notes due in 2038, the Bancorp entered into an interest rate swap designated as a fair value hedge to convert $705 million of the notes to a floating rate of compounded SOFR plus 3.31%, and the Bancorp paid a rate of 8.66% on the hedged portion of these notes at December 31, 2023.

On November 20, 2013, the Bancorp issued and sold $750 million of 4.30% unsecured subordinated fixed-rate notes which were outstanding at December 31, 2023 and subsequently matured on January 16, 2024.

Subsidiary Long-Term Borrowings
Senior and subordinated debt
Medium-term senior notes and subordinated bank notes with maturities ranging from one year to 30 years can be issued by the Bancorp’s banking subsidiary. Under the Bancorp’s banking subsidiary’s global bank note program, the Bank’s capacity to issue its senior and subordinated unsecured bank notes is $25.0 billion. As of December 31, 2023, $20.9 billion was available for future issuance under the global bank note program.

On March 15, 2016, the Bank issued and sold, under its bank notes program, $750 million of 3.85% subordinated fixed-rate notes due on March 15, 2026. These bank notes will be redeemable by the Bank, in whole or in part, on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.

On July 26, 2018, the Bank issued and sold, under its bank notes program, $750 million of 3.95% senior fixed-rate notes due on July 28, 2025. The Bank entered into interest rate swaps designated as fair value hedges to convert these fixed-rate notes to a floating rate of compounded SOFR plus 1.16%, and the Bancorp paid a rate of 6.50% at December 31, 2023. These bank notes will be redeemable by the Bank, in whole or in part, on or after the date that is 30 days prior to the maturity date at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.
On January 31, 2020, the Bank issued and sold, under its bank notes program, $600 million of 2.25% senior fixed-rate notes, with a maturity of seven years, due on February 1, 2027. The notes will be redeemable at the Bank’s option, in whole or in part, at any time or from time to time, on or after July 31, 2020, and prior to January 4, 2027, at a redemption price, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date, equal to the greater of: (a) 100% of the aggregate principal amount of the notes being redeemed on that redemption date; and (b) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed that would be due if the notes to be redeemed matured on January 4, 2027 (not including any portion of such payments of interest accrued to the redemption date) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Rate plus the Applicable Spread for the Notes to be redeemed.
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Additionally, on or after January 4, 2027, the notes will also be redeemable, in whole or in part, at any time and from time to time, at the Bank’s option at a redemption price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date.

On October 27, 2022, under its bank notes program, the Bank issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on October 27, 2025. The senior notes will bear interest at a rate of 5.852% per annum to, but excluding, October 27, 2024. From, and including October 27, 2024 until, but excluding October 27, 2025, the senior notes will bear interest at a rate of compounded SOFR plus 1.230%. The Bank entered into an interest rate swap designated as a fair value hedge to convert the fixed-rate period of the notes to a floating rate of compounded SOFR plus 1.218%, and the Bank paid a rate of 6.56% at December 31, 2023. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 30 days prior to maturity.

Junior subordinated debt
The junior subordinated floating-rate debentures due in 2035 were assumed by the Bancorp’s direct nonbank subsidiary holding company as part of the acquisition of First Charter in June 2008. The obligation was issued to First Charter Capital Trust I and II. The Bancorp’s nonbank subsidiary holding company has fully and unconditionally guaranteed all obligations under the acquired TruPS issued by First Charter Capital Trust I and II.

In June 2023, the outstanding floating-rate capital securities issued by First Charter Capital Trust I and II that used three-month U.S. dollar LIBOR as its reference rate transitioned to a replacement reference rate after June 30, 2023. The replacement reference rate is three-month CME Term SOFR plus a tenor spread adjustment of 0.26161%. Dividends and interest began accruing based on the replacement reference rate on September 15, 2023 with the first payment date of SOFR-based interest occurring on December 15, 2023. Likewise, the aforementioned subordinated floating-rate debentures have undergone the same transition as the floating-rate capital securities. Refer to Note 1 for additional information regarding this transition.

FHLB advances
At December 31, 2023, FHLB advances have a weighted-average rate of 5.62%, with interest payable monthly. The Bancorp has pledged $30.3 billion of loans and securities to secure its borrowing capacity at the FHLB which is partially utilized to fund $1.5 billion in FHLB advances that are outstanding. The FHLB advances mature as follows: $1.5 billion in 2024, $4 million in 2025 and $6 million after 2028.

Notes associated with consolidated VIEs
As discussed in Note 12, the Bancorp was determined to be the primary beneficiary of various VIEs associated with certain automobile and solar loan securitizations, including an automobile loan securitization transaction that occurred in August of 2023. Third-party holders of this debt do not have recourse to the general assets of the Bancorp. Approximately $1.3 billion of outstanding notes related to these VIEs were included in long-term debt in the Consolidated Balance Sheets as of December 31, 2023. The notes mature as follows: $70 million in 2024, $587 million in 2026, $550 million in 2028 and $133 million thereafter.
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18. 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 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 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 December 31:
($ in millions) 2023 2022
Commitments to extend credit $ 81,570  83,437 
Letters of credit 2,095  2,009 
Forward contracts related to residential mortgage loans measured at fair value 650  1,869 
Capital commitments for private equity investments 170  163 
Capital expenditures 95  94 
Purchase obligations 69  113 

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 December 31, 2023 and 2022, the Bancorp had a reserve for unfunded commitments, including letters of credit, totaling $166 million and $216 million, respectively, included in other liabilities in the 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 December 31:
($ in millions) 2023 2022
Pass $ 79,593  81,345 
Special mention 1,301  976 
Substandard 676  1,116 
Total commitments to extend credit $ 81,570  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 December 31, 2023:
($ in millions)
Less than 1 year(a)
 $ 713 
1 - 5 years(a)
 1,373 
Over 5 years 9 
Total letters of credit $ 2,095 
(a)Includes $7 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 December 31, 2023 and 2022 and are considered guarantees in accordance with U.S. GAAP. Approximately 72% and 67% of the total standby letters of credit were collateralized as of December 31, 2023 and 2022, respectively. 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 $20 million and $22 million at December 31, 2023 and 2022, respectively. 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 December 31:
($ in millions) 2023 2022
Pass $ 1,902  1,827 
Special mention 81  47 
Substandard 112  135 
Total letters of credit $ 2,095  2,009 

At December 31, 2023 and 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 December 31, 2023 and 2022, total VRDNs, of which FTS was the remarketing agent for all, were $400 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 $83 million and $102 million of the VRDNs remarketed by FTS at December 31, 2023 and 2022, respectively. These letters of credit are included in the total letters of credit balance provided in the previous tables. The Bancorp held $6 million and $3 million of these VRDNs in its portfolio and classified them as trading debt securities at December 31, 2023 and 2022, respectively.

Forward contracts related to residential mortgage loans measured at fair value
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, and certain residential mortgage portfolio loans measured at fair value, 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 19 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.

As of December 31, 2023 and 2022, the Bancorp maintained reserves related to loans sold with representation and warranty provisions totaling $7 million and $9 million, respectively, included in other liabilities in the 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 December 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 $10 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 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 years ended December 31, 2023 and 2022, the Bancorp paid an immaterial amount in the form of make-whole payments and repurchased $54 million and $63 million, respectively, in outstanding principal of loans to satisfy investor demands. Total repurchase demand requests during the years ended December 31, 2023 and 2022 were $89 million and $104 million, respectively.
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Total outstanding repurchase demand inventory was $8 million and $25 million at December 31, 2023 and 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 $6 million and $14 million at December 31, 2023 and 2022, respectively. 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 December 31, 2023 and 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 were 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 28 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 December 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 $168 million and $195 million at December 31, 2023 and 2022, respectively. Refer to Note 14 and Note 28 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 
Q2 2023 500  21 
Q3 2023 150  6 
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19. 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 18 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 18 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. Both parties have filed post-trial motions related to the jury verdict, which are currently pending before the trial court.

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, 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. On September 26, 2023, the trial court entered an order on Fifth Third’s motion to dismiss, holding certain constitutional questions in abeyance pending determination by the United States Supreme Court, and granting Fifth Third’s motion to the extent it argued that the CFPB could not pursue Consumer Protection Act violations occurring prior to July 21, 2011. The court denied Fifth Third’s motion as to all other issues, and the case is currently in discovery. No trial date has been set.

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Shareholder Litigation
On January 27, 2022, a shareholder filed a derivative lawsuit seeking monetary damages on behalf of the Bancorp alleging claims for breach of fiduciary duty, unjust enrichment and indemnification against various officers and directors relating to an alleged improper cross-selling strategy in the Hamilton County, Ohio Court of Common Pleas styled as The City of Miami Firefighters’ and Police Officers’ Retirement Trust v. Carmichael, et al., Case No. A2200330. On August 29, 2023, the trial court granted defendants’ motion to dismiss. That case is now on appeal.

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 in discovery, and no trial date has been set.

Record-Keeping Investigations
The Commodity Futures Trading Commission is conducting an investigation into the Bancorp’s registered swap dealer concerning compliance with certain record-keeping requirements for business-related electronic communications.

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, Fifth Third Bank, National Association is currently cooperating with investigations related to several civil investigative demands by a number of state attorneys general regarding the residential solar installation industry and lending practices of credit providers to this market, which includes Dividend Solar Finance, LLC, which the Bank acquired in May 2022. Among these are investigations related to multiple lenders by a coalition of 17 state attorneys general relating to the Chapter 7 bankruptcy filing of one such installer, Power Home Solar, LLC, dba Pink Energy. Dividend Solar Finance, LLC financed installations of Power Home Solar, LLC customers in 11 of the 17 states represented by the coalition. 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 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.
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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 $107 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.

20. Related Party Transactions
The Bancorp maintains written policies and procedures covering related party transactions with principal shareholders, directors and executives of the Bancorp. These policies and procedures cover transactions such as employee-stock purchase loans, personal lines of credit, residential secured loans, overdrafts, letters of credit and increases in indebtedness. Such transactions are subject to the Bancorp’s normal underwriting and approval procedures. Prior to approving a loan to a related party, Compliance Risk Management must review and determine whether the transaction requires approval from or a post notification to the Bancorp’s Board of Directors. At December 31, 2023 and 2022, certain directors, executive officers, principal holders of Bancorp common stock and their related interests were indebted, including undrawn commitments to lend, to the Bancorp’s banking subsidiary.

The following table summarizes the Bancorp’s lending activities with its principal shareholders, directors, executives and their related interests at December 31:
($ in millions) 2023 2022
Commitments to lend, net of participations:
Directors and their affiliated companies $ 165  183 
Executive officers 3  5 
Total $ 168  188 
Outstanding balance on loans, net of participations and undrawn commitments $ 111  85 

The commitments to lend are in the form of loans and guarantees for various business and personal interests. This indebtedness was incurred in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties. This indebtedness does not involve more than the normal risk of repayment or present other features unfavorable to the Bancorp.

Coforge Business Process Solutions Private Limited
As of December 31, 2023, the Bancorp owns 100% of Fifth Third Mauritius Holdings Limited, which owns 20% of Coforge Business Process Solutions Private Limited (formerly known as SLK Global Solutions Private Limited), and accounts for this investment under the equity method of accounting. During the second quarter of 2021, Coforge Limited acquired a controlling interest in SLK Global Solutions Private Limited. As part of this transaction, the Bancorp sold a 9% interest in SLK Global Solutions Private Limited to Coforge Limited and recognized a gain of $12 million as a result of the transaction. Additionally, during the second quarter of 2023, the Bancorp sold a 20% interest in Coforge Business Process Solutions Private Limited and recognized a gain of $34 million as a result of the transaction. The Bancorp recognized $3 million, $7 million and $3 million in other noninterest income in the Consolidated Statements of Income as part of its equity method investment in Coforge Business Process Solutions Private Limited for the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp received cash distributions of $4 million, $9 million and $5 million during the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp’s investment in Coforge Business Process Solutions Private Limited was $8 million and $17 million at December 31, 2023 and 2022, respectively. The Bancorp paid Coforge Business Process Solutions Private Limited $41 million, $26 million and $21 million for their process and software services during the years ended December 31, 2023, 2022 and 2021, respectively, which are included in other noninterest expense in the Consolidated Statements of Income.

CDC investments
The Bancorp holds equity investments in non-consolidated VIEs related to CDC. The Bancorp had loans outstanding to these VIEs of $6 million and $10 million at December 31, 2023 and 2022, respectively, as well as unfunded commitment balances of $12 million and $16 million at December 31, 2023 and 2022, respectively. The Bancorp also held $83 million and $73 million of deposits for these entities at December 31, 2023 and 2022, respectively. For further information on CDC investments, refer to Note 12.
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21. Income Taxes
The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes included in the Consolidated Statements of Income for the years ended December 31:
($ in millions) 2023 2022 2021
Current income tax expense:
U.S. Federal income taxes $ 647  570  657 
State and local income taxes 96  126  102 
Foreign income taxes 2  11  2 
Total current income tax expense 745  707  761 
Deferred income tax (benefit) expense:
U.S. Federal income taxes (81) (31) (21)
State and local income taxes (23) (29) 8 
Foreign income taxes (2) —  (1)
Total deferred income tax benefit (106) (60) (14)
Applicable income tax expense $ 639  647  747 

The current U.S. Federal income taxes above include proportional amortization for qualifying LIHTC investments of $200 million, $189 million and $163 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended December 31:
2023 2022 2021
Statutory tax rate 21.0  % 21.0  21.0 
Increase (decrease) resulting from:
State taxes, net of federal benefit 1.9  2.5  2.5 
Tax-exempt income (0.8) (0.8) (0.6)
LIHTC investment and other tax benefits (7.7) (7.1) (5.5)
LIHTC investment proportional amortization 6.7  6.1  4.6 
Other tax credits (0.7) (0.4) (0.2)
Other, net 1.0  (0.3) (0.6)
Effective tax rate 21.4  % 21.0  21.2 

Other tax credits in the rate reconciliation table include New Markets, Rehabilitation Investment, Increasing Research Activities and Qualified Zone Academy Bond tax credits. Tax-exempt income in the rate reconciliation table includes interest on municipal bonds, interest on tax-exempt lending and income on life insurance policies held by the Bancorp.

The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:
($ in millions) 2023 2022 2021
Unrecognized tax benefits at January 1 $ 94  102  100 
Gross increases for tax positions taken during prior period 14  3  10 
Gross decreases for tax positions taken during prior period (5) (5) (4)
Gross increases for tax positions taken during current period 15  11  11 
Settlements with taxing authorities (1) —  — 
Lapse of applicable statute of limitations (20) (17) (15)
Unrecognized tax benefits at December 31(a)
 $ 97  94  102 
(a)All amounts represent unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

The Bancorp’s unrecognized tax benefits as of December 31, 2023, 2022 and 2021 primarily related to state income tax exposures from taking tax positions where the Bancorp believes it is likely that, upon examination, a state would take a position contrary to the position taken by the Bancorp.

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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Deferred income taxes are comprised of the following items at December 31:
($ in millions) 2023 2022
Deferred tax assets:
Other comprehensive income $ 1,395  $ 1,595 
Allowance for loan and lease losses 488  461 
Loan origination fees and costs 195  95 
Deferred compensation 114  105 
State deferred taxes 43  20 
Reserves for unfunded commitments 35  45 
Reserves 33  34 
Federal net operating loss carryforwards 19  31 
State net operating loss carryforwards 11  14 
Other 135  136 
Total deferred tax assets $ 2,468  $ 2,536 
Deferred tax liabilities:
Lease financing $ 551  $ 561 
MSRs and related economic hedges 141  120 
Goodwill and intangible assets 70  78 
Bank premises and equipment 68  66 
Investments in joint ventures and partnership interests 58  61 
Other 143  101 
Total deferred tax liabilities $ 1,031  $ 987 
Total net deferred tax asset $ 1,437  $ 1,549 

At December 31, 2023 and 2022, the Bancorp’s deferred income taxes included deferred tax assets of $11 million and $14 million, respectively, related to state net operating loss carryforwards. The deferred tax assets relating to state net operating losses are presented net of specific valuation allowances of $5 million at both December 31, 2023 and 2022. If these carryforwards are not utilized, they will expire in varying amounts through 2043.

The Bancorp has determined that a valuation allowance is not needed against the remaining deferred tax assets as of December 31, 2023 or 2022. The Bancorp considered all of the positive and negative evidence available to determine whether it is more likely than not that the deferred tax assets will ultimately be realized and, based upon that evidence, the Bancorp believes it is more likely than not that the deferred tax assets recorded at December 31, 2023 and 2022 will ultimately be realized. The Bancorp reached this conclusion as it is expected that the Bancorp’s remaining deferred tax assets will be realized through the reversal of its existing taxable temporary differences, its projected future taxable income and tax-planning strategies.

The statute of limitations for the Bancorp’s federal income tax returns remains open for tax years 2019 through 2023. On occasion, as various state and local taxing jurisdictions examine the returns of the Bancorp and its subsidiaries, the Bancorp may agree to extend the statute of limitations for a reasonable period of time. Otherwise, the statutes of limitations for state income tax returns remain open only for tax years in accordance with each state’s statutes.

Any interest and penalties incurred in connection with income taxes are recorded as a component of applicable income tax expense in the Consolidated Financial Statements. During the years ended December 31, 2023, 2022 and 2021, the Bancorp recognized $2 million, $1 million and $1 million, respectively, of interest expense in connection with income taxes. At December 31, 2023 and 2022, the Bancorp had accrued interest liabilities, net of the related tax benefits, of $10 million and $8 million, respectively. No material liabilities were recorded for penalties related to income taxes.

Retained earnings at both December 31, 2023 and 2022 included $157 million in allocations of earnings for bad debt deductions of former thrift subsidiaries for which no income tax has been provided. Under current tax law, if certain of the Bancorp’s subsidiaries use these bad debt reserves for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the current corporate tax rate.


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22. Retirement and Benefit Plans
The Bancorp’s qualified defined benefit plan’s benefits were frozen in 1998, except for grandfathered employees. The Bancorp’s other defined benefit retirement plans consist of non-qualified plans which are frozen and funded on an as-needed basis. A majority of these plans were obtained in acquisitions and are included with the qualified defined benefit plan in the following tables (“the Plan”). The Bancorp recognizes the overfunded or underfunded status of the Plan in other assets and accrued taxes, interest and expenses, respectively, in the Consolidated Balance Sheets.

The following table summarizes the defined benefit retirement plans as of and for the years ended December 31:
($ in millions)
 2023 2022
Fair value of plan assets at January 1 $ 109  152 
Actual return on assets 5  (27)
Contributions 2  2 
Settlement (7) (11)
Benefits paid (7) (7)
Fair value of plan assets at December 31 $ 102  109 
Projected benefit obligation at January 1 $ 120  176 
Interest cost 6  5 
Settlement (7) (11)
Actuarial loss (gain) 1  (43)
Benefits paid (7) (7)
Projected benefit obligation at December 31 $ 113  120 
Underfunded projected benefit obligation at December 31 $ (11) (11)
Accumulated benefit obligation at December 31(a)
 $ 113  120 
(a)Since the Plan’s benefits are frozen, the rate of compensation increase is no longer an assumption used to calculate the accumulated benefit obligation. Therefore, the accumulated benefit obligation was the same as the projected benefit obligation at both December 31, 2023 and 2022.

The following table summarizes net periodic benefit cost and other changes in the Plan’s assets and benefit obligations recognized in OCI for the years ended December 31:
($ in millions) 2023 2022 2021
Components of net periodic benefit cost:
Interest cost $ 6  5  4 
Expected return on assets (5) (4) (4)
Amortization of net actuarial loss 2  3  6 
Settlement 2  3  3 
Net periodic benefit cost $ 5  7  9 
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain) $ 1  (11) (5)
Amortization of net actuarial loss (2) (3) (6)
Settlement (2) (3) (3)
Total recognized in other comprehensive income (3) (17) (14)
Total recognized in net periodic benefit cost and other comprehensive income $ 2  (10) (5)

Fair Value Measurements of Plan Assets
The following tables summarize Plan assets measured at fair value on a recurring basis as of December 31:
Fair Value Measurements Using(a)
2023 ($ in millions) Level 1 Level 2 Level 3     Total Fair Value
Cash equivalents $ 7  —  —  7 
Debt securities:
U.S. Treasury and federal agencies securities 52  3  —  55 
Asset-backed securities and other debt securities(b)
 —  40  —  40 
Total debt securities $ 52  43  —  95 
Total Plan assets $ 59  43  —  102 
(a)For further information on fair value hierarchy levels, refer to Note 1.
(b)Includes corporate bonds.

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Fair Value Measurements Using(a)
2022 ($ in millions) Level 1 Level 2 Level 3  Total Fair Value
Cash equivalents $ 8  —  —  8 
Debt securities:
U.S. Treasury and federal agencies securities 54  3  —  57 
Asset-backed securities and other debt securities(b)
 —  44  —  44 
Total debt securities $ 54  47  —  101 
Total Plan assets $ 62  47  —  109 
(a)For further information on fair value hierarchy levels, refer to Note 1.
(b)Includes corporate bonds.

The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Cash equivalents
Cash equivalents are comprised of money market mutual funds that invest in short-term money market instruments that are issued and payable in U.S. dollars. The Plan measures its cash equivalent funds that are exchange-traded using the fund’s quoted price, which is in an active market. Therefore, these investments are classified within Level 1 of the valuation hierarchy.

Debt 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. 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. Examples of such instruments, which are classified within Level 2 of the valuation hierarchy, include federal agencies securities and asset-backed securities and other debt securities.

Plan Assumptions
The Plan’s assumptions are evaluated annually and are updated as necessary. The discount rate assumption reflects the yield on a portfolio of high quality fixed-income instruments that have a similar duration to the Plan’s liabilities. The expected long-term rate of return assumption reflects the average return expected on the assets invested to provide for the Plan’s liabilities. In determining the expected long-term rate of return, the Bancorp evaluated actuarial and economic inputs, including long-term inflation rate assumptions and broad equity and bond indices long-term return projections, as well as actual long-term historical plan performance.

The following table summarizes the weighted-average plan assumptions for the years ended December 31:
2023 2022 2021
For measuring benefit obligations at year end:
Discount rate 5.04  % 5.37  2.85 
For measuring net periodic benefit cost:
Discount rate 5.50  3.69  2.26 
Expected return on plan assets 5.52  3.91  2.43 

Lowering both the expected rate of return on the plan assets and the discount rate by 0.25% would have increased the 2023 pension expense by approximately $1 million.

Based on the actuarial assumptions, the Bancorp expects to contribute $1 million to the Plan in 2024. Estimated pension benefit payments are $13 million for 2024, $13 million for 2025, $12 million for 2026, $12 million for 2027 and $11 million for 2028. The total estimated payments for the years 2029 through 2033 is $44 million.

Investment Policies and Strategies
The Bancorp’s policy for the investment of Plan assets is to employ investment strategies that achieve a range of weighted-average target asset allocations relating to equity securities, fixed-income securities (including U.S. Treasury and federal agencies securities, mortgage-backed securities, asset-backed securities, corporate bonds and municipal bonds), alternative strategies (including traditional mutual funds, precious metals and commodities) and cash.

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The following table provides the Bancorp’s targeted and actual weighted-average asset allocations by asset category, with mutual and exchange-traded funds incorporated according to their underlying investments, for the years ended December 31:
Targeted Range   2023 2022
Equity securities
0-55  % 
 —  — 
Fixed-income securities
50-100      
 90  92 
Alternative strategies
0-5      
 —  — 
Cash or cash equivalents
0-100      
 10  8 
Total 100  % 100 

Plan Management’s objective is to achieve and maintain a fully-funded status of the qualified defined benefit plan while also minimizing the risk of excess assets. As a result, the portfolio assets of the qualified defined benefit plan will continue to increase the weighting of long duration fixed income, or liability matching assets, as the funded status increases. There were no significant concentrations of risk associated with the investments of the Plan at December 31, 2023.

Permitted asset classes of the Plan include cash and cash equivalents, fixed-income (domestic and non-U.S. bonds), equities (U.S., non-U.S., emerging markets and real estate investment trusts), equipment leasing and mortgages. The Plan utilizes derivative instruments including puts, calls, straddles or other option strategies, as approved by management.

Fifth Third Bank, National Association, as Trustee, is expected to manage Plan assets in a manner consistent with the Plan agreement and other regulatory, federal and state laws. The Fifth Third Bank Pension, 401(k) and Medical Plan Committee (the “Committee”) is the plan administrator. The Trustee is required to provide to the Committee monthly and quarterly reports covering a list of Plan assets, portfolio performance, transactions and asset allocation. The Trustee is also required to keep the Committee apprised of any material changes in the Trustee’s outlook and recommended investment policy. There were no fees paid by the Plan for investment management, accounting or administrative services provided by the Trustee for the years ended December 31, 2023, 2022 and 2021.

Other Information on Retirement and Benefit Plans
The Bancorp has a qualified defined contribution savings plan that allows participants to make voluntary 401(k) contributions on a pre-tax or Roth basis, subject to statutory limitations. Expenses recognized for matching contributions to the Bancorp’s qualified defined contribution savings plan were $114 million, $111 million and $108 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Bancorp did not make profit sharing contributions during the years ended December 31, 2023, 2022 and 2021. In addition, the Bancorp has a non-qualified defined contribution plan that allows certain employees to make voluntary contributions into a deferred compensation plan. Expenses recognized by the Bancorp for its non-qualified defined contribution plan were $5 million, $7 million and $5 million for the years ended December 31, 2023, 2022 and 2021, respectively.
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23. Accumulated Other Comprehensive Income
The tables below present the activity of the components of OCI and AOCI for the years ended December 31:
Total OCI Total AOCI
2023 ($ 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 the year		 $ 656  (162) 494 
Reclassification adjustment for net losses on available-for-sale debt
    securities included in net income		 1  —  1 
Net unrealized losses on available-for-sale debt securities 657  (162) 495  (4,589) 495  (4,094)
Unrealized holding losses on cash flow hedge derivatives arising
    during the year
 		 (171) 40  (131)
Reclassification adjustment for net losses on cash flow hedge
    derivatives included in net income		 334  (77) 257 
Net unrealized losses on cash flow hedge derivatives 163  (37) 126  (498) 126  (372)
Net actuarial loss arising during the year (1) —  (1)
Reclassification of amounts to net periodic benefit costs 4  (1) 3 
Defined benefit pension plans, net 3  (1) 2  (19) 2  (17)
Other —  —  —  (4) —  (4)
Total $ 823  (200) 623  (5,110) 623  (4,487)

Total OCI Total AOCI
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 the year		 $ (7,194) 1,716  (5,478)
Reclassification adjustment for net gains on available-for-sale debt
    securities included in net income		 (2) —  (2)
Net unrealized losses on available-for-sale debt securities (7,196) 1,716  (5,480) 891  (5,480) (4,589)
Unrealized holding losses on cash flow hedge derivatives arising
    during the year		 (1,006) 232  (774)
Reclassification adjustment for net gains on cash flow hedge
    derivatives included in net income		 (99) 22  (77)
Net unrealized losses on cash flow hedge derivatives (1,105) 254  (851) 353  (851) (498)
Net actuarial gain arising during the year 11  (2) 9 
Reclassification of amounts to net periodic benefit costs 6  (1) 5 
Defined benefit pension plans, net 17  (3) 14  (33) 14  (19)
Other —  —  —  (4) —  (4)
Total $ (8,284) 1,967  (6,317) 1,207  (6,317) (5,110)
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Total OCI Total AOCI
2021 ($ 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 the year
 		 $ (1,366) 323  (1,043)
Reclassification adjustment for net losses on available-for-sale debt
    securities included in net income		 4  (1) 3 
Net unrealized gains on available-for-sale debt securities (1,362) 322  (1,040) 1,931  (1,040) 891 
Unrealized holding losses on cash flow hedge derivatives arising
    during the year
 		 (185) 43  (142)
Reclassification adjustment for net gains on cash flow hedge
    derivatives included in net income		 (293) 70  (223)
Net unrealized gains on cash flow hedge derivatives (478) 113  (365) 718  (365) 353 
Net actuarial gain arising during the year
 		 5  (1) 4 
Reclassification of amounts to net periodic benefit costs 9  (2) 7 
Defined benefit pension plans, net 14  (3) 11  (44) 11  (33)
Other —  —  —  (4) —  (4)
Total $ (1,826) 432  (1,394) 2,601  (1,394) 1,207 

The table below presents reclassifications out of AOCI for the years ended December 31:
($ in millions) Consolidated Statements of
Income Caption		 2023 2022 2021
Net unrealized (losses) gains on available-for-sale debt securities:(a)
Net (losses) gains included in net income Securities gains (losses), net $ (1) 2  (4)
Income before income taxes (1) 2  (4)
Applicable income tax expense —  —  1 
Net income (1) 2  (3)
Net unrealized (losses) gains on cash flow hedge derivatives:(a)
Interest rate contracts related to C&I, commercial mortgage and commercial construction loans Interest and fees on loans and leases (334) 99  293 
Income before income taxes (334) 99  293 
Applicable income tax expense 77  (22) (70)
Net income (257) 77  223 
Net periodic benefit costs:(a)
Amortization of net actuarial loss
Compensation and benefits(b)
 (2) (3) (6)
Settlements
Compensation and benefits(b)
 (2) (3) (3)
Income before income taxes (4) (6) (9)
Applicable income tax expense 1  1  2 
Net income (3) (5) (7)
Total reclassifications for the period Net income $ (261) 74  213 
(a)Amounts in parentheses indicate reductions to net income.
(b)This AOCI component is included in the computation of net periodic benefit cost. Refer to Note 22 for information on the computation of net periodic benefit cost.

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24. Common, Preferred and Treasury Stock
The table presents a summary of the share activity within common, preferred and treasury stock for the years ended:
Common Stock Preferred Stock Treasury Stock
($ in millions, except share data) Value Shares Value Shares Value Shares
December 31, 2020 $ 2,051  923,892,581  $ 2,116  278,000 $ (5,676) 211,132,256 
Shares acquired for treasury —  —  —  —  (1,393) 35,652,079 
Impact of stock transactions under stock
   compensation plans, net		 —  —  —  —  44  (5,621,878)
Other —  —  —  —  1  (47,540)
December 31, 2021 $ 2,051  923,892,581  $ 2,116  278,000 $ (7,024) 241,114,917 
Shares acquired for treasury —  —  —  —  (100) 3,079,462 
Impact of stock transactions under stock
   compensation plans, net		 —  —  —  —  21  (3,687,834)
Other —  —  —  —  —  156 
December 31, 2022 $ 2,051  923,892,581  $ 2,116  278,000 $ (7,103) 240,506,701 
Shares acquired for treasury —  —  —  — (201) 5,589,996 
Impact of stock transactions under stock
   compensation plans, net		 —  —  —  —  42  (3,328,926)
December 31, 2023 $ 2,051  923,892,581  $ 2,116  278,000 $ (7,262) 242,767,771 

Preferred Stock—Series L
On July 30, 2020, the Bancorp issued in a registered public offering 350,000 depositary shares, representing 14,000 shares of 4.50% fixed-rate reset non-cumulative perpetual preferred stock, Series L, for net proceeds of approximately $346 million. Each preferred share has a $25,000 liquidation preference. The preferred stock accrues dividends on a non-cumulative basis at an annual rate of 4.50% through but excluding September 30, 2025. From, and including, September 30, 2025 and for each dividend reset period thereafter, dividends will accrue on the Series L preferred stock, on a non-cumulative basis, at a rate equal to the five-year U.S. Treasury rate as of the most recent reset dividend determination date plus 4.215%. Dividends will be payable, when, as and if declared by the Bancorp’s Board of Directors, quarterly in arrears on each of March 31, June 30, September 30 and December 31, beginning on September 30, 2020. Subject to obtaining all required regulatory approvals, on any dividend payment date on or after September 30, 2025, the Bancorp may redeem the Series L preferred stock and the related depositary shares in whole or in part, at 100% of their liquidation preference, plus an amount equal to any declared and unpaid dividends, without accumulation of any undeclared dividends. In addition, the Series L preferred stock and the related depositary shares may be redeemed, subject to obtaining all required regulatory approvals, in whole but not in part, at any time, following the occurrence of a regulatory capital event, at 100% of their liquidation preference, plus an amount equal to any declared and unpaid dividends, without accumulation of any undeclared dividends. The Series L preferred shares are not convertible into Bancorp common shares or any other securities.

Preferred Stock—Series K
On September 17, 2019, the Bancorp issued, in a registered public offering 10,000,000 depositary shares, representing 10,000 shares of 4.95% non-cumulative Series K perpetual preferred stock, for net proceeds of approximately $242 million. Each preferred share has a $25,000 liquidation preference. Subject to any required regulatory approval, the Bancorp may redeem the Series K preferred shares at its option in whole or in part, on any dividend payment date on or after September 30, 2024 and may redeem in whole, but not in part, at any time following a regulatory capital event. The Series K preferred shares are not convertible into Bancorp common shares or any other securities.

Preferred Stock—Class B, Series A
On August 26, 2019, the Bancorp issued 200,000 shares of 6.00% non-cumulative perpetual Class B preferred stock, Series A. Each preferred share has a $1,000 liquidation preference. These shares were issued to the holders of MB Financial, Inc.’s 6.00% non-cumulative perpetual preferred stock, Series C, in conjunction with the merger of MB Financial, Inc. with and into Fifth Third Bancorp. The newly issued shares of Class B preferred stock, Series A were recognized by the Bancorp at the carrying value previously assigned to the MB Financial, Inc. Series C preferred stock prior to the transaction. Subject to any required regulatory approval, the Bancorp may redeem the shares of Class B preferred stock, Series A at its option, in whole or in part, at any time on any dividend payment due date and may redeem, in whole but not in part, within 90 days following a regulatory capital treatment event.

Preferred Stock—Series J
On June 5, 2014, the Bancorp issued, in a registered public offering, 300,000 depositary shares, representing 12,000 shares of 4.90% fixed to floating-rate non-cumulative Series J perpetual preferred stock, for net proceeds of $297 million. Each preferred share has a $25,000 liquidation preference. The preferred stock accrued dividends, on a non-cumulative semi-annual basis, at an annual rate of 4.90% through but excluding September 30, 2019, at which time it converted to a quarterly floating-rate dividend of three-month LIBOR plus 3.129%. Pursuant to LIBOR transition, it later converted from a reference rate of three-month LIBOR to a reference rate of three-month CME Term SOFR on September 30, 2023.
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Following this conversion, the quarterly floating-rate dividend is three-month CME Term SOFR plus 3.129% plus the tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series J preferred shares at its option, in whole or in part, at any time. The Series J preferred shares are not convertible into Bancorp common shares or any other securities.

Preferred Stock—Series I
On December 9, 2013, the Bancorp issued, in a registered public offering, 18,000,000 depositary shares, representing 18,000 shares of 6.625% fixed to floating-rate non-cumulative Series I perpetual preferred stock, for net proceeds of $441 million. Each preferred share has a $25,000 liquidation preference. The preferred stock accrued dividends, on a non-cumulative quarterly basis, at an annual rate of 6.625% through but excluding December 31, 2023, at which time it converted to a quarterly floating-rate dividend of three-month CME Term SOFR plus 3.71% plus the tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series I preferred shares at its option in whole or in part, at any time. The Series I preferred shares are not convertible into Bancorp common shares or any other securities.

Preferred Stock—Series H
On May 16, 2013, the Bancorp issued, in a registered public offering, 600,000 depositary shares, representing 24,000 shares of 5.10% fixed to floating-rate non-cumulative Series H perpetual preferred stock, for net proceeds of $593 million. Each preferred share has a $25,000 liquidation preference. The preferred stock accrued dividends, on a non-cumulative semi-annual basis, at an annual rate of 5.10% through but excluding June 30, 2023, at which time it converted to a quarterly floating-rate dividend of three-month LIBOR plus 3.033%. Pursuant to LIBOR transition, it later converted from a reference rate of three-month LIBOR to a reference rate of three-month CME Term SOFR on September 30, 2023. Following this conversion, the quarterly floating-rate dividend is three-month CME Term SOFR plus 3.033% plus the tenor spread adjustment of 0.26161%. Subject to any required regulatory approval, the Bancorp may redeem the Series H preferred shares at its option in whole or in part, at any time. The Series H preferred shares are not convertible into Bancorp common shares or any other securities.

Treasury Stock
In June of 2019, the Board of Directors authorized the Bancorp to repurchase up to 100 million common shares in the open market or in privately negotiated transactions and to utilize any derivative or similar instrument to effect share repurchase transactions.

Under this authorization, the Bancorp entered into and settled accelerated share repurchase transactions during the years ended December 31, 2023 and 2022. As part of these transactions, the Bancorp entered into forward contracts 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 these repurchase agreements. The accelerated share repurchases were 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 transactions that were entered into and settled during the years ended December 31, 2023 and 2022:
Repurchase Date Amount  ($ in millions) Shares Repurchased on Repurchase Date Shares Received from Forward Contract  Settlement Total Shares Repurchased Final Settlement Date
December 8, 2022 $ 100  2,636,476  442,986  3,079,462  December 19, 2022
January 24, 2023 200  4,911,875  678,121  5,589,996  March 6, 2023



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25. Stock-Based Compensation
Stock-based awards are eligible for issuance under the Bancorp’s Incentive Compensation Plan to executives, directors and key employees of the Bancorp and its subsidiaries. The 2021 Incentive Compensation Plan was approved by shareholders on April 13, 2021 and authorized the issuance of up to 50 million shares as equity compensation. The plan authorizes the issuance of SARs, RSAs, RSUs, stock options, performance share or unit awards, dividend or dividend equivalent rights and stock awards. As of December 31, 2023, there were 24.7 million shares available for future issuance. Based on total stock-based awards outstanding (including SARs, RSUs, stock options and PSAs) and shares remaining for future grants under the 2021 Incentive Compensation Plan, the potential dilution to which the Bancorp’s common shareholders are exposed due to the potential that stock-based compensation will be awarded to executives, directors or key employees of the Bancorp and its subsidiaries is 6%. SARs, RSUs, stock options and PSAs outstanding represent 3% of the Bancorp’s issued shares at December 31, 2023.

All of the Bancorp’s stock-based awards are to be settled with stock. The Bancorp has historically used treasury stock to settle stock-based awards, when available. SARs, issued at fair value based on the closing price of the Bancorp’s common stock on the date of grant, have terms up to ten years and vest and typically become exercisable ratably over a three year period of continued employment. The Bancorp does not grant discounted SARs or stock options, re-price previously granted SARs or stock options or grant reload stock options. RSUs are typically released after three or four years or ratably over three or four years of continued employment and receive dividend equivalents. Dividend equivalents are accrued and paid in cash when the underlying shares are distributed, except for certain RSUs which have the rights to receive dividend equivalents paid in cash at each dividend payment date. Stock options were previously issued at fair value based on the closing price of the Bancorp’s common stock on the date of grant, had up to ten year terms and vested and became fully exercisable ratably over a three or four-year period of continued employment. For PSAs that are eligible to receive dividend equivalents, the accrued cash dividends are adjusted by the payout percentage achieved on the underlying awards. PSAs have three-year cliff vesting terms with performance conditions as defined by the plan. All of the Bancorp’s executive stock-based awards contain an annual performance hurdle of 2% return on tangible common equity. If this threshold is not met in any one of the three years during the performance period, one-third of PSAs are forfeited. Additionally, if this threshold is not met, all SARs and RSUs that would vest in the next year may also be forfeited at the discretion of the Human Capital and Compensation Committee of the Board of Directors. The Bancorp met this threshold as of December 31, 2023.

Stock-based compensation expense was $169 million, $165 million and $120 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is included in compensation and benefits expense in the Consolidated Statements of Income. The total related income tax benefit recognized was $35 million, $34 million and $25 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Stock Appreciation Rights
The Bancorp uses assumptions, which are evaluated and revised as necessary, in estimating the grant-date fair value of each SAR grant.

The weighted-average assumptions were as follows for the years ended December 31:
2023 2022 2021
Expected life (in years) 7 7 7
Expected volatility 31  % 31  29 
Expected dividend yield 3.6  3.4  3.2 
Risk-free interest rate 3.8  2.7  0.9 

The expected life is generally derived from historical exercise patterns and represents the amount of time that SARs granted are expected to be outstanding. The expected volatility is based on a combination of historical and implied volatilities of the Bancorp’s common stock. The expected dividend yield is based on annual dividends divided by the Bancorp’s stock price. Annual dividends are based on projected dividends, estimated using an expected long-term dividend payout ratio, over the estimated life of the awards. The risk-free interest rate for periods within the contractual life of the SARs is based on the U.S. Treasury yield curve in effect at the time of grant.

The grant-date fair value of SARs is measured using the Black-Scholes option-pricing model. The weighted-average grant-date fair value of SARs granted was $10.49, $12.76 and $7.84 per share for the years ended December 31, 2023, 2022 and 2021, respectively. The total grant-date fair value of SARs that vested during the years ended December 31, 2023, 2022 and 2021 was $3 million, $2 million and $8 million, respectively.

At December 31, 2023, there was $2 million of stock-based compensation expense related to outstanding SARs not yet recognized. The expense is expected to be recognized over an estimated remaining weighted-average period at December 31, 2023 of 1.6 years.

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The following table summarizes SARs activity for the years ended December 31:
2023 2022 2021
SARs (in thousands, except per share data) Number of
SARs		 Weighted-
Average Grant
Price Per Share		 Number of
SARs		 Weighted-
Average Grant
Price Per Share		 Number of
SARs		 Weighted-
Average Grant
Price Per Share 
Outstanding at January 1 9,112  $ 22.22  11,185  $ 20.47  19,258  $ 18.83 
Granted 253  37.19  304  46.96  322  33.53 
Exercised (2,011) 18.42  (2,358) 17.05  (8,367) 17.20 
Forfeited or expired (23) 40.36  (19) 30.43  (28) 23.01 
Outstanding at December 31 7,331  $ 23.72  9,112  $ 22.22  11,185  $ 20.47 
Exercisable at December 31 6,796  $ 22.44  8,487  $ 20.97  10,515  $ 19.80 

The following table summarizes outstanding and exercisable SARs by grant price per share at December 31, 2023:
Outstanding SARs Exercisable SARs
SARs (in thousands, except per share data) Number of
SARs		 Weighted-Average Grant Price Per Share Weighted-
Average Remaining
Contractual Life
(in years)		 Number of
SARs		 Weighted-Average Grant Price Per Share Weighted-
Average Remaining
Contractual Life
(in years)
$10.01-$20.00
 3,373  $ 17.98  1.8 3,373  $ 17.98  1.8
$20.01-$30.00
 2,926  25.27  2.7 2,926  25.27  2.7
$30.01-$40.00
 789  34.57  7.1 413  33.36  5.8
Over $40.00
 243  49.51  8.1 84  49.51  8.1
All SARs 7,331  $ 23.72  3.0 6,796  $ 22.44  2.5

Restricted Stock Units
The total grant-date fair value of RSUs that were released during the years ended December 31, 2023, 2022 and 2021 was $130 million, $110 million and $99 million, respectively. At December 31, 2023, there was $174 million of stock-based compensation expense related to outstanding RSUs not yet recognized. The expense is expected to be recognized over an estimated remaining weighted-average period at December 31, 2023 of 2.3 years.

The following table summarizes RSUs activity for the years ended December 31:
2023 2022 2021
RSUs (in thousands, except per unit data) Units  Weighted-Average Grant-Date Fair Value Per Unit Units  Weighted-Average Grant-Date Fair Value Per Unit Units  Weighted-Average Grant-Date Fair Value Per Unit
Outstanding at January 1 9,906  $ 38.04  9,487  $ 30.67  9,466  $ 28.38 
Granted 4,763  34.94  4,682  47.11  4,186  34.25 
Released (3,696) 35.04  (3,608) 30.54  (3,432) 28.87 
Forfeited (608) 38.75  (655) 37.12  (733) 29.80 
Outstanding at December 31 10,365  $ 37.63  9,906  $ 38.04  9,487  $ 30.67 

The following table summarizes outstanding RSUs by grant-date fair value per unit at December 31, 2023:
Outstanding RSUs
RSUs (in thousands) Units        Weighted-Average Remaining Contractual Life (in years)
Under $25.00
 719  0.8
$25.01-$30.00
 1,059  0.7
$30.01-$35.00
 1,651  0.7
$35.01-$40.00
 4,281  1.5
$40.01-$45.00
 150  0.9
$45.01 and over
 2,505  1.1
All RSUs 10,365  1.2

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Stock Options
There were no stock options granted during the years ended December 31, 2023, 2022 and 2021. The Bancorp generally utilizes the Black-Scholes option pricing model to measure the fair value of stock option grants.

The total intrinsic value of stock options exercised was $1 million, $2 million and $7 million for the years ended December 31, 2023, 2022 and 2021, respectively. Cash received from stock options exercised was $1 million, $1 million and $6 million for the years ended December 31, 2023, 2022 and 2021, respectively. The tax benefit realized from exercised stock options was immaterial for both the years ended December 31, 2023 and 2022 and $1 million for the year ended December 31, 2021. No stock options vested during the year ended December 31, 2023 and an immaterial amount of stock options vested during both the years ended December 31, 2022 and 2021. As of December 31, 2023, the aggregate intrinsic value of both outstanding stock options and exercisable stock options was $3 million.

The following table summarizes stock options activity for the years ended December 31:
2023 2022 2021
Stock Options (in thousands, except per share data)   Number of Options Weighted-Average Exercise Price Per Share Number of Options Weighted-Average Exercise Price Per Share Number of Options Weighted-Average Exercise Price Per Share
Outstanding at January 1 312  $ 21.65  409  $ 21.51  793  $ 20.81 
Exercised (86) 21.97  (97) 21.06  (384) 20.06 
Forfeited or expired (2) 27.71  —  —  —  — 
Outstanding at December 31 224  $ 21.45  312  $ 21.65  409  $ 21.51 
Exercisable at December 31 224  $ 21.45  312  $ 21.65  386  $ 21.31 

The following table summarizes outstanding and exercisable stock options by exercise price per share at December 31, 2023:
Outstanding Stock Options Exercisable Stock Options
Stock Options (in thousands, except per share data) Number of Options Weighted-Exercise Price Per Share Weighted-Average Remaining Contractual Life (in years) Number of Options Weighted-Exercise Price Per Share Weighted-Average Remaining Contractual Life (in years)
Under $10.00
 2  $ 8.98  2.6 2  $ 8.98  2.6
$10.01-$20.00
 136  18.59  1.4 136  18.59  1.4
$20.01-$30.00
 86  26.26  3.2 86  26.26  3.2
All stock options 224  $ 21.45  2.1 224  $ 21.45  2.1

Other Stock-Based Compensation
PSAs are payable contingent upon the Bancorp achieving certain predefined performance targets over a three-year measurement period. Depending on performance, between zero and 1.1 million shares may be released to settle the PSAs outstanding at December 31, 2023 once the applicable performance periods are completed. Awards granted during the years ended December 31, 2023, 2022 and 2021 will be entirely settled in stock. The performance targets are based on the Bancorp’s performance relative to a defined peer group. PSAs use a performance-based metric based on return on tangible common equity in relation to peers. During the years ended December 31, 2023, 2022 and 2021, approximately 256 thousand, 288 thousand and 251 thousand PSAs, respectively, were granted by the Bancorp. These awards were granted at a weighted-average grant-date fair value of $37.19, $47.03 and $33.53 per unit during the years ended December 31, 2023, 2022 and 2021, respectively.

The Bancorp sponsors an employee stock purchase plan that allows qualifying employees to purchase shares of the Bancorp’s common stock with a 15% match. During the years ended December 31, 2023, 2022 and 2021, there were approximately 768 thousand, 520 thousand and 470 thousand shares, respectively, purchased by participants. The Bancorp recognized expense of $2 million in each of the years ended December 31, 2023, 2022 and 2021 related to this plan. This expense is included in compensation and benefits expense in the Consolidated Statements of Income. As of December 31, 2023, there were approximately 2.0 million shares available for future issuance, which represents the remaining shares of Fifth Third common stock under the Bancorp’s 1993 Stock Purchase Plan, as amended and restated, including an additional 1.5 million shares approved by shareholders on March 28, 2007 and an additional 12 million shares approved by shareholders on April 21, 2009.
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26. Other Noninterest Income and Other Noninterest Expense
The following table presents the major components of other noninterest income and other noninterest expense for the years ended December 31:
($ in millions) 2023 2022 2021
Other noninterest income:
BOLI income $ 61 64 61
Cardholder fees 56 54 50
Equity method investment income 52 22 30
Private equity investment income 44 70 81
Banking center income 25 24 23
Income from the TRA associated with Worldpay, Inc. 22 46 46
Consumer loan fees 20 19 17
Gains on contract sales 2 3 62
Loss on swap associated with the sale of Visa, Inc. Class B Shares (94) (84) (86)
Other, net 19 47 48
Total other noninterest income $ 207 265 332
Other noninterest expense:
FDIC insurance and other taxes $ 385 132 114
Loan and lease 133 167 217
Losses and adjustments 91 91 69
Data processing 87 82 79
Dues and subscriptions 61 58 55
Travel 56 60 34
Professional service fees 53 54 63
Securities recordkeeping 50 48 52
Cash and coin processing 48 44 39
Postal and courier 46 40 37
Intangible amortization 43 47 44
Other, net 184 145 148
Total other noninterest expense $ 1,237 968 951

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27. 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 for the years ended December 31:
2023 2022 2021
($ in millions, except per share data) Income Average Shares Per Share Amount Income Average Shares Per Share Amount Income Average Shares Per Share Amount
Earnings Per Share:
Net income available to common
    shareholders		 $ 2,212  2,330  2,659 
Less: Income allocated to participating
    securities		 —  2  7 
Net income allocated to common
    shareholders		 $ 2,212  684  3.23  2,328  689  3.38  2,652  702  3.78 
Earnings Per Diluted Share:
Net income available to common
    shareholders		 $ 2,212  2,330  2,659 
Effect of dilutive securities:
Stock-based awards —  4  —  6  —  9 
Net income available to common
    shareholders plus assumed conversions		 2,212  2,330  2,659 
Less: Income allocated to participating
    securities		 —  2  7 
Net income allocated to common
    shareholders plus assumed conversions		 $ 2,212  688  3.22  2,328  695  3.35  2,652  711  3.73 

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 years ended December 31, 2023, 2022 and 2021 excludes 6 million, 3 million and an immaterial amount shares, respectively, of stock-based awards because their inclusion would have been anti-dilutive.
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28. 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. For more information regarding the fair value hierarchy and how the Bancorp measures fair value, refer to Note 1.

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
December 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 $ 4,336  —  —  4,336 
Obligations of states and political subdivisions securities —  2  —  2 
Mortgage-backed securities:
Agency residential mortgage-backed securities —  10,282  —  10,282 
Agency commercial mortgage-backed securities —  25,720  —  25,720 
          Non-agency commercial mortgage-backed securities —  4,445  —  4,445 
Asset-backed securities and other debt securities —  4,912  —  4,912 
Available-for-sale debt and other securities(a)
 4,336  45,361  —  49,697 
Trading debt securities:
U.S. Treasury and federal agencies securities 640  7  —  647 
Obligations of states and political subdivisions securities —  39  —  39 
Agency residential mortgage-backed securities —  6  —  6 
Asset-backed securities and other debt securities —  207  —  207 
Trading debt securities 640  259  —  899 
Equity securities 600  13  —  613 
Residential mortgage loans held for sale —  334  —  334 
Residential mortgage loans(b)
 —  —  116  116 
Servicing rights —  —  1,737  1,737 
Derivative assets:
Interest rate contracts —  977  6  983 
Foreign exchange contracts —  643  —  643 
Commodity contracts 205  846  —  1,051 
Derivative assets(c)
 205  2,466  6  2,677 
Total assets $ 5,781  48,433  1,859  56,073 
Liabilities:
Derivative liabilities:
Interest rate contracts $ 5  1,202  6  1,213 
Foreign exchange contracts —  600  —  600 
Equity contracts —  —  168  168 
Commodity contracts 28  990  —  1,018 
Derivative liabilities(d)
 33  2,792  174  2,999 
Short positions:
U.S. Treasury and federal agencies securities 31  —  —  31 
Asset-backed securities and other debt securities —  76  —  76 
Short positions(d)
 31  76  —  107 
Total liabilities $ 64  2,868  174  3,106 
(a)Excludes FHLB, FRB and DTCC restricted stock holdings totaling $224, $496 and $2, respectively, at December 31, 2023.
(b)Includes residential mortgage loans originated as held for sale and subsequently transferred to held for investment.
(c)Included in other assets in the Consolidated Balance Sheets.
(d)Included in other liabilities in the Consolidated Balance Sheets.
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Fair Value Measurements Using
December 31, 2022 ($ 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 Consolidated Balance Sheets.
(d)Included in other liabilities in the 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.

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.
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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. As of December 31, 2023 and 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 18 for additional information on the Covered Litigation.

The net asset fair value of the Bancorp’s IRLCs at December 31, 2023 was $5 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 $1 million and $3 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 $2 million and $3 million, respectively. An immediate 10% or 20% change in loan closing rates, either adverse or favorable, would not have a material impact on the fair value of IRLCs as of December 31, 2023. 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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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 year ended December 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 2  (105) 53  (94) (144)
Purchases/originations —  96  (3) —  93 
Settlements (15) —  (49) 121  57 
Transfers into Level 3(c)
 6  —  —  —  6 
Balance, end of period $ 116  1,737  —  (168) 1,685 
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 December 31, 2023
 $ 2  (28) 5  (94) (115)
(a)Net interest rate derivatives include $6 for both derivative assets and liabilities as of December 31, 2023.
(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 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 year ended December 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 (18) 177  22  (84) 97 
Purchases/originations —  448  1  —  449 
Settlements (23) —  (28) 103  52 
Transfers into Level 3(c)
 10  —  —  —  10 
Balance, end of period $ 123  1,746  (1) (195) 1,673 
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 December 31, 2022
 $ (18) 311  6  (84) 215 
(a)Net interest rate derivatives include derivative assets and liabilities of $7 and $8, respectively, as of December 31, 2022.
(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 31, 2022.
(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 year ended December 31, 2021 ($ in millions) Residential Mortgage Loans Servicing
Rights
Interest Rate
Derivatives,
Net(a)
 Equity
Derivatives		 Total Fair Value
Balance, beginning of period $ 161  656  53  (201) 669 
Total (losses) gains (realized/unrealized):(b)
Included in earnings (2) (139) 153  (86) (74)
Purchases/originations —  604  (3) —  601 
Settlements (54) —  (199) 73  (180)
Transfers into Level 3(c)
 49  —  —  —  49 
Balance, end of period $ 154  1,121  4  (214) 1,065 
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 December 31, 2021
 $ (2) 78  15  (86) 5 
(a)Net interest rate derivatives include derivative assets and liabilities of $12 and $8, respectively, as of December 31, 2021.
(b)There were no unrealized gains or losses for the period included in other comprehensive income for instruments still held at December 31, 2021.
(c)Includes certain residential mortgage loans originated as held for sale that were transferred to held for investment.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 as follows:
($ in millions) 2023 2022 2021
Mortgage banking net revenue $ (54) 177  9 
Commercial banking revenue 4  4  3 
Other noninterest income (94) (84) (86)
Total (losses) gains $ (144) 97  (74)

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 December 31, 2023, 2022 and 2021 were recorded in the Consolidated Statements of Income as follows:
($ in millions) 2023 2022 2021
Mortgage banking net revenue $ (25) 295  88 
Commercial banking revenue 4  4  3 
Other noninterest income (94) (84) (86)
Total (losses) gains $ (115) 215  5 

The following tables present information 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 December 31, 2023 ($ in millions)
Financial Instrument Fair Value Valuation Technique Significant Unobservable
Inputs		 Range of Inputs Weighted-Average
Residential mortgage loans $ 116  Loss rate model Interest rate risk factor (23.4) - 3.4% (11.6) %
(a)
Credit risk factor —  - 0.6% 0.2  %
(a)
(Fixed) 5.9  %
(b)
Servicing rights 1,737  DCF Prepayment speed —  - 100.0% (Adjustable) 20.3  %
(b)
(Fixed) 569
(b)
OAS (bps) 477 - 1,447 (Adjustable) 1,016
(b)
IRLCs, net 5  DCF Loan closing rates 20.9  - 96.0% 82.3  %
(c)
Swap associated with the sale of Visa, Inc. Class B Shares (168) DCF Timing of the resolution of the Covered Litigation Q4 2024 - Q1 2027 Q4 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 December 31, 2022 ($ in millions)
Financial Instrument Fair Value Valuation Technique Significant Unobservable
Inputs		 Range of Inputs Weighted-Average
Residential mortgage loans $ 123  Loss rate model Interest rate risk factor (24.1) - 2.4% (12.3) %
(a)
Credit risk factor —  - 22.9% 0.5  %
(a)
(Fixed) 5.1  %
(b)
Servicing rights 1,746  DCF Prepayment speed —  - 100.0% (Adjustable) 20.3  %
(b)
(Fixed) 734
(b)
OAS (bps) 542 - 1,513 (Adjustable) 1,204
(b)
IRLCs, net 1  DCF Loan closing rates 34.7  - 97.5% 86.6  %
(c)
Swap associated with the sale of Visa, Inc. Class B Shares (195) 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.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables provide the fair value hierarchy and carrying amount of all assets that were held as of December 31, 2023 and 2022, and for which a nonrecurring fair value adjustment was recorded during the years ended December 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 December 31, 2023 ($ in millions) Level 1   Level 2 Level 3     Total  For the year ended December 31, 2023
Commercial loans held for sale $ —  —  1  1  — 
Commercial loans and leases —  —  163  163  (162)
Consumer and residential mortgage loans —  —  189  189  (12)
OREO —  —  18  18  (8)
Bank premises and equipment —  —  15  15  (2)
Operating lease equipment —  —  2  2  — 
Private equity investments —  —  —  —  (2)
Total $ —  —  388  388  (186)
Fair Value Measurements Using Total (Losses) Gains
As of December 31, 2022 ($ in millions) Level 1 Level 2 Level 3 Total For the year ended December 31, 2022
Commercial loans held for sale $ —  —  40  40  (1)
Commercial loans and leases —  —  162  162  (83)
Consumer and residential mortgage loans —  —  109  109  1 
OREO —  —  3  3  — 
Bank premises and equipment —  —  19  19  (9)
Operating lease equipment —  —  1  1  (2)
Private equity investments —  9  1  10  (8)
Total $ —  9  335  344  (102)

The following tables present information as of December 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 December 31, 2023 ($ in millions)
Financial Instrument Fair Value Valuation Technique Significant Unobservable Inputs Ranges of
Inputs		 Weighted-Average
Commercial loans held for sale $ 1  Comparable company analysis Market comparable transactions NM NM
Commercial loans and leases 163  Appraised value Collateral value NM NM
Consumer and residential mortgage loans 189  Appraised value Collateral value NM NM
OREO 18  Appraised value Appraised value NM NM
Bank premises and equipment 15  Appraised value Appraised value NM NM
Operating lease equipment 2  Appraised value Appraised value NM NM
Private equity investments —  Comparable company analysis Market comparable transactions NM NM
As of December 31, 2022 ($ in millions)
Financial Instrument Fair Value Valuation Technique Significant Unobservable Inputs Ranges of  
Inputs  		 Weighted-Average
Commercial loans held for sale $ 40  Comparable company analysis Market comparable transactions NM NM
Commercial loans and leases 162  Appraised value Collateral value NM NM
Consumer and residential mortgage loans 109  Appraised value Collateral value NM NM
OREO 3  Appraised value Appraised value NM NM
Bank premises and equipment 19  Appraised value Appraised value NM NM
Operating lease equipment 1  Appraised value Appraised value NM NM
Private equity investments 1  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 years ended December 31, 2023 and 2022, resulting in negative fair value adjustments of an immaterial amount and $1 million during the years ended December 31, 2023 and 2022, respectively. These valuations were based on quoted prices for similar assets in active markets (Level 2 of the valuation hierarchy), 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). The Bancorp recognized an immaterial amount of gains and losses on the sale of certain commercial loans held for sale during the years ended December 31, 2023 and 2022.
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Portfolio loans and leases
During the years ended December 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 years ended December 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 $8 million recorded as negative fair value adjustments and an immaterial amount recorded as positive fair value adjustments for the years ended December 31, 2023 and 2022, respectively, recorded upon the transfer, or subsequent to the transfer, of properties to OREO. These losses also included an immaterial amount in losses recorded as charge-offs on new OREO properties transferred from loans for both the years ended December 31, 2023 and 2022.

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.

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 year ended December 31, 2023 and recognized gains of $4 million during the year ended December 31, 2022, resulting from observable price changes. The carrying value of the Bancorp’s private equity investments still held as of December 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 impairment charges of $2 million and $12 million during the years ended December 31, 2023 and 2022, respectively. The carrying value of the Bancorp’s private equity investments still held as of December 31, 2023 includes a cumulative $15 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.
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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 December 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 $6 million and $10 million, respectively. These losses are reported in mortgage banking net revenue in the 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 an immaterial amount and $1 million at December 31, 2023 and 2022, respectively. 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 Consolidated Statements of Income.

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:
($ in millions) Aggregate  Fair Value Aggregate Unpaid Principal Balance Difference
December 31, 2023
Residential mortgage loans measured at fair value $ 450  456  (6)
Past due loans of 30-89 days 1  1  — 
Nonaccrual loans 2  2  — 
December 31, 2022
Residential mortgage loans measured at fair value $ 723  733  (10)
Past due loans of 30-89 days 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 December 31, 2023 and 2022. Fair value changes recognized in earnings included gains of zero and $11 million for the years ended December 31, 2023 and 2022, respectively, reported in securities gains (losses), net in the Consolidated Statements of Income.
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Fair Value of Certain Financial Instruments
The following tables summarize the carrying amounts and estimated fair values for certain financial instruments, excluding financial instruments measured at fair value on a recurring basis:
Net Carrying Fair Value Measurements Using         Total
As of December 31, 2023 ($ in millions) Amount Level 1 Level 2 Level 3 Fair Value
Financial assets:
Cash and due from banks $ 3,142  3,142  —  —  3,142 
Other short-term investments 22,082  22,082  —  —  22,082 
Other securities 722  —  722  —  722 
Held-to-maturity securities 2  —  —  2  2 
Loans and leases held for sale 44  —  —  44  44 
Portfolio loans and leases:
Commercial loans and leases 71,616  —  —  71,766  71,766 
Consumer and residential mortgage loans 43,180  —  —  41,410  41,410 
Total portfolio loans and leases, net $ 114,796  —  —  113,176  113,176 
Financial liabilities:
Deposits $ 168,912  —  168,873  —  168,873 
Federal funds purchased 193  193  —  —  193 
Other short-term borrowings 2,861  —  2,872  —  2,872 
Long-term debt 16,418  14,481  1,903  —  16,384 
Net Carrying Fair Value Measurements Using         Total
As of December 31, 2022 ($ in millions) Amount Level 1 Level 2 Level 3 Fair Value
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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29. Regulatory Capital Requirements and Capital Ratios
The Board of Governors of the Federal Reserve System issued capital adequacy guidelines pursuant to which it assesses the adequacy of capital in examining and supervising a BHC. These guidelines include quantitative measures that assign risk weightings to assets and off-balance sheet items, define and set minimum regulatory capital requirements as well as the measure of “well-capitalized” status. Additionally, the U.S. banking agencies issued similar guidelines for minimum regulatory capital requirements and “well-capitalized” measurements for banking subsidiaries.

The following table summarizes the prescribed capital ratios for the Bancorp and its banking subsidiary.
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 

Failure to meet the minimum capital requirements or falling below the “well-capitalized” measure can initiate certain actions by regulators that could have a direct material effect on the Consolidated Financial Statements of the Bancorp. 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 Fifth Third’s 2023 Capital Plan submission with an effective date of October 1, 2023. The Bancorp’s capital ratios have exceeded the stress capital buffer requirement for all periods presented.

The Bancorp and its banking subsidiary, Fifth Third Bank, National Association, had CET1 capital, Tier 1 risk-based capital, Total risk-based capital and Leverage ratios above the “well-capitalized” levels at both December 31, 2023 and 2022. To continue to qualify for financial holding company status pursuant to the Gramm-Leach-Bliley Act of 1999, the Bancorp’s banking subsidiary must, among other things, maintain “well-capitalized” capital ratios.

The following table presents capital and risk-based capital and leverage ratios for the Bancorp and its banking subsidiary at December 31:
2023 2022
($ in millions) Amount Ratio         Amount Ratio      
CET1 capital:
Fifth Third Bancorp $ 16,800  10.29  % $ 15,670  9.28  %
Fifth Third Bank, National Association 20,147  12.42  18,952  11.31 
Tier 1 risk-based capital:
Fifth Third Bancorp 18,916  11.59  17,786  10.53 
Fifth Third Bank, National Association 20,147  12.42  18,952  11.31 
Total risk-based capital:
Fifth Third Bancorp 22,400  13.72  21,606  12.79 
Fifth Third Bank, National Association 22,463  13.85  21,463  12.81 
Leverage:(a)
Fifth Third Bancorp 18,916  8.73  17,786  8.56 
Fifth Third Bank, National Association 20,147  9.38  18,952  9.23 
(a)Quarterly average assets are a component of the Leverage ratio and for this purpose do not include goodwill and any other intangible assets and other investments that the U.S. banking agencies determine should be deducted from Tier 1 capital.
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30. Parent Company Financial Statements
Condensed Statements of Income (Parent Company Only)
For the years ended December 31 ($ in millions) 2023 2022 2021
Income
Dividends from consolidated nonbank subsidiaries(a)
 $ 1,819  165  3,040 
Securities gains (losses), net 4  (9) 1 
Interest 63  11  11 
Total income 1,886  167  3,052 
Expenses
Interest 525  311  250 
Other 39  19  30 
Total expenses 564  330  280 
Income (Loss) Before Income Taxes and Equity in Undistributed Earnings of Subsidiaries 1,322  (163) 2,772 
Applicable income tax benefit (112) (76) (62)
Income (Loss) Before Equity in Undistributed Earnings of Subsidiaries 1,434  (87) 2,834 
Equity in undistributed earnings 915  2,533  (64)
Net Income Attributable to Bancorp $ 2,349  2,446  2,770 
Other Comprehensive Income —  —  — 
Comprehensive Income Attributable to Bancorp $ 2,349  2,446  2,770 
(a)Includes dividends paid by the Bancorp’s indirect banking subsidiary to the Bancorp’s direct nonbank subsidiary holding company of $1.8 billion and $3.0 billion for the years ended December 31, 2023 and 2021, respectively. The Bancorp’s indirect banking subsidiary did not pay dividends during the year ended December 31, 2022.

Condensed Balance Sheets (Parent Company Only)
As of December 31 ($ in millions) 2023 2022
Assets
Cash $ 120  120 
Other short-term investments 6,500  5,667 
Available-for-sale debt and other securities 1,000  1,000 
Equity securities 34  34 
Loans to nonbank subsidiaries —  60 
Investment in nonbank subsidiaries 21,998  20,256 
Goodwill 80  80 
Other assets 179  326 
Total Assets $ 29,911  27,543 
Liabilities
Other short-term borrowings $ —  121 
Accrued expenses and other liabilities 631  764 
Long-term debt (external) 10,108  9,331 
Total Liabilities $ 10,739  10,216 
Equity
Common stock $ 2,051  2,051 
Preferred stock 2,116  2,116 
Capital surplus 3,757  3,684 
Retained earnings 22,997  21,689 
Accumulated other comprehensive loss (4,487) (5,110)
Treasury stock (7,262) (7,103)
Total Equity 19,172  17,327 
Total Liabilities and Equity $ 29,911  27,543 
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Condensed Statements of Cash Flows (Parent Company Only)      
For the years ended December 31 ($ in millions) 2023 2022 2021
Operating Activities      
Net income $ 2,349  2,446  2,770 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and accretion 7  7  7 
Provision for (benefit from) deferred income taxes 1  (3) (1)
Securities (gains) losses, net (4) 9  (1)
Equity in undistributed earnings (915) (2,533) 64 
Net change in:
Equity securities 4  6  1 
Other assets 147  (115) (40)
Accrued expenses and other liabilities (126) 45  (80)
Net Cash Provided by (Used in) Operating Activities 1,463  (138) 2,720 
Investing Activities
Proceeds from maturities of securities issued by subsidiary 1,000  —  — 
Purchase of securities issued by subsidiary (1,000) (1,000) — 
Net change in:
Other short-term investments (833) 567  (656)
Loans to nonbank subsidiaries 60  132  158 
Net Cash Used in Investing Activities (773) (301) (498)
Financing Activities
Net change in other short-term borrowings (121) (240) (89)
Proceeds from issuance of long-term debt 1,244  2,986  498 
Repayment of long-term debt (500) (1,200) (250)
Dividends paid on common and preferred stock (1,060) (927) (897)
Repurchase of treasury stock and related forward contract (200) (100) (1,393)
Other, net (53) (82) (89)
Net Cash (Used in) Provided by Financing Activities (690) 437  (2,220)
(Decrease) Increase in Cash —  (2) 2 
Cash at Beginning of Period 120  122  120 
Cash at End of Period $ 120  120  122 

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31. 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 solutions for individuals, companies and not-for-profit organizations, including wealth planning, investment management, banking, insurance, trust and estate services. These offerings include retail brokerage services for individual clients, advisory services for institutional clients including middle market businesses, non-profits, states and municipalities, and wealth management strategies and products for high net worth and ultra-high net worth clients.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the results of operations and assets by business segment for the years ended December 31:
2023 ($ in millions) Commercial
Banking		 Consumer and Small Business Banking Wealth
and Asset
Management		 General
Corporate
and Other		 Eliminations Total
Net interest income $ 3,812  5,207  360  (3,552) —  5,827 
Provision for credit losses 12  303  1  199  —  515 
Net interest income after provision for credit
     losses
 3,800  4,904  359  (3,751) —  5,312 
Noninterest income:
Commercial banking revenue 619  4  1  —  —  624 
Wealth and asset management revenue 2  216  549  —  (186)
(a)
 581 
Service charges on deposits 371  208  1  (3) —  577 
Card and processing revenue 92  312  2  10  —  416 
Mortgage banking net revenue —  250  —  —  —  250 
Leasing business revenue 208  —  —  —  —  208 
Other noninterest income(b)
 73  115  2  17  —  207 
Securities gains (losses), net (9) —  —  27  —  18 
Securities losses, net - non-qualifying
     hedges on MSRs		 —  —  —  —  —  — 
Total noninterest income 1,356  1,105  555  51  (186) 2,881 
Noninterest expense:
Compensation and benefits 654  878  220  942  —  2,694 
Technology and communications 14  27  1  422  —  464 
Net occupancy expense(c)
 41  209  12  69  —  331 
Equipment expense 29  44  —  75  —  148 
Marketing expense 3  70  1  52  —  126 
Leasing business expense 121  —  —  —  —  121 
Card and processing expense 11  76  1  (4) —  84 
Other noninterest expense 1,130  1,211  326  (1,244) (186) 1,237 
Total noninterest expense 2,003  2,515  561  312  (186) 5,205 
Income (loss) before income taxes 3,153  3,494  353  (4,012) —  2,988 
Applicable income tax expense (benefit) 594  733  74  (762) —  639 
Net income (loss) 2,559  2,761  279  (3,250) —  2,349 
Total goodwill $ 2,324  2,369  226  —  —  4,919 
Total assets $ 77,640  88,144  10,891  37,899 
(d)
 —  214,574 
(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income. 
(b)Includes impairment charges of $1 recorded in Consumer and Small Business Banking and $1 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7 and Note 28.
(c)Includes impairment losses and termination charges of $2 for ROU assets related to certain operating leases. For more information, refer to Note 9.
(d)Includes bank premises and equipment of $19 classified as held for sale. For more information, refer to Note 7. 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2022 ($ in millions) Commercial Banking Consumer and Small Business Banking Wealth
and Asset
Management		 General
Corporate
and Other		 Eliminations Total      
Net interest income $ 2,542  3,131  262  (326) —  5,609 
Provision for credit losses 33  139  —  391  —  563 
Net interest income after provision for credit
     losses		 2,509  2,992  262  (717) —  5,046 
Noninterest income:
Commercial banking revenue 563  3  1  (2) —  565 
Wealth and asset management revenue 3  204  540  —  (177)
(a)
 570 
Service charges on deposits 372  216  1  —  —  589 
Card and processing revenue 87  308  2  12  —  409 
Mortgage banking net revenue —  214  1  —  —  215 
Leasing business revenue 237 
(c)
 —  —  —  —  237 
Other noninterest income(b)
 111  110  —  44  —  265 
Securities losses, net (33) —  —  (49) —  (82)
Securities losses, net -non-qualifying
hedges on MSRs
 —  (2) —  —  —  (2)
Total noninterest income 1,340  1,053  545  5  (177) 2,766 
Noninterest expense:
Compensation and benefits 639  828  218  869  —  2,554 
Technology and communications 11  22  1  382  —  416 
Net occupancy expense(d)
 40  196  13  58  —  307 
Equipment expense 27  38  —  80  —  145 
Marketing expense 5  58  1  54  —  118 
Leasing business expense 131  —  —  —  —  131 
Card and processing expense 11  72  1  (4) —  80 
Other noninterest expense 959  1,175  322  (1,311) (177) 968 
Total noninterest expense 1,823  2,389  556  128  (177) 4,719 
Income (loss) before income taxes 2,026  1,656  251  (840) —  3,093 
Applicable income tax expense (benefit) 377  347  53  (130) —  647 
Net income (loss) 1,649  1,309  198  (710) —  2,446 
Total goodwill $ 2,324  2,365  226  —  —  4,915 
Total assets $ 83,535  83,697  14,253  25,967 
(e)
 —  207,452 
(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income.
(b)Includes impairment charges of $6 recorded in Consumer and Small Business Banking and $3 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7 and Note 28.
(c)Includes impairment charges of $2 for operating lease equipment. For more information, refer to Note 8 and Note 28.
(d)Includes impairment losses and termination charges of $2 for ROU assets related to certain operating leases. For more information, refer to Note 9. 
(e)Includes bank premises and equipment of $24 classified as held for sale. For more information, refer to Note 7.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2021 ($ in millions) Commercial
Banking		 Consumer and Small Business Banking Wealth
and Asset
Management		 General
Corporate
and Other		 Eliminations Total      
Net interest income $ 1,596  1,685  88  1,401  —  4,770 
(Benefit from) provision for credit losses (597) 120  (1) 101  —  (377)
Net interest income after (benefit from) provision
     for credit losses		 2,193  1,565  89  1,300  —  5,147 
Noninterest income:
Commercial banking revenue 633  2  2  —  —  637 
Wealth and asset management revenue 2  206  558  —  (180)
(a)
 586 
Service charges on deposits 385  214  1  —  —  600 
Card and processing revenue 78  312  2  10  —  402 
Mortgage banking net revenue —  267  3  —  —  270 
Leasing business revenue 300 
(c)
 —  —  —  —  300 
Other noninterest income(b)
 91  108  4  129  —  332 
Securities (losses) gains, net 8  —  —  (15) —  (7)
Securities losses, net -non-qualifying hedges
on MSRs
 —  (2) —  —  —  (2)
Total noninterest income 1,497  1,107  570  124  (180) 3,118 
Noninterest expense:
Compensation and benefits 644  833  205  944  —  2,626 
Technology and communications 17  16  1  354  —  388 
Net occupancy expense(d)
 37  197  15  63  —  312 
Equipment expense 26  38  —  74  —  138 
Marketing expense 7  41  2  57  —  107 
Leasing business expense 137  —  —  —  —  137 
Card and processing expense 7  85  1  (4) —  89 
Other noninterest expense 898  1,185  316  (1,268) (180) 951 
Total noninterest expense 1,773  2,395  540  220  (180) 4,748 
Income before income taxes 1,917  277  119  1,204  —  3,517 
Applicable income tax expense 363  57  25  302  —  747 
Net income 1,554  220  94  902  —  2,770 
Total goodwill $ 1,980  2,303  231  —  —  4,514 
Total assets $ 75,387  85,455  13,836  36,438 
(e)
 —  211,116 
(a)Revenue sharing agreements between Wealth and Asset Management and Consumer and Small Business Banking are eliminated in the Consolidated Statements of Income.
(b)Includes impairment charges of $6 recorded in Consumer and Small Business Banking and $1 recorded in General Corporate and Other for bank premises and equipment. For more information, refer to Note 7.
(c)Includes impairment charges of $25 for operating lease equipment. For more information, refer to Note 8.
(d)Includes impairment losses and termination charges of $3 for ROU assets related to certain operating leases. For more information, refer to Note 9.
(e)Includes bank premises and equipment of $24 classified as held for sale.

32. Subsequent Event
On January 29, 2024, the Bancorp issued and sold $1 billion of fixed-rate/floating-rate senior notes which will mature on January 29, 2032. The senior notes will bear interest at a rate of 5.631% per annum to, but excluding, January 29, 2031. From, and including January 29, 2031 until, but excluding January 29, 2032, the senior notes will bear interest at a rate of compounded SOFR plus 1.840%. The senior notes are redeemable in whole at par plus accrued and unpaid interest one year prior to their maturity date, or may be wholly or partially redeemed on or after 60 days prior to maturity. Additionally, the senior notes are redeemable at the Bancorp’s option, in whole or in part, beginning 180 days after the issue date and prior to January 29, 2031, at the greater of: (a) the aggregate principal amount of the senior notes being redeemed, or (b) the present value of the remaining scheduled payments of principal and interest that would be due if the senior notes being redeemed matured on January 29, 2031.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
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 management including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

MANAGEMENT’S ASSESSMENT AS TO THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Fifth Third Bancorp is responsible for establishing and maintaining adequate internal control, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Bancorp’s management assessed the effectiveness of the Bancorp’s internal control over financial reporting as of December 31, 2023. Management’s assessment is based on the criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and was designed to provide reasonable assurance that the Bancorp maintained effective internal control over financial reporting as of December 31, 2023. Based on this assessment, management believes that the Bancorp maintained effective internal control over financial reporting as of December 31, 2023. The Bancorp’s independent registered public accounting firm, that audited the Bancorp’s consolidated financial statements included in this annual report, has issued an audit report on our internal control over financial reporting as of December 31, 2023. This report appears on page 212 of the annual report.

CHANGES IN INTERNAL CONTROLS
The Bancorp’s management also conducted an evaluation of internal control over financial reporting to determine whether any changes occurred during the year 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 year covered by this report.

/s/ Timothy N. Spence /s/ Bryan D. Preston
Timothy N. Spence Bryan D. Preston
Chairman, Chief Executive Officer and President Executive Vice President and Chief Financial Officer
February 27, 2024 February 27, 2024


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Fifth Third Bancorp:

Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Fifth Third Bancorp and subsidiaries (the “Bancorp”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Bancorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Bancorp and our report dated February 27, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion
The Bancorp’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment as to the Effectiveness of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Bancorp’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bancorp in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Cincinnati, Ohio
February 27, 2024
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ITEM 9B. OTHER INFORMATION
Effective February 27, 2024, the Bancorp’s Board of Directors approved executive retention grant awards under the Bancorp’s 2021 Incentive Compensation Plan to certain of the Bancorp’s named executive officers, which awards were issued in part to promote continuity in key leadership roles and recognize new or expanded roles and responsibilities, where applicable. The Board granted these awards in the form of RSUs that will vest three years from the date of grant conditioned on the recipient’s continued employment and satisfactory performance of duties. In the event the recipient’s employment is terminated due to death or disability, any unvested RSUs will become immediately vested. In the event the recipient’s employment is terminated for any other reason, the unvested RSUs will be forfeited. In addition, if the Bancorp’s return on average tangible common equity for the fiscal year ending immediately prior to a vesting date (i.e., 2024, 2025 and 2026) does not meet or exceed 2%, one-third of the RSUs may be forfeited at the discretion of the Human Capital and Compensation Committee of the Bancorp’s Board of Directors. Furthermore, as a condition to receiving the award, if the recipient is asked to assume a different role within the Bancorp before the RSUs vest, the recipient is required to accept such a role and fully cooperate with any transition of required duties, as needed.

Kevin P. Lavender, the Bancorp’s Executive Vice President and Head of Commercial Bank, James C. Leonard, the Bancorp’s Executive Vice President and Chief Operating Officer, Jude A. Schramm, the Bancorp’s Executive Vice President and Chief Information Officer, and Robert P. Shaffer, the Bancorp’s Executive Vice President and Chief Risk Officer, will each receive a grant of RSUs in the amount of $2,000,000, based on the closing price of the Bancorp’s common stock on February 27, 2024.

Adoption or Termination of Insider Trading Arrangements
On December 14, 2023, Jude A. Schramm, Executive Vice President and Chief Information Officer of the Bancorp, adopted a trading arrangement for the sale of shares of stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c). Mr. Schramm’s Rule 10b5-1 Trading Plan, which shall terminate on December 31, 2024, provides for the sale of up to 10,000 shares of common stock pursuant to the terms of the Rule 10b5-1 Trading Plan.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not applicable.

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Bancorp has adopted an Enterprise Insider Trading and Ethical Investing Policy that applies to all of its directors and employees.

The information required by this item relating to the Executive Officers of the Registrant is included in PART I under “INFORMATION ABOUT OUR EXECUTIVE OFFICERS.”

The information required by this item concerning Directors and the nomination process is incorporated herein by reference under the caption “Election of Directors” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders.

The information required by this item concerning the Audit Committee and Code of Business Conduct and Ethics is incorporated herein by reference under the captions “Corporate Governance” and “Board of Directors, Committees, Meetings, and Functions” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders. Fifth Third’s Code of Business Conduct and Ethics is available on Fifth Third’s corporate website at www.53.com. In addition, any future amendments to, or waivers from, a provision of the Fifth Third Code of Business Conduct and Ethics that applies to Fifth Third’s directors or executive officers (including Fifth Third’s principal executive officer, principal financial officer, and principal accounting officer or controller) will be posted at this internet address.

The information required by this item concerning Delinquent Section 16(a) Reports is incorporated herein by reference under the caption “Delinquent Section 16(a) Reports” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders.

ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference under the captions “Compensation Discussion and Analysis,” “Compensation of Named Executive Officers,” “Board of Directors Compensation,” “CEO Pay Ratio,” “Human Capital and Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security ownership information of certain beneficial owners and management is incorporated herein by reference under the captions “Certain Beneficial Owners,” “Election of Directors,” “Compensation Discussion and Analysis,” “Board of Directors Compensation,” and “Compensation of Named Executive Officers” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders.

The information required by this item concerning Equity Compensation Plan information is included in Note 25 of the Notes to Consolidated Financial Statements.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference under the captions “Certain Transactions”, “Election of Directors”, “Corporate Governance” and “Board of Directors, Committees, Meetings, and Functions” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated herein by reference under the caption “Principal Independent External Audit Firm Fees” of the Bancorp’s Proxy Statement for the 2024 Annual Meeting of Shareholders. The Bancorp’s principal independent external audit firm is Deloitte & Touche LLP, whose PCAOB Firm ID is 34.

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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Pages
110, 212

The schedules for the Bancorp and its subsidiaries are omitted because of the absence of conditions under which they are required, or because the information is set forth in the Consolidated Financial Statements or the notes thereto.

The following lists the Exhibits to the Annual Report on Form 10-K:
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
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4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
4.47
4.48
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4.49 Certain instruments defining the rights of holders of long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
4.50
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
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10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
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10.65
10.66
10.67
10.68
10.69
10.70
10.71
10.72
10.73
10.74
10.75
10.76
10.77
19
21
23
31(i)
31(ii)
32(i)
32(ii)
97
101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(1)Fifth Third Bancorp also entered into an identical security on March 4, 2008 representing an additional $500,000,000 of its 8.25% Subordinated Notes due 2038.
(2)Fifth Third Bancorp also entered into an identical security on November 20, 2013 representing an additional $250,000,000 in principal amount of its 4.30% Subordinated Notes due 2024.

* Denotes management contract or compensatory plan or arrangement.
** An application for confidential treatment for selected portions of this exhibit has been filed with the SEC.
*** Selected portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K.

ITEM 16. FORM 10–K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
Principal Executive Officer
February 27, 2024

Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed on February 27, 2024 by the following persons on behalf of the Registrant and in the capacities indicated.


OFFICERS:
/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
Principal Executive Officer
/s/ Bryan D. Preston
Bryan D. Preston
Executive Vice President and Chief Financial Officer
Principal Financial Officer
/s/ Mark D. Hazel
Mark D. Hazel
Executive Vice President and Controller
Principal Accounting Officer






















DIRECTORS:
/s/ Timothy N. Spence
Timothy N. Spence
Chairman
/s/ Nicholas K. Akins
Nicholas K. Akins
Lead Independent Director
/s/ B. Evan Bayh III
B. Evan Bayh III
/s/ Jorge L. Benitez
Jorge L. Benitez
/s/ Katherine B. Blackburn
Katherine B. Blackburn
/s/ Emerson L. Brumback
Emerson L. Brumback
/s/ Linda W. Clement-Holmes
Linda W. Clement-Holmes
/s/ C. Bryan Daniels
C. Bryan Daniels
/s/ Laurent Desmangles
Laurent Desmangles
/s/ Mitchell S. Feiger
Mitchell S. Feiger
/s/ Thomas H. Harvey
Thomas H. Harvey
/s/ Gary R. Heminger
Gary R. Heminger
/s/ Eileen A. Mallesch
Eileen A. Mallesch
/s/ Michael B. McCallister
Michael B. McCallister
/s/ Kathleen A. Rogers
Kathleen A. Rogers
/s/ Marsha C. Williams
Marsha C. Williams
220 Fifth Third Bancorp
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CONSOLIDATED TEN YEAR COMPARISON
AVERAGE ASSETS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS)
Interest-Earning Assets
Year Loans and
Leases		 Other Short-Term Investments Investment
Securities		 Total Cash and Due
from Banks		 Other Assets Total Average
Assets
2023 $ 122,282  11,934  57,527  191,743  2,772  16,169  208,426 
2022 120,561  12,419  53,346  186,326  3,093  19,490  206,929 
2021 114,117  33,243  37,018  184,378  3,055  21,050  206,324 
2020 114,411  21,935  36,342  172,688  2,978  20,933  194,230 
2019 107,794  2,140  35,470  145,404  2,748  16,903  163,936 
2018 93,876  1,476  33,553  128,905  2,200  12,203  142,183 
2017 92,731  1,390  32,172  126,293  2,224  13,236  140,527 
2016 94,320  1,866  30,099  126,285  2,303  14,870  142,173 
2015 93,339  3,258  26,987  123,584  2,608  15,100  139,999 
2014 91,127  3,043  21,823  115,993  2,892  14,443  131,847 
AVERAGE DEPOSITS AND AVERAGE SHORT-TERM BORROWINGS FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS)
Deposits
Year Demand Interest
Checking		 Savings Money
Market
Certificates of Deposit(a)
 Foreign Office and Other Total
Short-Term Borrowings(b)
 Total
2023 $ 46,195  52,378  20,872  30,943  13,630  158  164,176  5,351  169,527 
2022 60,185  45,835  23,445  29,326  4,030  170  162,991  4,925  167,916 
2021 62,028  45,850  20,531  30,631  3,744  164  162,948  1,440  164,388 
2020 47,111  46,890  16,440  29,879  7,455  256  148,031  2,094  150,125 
2019 34,343  36,658  14,041  25,879  9,974  474  121,369  2,313  123,682 
2018 32,634  29,818  13,330  21,769  6,532  839  104,922  3,120  108,042 
2017 35,093  26,382  13,958  20,231  6,335  665  102,664  3,715  106,379 
2016 35,862  25,143  14,346  19,523  6,745  830  102,449  3,351  105,800 
2015 35,164  26,160  14,951  18,152  6,920  874  102,221  2,641  104,862 
2014 31,755  25,382  16,080  14,670  7,691  1,828  97,406  2,331  99,737 
INCOME FOR THE YEARS ENDED DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA)
Per Share
Year Interest Income Interest
Expense		 Noninterest
Income		 Noninterest
Expense		 Net Income Available to Common Shareholders Earnings Diluted
Earnings		 Dividends
Declared
2023 $ 9,760  3,933  2,881  5,205  2,212  3.23  3.22  1.36 
2022 6,587  978  2,766  4,719  2,330  3.38  3.35  1.26 
2021 5,211  441  3,118  4,748  2,659  3.78  3.73  1.14 
2020 5,572  790  2,830  4,718  1,323  1.84  1.83  1.08 
2019 6,254  1,457  3,536  4,660  2,419  3.38  3.33  0.94 
2018 5,183  1,043  2,790  3,958  2,118  3.11  3.06  0.74 
2017 4,489  691  3,224  3,782  2,105  2.86  2.81  0.60 
2016 4,193  578  2,696  3,737  1,472  1.92  1.91  0.53 
2015 4,028  495  3,003  3,643  1,610  2.00  1.97  0.52 
2014 4,030  451  2,473  3,619  1,384  1.65  1.63  0.51 
MISCELLANEOUS AT DECEMBER 31 ($ IN MILLIONS, EXCEPT PER SHARE DATA)
Equity
Year Common Shares
Outstanding		 Common
Stock		 Preferred
Stock		 Capital
Surplus		 Retained
Earnings		 Accumulated Other Comprehensive (Loss) Income Treasury
Stock		 Total Book Value
Per Share		 Allowance for
Loan and
Lease Losses
2023 681,124,810 $ 2,051  2,116  3,757  22,997  (4,487) (7,262) 19,172  25.04 2,322 
2022 683,385,880 2,051  2,116  3,684  21,689  (5,110) (7,103) 17,327  22.26 2,194 
2021 682,777,664 2,051  2,116  3,624  20,236  1,207  (7,024) 22,210  29.43 1,892 
2020 712,760,325 2,051  2,116  3,635  18,384  2,601  (5,676) 23,111  29.46 2,453 
2019 708,915,629 2,051  1,770  3,599  18,315  1,192  (5,724) 21,203  27.41 1,202 
2018 646,630,857 2,051  1,331  2,873  16,578  (112) (6,471) 16,250  23.07 1,103 
2017 693,804,893 2,051  1,331  2,790  14,957  73  (5,002) 16,200  21.43 1,196 
2016 750,479,299 2,051  1,331  2,756  13,290  59  (3,433) 16,054  19.62 1,253 
2015 785,080,314 2,051  1,331  2,666  12,224  197  (2,764) 15,705  18.31 1,272 
2014 824,046,952 2,051  1,331  2,646  11,034  429  (1,972) 15,519  17.22 1,322 
(a) Includes CDs $250,000 or less and CDs over $250,000.
(b) Includes federal funds purchased and other short-term borrowings.

221 Fifth Third Bancorp
Table of Contents

DIRECTORS AND OFFICERS
FIFTH THIRD BANCORP DIRECTORS FIFTH THIRD BANCORP OFFICERS
REGIONAL PRESIDENTS
Timothy N. Spence
Chairman
Fifth Third Bancorp

Nicholas K. Akins, Lead Director
Retired Chairman & Chief Executive Officer
American Electric Power Company

B. Evan Bayh, III
Senior Advisor
Apollo Global Management

Jorge L. Benitez
Retired Chief Executive Officer
North America of Accenture plc

Katherine B. Blackburn
Executive Vice President
Cincinnati Bengals, Inc.

Emerson L. Brumback
Retired President & Chief Operating Officer
M&T Bank

Linda W. Clement-Holmes
Retired Chief Information Officer
The Procter & Gamble Company

C. Bryan Daniels
Founding Partner
Prairie Capital

Laurent Desmangles
Retired Senior Partner & Managing Director
Boston Consulting

Mitchell S. Feiger
Retired Chief Executive Officer and President
MB Financial, Inc.

Thomas H. Harvey
Chief Executive Officer
Energy Innovation: Policy and Technology, LLC

Gary R. Heminger
Retired Chief Executive Officer & Chairman
Marathon Petroleum Corporation

Eileen A. Mallesch
Retired Chief Financial Officer
Nationwide Property & Casualty Segment, Nationwide Mutual Insurance Company

Michael B. McCallister
Retired Chairman & Chief Executive Officer
Humana, Inc.

Kathleen A. Rogers
Retired Executive Vice President
U.S. Bancorp

Marsha C. Williams
Retired Chief Financial Officer
Orbitz Worldwide, Inc
Timothy N. Spence
Chairman, Chief Executive Officer and President

Kristine R. Garrett
Executive Vice President,
Group Regional President &
Head of Wealth & Asset Management

Kala J. Gibson
Executive Vice President &
Chief Corporate Responsibility Officer

Mark D. Hazel
Executive Vice President &
Controller

Kevin P. Lavender
Executive Vice President &
Head of Commercial Bank

James C. Leonard
Executive Vice President &
Chief Operating Officer

Nancy C. Pinckney
Executive Vice President &
Chief Human Resource Officer

Bryan D. Preston
Executive Vice President &
Chief Financial Officer

Jude A. Schramm
Executive Vice President &
Chief Information Officer

Robert P. Shaffer
Executive Vice President &
Chief Risk Officer

Melissa S. Stevens
Executive Vice President &
Chief Marketing Officer

Susan B. Zaunbrecher
Executive Vice President &
Chief Legal Officer
Michael Ash
David Briggs
Timothy Elsbrock
Lee Fite
David Girodat
Stephanie Green
Kimberly Halbauer
Mark Heckler
Francie Henry
Randy Koporc
Tom Partridge
Cary Putrino
Thomas G. Welch, Jr.
Joseph Yurosek

FIFTH THIRD BANCORP BOARD COMMITTEES

Audit Committee
Eileen A. Mallesch, Chair
Jorge L. Benitez
Katherine B. Blackburn
Linda W. Clement-Holmes
C. Bryan Daniels
Thomas H. Harvey
Gary R. Heminger
Kathleen A. Rogers

Finance Committee
Gary R. Heminger, Chair
Nicholas K. Akins
Jorge L. Benitez
Emerson L. Brumback
Thomas H. Harvey
Eileen A. Mallesch
Michael B. McCallister

Human Capital and Compensation Committee
Michael B. McCallister, Chair
Nicholas K. Akins
Jorge L. Benitez
Emerson L. Brumback
Linda W. Clement-Holmes
Gary R. Heminger
Kathleen A. Rogers

Nominating and Corporate Governance Committee
Thomas H. Harvey, Chair
Nicholas K. Akins
B. Evan Bayh, III
Jorge L. Benitez
Katherine B. Blackburn
Laurent Desmangles
Marsha C. Williams

Risk and Compliance Committee
Emerson L. Brumback, Chair
Nicholas K. Akins
C. Bryan Daniels
Laurent Desmangles
Mitchell S. Feiger
Eileen A. Mallesch
Michael B. McCallister
Kathleen A. Rogers
Marsha C. Williams

Technology Committee
Jorge L. Benitez, Chair
B. Evan Bayh, III
Linda W. Clement-Holmes
C. Bryan Daniels
Laurent Desmangles
Mitchell S. Feiger
Thomas H. Harvey
222 Fifth Third Bancorp
EX-10.72 2 fitb-123123xexx1072.htm EX-10.72 Document

Exhibit 10.72

Long-Term Incentive Overview
image_06.jpg    image_11.jpg

Long-Term Incentive Compensation Program Overview
Awards Granted in 2024
Category 1 Covered Executives
There are three primary components of compensation at Fifth Third Bank: Base Salary, Variable Compensation (VC), and Long-Term Incentive Compensation (LTI). The following pages, the Fifth Third Bancorp 2021 Incentive Compensation Plan (“Plan”) and the applicable award agreements provide key details of the LTI program for awards granted in 2024. Please review this information carefully to understand how this element of your compensation will be awarded and delivered.
Compensation Philosophy at Fifth Third Bank
Fifth Third Bank pays for performance, both on an individual and a group basis (i.e. division or region). We structure our market-based compensation programs to target pay at the median of our peers for median performance and to provide upside and downside performance above and below median. We expect that our highest performers will receive a significantly larger share of cash incentive and long- term incentive awards with the lowest performers receiving little to no awards.
Awards to be granted to eligible employees in February of 2024 will be delivered as follows:

    Band
Performance Shares
Restricted Stock Units
Stock Appreciation Rights
Bands A-B & Other Category 1 Covered Executives
50%
 35% 15%









Long-Term Incentive Overview

2024 Performance Share Awards
Performance Shares – An Overview:
A Performance Share is a long-term incentive compensation vehicle granted pursuant to the Plan that gives participants the opportunity to receive a value subject to achievement of specific performance goals tied to the grant. The grant remains subject to forfeiture over a multi-year performance period with shares earned based on the achievement of the pre-determined performance metrics and goals set forth below.
The Performance Period for Performance Shares is three years. For grants made in February 2024 the performance period will run from Jan. 1, 2024 through Dec. 31, 2026, with payout, if any, occurring in February 2027 (as also outlined in the Award Agreement).

Performance Definition and Goals:
For Performance Shares, there are four performance criteria that are measured and assessed before any shares are earned: a core performance metric of Return on Average Common Equity (ROACE), two threshold goals of Efficiency Ratio and Return on Tangible Common Equity (ROTCE) and the Individual Risk Performance Evaluation. ROACE and the Efficiency Ratio are used to determine payout levels. The ROTCE and Risk Performance Evaluation are used to determine whether portions of grants should be forfeited. Each metric and how it is measured is described below:
Return on Average Common Equity (ROACE)
The core performance metric for Performance Shares is Return on Average Common Equity (ROACE). Fifth Third Bancorp’s ROACE is measured against the Bank’s revised peer group as follows:
•Citizen’s Financial Group, Inc.
•Comerica Incorporated
•First Horizon Corporation
•U.S. Bancorp
•First Citizens Bancshares, Inc.
•Huntington Bancshares Incorporated
•KeyCorp
•M&T Bank Corporation
•PNC Financial Services Group, Inc.
•Regions Financial Corporation
•Truist Financial Corporation
•Zions Bancorporation

ROACE Calculation: the number of performance shares earned is dependent upon the ROACE achieved by Fifth Third Bancorp during the Performance Period commencing Jan. 1, 2024 and ending Dec. 31, 2026 relative to the Peer Group set forth above. For this purpose, ROACE is calculated as cumulative adjusted net income available to common shareholders divided by average adjusted Bancorp common shareholders’ equity during the Performance Period. Adjusted net income available to common shareholders shall be determined based upon the financial results for each of the three fiscal years during the Performance Period, adjusted for the following items:
•Changes in tax laws, generally accepted accounting principles, or other laws or provisions affecting reported results
•Significant legal and regulatory settlements
•Asset write-downs, write-offs, dispositions, or sales resulting from a change in business strategy
•Mark-to-Market impacts on the Visa swap and gains associated with the redemption or sale of Visa shares



Long-Term Incentive Overview

•Merger-related, restructuring, early debt extinguishment, and other-than-temporary impairment charges
•Gains or losses on securities
To the extent possible, the Human Capital and Compensation Committee (“the Committee”) also makes similar adjustments to the reported performances of peer group members.
Changes in the peer group resulting from M&A activity (e.g., a merger of peers, or a peer participating in an M&A transaction whereby they are not the surviving entity) will have an impact on the performance calculation. If such a change occurs, the Committee will review the situation, including time elapsed in each performance period to determine if the competitor should remain in the performance evaluation or be removed.
For performance periods where the peer or peers remain in the performance group, we will recognize the final reported financial performance of impacted peer(s) prior to the close of the M&A transaction, with any adjustments as noted above. The impacted peer(s) ROACE, will then be adjusted by the average change in overall remaining peer group’s performance throughout the Performance Period.
Average adjusted Bancorp common shareholders’ equity shall be determined based upon reported financial results for each of the three fiscal years during the Performance Period, adjusted to exclude accumulated other comprehensive income.
At the end of the three-year Performance Period, the percentile rank for ROACE will be determined based on cumulative adjusted results for Fifth Third Bancorp and the peer institutions above. The performance level payout will be determined according to the payout grid below.
Prior to payment, the Committee will certify the results achieved and will retain the ability to reduce the payout percentage at its discretion.

Efficiency Ratio
Efficiency Ratio is cumulative adjusted non-interest expense for the Performance Period divided by the cumulative adjusted revenue for such period based on reported financial results. The revenue adjustments exclude the same items as ROACE over the Performance Period. The Efficiency Ratio Performance Goal acts as a threshold goal and is applied following the end of the Performance Period.
The Efficiency Ratio Performance Goal works such that regardless of the percentage payout determined by the ROACE calculation, in order for the payout percentage to be above 100%, the average annual Efficiency Ratio during the Performance Period must be less than 65%. If the Committee certifies that average Efficiency Ratio during the Performance Period is higher than 65%, the maximum payout percentage for performance shares will be 100%.
For example: If Fifth Third Bancorp’s three-year cumulative ROACE performance places Fifth Third in 3rd ranking among peer banks and the Efficiency Ratio is less than 65%, the 2024 performance share award will payout at 150%. In this example, if Efficiency Ratio was higher than 65%, the payout would be capped at 100%.



Long-Term Incentive Overview


Payout Grid
In 2022, the payout calculation was changed from a tiered approach in ranking vs. peers for payout to an interpolated calculation approach in ranking vs. peers.

Rank Payout Percentage Rank Ticker ROACE Payout
1 150% 1 Peer 1 14.06% 150%
2 150% 2 Peer 2 13.99% 150%
3 150% 3 Peer 3 13.96% 150%
4 Interpolated relative to top 4 Peer 4 13.40% 124%
5 quartile performance 5 Peer 5 13.19% 114%
6 100% 6 Peer 6 12.88% 100%
7 100% 7 Peer 7 12.81% 100%
8 Interpolated relative to 8 Peer 8 12.42% 92%
9 bottom quartile performance 9 Peer 9 10.53% 56%
10 0% 10 Peer 10 10.22% 0%
11 0% 11 Peer 11 9.74% 0%
12 0% 12 Peer 12 9.70% 0%


Payout Example
Assumptions Example 1 Example 2
ROACE Percentile Rank 3rd 3rd
Efficiency Ratio 62% 67%
Payout 150% 100%

Performance Shares Earned
Following the end of the Performance Period, the Committee shall determine the level of ROACE, ROTCE and Efficiency Ratio achieved during the Performance Period and will certify results as such. The actual number of Performance Shares earned, if any, will be determined by multiplying the participant’s number of granted Performance Shares by the percentage payout result according to the ROACE payout grid reduced as appropriate by the Efficiency Ratio.
The number of performance shares that will be earned are subject to additional performance- based vesting provisions discussed in the “Additional Information for all Types of LTI” section. It is possible earned shares can be further reduced for failure to meet these additional provisions.
Except as otherwise provided herein, participants must be employed by Fifth Third on the distribution date in order to earn any Performance Shares.





Long-Term Incentive Overview


Distribution
Participants shall receive a number of shares of Fifth Third Bancorp stock equal to the number of Performance Shares earned within 70 days following the end of the Performance Period (or, if later, the date on the which it has been determined the extent to which the Performance Goals have been met). It is expected that the Committee will certify performance for Performance Shares in February 2027. The distribution of stock shall be net of any applicable taxes that Fifth Third is required to withhold. The Plan Administrator shall reduce an appropriate portion of the Fifth Third stock otherwise distributable to a participant to satisfy the withholding liability.
Please note that at this time the IRS allows employers to withhold only a statutory minimum amount of taxes. Tax withholding rates cannot be increased.
Dividend Equivalents
The 2024 performance share grant will earn dividend equivalent payments on performance shares each time a dividend is declared (typically quarterly). The amount of the dividend equivalents earned will be determined by multiplying a participant’s number of unvested Performance Shares by the stated dividend amount. Dividend equivalents will be accrued in cash and will be paid out when the underlying Performance Shares are earned and distributed.
Until distribution, any calculated dividends will be attached to the underlying Performance Share grant and viewable on the Fidelity website. When the shares are earned and approved for distribution, all accrued cash dividends attached to the shares will be adjusted according to the percent payout achieved and then will be paid in cash, net of any applicable taxes, through Fifth Third Payroll.
Impact of Termination
Except as otherwise provided below or in the Award Agreement, if the employment or service of a participant terminates voluntarily (except for Retirement), or involuntarily with Cause, or due to engaging in Detrimental Activity, misconduct, violation of Fifth Third’s Code of Conduct or other policies and procedures in the Company’s judgment and sole discretion, after the Performance Period but prior to distribution date, all Performance Shares shall be forfeited and no payment shall be made with respect thereto.
Participants who terminate employment during the Performance Period due to death or Disability as defined in “Additional Information for All Types of LTI” shall earn Performance Shares determined by: multiplying the participant’s number of Performance Shares granted by the appropriate percentage payout set forth in the Performance Level grid, calculated using the most recently reported financial results (reduced as needed by the Efficiency Ratio threshold and any portion forfeited due to failure to meet ROTCE and Risk Performance Evaluation Goals).
Participants who Retire, as defined in the “Additional Information for All Types of LTI” section below, or whose employment is terminating involuntarily without Cause or voluntarily for Good Reason, shall continue to be eligible to receive Performance Shares as set forth in Performance Shares Earned section above as if the participant remained employed through the distribution date; provided however, that following leaving the bank, participant’s Performance Shares shall not be subject to forfeiture based upon a Risk Performance Evaluation rating for any full calendar year in which participant did not work through Dec. 31.






Long-Term Incentive Overview

2024 Restricted Stock Units
Restricted Stock Units – An Overview
A Restricted Stock Unit (RSU) granted pursuant to the Plan is a long-term incentive vehicle that gives a participant a conditional right to Fifth Third Bancorp common stock following a multi-year vesting period. The units are considered “restricted” or “conditional” until they vest.
Restricted Stock Unit Vesting (also referred to as “Distribution”)
On the anniversary of the grant date over a three-year vesting period, one-third of the Restricted Stock Unit grant will vest. On the vesting date (or, “distribution date”), one-third of the granted units convert to Fifth Third Bancorp common stock and shares are issued and registered in each participant’s name by the Bancorp. These shares are delivered to the participant’s Fidelity Brokerage Account net of any applicable taxes that Fifth Third is required to withhold. The Plan Administrator shall reduce an appropriate portion of the Fifth Third stock otherwise distributable to satisfy the withholding liability unless an election is made on Fidelity’s website to pay the tax obligations with cash available in the participant’s Fidelity brokerage account. If the cash election is chosen, there must be enough cash in the brokerage account to cover the entire tax obligation owed one full week before the vest date. Please note that at this time the IRS allows employers to withhold only statutory minimum amount of taxes. Tax withholding rates cannot be increased.
The number of RSUs that vest each year are subject to additional performance-based vesting provisions discussed in the “Additional Information for All Types of LTI” section.
Dividend Equivalents
Dividend equivalents will be earned each time a dividend is declared (typically quarterly). The amount of the dividend equivalents earned will be determined by multiplying a participant’s number of unvested RSUs by the stated dividend amount. The 2024 RSU grant dividend equivalents will be accrued in cash and will be paid out when the underlying RSUs are earned and distributed.
Until distribution, any calculated dividends will be attached to the underlying RSUs and viewable on the Fidelity website. When the shares are earned and approved for distribution, all accrued cash dividends attached to the shares will be paid in cash, net of any applicable taxes, through Fifth Third Payroll.
Impact of Termination
Except as otherwise provided below or in the Award Agreement, if the employment or service of a participant terminates voluntarily (except for Retirement), or involuntarily with Cause, or due to engaging in Detrimental Activity, misconduct, violation of Fifth Third’s Code of Conduct or other policies and procedures in the Company’s judgment and sole discretion, all unvested Restricted Stock Units shall be forfeited and no payment shall be made with respect thereto.
Participants who terminate employment due to death or Disability as defined in “Additional Information for All Types of LTI”, shall immediately vest in all unvested Restricted Stock Units upon death of disability. Distribution of the shares of Fifth Third Common Stock will be made following such date.
Participants who Retire or whose employment is terminated without Cause or voluntarily for Good Reason as defined in “Additional Information for All Types of LTI”, shall continue to vest in Restricted Stock Units and distribution of shares of Fifth Third common stock shall be made on the applicable annual vesting dates.



Long-Term Incentive Overview


2024 Stock Appreciation Rights
Stock Appreciation Rights – An Overview
A Stock Appreciation Right Award (SAR) is a long-term incentive vehicle granted pursuant to the Plan that gives a Participant a conditional right to receive Fifth Third common stock of a value equal to any appreciation in the value of Fifth Third common stock between the Grant Date of the award and the date the Stock Appreciation Right is exercised following vesting.
Stock Appreciation Rights Vesting
Stock Appreciation Rights will vest in equal installments over the multi-year period set forth in the Award Agreement. Stock Appreciation Rights granted in February 2024 will vest in one-third increments over three years.
The number of SARs that vest each year are subject to additional performance-based vesting provisions discussed in the “Additional Information for All Types of LTI” section.
Exercise of Stock Appreciation Rights
Participants holding vested Stock Appreciation Rights may initiate an exercise at netbenefits.fidelity.com indicating the number of Stock Appreciation Rights they would like to exercise. At exercise, stock is received at a value equal to the appreciation of the stock from the grant date to the date the rights are exercised. Stock Appreciation Rights are payable and settled in stock net of any applicable taxes at the time of exercise.

Stock Appreciation Rights: Sample Exercise
The example at right shows the potential value of your SARs assuming:

•You are granted 1,000 SARs in February 2024.

•The grant price is $30 (fair market value on the date of the grant).

•You are 100% vested in 2027 (1/3 every year).

•You exercise 1,000 SARs when the stock is values at $40 per share.
 Assumptions: Calculation:
SARs granted
          
 1,000 Market Value per share at exercise $40
Grant price $30 Grant Price $30
Exercise Date 5/3/2028 Increase in value per share $10
Market value per share at exercise $40 Total gain ($10 * 1,000) $10,000
SARs Exercised 1,000 Taxes Withheld (35%) $3,500
Tax Rate 35% Gain net of taxes $6,500
Number of shares to employee ($6,500 / $40) 162*


*In the event of fractional shares, the participant will receive cash equivalent to the fractional share value deposited into his/her Fidelity account. The above is for illustration purposes only and not a guarantee of future stock price appreciation.




Long-Term Incentive Overview


Grant Expiration Date
Each unexercised Stock Appreciation Right shall expire upon the 10th anniversary of its Grant Date set forth in the Award Agreement.
If an expiration date falls on a day where the NASDAQ market is not in session (i.e. over a weekend) the grant will expire at market close on the LAST trading day before the expiration date. Example: the ten-year anniversary date (expiration date) falls on a Saturday; the last day to exercise the SAR would be before market close on the last trading day before the expiration date, Friday.
NOTE: For any SAR that is at least $0.01 “in-the-money” at 4pm EST on the expiration date (i.e. FITB stock price is higher than the exercise price of the grant)”, Fidelity will initiate an automatic exercise of all shares set to expire. This “auto-exercise” feature ensures that any benefit attached to an award at expiration is realized and not lost.
Impact of Termination
Except as otherwise provided herein or in the Award Agreement, if the employment or service of a participant terminates for any reason, a participant shall have 90 days from the separation date to exercise any vested or “exercisable” Stock Appreciation Rights held as of the separation date.
Except as otherwise provided below or in the Award Agreement, if the employment or service of a participant terminates voluntarily (except for Retirement), or involuntarily with Cause, or due to engaging in Detrimental Activity, misconduct, violation of Fifth Third’s Code of Conduct or other policies and procedures in the Company’s judgment and sole discretion, all unvested Stock Appreciation Rights shall be forfeited and no payment shall be made with respect thereto.
Participants who terminate employment due to Death or Disability as defined in “Additional Information for All Types of LTI”, may immediately exercise all Stock Appreciation Rights granted to participant (whether or not vested and exercisable as of the date of death or disability) on or before the expiration date set forth in the Award Agreement.
Participants who Retire or whose employment is terminated without Cause or voluntarily for Good Reason as defined in “Additional Information for All Types of LTI”, shall continue to vest in Stock Appreciation Rights on the applicable vesting dates. Such awards shall be exercisable following the applicable vesting dates until the expiration dates.
How many SARs will I receive?
Each SAR is assigned an economic value based on the stock price at the time of grant, as well as other factors including the term of the SAR, shares available for awards and the volatility of Fifth Third stock. For example, if the economic value assigned to each SAR was $11.33, an individual receiving a long-term incentive award of $100,000 would receive 15 percent of that award ($15,000) in SARs. The number of SARs representing that $15,000 of value was calculated in this way: $15,000 divided by $11.33 equals 1,324 SARs.




Long-Term Incentive Overview


An Overview of Performance Shares, Restricted Stock Units, and Stock Appreciation Rights
The following is an overview of the key characteristics of each

Feature Performance Shares Restricted Stock Units Stock Appreciation Rights
Definition A performance share is a long-term incentive compensation vehicle that vests over a multi-year period, and derives value based on an achievement of predetermined long-term performance objectives. Restricted stock units (RSUs) are equivalent to shares of common stock that cannot be sold until the vesting restrictions lapse. A stock appreciation right (SAR) is not an actual share of stock but rather the right to receive stock at a value equal to the appreciation of the stock from the grant date to the date the SAR is exercised.
Value The value of the performance shares will be based on the achievement of the performance goals. The value of the unit equals the stock market’s price. When you exercised your SARs, you will receive shares equal to the difference between the value at grant and the then current fair market value.
Vesting Vesting of performance shares is three years. The performance period is Jan. 1, 2024 – Dec. 31, 2026. Vesting of your RSUs may vary by grant. For this annual grant, restricted stock will vest 1/3 per year over three years on the anniversary date of the grant. Vesting of your SARs may vary by grant, For this annual grant, SARs will vest 1/3 per year over three years on the anniversary date of the grant.
Grant Price Not applicable Not applicable The closing price of the stock on the date of grant,
Grant Term Not applicable Not applicable 10 years from the date of the grant.
Dividends You are eligible to earn dividend equivalents on your unvested performance shares. You are eligible to earn dividend equivalents on your unvested RSUs. You are not eligible to earn dividends or dividend equivalents on unexercised SARs.
Voting Rights You do not have voting rights on your performance shares. You do not have voting rights on your unvested RSUs. You do not have voting rights on your SARs.
Taxation You are subject to tax on the market value of the award at the end of the performance period. Accumulated dividend equivalents will be subject to ordinary income tax. Taxes are reflected on your pay statements and W-2. You are subject to tax on the market value of the award at the vesting date. Accumulated dividend equivalents will be subject to ordinary income tax. Taxes are reflected on your pay statements and W-2. You are subject to tax on the increase in value between the grant date and the date on which you exercise your SARs. Taxes are reflected on your pay statements and W-2.
Transactions*
Upon vesting, you can:
•Hold the shares.
•Sell the shares.
•Transfer the shares.
Upon vesting, you can:
•Hold the shares.
•Sell the shares.
•Transfer the shares.
Upon vesting, you can.
•Exercise the SARs prior to expiration.
•Hold, sell, or transfer any shares that are paid to you as stock.
*subject to insider trading restrictions, market conditions, and the stock ownership policy




Long-Term Incentive Overview

Additional Information for All Types of LTI
Grant Notification and Accepting your Award
Managers will communicate an award amount. Awards will be housed at Fidelity Investments. Once an LTI award is viewable on the Fidelity website, participants will receive an internal email communication containing a link to accept the award. This email will contain instructions for navigating the Fidelity website; www.netbenefits.fidelity.com.
Performance-based Vesting Applicable to RSUs and SARs
Adjusted Return on Tangible Common Equity (ROTCE)
ROTCE means the adjusted return on tangible common equity of Fifth Third Bancorp. Returns are calculated as cumulative adjusted net income available to common shareholders for the three fiscal years during the Performance Period divided by average tangible common equity (TCE). TCE is calculated as the weighted average sum of reported average Bancorp shareholder’s equity less average preferred stock, goodwill, and intangible assets, other servicing rights (excluding mortgage servicing rights) and accumulated other comprehensive income for each of the three fiscal years during the Performance Period.
Adjusted net income available to common shareholders shall be determined based upon reported financial results for each of the three fiscal years during the Performance Period, adjusted for the following items:
•changes in tax laws, generally accepted accounting principles, or other laws or provisions affecting reported results
•significant legal and regulatory settlements
•asset write-downs, write-offs, dispositions, or sales resulting from a change in business strategy
•mark-to-market impacts on the Visa swap and gains associated with the redemption or sale of Visa shares
•merger-related, restructuring, early debt extinguishment, and other-than-temporary impairment charges
•gains or losses on securities
To the extent possible, the Committee also makes similar adjustments to the reported performance of peer group members.
ROTCE (determined in the same manner for all award types) for Fifth Third Bancorp for the fiscal year ending immediately prior to the anniversary date of the grant must meet or exceed 2 percent. If the ROTCE threshold is not met in any one of the three years during the vesting period (2024, 2025, 2026), one-third of the Performance Share grant will be forfeited and one-third of the RSU and the SAR grants may be forfeited at the Committee discretion. In addition, the Committee has discretion to forfeit up to 100 percent of all unvested grants of any type.




Long-Term Incentive Overview


Individual Annual Risk Performance Evaluation
The vesting of LTI is also subject to an individual risk management performance vesting condition. A participant’s individual Annual Risk Performance Evaluation is completed by the chief risk officer of Fifth Third Bancorp. For any fiscal year ending during the vesting period for which a Participant receives a rating less than “Achieves” on the annual Risk Performance Evaluation, the Committee has the discretion on an individual case-by-case basis to forfeit up to 100 percent of the Performance Shares, and unvested RSUs and SARs. In making its decision, the Committee will take into consideration the magnitude of the event and the accountability level of the participant.
Designation of a Beneficiary
Beneficiaries must be designated at Fidelity which allows a person or persons to receive any rights to which you would be entitled under the Long-Term Incentive Plan and all of the proceeds of your Fidelity brokerage account, including vested Fifth Third shares, in the event of your death.
Our ability to release awards timely to your beneficiary depends on various state laws and regulations. To assist in this process, it is imperative to designate a beneficiary on your Fidelity profile. If a participant does not establish a beneficiary, the estate shall be deemed to be the beneficiary. The process to release awards to the estate is dependent on when the estate provides adequate evidence, as applicable, to take control of the Fidelity account.
To designate a beneficiary at Fidelity, log onto your account at Fidelity.com > Customer Service > Update Your Profile > Beneficiaries. Then, complete the steps that follow.
Non-Transferability
LTI awards may not be assigned, transferred or pledged in any manner, and may be exercised only by a Participant during his or her lifetime. In the event of a participant’s death, the beneficiary (or if none, the estate) shall have the right to exercise any stock appreciation rights or sell any restricted stock held by the participant at death in accordance with Plan terms.
Retirement
Retirement means termination of employment as a Fifth Third employee by a participant who is at least 55 years of age, who also has completed five or more years of consecutive service, and for whom the combination of age and years of service is greater than or equal to 65. For purposes of retirement eligibility calculation, no partial years are considered. In addition, a break in service of any length will reset your service years.
NOTE: For the purposes of Stock Appreciation Rights; anyone meeting age 50 with five or more years of consecutive service, and for whom the combination of age and years of service is greater than or equal to 60, will be able to retain their VESTED stock appreciation rights for the full remaining term of the grant.
Impact of Awards on Other Terms and Conditions of Employment
The granting of an award is at the sole discretion of Fifth Third. Fifth Third is not obligated to make any award or permit any award to be made in the future. Nothing in these awards constitutes an obligation or guarantee with respect to the value of any award.
By accepting a grant agreement, you will be accepting and entering into the Confidential Information and Non- Solicitation Agreement attached to your grant agreement. Please be sure to read and understand this agreement prior to accepting your award.



Long-Term Incentive Overview

Finding the Plans
A general description of the tax effect of this award is included in the prospectus for Fifth Third’s equity compensation plans. You can locate the 2021 Incentive Compensation Plan and the 2021 Incentive Compensation Plan Prospectus by logging on to your Fidelity account at www.netbenefits.fidelity.com.
Defined Terms

Whenever used in the LTI Plan Overview, the following capitalized terms shall have the meanings set forth below

“Cause” means any of the following as determined by the Company:
•The Participant has committed a felony or an intentional act of gross misconduct, moral turpitude, fraud, embezzlement or theft;

•The Company or any subsidiary has been ordered or directed by any federal or state regulatory agency with jurisdiction to terminate or suspend the Participant’s employment, and such order or directive has not been vacated or reversed upon appeal; or

•After being notified in writing by the Company to cease any particular Competitive Activity (as defined in the CIC Severance Plan), the Participant continues such Competitive Activity and the Company has determined that such act is materially harmful to the Company and/or any affiliate.

“Detrimental Activity” means any of the following as determined by the Company:

•Any activity that, in the Company’s judgment and sole discretion, causes, or could reasonably be expected to cause, harm to the Company’s performance or reputation. Examples of conduct that could rise to the level of “Detrimental Activity” include but are not limited to significant violation of Company policy and significant poor performance that continues after warning of such performance.

“Good Reason” means the occurrence of any one or more of the following without the Participant’s written consent:

•a material diminution in the Participant’s authority, duties or responsibilities (other than those which occur in connection with the Company’s succession planning, as determined by the Company in its sole discretion), provided that in no event shall the fact of a Participant ceasing to serve on the Enterprise Committee in and of itself constitute Good Reason;
•a material diminution by the Company in the Participant’s base compensation;
•a material (at least 50 miles) change in the geographic location in which the executive must perform services; or
•any other action or inaction that constitutes a material breach by the Company of the Plan.


“Disability” means totally and permanently disabled as from time to time defined under the Long-Term Disability Plan of the Company or a Subsidiary applicable to Employee, or in the case where there is no applicable plan, permanent and total disability as defined in Section 22(e)(3) of the Code (or any successor Section); provided, however, that to the extent an amount payable under this Plan which constitutes deferred compensation subject to Section 409A the Code would become payable upon Disability. “Disability” for purposes of such payment shall not be deemed to have occurred unless the disability also satisfies the requirements of Treasury Regulation Section 1.409A-3.

“Retire” or “Retirement” means separation from service as an Employee, Director or Consultant for any reason (other than Death, Disability, Involuntary Without Cause, or under circumstances determined by the Company or a Subsidiary to constitute cause) on or after attaining the age and/ or a combination of age and years of service with the Company and/or Subsidiary, if any, provided by the Committee in the applicable Award Agreement or any amendment or modification thereof as constituting “Retirement” for purposes of such Award.



Long-Term Incentive Overview

Additional information on age requirements is described in the Retirement section above.



Long-Term Incentive Overview


Stock Ownership Guidelines
Stock ownership guidelines for Executives were updated in 2021.

Executive Level Multiple of Base Salary
CEO (Pay Band A) 6x
Enterprise Executives (Pay Band B) 3x
Other Section 16 Officers (Pay Band C) 2x

Executives designated as Section 16 officers are required to retain 75% of net, after tax shares received from stock appreciation right exercises and restricted stock unit and performance share award vestings until the minimum ownership guidelines are met. Once these guidelines are met, Executives must retain 25% of net, after tax shares until two times their guidelines are met.
Please note that all shares obtained from awards made under any one of Fifth Third’s Incentive Compensation Plans apply to this requirement, regardless of when an individual became an executive or Section 16 officer.
Ownership will include shares owned individually and by immediate family members, restricted stock not yet vested, and shares purchased through the employee stock purchase plan.
Executives have up to five years to achieve the share ownership requirements highlighted above.
Section 16 executive officers are prohibited from engaging in speculative trading or hedging strategies with respect to Fifth Third Bancorp securities. Any hedged shares for non-Section 16 Officers are excluded from the calculation of ownership levels when analyzing progress towards meeting the stock ownership guidelines.











Note: All compensation plans, including the Variable Compensation Plan, are automatically amended as necessary to comply with requirements and/ or limitations under the American Recovery and Reinvestment Act, or any other laws, rules, regulations, or regulatory agreements up to and including revocation on the award.
The 2021 Incentive Compensation Plan, approved by shareholders on April 13, 2021, governs awards. This material is an overview for your reference.
Any bonus, commission, or other compensation, including but not limited to payments made under the Fifth Third Bancorp 2021 Incentive Compensation Plan received is subject to recovery, or “claw back” by the Company for a period of 3 years (or such longer period as may be required by law) if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise
required by law.

EX-10.73 3 fitb-123123xexx1073.htm EX-10.73 Document

Exhibit 10.73
image_04b.jpg
Performance Share Award Agreement
[Participant Name]
It is my pleasure to inform you that you are hereby granted a Performance Share Award (“Award”), subject to the terms and conditions contained in this Award Agreement, the applicable Long-Term Incentive Compensation Program Overview (“Overview”) and the terms of the Fifth Third Bancorp 2021 Incentive Compensation Plan (the “Plan”) (collectively, the Award Agreement, Overview, and Plan shall be referred to herein as the “Award Terms”).

Grant Date of Performance Share Award Performance Period



Performance Shares Granted Performance Goals


[Grant Date]
The three-year period beginning January 1st of the year of grant and ending December 31st three years later
[Quantity Granted]
Return on Average Common Equity (ROACE) Relative to Peer Group, Adjusted Return on Tangible Common Equity (ROTCE), Efficiency Ratio, and Risk Performance Evaluation Rating of “Achieves” or above

These Performance Shares will vest on the third anniversary of the Grant Date subject to achievement of Performance Goals. The number of vested Performance Shares earned as part of this Award, if any, and the value of such Award will be determined following the end of the 3-year Performance Period based upon Performance Goals achieved. Details regarding the Performance Goals and their impact on the number of Performance Shares earned and forfeiture of Performance Shares are contained in the Overview.

Separation from employment impacts the vesting and earning of this Award. For details on the impact of employment separations, including the definition of Retirement applicable to this Award, please review the Award Terms.

Any bonus, commission, compensation, or award granted to you under the Plan is subject to recovery, or “clawback” by the Company in such amount and with respect to such time period as the Committee shall determine to be required by policy, applicable law, rules, or regulations if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise required by law. In addition, all executive compensation plans and awards are automatically amended as necessary to comply with the requirements and/or limitations under any other laws, rules, regulations, or regulatory agreements up to and including a revocation of this Award.

Acceptance of this Award confirms your agreement to the Award Terms (copies of which were delivered with this Award Agreement) including the Confidential Information and Non-Solicitation Agreement located on the following pages. In the event of any conflict between the terms of this Award Agreement and the Plan, the terms of the Plan shall control. In addition, you confirm that you have received, or have access to, the 2021 Incentive Compensation Plan Prospectus.

This Award will expire by its own terms unless accepted within 60 days of the grant date.

For Fifth Third Bancorp:

image_43.jpg                                                            [Grant date]

Tim Spence
Chairman, Chief Executive Officer and President

[Acceptance Date]
[Signature]



This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended.


CONFIDENTIAL INFORMATION AND NON-SOLICITATION AGREEMENT

This Confidential Information and Non-Solicitation Agreement (“Agreement”) is made by and between Fifth Third Bancorp (which includes its subsidiaries and/or affiliated entities, hereinafter collectively referred to as “the Company”) and the undersigned Employee.

RECITALS

A.The Company is a diversified financial services company that operates three main businesses - Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management;
B.The Company has informed Employee herein that the execution of this Agreement, being in the best interests of the Company, is a condition of employment of the Employee or, in the case of an existing employee, to the continued employment of the Employee by the Company; and
C.The Company has informed Employee herein that the execution of this Agreement is a condition of the receipt of any Long-Term Incentive Award issued under the Fifth Third Bancorp 2021 Incentive Compensation Plan.

NOW, THEREFORE, in consideration of the Recitals and the mutual covenants contained herein, it is mutually agreed as follows:

AGREEMENT SECTION 1.    COVENANT NOT TO USE CONFIDENTIAL INFORMATION
A.As a necessary function of Employee’s employment with the Company, Employee will have access to, use, receive, and otherwise acquire various kinds of customer, business, and technical information relating to the Company’s business that is of a confidential nature to the Company, whether or not such information is specifically labeled as “confidential”. Employee agrees that such Confidential Information means Trade Secrets and other Company information not generally known by or available to the Company’s competitors or the public. Confidential Information. Confidential Information includes, for example, the following:

Current, prospective and former customer names and information, including but not limited to contact, financial and account information; product information; compensation plans and arrangements, including incentive compensation plans; performance specifications; pricing, profit margin, and other financial information; product specifications; vendor information; Company training, reference and/or educational materials; Company forecasts/plans/pipelines; objectives and strategies; quality control and/or compliance standards; business referrals, suppliers, and customer lists; unpublished works of any nature whether or not copyrightable; business plans; Company research and/or development materials relating to the Company’s business; information contained in pending patent applications; inventions, technical improvements, and ideas; and all other information and knowledge in whatever form used or useful in management, marketing, purchasing, finance, or operations of the Company’s business and any compilation of such information and all other similar information used by the Company that is not available to those outside of the Company.

B.Employee also understands that he or she will occupy a position of confidence and trust with respect to the Company’s Confidential Information and Trade Secrets during his or her employment. Employee acknowledges and agrees that such Confidential Information and Trade Secrets is not generally known outside of the Company, that the Company has taken measures to guard the secrecy of its Confidential Information, that such information is extremely valuable and an essential asset of the Company’s business, and that such information, if disclosed without authorization to a third party or used by Employee for purposes other than conducting the Company business would cause irreparable harm to the Company and/or its customers.

C.Employee further agrees that, during Employee’s employment with the Company and following his or her termination for whatever reason, Employee will not disclose or use, directly or indirectly, or authorize or permit anyone under his or her direction to disclose to anyone, any Confidential Information and Trade Secrets of the Company that he or she obtains during the course of his or her employment relating to or otherwise concerning the business of the Company, whether or not acquired, originated, or developed in whole or in part by Employee.

D.The obligations set forth herein shall not apply to any Trade Secrets or Confidential Information that have become generally known to competitors of the Company through no act or omission of Employee, any information arising from Employee’s general training, knowledge, skill or experience (whether gained on the job or otherwise), information readily ascertainable to the public, and/or information that Employee has a right to disclose, nor shall the obligations set forth herein apply to disclosures made pursuant to the Sarbanes-Oxley Act of 2002. However, Employee agrees that after termination of employment he or she will not compile pieces of information from several sources and assemble them together in any manner in an attempt to circumvent a violation of his or her confidentiality obligations to the Company or attempt to demonstrate thereby that any of the Confidential Information and Trade Secrets is in the public domain.

E.Under the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Employee’s attorney in relation to a lawsuit for retaliation against Employee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

F.Employee understands that nothing contained in this Plan limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Plan does not limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.





SECTION II.    COVENANT PROHIBITING COMPETITION AND SOLICITATION OF CUSTOMERS

Confidential Information and Trade Secrets of the Company gained by Employee during employment is developed by the Company through substantial expenditures of time, effort, and financial resources, and constitutes valuable and unique property of the Company. Employee acknowledges, understands, and agrees that the foregoing makes it necessary for the protection of the Company’s business that Employee does not divert business of the Company’s customers from the Company and that he or she maintain the confidentiality and integrity of Confidential Information and Trade Secrets. Therefore, Employee agrees that during his or her employment and for a period of one (1) year thereafter he or she will not:



A.Enter into an ownership, consulting or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company in any territory to which Employee was assigned and/or for which Employee was responsible for during the twenty-four (24) month period preceding Employee’s departure from the Company;

B.Solicit, divert, entice, or take away, or attempt to solicit, divert, entice or take away any customers in the Covered Territory with whom Employee had contact, involvement, or responsibility or regarding which Employee received Confidential Information (as defined in Section I.A. above) during the last two (2) years of employment with Fifth Third (the “Look Back Period”) (such customers to be referred to as “Customer(s)”) for the sale or provision of any product or service that competes with a product or service offered by Fifth Third and/or as to which Employee had material-involvement or about which Employee received confidential or proprietary information during the Look Back Period. “Covered Territory” is the geographic territory where Employee worked, to which Employee was assigned and/or for which Employee was responsible at any time during the Look Back Period;

C.Directly or indirectly solicit, divert, entice or take away any potential customer or business identified, selected or targeted by the Company in the Covered Territory with whom he or she had contact, involvement or responsibility during his or her employment with the Company during the Lookback Period, or attempt to do so for the sale of any product or service that competes with a product or service offered by the Company and as to which Employee had material involvement or about which Employee received Confidential Information during the Look Back Period; or

D.Accept or provide assistance in the accepting of (including, but not limited to, providing any service, information or assistance or other facilitation or other involvement) business or orders from customers or any potential customers of the Company in the Covered Territory with whom he or she has had material contact, involvement, or responsibility on behalf of any third party or otherwise for his or her own benefit.

Nothing contained in this Section shall preclude Employee from accepting employment with or creating his or her own company, firm, or business that competes with the Company so long as his or her activities do not violate any of the terms of this Agreement.

If Employee is located in either Nebraska or Oklahoma, the provisions of this Section II.(c). concerning potential customers shall not apply.
For Colorado, Illinois, and Virginia employees, the non-solicitation provisions of Section II shall not apply to Employees whose average weekly earnings fall below the threshold required for non-solicitation obligations provided for under applicable state law as it exists at the time of the execution of this Agreement.

If Employee is located in Colorado, any choice of law, jurisdiction or venue provision in this Agreement does not apply with respect to any claims relating to Sections I-III.  Such claims (and only such claims) will be governed by Colorado law and may be adjudicated in the state or federal courts of Colorado.

SECTION III.    COVENANT NOT TO SOLICIT EMPLOYEES

Employee agrees that during his or her employment with the Company and for a period of one (1) year thereafter, he or she will not directly or indirectly, recruit, hire or attempt to recruit or hire, directly or by assisting others, any current employee of the Company, nor encourage any such employee to leave the employment of the Company. Among other things, this paragraph means that Employee agrees not to engage in discussions with any officer, manager, employee, or independent contractor of the Company in an attempt to induce or encourage the individual to end his or her relationship with the Company, not to share any Company officer, manager, employee, or independent contractor’s name or contact information with any other person or entity so that the person or entity can speak to Fifth Third’s officer, manager, employee, or independent contractor about potentially leaving the Company, and not to participate in any interviewing or hiring of a Company officer, manager, employee, or independent contractor.

SECTION IV.    EMPLOYEE WARRANTIES

Employee represents and warrants that his or her employment with the Company and the performance of this Agreement will not violate any express or implied obligation to any former employer or other party. Employee further represents that he or she has not brought with him or her and will not use or disclose during his or her employment with the Company any information, documents, or materials subject to any legally enforceable restrictions or obligations as to confidentiality or secrecy. Furthermore, Employee shall not make any agreements with or commitments to any person, firm, or corporation that would prevent, restrict, or hinder the performance of Employee’s duties and obligations under this Agreement. In addition, Employee agrees that he or she shall share a copy of this Agreement with any subsequent employer in order to ensure that there is no violation hereof, and Employee consents to the Company sharing a copy of this Agreement with any such employer.

SECTION V.    OTHER PROVISIONS

A.Restrictive Covenant Breach: If you breach any of the terms of the restrictive covenants in Sections I., II., or III. of this Grant Agreement, (1) the terms of those Sections will be extended by the period of the breach, and (2) any and all Restricted Stock Units granted under this Agreement that are not yet vested shall be immediately and irrevocably forfeited.  This paragraph does not constitute Fifth Third’s exclusive remedy for any violation of your restrictive covenant obligations, and Fifth Third may seek additional legal or equitable remedies, including injunctive relief, for any such violation or breach.
B.Governing Law: This Agreement and all the rights, duties and remedies of the parties hereunder shall be governed by the laws of the state of Ohio. The Company shall have the right to specifically enforce the covenants contained in this Agreement, in addition to any other legal, equitable (including specifically, but not limited to temporary restraining orders or preliminary or permanent injunctive relief) or other remedies as may be available to the Company for Employee’s breach of any such covenants.
C.Severability: If any provision of this Agreement is declared invalid or unenforceable, such provision shall be deemed modified to the extent necessary and possible to render it valid and enforceable.
D.Waiver/Modification: No waiver or modification of this Agreement will be valid unless in writing and duly executed by the party against whom enforcement is sought. Failure of the Company to enforce any provision of this Agreement shall not be construed as a waiver of such provision or of the right of the Company thereafter to enforce each and every provision.
E.At-Will Nature of Employment: Employee understands that nothing in this Agreement requires him or her to continue employment with the Company for any particular length of time or requires that the Company continue to employ Employee for any particular length of time.
F.Successors/Assigns: The terms and provisions of this Agreement shall be binding on and inure to the benefit of the successors and assigns of the Company (including but not limited to any corporate successor of The Company) and Employee’s heirs, executors and personal representatives. As part of this provision, Employee understands and agrees that should Employee become employed by another entity owned or otherwise affiliated with Fifth Third Bancorp (such as its subsidiaries, divisions or unincorporated affiliates), the obligations of this Agreement follow Employee to such other entity automatically and without further action, and that entity becomes the “Company” within the meaning of this Agreement.
G.Obligation to Comply With Other Laws: The duties Employee owes the Company under this Agreement shall be deemed to include federal, state and common law obligations of employees to their employers. This Agreement is intended, amongst other things, to supplement the provisions of state trade secret law and duties Employee owes the Company under common law, including but not limited to the duty of loyalty, and does not in any way supersede any of the obligations or duties Employee otherwise owe the Company.


H.Obligation to Comply With Other Agreements: This Agreement is in addition to and not in lieu of other non-solicitation, non-disclosure, and non- competition obligations Employee may owe to the Company.
I.Attorney’s Fees: If the Company must enforce any of its rights under this Agreement through legal proceedings, Employee agrees to reimburse the Company for all reasonable costs, expenses, and attorney’s fees incurred by it in connection with the enforcement of its rights.
J.Injunctive Relief: Employee acknowledges that should Employee violate any of the provisions of this Agreement, the Company will suffer irreparable harm and not have adequate an adequate remedy at law. Accordingly, Employee agrees that the Company may seek injunctive relief to restrain any such violation, as well as equitable relief, in a court of competent jurisdiction.
K.Counterparts: This Agreement may be signed in counterparts.


THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS
TERMS. Employee has been given sixty (60) days to accept this Agreement, and Employee therefore acknowledges they have been provided with at least fourteen (14) days to review the Agreement prior to acceptance (though Employee is permitted to accept/acknowledge the Agreement in less time, if they choose).They further acknowledge that they have exercised due diligence in reviewing this Agreement, and that each has been advised to, and has had adequate opportunity to consult with legal counsel or other advisors to the extent that each deemed such consultation necessary.

EX-10.74 4 fitb-123123xexx1074.htm EX-10.74 Document

Exhibit 10.74
image_07.jpg
Restricted Stock Unit Grant Agreement


[Participant Name]

It is my pleasure to inform you that you are hereby granted an award of Restricted Stock Units (“Grant”) subject to the terms and conditions of this Grant Agreement, the applicable Long-Term Incentive Compensation Program Overview (“Overview”) and the terms of the Fifth Third Bancorp 2021 Incentive Compensation Plan (the “Plan”) (collectively, the Grant Agreement, Overview, and Plan shall be referred to herein as the “Grant Terms”).

Grant Date of Restricted Stock Units            [Grant Date]
Total Number of Restricted Units Granted Performance Goals

[Units Granted]
Adjusted Return on Tangible Common Equity (ROTCE) and Annual Risk Performance Evaluation Rating of “Achieves” or Above


This Restricted Stock Unit Grant will vest in three equal annual installments on the first, second, and third anniversaries of the Grant Date (“Anniversary Date(s)”) subject to achievement of Performance Goals. If Performance Goals are not met for the fiscal year ended immediately prior to an Anniversary Date, then the annual installment of the grant that otherwise was scheduled to vest on that Anniversary Date, as well as any other unvested installments, may be forfeited at the discretion of the Committee. Details regarding the Performance Goals and their impact on forfeiture of Restricted Stock Units are contained in the Overview.

Separation from employment impacts the vesting and delivery of this Grant. For details on the impact of employment separations, including the definition of Retirement applicable to this Award, please review the Grant Terms.

Any bonus, commission, compensation, or awards granted to you under the Plan is subject to recovery, or “clawback” by the Company in such amount and with respect to such time period as the Committee shall determine to be required by policy, applicable laws, rules, or regulations if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise required by law. In addition, all executive compensation plans and awards are automatically amended as necessary to comply with the requirements and/or limitations under any other laws, rules, regulations, or regulatory agreements up to and including a revocation of this Grant.

Acceptance of this Grant confirms your agreement to the Grant Terms (copies of which were delivered with this Agreement) including the Confidential Information and Non-Solicitation Agreement located on the following pages. In the event of any conflict between the terms of this Grant Agreement and the Plan, the terms of the Plan shall control. In addition, you confirm that you have received, or have access to, the 2021 Incentive Compensation Plan Prospectus.

This Grant will expire by its own terms unless accepted within 60 days of the grant date.


For Fifth Third Bancorp:
image_71a.jpg                                             [Grant Date]     
Tim Spence
President and Chief Executive Officer

[Acceptance Date]
[Signature]



This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended.


CONFIDENTIAL INFORMATION AND NON-SOLICITATION AGREEMENT

This Confidential Information and Non-Solicitation Agreement (“Agreement”) is made by and between Fifth Third Bancorp (which includes its subsidiaries and/or affiliated entities, hereinafter collectively referred to as “the Company”) and the undersigned Employee.

RECITALS

A.The Company is a diversified financial services company that operates three main businesses - Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management;
B.The Company has informed Employee herein that the execution of this Agreement, being in the best interests of the Company, is a condition of employment of the Employee or, in the case of an existing employee, to the continued employment of the Employee by the Company; and
C.The Company has informed Employee herein that the execution of this Agreement is a condition of the receipt of any Long-Term Incentive Award issued under the Fifth Third 2021 Incentive Compensation Plan.

NOW, THEREFORE, in consideration of the Recitals and the mutual covenants contained herein, it is mutually agreed as follows:

AGREEMENT SECTION I.    COVENANT NOT TO USE CONFIDENTIAL INFORMATION
A.As a necessary function of Employee’s employment with the Company, Employee will have access to, use, receive, and otherwise acquire various kinds of customer, business, and technical information relating to the Company’s business that is of a confidential nature to the Company, whether or not such information is specifically labeled as “confidential”. Employee agrees that such Confidential Information means Trade Secrets and other Company information not generally known by or available to the Company’s competitors or the public. Confidential Information. Confidential Information includes, for example, the following:

Current, prospective and former customer names and information, including but not limited to contact, financial and account information; product information; compensation plans and arrangements, including incentive compensation plans; performance specifications; pricing, profit margin, and other financial information; product specifications; vendor information; Company training, reference and/or educational materials; Company forecasts/plans/pipelines; objectives and strategies; quality control and/or compliance standards; business referrals, suppliers, and customer lists; unpublished works of any nature whether or not copyrightable; business plans; Company research and/or development materials relating to the Company’s business; information contained in pending patent applications; inventions, technical improvements, and ideas; and all other information and knowledge in whatever form used or useful in management, marketing, purchasing, finance, or operations of the Company’s business and any compilation of such information and all other similar information used by the Company that is not available to those outside of the Company.

B.Employee also understands that he or she will occupy a position of confidence and trust with respect to the Company’s Confidential Information and Trade Secrets during his or her employment. Employee acknowledges and agrees that such Confidential Information and Trade Secrets is not generally known outside of the Company, that the Company has taken measures to guard the secrecy of its Confidential Information, that such information is extremely valuable and an essential asset of the Company’s business, and that such information, if disclosed without authorization to a third party or used by Employee for purposes other than conducting the Company business would cause irreparable harm to the Company and/or its customers.

C.Employee further agrees that, during Employee’s employment with the Company and following his or her termination for whatever reason, Employee will not disclose or use, directly or indirectly, or authorize or permit anyone under his or her direction to disclose to anyone, any Confidential Information and Trade Secrets of the Company that he or she obtains during the course of his or her employment relating to or otherwise concerning the business of the Company, whether or not acquired, originated, or developed in whole or in part by Employee.

D.The obligations set forth herein shall not apply to any Trade Secrets or Confidential Information that have become generally known to competitors of the Company through no act or omission of Employee, any information arising from Employee’s general training, knowledge, skill or experience (whether gained on the job or otherwise), information readily ascertainable to the public, and/or information that Employee has a right to disclose, nor shall the obligations set forth herein apply to disclosures made pursuant to the Sarbanes-Oxley Act of 2002. However, Employee agrees that after termination of employment he or she will not compile pieces of information from several sources and assemble them together in any manner in an attempt to circumvent a violation of his or her confidentiality obligations to the Company or attempt to demonstrate thereby that any of the Confidential Information and Trade Secrets is in the public domain.

E.Under the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Employee’s attorney in relation to a lawsuit for retaliation against Employee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

F.Employee understands that nothing contained in this Plan limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Plan does not limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

SECTION II.    COVENANT PROHIBITING COMPETITION AND SOLICITATION OF CUSTOMERS

Confidential Information and Trade Secrets of the Company gained by Employee during employment is developed by the Company through substantial expenditures of time, effort, and financial resources, and constitutes valuable and unique property of the Company. Employee acknowledges, understands, and agrees that the foregoing makes it necessary for the protection of the Company’s business that Employee does not divert business of the Company’s customers from the Company and that he or she maintain the confidentiality and integrity of Confidential Information and Trade Secrets. Therefore, Employee agrees that during his or her employment and for a period of one (1) year thereafter he or she will not:

A.Enter into an ownership, consulting or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company in any territory to which Employee was assigned and/or for which Employee was responsible for during the twenty-four (24) month period preceding Employee’s departure from the Company;`

B.Solicit, divert, entice, or take away, or attempt to solicit, divert, entice or take away any customers in the Covered Territory with whom Employee had contact, involvement, or responsibility or regarding which Employee received Confidential Information (as defined in Section I.A. above) during the last two (2) years of employment with Fifth Third (the “Look Back Period”) (such customers to be referred to as “Customer(s)”) for the sale or provision of any product or service that competes with a product or service offered by Fifth Third and/or as to which Employee had material-involvement or about which Employee received confidential or proprietary information during the Look Back Period. “Covered Territory” is the geographic territory where Employee worked, to which Employee was assigned and/or for which Employee was responsible at any time during the Look Back Period



C.Directly or indirectly solicit, divert, entice or take away any potential customer or business identified, selected or targeted by the Company in the Covered Territory with whom he or she had contact, involvement or responsibility during his or her employment with the Company during the Lookback Period, or attempt to do so for the sale of any product or service that competes with a product or service offered by the Company and as to which Employee had material involvement or about which Employee received Confidential Information during the Look Back Period; or

D.Accept or provide assistance in the accepting of (including, but not limited to, providing any service, information or assistance or other facilitation or other involvement) business or orders from customers or any potential customers of the Company in the Covered Territory with whom he or she has had material contact, involvement, or responsibility on behalf of any third party or otherwise for his or her own benefit.

Nothing contained in this Section shall preclude Employee from accepting employment with or creating his or her own company, firm, or business that competes with the Company so long as his or her activities do not violate any of the terms of this Agreement.

If Employee is located in either Nebraska or Oklahoma, the provisions of this Section II.(c). concerning potential customers shall not apply.

For Colorado, Illinois, and Virginia employees, the non-solicitation provisions of Section II shall not apply to Employees whose average weekly earnings fall below the threshold required for non-solicitation obligations provided for under applicable state law as it exists at the time of the execution of this Agreement.

If Employee is located in Colorado, any choice of law, jurisdiction or venue provision in this Agreement does not apply with respect to any claims relating to Sections I-III.  Such claims (and only such claims) will be governed by Colorado law and may be adjudicated in the state or federal courts of Colorado.


SECTION III.    COVENANT NOT TO SOLICIT EMPLOYEES

Employee agrees that during his or her employment with the Company and for a period of one (1) year thereafter, he or she will not directly or indirectly, recruit, hire or attempt to recruit or hire, directly or by assisting others, any current employee of the Company, nor encourage any such employee to leave the employment of the Company. Among other things, this paragraph means that Employee agrees not to engage in discussions with any officer, manager, employee, or independent contractor of the Company in an attempt to induce or encourage the individual to end his or her relationship with the Company, not to share any Company officer, manager, employee, or independent contractor’s name or contact information with any other person or entity so that the person or entity can speak to Fifth Third’s officer, manager, employee, or independent contractor about potentially leaving the Company, and not to participate in any interviewing or hiring of a Company officer, manager, employee, or independent contractor.

SECTION IV.    EMPLOYEE WARRANTIES

Employee represents and warrants that his or her employment with the Company and the performance of this Agreement will not violate any express or implied obligation to any former employer or other party. Employee further represents that he or she has not brought with him or her and will not use or disclose during his or her employment with the Company any information, documents, or materials subject to any legally enforceable restrictions or obligations as to confidentiality or secrecy. Furthermore, Employee shall not make any agreements with or commitments to any person, firm, or corporation that would prevent, restrict, or hinder the performance of Employee’s duties and obligations under this Agreement. In addition, Employee agrees that he or she shall share a copy of this Agreement with any subsequent employer in order to ensure that there is no violation hereof, and Employee consents to the Company sharing a copy of this Agreement with any such employer.

SECTION V.    OTHER PROVISIONS

A.Restrictive Covenant Breach: If you breach any of the terms of the restrictive covenants in Sections I., II., or III. of this Grant Agreement, (1) the terms of those Sections will be extended by the period of the breach, and (2) any and all Restricted Stock Units granted under this Agreement that are not yet vested shall be immediately and irrevocably forfeited.  This paragraph does not constitute Fifth Third’s exclusive remedy for any violation of your restrictive covenant obligations, and Fifth Third may seek additional legal or equitable remedies, including injunctive relief, for any such violation or breach.
B.Governing Law: This Agreement and all the rights, duties and remedies of the parties hereunder shall be governed by the laws of the state of Ohio. The Company shall have the right to specifically enforce the covenants contained in this Agreement, in addition to any other legal, equitable (including specifically, but not limited to temporary restraining orders or preliminary or permanent injunctive relief) or other remedies as may be available to the Company for Employee’s breach of any such covenants.
C.Severability: If any provision of this Agreement is declared invalid or unenforceable, such provision shall be deemed modified to the extent necessary and possible to render it valid and enforceable.
D.Waiver/Modification: No waiver or modification of this Agreement will be valid unless in writing and duly executed by the party against whom enforcement is sought. Failure of the Company to enforce any provision of this Agreement shall not be construed as a waiver of such provision or of the right of the Company thereafter to enforce each and every provision.
E.At-Will Nature of Employment: Employee understands that nothing in this Agreement requires him or her to continue employment with the Company for any particular length of time or requires that the Company continue to employ Employee for any particular length of time.
F.Successors/Assigns: The terms and provisions of this Agreement shall be binding on and inure to the benefit of the successors and assigns of the Company (including but not limited to any corporate successor of The Company) and Employee’s heirs, executors and personal representatives. As part of this provision, Employee understands and agrees that should Employee become employed by another entity owned or otherwise affiliated with Fifth Third Bancorp (such as its subsidiaries, divisions or unincorporated affiliates), the obligations of this Agreement follow Employee to such other entity automatically and without further action, and that entity becomes the “Company” within the meaning of this Agreement.
G.Obligation to Comply With Other Laws: The duties Employee owes the Company under this Agreement shall be deemed to include federal, state and common law obligations of employees to their employers. This Agreement is intended, amongst other things, to supplement the provisions of state trade secret law and duties Employee owes the Company under common law, including but not limited to the duty of loyalty, and does not in any way supersede any of the obligations or duties Employee otherwise owe the Company.
H.Obligation to Comply With Other Agreements: This Agreement is in addition to and not in lieu of other non-solicitation, non-disclosure, and non- competition obligations Employee may owe to the Company.
I.Attorney’s Fees: If the Company must enforce any of its rights under this Agreement through legal proceedings, Employee agrees to reimburse the Company for all reasonable costs, expenses, and attorney’s fees incurred by it in connection with the enforcement of its rights.
J.Injunctive Relief: Employee acknowledges that should Employee violate any of the provisions of this Agreement, the Company will suffer irreparable harm and not have adequate an adequate remedy at law. Accordingly, Employee agrees that the Company may seek injunctive relief to restrain any such violation, as well as equitable relief, in a court of competent jurisdiction.
K.Counterparts: This Agreement may be signed in counterparts.
THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS
TERMS. Employee has been given sixty (60) days to accept this Agreement, and Employee therefore acknowledges they have been provided with at least fourteen (14) days to review the Agreement prior to acceptance (though Employee is permitted to accept/acknowledge the Agreement in less time, if they choose).They further acknowledge that they have exercised due diligence in reviewing this Agreement, and that each has been advised to, and has had adequate opportunity to consult with legal counsel or other advisors to the extent that each deemed such consultation necessary.

EX-10.75 5 fitb-123123xexx1075.htm EX-10.75 Document

Exhibit 10.75
    image_03a.jpg
Stock Appreciation Right Award Agreement
[Participant Name]

It is my pleasure to inform you that you are hereby granted an award of Stock Appreciation Rights (“SARs”) subject to the terms and conditions of this Award Agreement, the applicable Long-Term Incentive Award Overview (“Overview”), and the terms of the Fifth Third Bancorp 2021 Incentive Compensation Plan (the “Plan”) (collectively, the Award Agreement, Overview, and Plan shall be referred to herein as the “Award Terms”):

Date of Grant    [Grant Date]
Total Number of SARs Granted    [Quantity Granted]
Grant Date Price per Share of Stock    [Grant Price]
Expiration Date    [Expiration Date]
Performance Goals    Adjusted Return on Tangible Common Equity (ROTCE), Annual Risk Performance Evaluation rating of “Achieves” or above
These Stock Appreciation Rights will vest in three equal annual installments on the first, second, and third anniversaries of the Grant Date (“Anniversary Date(s)”) subject to achievement of Performance Goals. The number of Stock Appreciation Rights earned as part of this Award on each applicable Anniversary Date, if any, will be determined following the end of the fiscal year ended immediately prior to such Anniversary Date based upon the Performance Goals achieved. Details regarding the Performance Goals and their impact on forfeiture of Stock Appreciation Rights are contained in the Overview.

Upon exercise, you will be entitled to a payment in the form of Fifth Third shares of stock with a fair market value equal to the fair market value of a share of Fifth Third stock at the date of exercise in excess of the Grant Date price per share of stock, multiplied by the number of SARs exercised.

Separation of employment impacts the vesting and earning of this Award. For details on the impact of employment separations, including the definition of Retirement applicable to this Award, please review the Award Terms. Please note, if you should voluntarily leave the Company at any point during the life of this Award, you will have 90 days from your termination date to exercise any vested rights that have accumulated.

Any bonus, commission, compensation, or awards granted to you under the Plan is subject to recovery, or “clawback” by the Company in such amount and with respect to such time period as the Committee shall determine to be required by policy, applicable law, rules, or regulations if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise required by law. In addition, all executive compensation plans and awards are automatically amended as necessary to comply with the requirements and/or limitations under any other laws, rules, regulations, or regulatory agreements up to and including a revocation of this Award.

Acceptance of this Award confirms your agreement to the Award Terms, copies of which were delivered with this Award Agreement, including the Confidential Information and Non-Solicitation Agreement located on the following pages. In the event of any conflict between the terms of this Award Agreement and the Plan, the terms of the Plan shall control. In addition, you confirm that you have received, or have access to, the 2021 Incentive Compensation Plan Prospectus.

This Award will expire by its own terms unless accepted within 60 days of the grant date.

For Fifth Third Bancorp:

image_51.jpg                              [Grant Date]
Tim Spence
Chairman, Chief Executive Officer and President
[Acceptance Date]
[Signature]


This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended.




CONFIDENTIAL INFORMATION AND NON-SOLICITATION AGREEMENT

This Confidential Information and Non-Solicitation Agreement (“Agreement”) is made by and between Fifth Third Bancorp (which includes its subsidiaries and/or affiliated entities, hereinafter collectively referred to as “the Company”) and the undersigned Employee.

RECITALS

A.The Company is a diversified financial services company that operates three main businesses - Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management;
B.The Company has informed Employee herein that the execution of this Agreement, being in the best interests of the Company, is a condition of employment of the Employee or, in the case of an existing employee, to the continued employment of the Employee by the Company; and
C.The Company has informed Employee herein that the execution of this Agreement is a condition of the receipt of any Long-Term Incentive Award issued under the Fifth Third Bancorp 2021 Incentive Compensation Plan,
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants contained herein, it is mutually agreed as follows:

AGREEMENT SECTION I.    COVENANT NOT TO USE CONFIDENTIAL INFORMATION
A.As a necessary function of Employee’s employment with the Company, Employee will have access to, use, receive, and otherwise acquire various kinds of customer, business, and technical information relating to the Company’s business that is of a confidential nature to the Company, whether or not such information is specifically labeled as “confidential”. Employee agrees that such Confidential Information means Trade Secrets and other Company information not generally known by or available to the Company’s competitors or the public. Confidential Information includes, for example, the following:

Current, prospective and former customer names and information, including but not limited to contact, financial and account information; product information; compensation plans and arrangements, including incentive compensation plans; performance specifications; pricing, profit margin, and other financial information; product specifications; vendor information; Company training, reference and/or educational materials; Company forecasts/plans/pipelines; objectives and strategies; quality control and/or compliance standards; business referrals, suppliers, and customer lists; unpublished works of any nature whether or not copyrightable; business plans; Company research and/or development materials relating to the Company’s business; information contained in pending patent applications; inventions, technical improvements, and ideas; and all other information and knowledge in whatever form used or useful in management, marketing, purchasing, finance, or operations of the Company’s business and any compilation of such information and all other similar information used by the Company that is not available to those outside of the Company.

B.Employee also understands that he or she will occupy a position of confidence and trust with respect to the Company’s Confidential Information and Trade Secrets during his or her employment. Employee acknowledges and agrees that such Confidential Information and Trade Secrets are not generally known outside of the Company, that the Company has taken measures to guard the secrecy of its Confidential Information and Trade Secrets, that such information is extremely valuable and an essential asset of the Company’s business, and that such information, if disclosed without authorization to a third party or used by Employee for purposes other than conducting the Company business would cause irreparable harm to the Company and/or its customers.

C.Employee further agrees that, during Employee’s employment with the Company and following his or her termination for whatever reason, Employee will not disclose or use, directly or indirectly, or authorize or permit anyone under his or her direction to disclose to anyone, any Confidential Information of the Company that he or she obtains during the course of his or her employment relating to or otherwise concerning the business of the Company, whether or not acquired, originated, or developed in whole or in part by Employee.

D.The obligations set forth herein shall not apply to any Trade Secrets or Confidential Information that have become generally known to competitors of the Company through no act or omission of Employee, any information arising from Employee’s general training, knowledge, skill or experience (whether gained on the job or otherwise), information readily ascertainable to the public, and/or information that Employee has a right to disclose ,nor shall the obligations set forth herein apply to disclosures made pursuant to the Sarbanes-Oxley Act of 2002. However, Employee agrees that after termination of employment he or she will not compile pieces of information from several sources and assemble them together in any manner in an attempt to circumvent a violation of his or her confidentiality obligations to the Company or attempt to demonstrate thereby that any of the Confidential Information and Trade Secrets is in the public domain.

E.    Under the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Employee’s attorney in relation to a lawsuit for retaliation against Employee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

F.Employee understands that nothing contained in this Plan limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Plan does not limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

SECTION II.    COVENANT PROHIBITING COMPETITION AND SOLICITATION OF CUSTOMERS

Confidential Information of the Company gained by Employee during employment is developed by the Company through substantial expenditures of time, effort, and financial resources, and constitutes valuable and unique property of the Company. Employee acknowledges, understands, and agrees that the foregoing makes it necessary for the protection of the Company’s business that Employee does not divert business of the Company’s customers from the Company and that he or she maintain the confidentiality and integrity of Confidential Information. Therefore, Employee agrees that during his or her employment and for a period of one (1) year thereafter he or she will not:

A.Enter into an ownership, consulting or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company in any territory to which Employee was assigned and/or for which Employee was responsible for during the twenty-four (24) month period preceding Employee’s departure from the Company.

B.Solicit, divert, entice, or take away, or attempt to solicit, divert, entice or take away any customers in the Covered Territory with whom Employee had contact, involvement, or responsibility or regarding which Employee received Confidential Information (as defined in Section I.A. above) during the last two (2) years of employment with Fifth Third (the “Look Back Period”) (such customers to be referred to as “Customer(s)”) for the sale or provision of any product or service that competes with a product or service offered by Fifth Third and/or as to which Employee had material-involvement or about which Employee received confidential or proprietary information during the Look Back Period. “Covered Territory” is the geographic territory where Employee worked, to which Employee was assigned and/or for which Employee was responsible at any time during the Look Back Period;



C.Directly or indirectly solicit, divert, entice or take away any potential customer or business identified, selected or targeted by the Company in the Covered Territory with whom he or she had contact, involvement or responsibility during his or her employment with the Company during the Lookback Period , or attempt to do so for the sale of any product or service that competes with a product or service offered by the Company and as to which Employee had material involvement or about which Employee received Confidential Information during the Look Back Period; or

D.Accept or provide assistance in the accepting of (including, but not limited to, providing any service, information or assistance or other facilitation or other involvement) business or orders from customers or any potential customers of the Company in the Covered Territory with whom he or she has had material contact, involvement, or responsibility on behalf of any third party or otherwise for his or her own benefit.

Nothing contained in this Section shall preclude Employee from accepting employment with or creating his or her own company, firm, or business that competes with the Company so long as his or her activities do not violate any of the terms of this Agreement.

If Employee is located in either Nebraska or Oklahoma, the provisions of this Section II.(c). concerning potential customers shall not apply.

For Colorado, Illinois, and Virginia employees, the non-solicitation provisions of Section II shall not apply to Employees whose average weekly earnings fall below the threshold required for non-solicitation obligations provided for under applicable state law as it exists at the time of the execution of this Agreement.

If Employee is located in Colorado, any choice of law, jurisdiction or venue provision in this Agreement does not apply with respect to any claims relating to Sections I-III.  Such claims (and only such claims) will be governed by Colorado law and may be adjudicated in the state or federal courts of Colorado.

SECTION III.    COVENANT NOT TO SOLICIT EMPLOYEES

Employee agrees that during his or her employment with the Company and for a period of one (1) year thereafter, he or she will not directly or indirectly, recruit, hire or attempt to recruit or hire, directly or by assisting others, any current employee of the Company, nor encourage any such employee to leave the employment of the Company. Among other things, this paragraph means that Employee agrees not to engage in discussions with any officer, manager, employee, or independent contractor of the Company in an attempt to induce or encourage the individual to end his or her relationship with the Company, not to share any Company officer, manager, employee, or independent contractor’s name or contact information with any other person or entity so that the person or entity can speak to Fifth Third’s officer, manager, employee, or independent contractor about potentially leaving the Company, and not to participate in any interviewing or hiring of a Company officer, manager, employee, or independent contractor.

SECTION IV.    EMPLOYEE WARRANTIES

Employee represents and warrants that his or her employment with the Company and the performance of this Agreement will not violate any express or implied obligation to any former employer or other party. Employee further represents that he or she has not brought with him or her and will not use or disclose during his or her employment with the Company any information, documents, or materials subject to any legally enforceable restrictions or obligations as to confidentiality or secrecy. Furthermore, Employee shall not make any agreements with or commitments to any person, firm, or corporation that would prevent, restrict, or hinder the performance of Employee’s duties and obligations under this Agreement. In addition, Employee agrees that he or she shall share a copy of this Agreement with any subsequent employer in order to ensure that there is no violation hereof, and Employee consents to the Company sharing a copy of this Agreement with any such employer.

SECTION V.    OTHER PROVISIONS

A.Restrictive Covenant Breach: If you breach any of the terms of the restrictive covenants in Sections I., II., or III. of this Grant Agreement, (1) the terms of those Sections will be extended by the period of the breach, and (2) any and all Restricted Stock Units granted under this Agreement that are not yet vested shall be immediately and irrevocably forfeited.  This paragraph does not constitute Fifth Third’s exclusive remedy for any violation of your restrictive covenant obligations, and Fifth Third may seek additional legal or equitable remedies, including injunctive relief, for any such violation or breach.
B.Governing Law: This Agreement and all the rights, duties and remedies of the parties hereunder shall be governed by the laws of the state of Ohio. The Company shall have the right to specifically enforce the covenants contained in this Agreement, in addition to any other legal, equitable (including specifically, but not limited to temporary restraining orders or preliminary or permanent injunctive relief) or other remedies as may be available to the Company for Employee’s breach of any such covenants.
C.Severability: If any provision of this Agreement is declared invalid or unenforceable, such provision shall be deemed modified to the extent necessary and possible to render it valid and enforceable.
D.Waiver/Modification: No waiver or modification of this Agreement will be valid unless in writing and duly executed by the party against whom enforcement is sought. Failure of the Company to enforce any provision of this Agreement shall not be construed as a waiver of such provision or of the right of the Company thereafter to enforce each and every provision.
E.At-Will Nature of Employment: Employee understands that nothing in this Agreement requires him or her to continue employment with the Company for any particular length of time or requires that the Company continue to employ Employee for any particular length of time.
F.Successors/Assigns: The terms and provisions of this Agreement shall be binding on and inure to the benefit of the successors and assigns of the Company (including but not limited to any corporate successor of The Company) and Employee’s heirs, executors and personal representatives. As part of this provision, Employee understands and agrees that should Employee become employed by another entity owned or otherwise affiliated with Fifth Third Bancorp (such as its subsidiaries, divisions or unincorporated affiliates), the obligations of this Agreement follow Employee to such other entity automatically and without further action, and that entity becomes the “Company” within the meaning of this Agreement.
G.Obligation to Comply With Other Laws: The duties Employee owes the Company under this Agreement shall be deemed to include federal, state and common law obligations of employees to their employers. This Agreement is intended, amongst other things, to supplement the provisions of state trade secret law and duties Employee owes the Company under common law, including but not limited to the duty of loyalty, and does not in any way supersede any of the obligations or duties Employee otherwise owe the Company.
H.Obligation to Comply With Other Agreements: This Agreement is in addition to and not in lieu of other non-solicitation, non-disclosure, and non- competition obligations Employee may owe to the Company.
I.Attorney’s Fees: If the Company must enforce any of its rights under this Agreement through legal proceedings, Employee agrees to reimburse the Company for all reasonable costs, expenses, and attorney’s fees incurred by it in connection with the enforcement of its rights.
J.Injunctive Relief: Employee acknowledges that should Employee violate any of the provisions of this Agreement, the Company will suffer irreparable harm and not have adequate an adequate remedy at law. Accordingly, Employee agrees that the Company may seek injunctive relief to restrain any such violation, as well as equitable relief, in a court of competent jurisdiction.
K.Counterparts: This Agreement may be signed in counterparts.

THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS
TERMS. Employee has been given sixty (60) days to accept this Agreement, and Employee therefore acknowledges they have been provided with at least fourteen (14) days to review the Agreement prior to acceptance (though Employee is permitted to accept/acknowledge the Agreement in less time, if they choose).They further acknowledge that they have exercised due diligence in reviewing this Agreement, and that each has been advised to, and has had adequate opportunity to consult with legal counsel or other advisors to the extent that each deemed such consultation necessary.

EX-10.76 6 fitb-123123xexx1076.htm EX-10.76 Document

Exhibit 10.76

image_01a.jpg

Restricted Stock Unit Grant Agreement


[Participant Name]

Fifth Third Bank, NA (the “Company”) would like to acknowledge your important role and the value you bring to our organization. As an expression of our commitment and desire to retain you, it is my pleasure to inform you that you are hereby granted the opportunity to earn an award of Restricted Stock Units (“Grant”), subject to the terms and conditions contained in this Grant Agreement, the applicable Long-Term Incentive Compensation Program Overview (“Overview”) and the terms of the Fifth Third Bancorp 2021 Incentive Compensation Plan (the “Plan”) (collectively, the Grant Agreement, Overview, and Plan shall be referred to herein as the “Grant Terms”). In addition, you understand and agree that as a condition of accepting this award, between the date of acceptance of this Grant and the third anniversary of the Grant Date, the Company may determine the need to place you in another role within the organization, based on business need. In such an event, your acceptance of this Grant further requires acceptance of the role and that you be available to assist with and otherwise fully cooperate with the transition of any required duties as needed.

Grant Date of Restricted Stock Units     [GrantDate]
Total Number of Restricted Units Granted [QuantityGranted]
Performance Goals Adjusted Return on Tangible Common Equity (ROTCE)
                                                                                    and Annual Risk Performance Evaluation Rating of
                                                                                    “Effective” or Above


The Restricted Stock Units subject to this Grant will vest on the third anniversary of the Grant Date, contingent on you continuing to perform your assigned duties in a satisfactory manner, as determined in the sole discretion of the Company, and remaining employed in your current position (or any later assigned positions) with the Company, through the vesting date.
Separation from employment impacts the vesting and earning of this Grant. For details on the impact of employment separations, please review the Grant Terms. However, because the Grant is given to you as a special retention incentive, notwithstanding anything to the contrary in the Grant Terms or elsewhere, the concept of “Retirement” or of resignation or termination for “Good Reason” (or any like term or concept) will not apply to the Grant, meaning that no further earning, vesting or any other beneficial treatment will apply to the Grant upon any separation that would otherwise qualify as “Retirement” or resignation or termination for “Good Reason” (or any like term or concept) under the Grant Terms, the Fifth Third Bank, National Association Executive Severance Benefits Plan, the Fifth Third Bancorp Executive Change in Control Severance Plan, or any other plan, agreement or arrangement of the Company or any of its affiliates.
Any bonus, commission, compensation, or awards granted to you under the Plan is subject to recovery, or “clawback” by the Company in such amount and with respect to such time period as the Committee shall determine to be required by policy, applicable law, rules, or regulations if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise required by law. In addition, all executive compensation plans and awards are automatically amended as necessary to comply with the requirements and/or limitations under any other laws, rules, regulations, or regulatory agreements up to and including a revocation of this Grant.
Acceptance of the benefits set forth in this confirms your agreement to the Grant Terms except as modified herein, copies of which were delivered with this Grant Agreement, including the Confidential Information and Non-Solicitation Agreement located on the following pages. In the event of any conflict between the terms of this Grant Agreement, the Overview and the Plan, the terms of the Overview shall control, followed by this Grant Agreement and then the Plan.


In addition, you confirm that you have received, or have access to, the 2021 Incentive Compensation Plan Prospectus.

This Award will expire by its own terms unless accepted within 60 days of the grant date.
For Fifth Third Bancorp:
image_41a.jpg                                         [GrantDate]        
Tim Spence
Chairman, Chief Executive Officer and President

[AcceptanceDate]
[Signature]


        

































This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933,              as amended.




CONFIDENTIAL INFORMATION AND NON-SOLICITATION AGREEMENT
This Confidential Information and Non-Solicitation Agreement (“Agreement”) is made by and between Fifth Third Bancorp (which includes its subsidiaries and/or affiliated entities, hereinafter collectively referred to as “the Company”) and the undersigned Employee.
RECITALS
A.The Company is a diversified financial services company that operates three main businesses - Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management.
B.The Company has informed Employee herein that the execution of this Agreement, being in the best interests of the Company, is a condition of employment of the Employee or, in the case of an existing employee, to the continued employment of the Employee by the Company.
C.The Company has informed Employee herein that the execution of this Agreement is a condition of the receipt of any Long-Term Incentive Award issued under the Fifth Third Bancorp 2021 Incentive Compensation Plan.
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants contained herein, it is mutually agreed as follows:
AGREEMENT
SECTION I.    COVENANT NOT TO USE CONFIDENTIAL INFORMATION
A.As a necessary function of Employee’s employment with the Company, Employee will have access to, use, receive, and otherwise acquire various kinds of customer, business, and technical information relating to the Company’s business that is of a confidential nature to the Company, whether or not such information is specifically labeled as “confidential”. Employee agrees that such confidential information includes, for example, the following:
Current, prospective and former customer names and information, including but not limited to contact, financial and account information; product information; compensation plans and arrangements, including incentive compensation plans; performance specifications; pricing, profit margin, and other financial information; product specifications; vendor information; Company training, reference and/or educational materials; Company forecasts/plans/pipelines; objectives and strategies; quality control and/or compliance standards; business referrals, suppliers, and customer lists; unpublished works of any nature whether or not copyrightable; business plans; Company research and/or development materials relating to the Company’s business; information contained in pending patent applications; inventions, technical improvements, and ideas; and all other information and knowledge in whatever form used or useful in management, marketing, purchasing, finance, or operations of the Company’s business and any compilation of such information and all other similar information used by the Company that is not available to those outside of the Company (hereinafter collectively referred to as “Confidential Information”).
B.Employee also understands that he or she will occupy a position of confidence and trust with respect to the Company’s Confidential Information during his or her employment. Employee acknowledges and agrees that such Confidential Information is not generally known outside of the Company, that the Company has taken measures to guard the secrecy of its Confidential Information, that such information is extremely valuable and an essential asset of the Company’s business, and that such information, if disclosed without authorization to a third party or used by Employee for purposes other than conducting the Company business would cause irreparable harm to the Company and/or its customers.
C.Employee further agrees that, during Employee’s employment with the Company and following his or her termination for whatever reason, Employee will not disclose or use, directly or indirectly, or authorize or permit anyone under his or her direction to disclose to anyone, any Confidential Information of the Company that he or she obtains during the course of his or her employment relating to or otherwise concerning the business of the Company, whether or not acquired, originated, or developed in whole or in part by Employee.
D.The obligations set forth herein shall not apply to any trade secrets or Confidential Information that has become generally known to competitors of the Company through no act or omission of Employee, nor shall the obligations set forth herein apply to disclosures made pursuant to the Sarbanes-Oxley Act of 2002. However, Employee agrees that after termination of employment he or she will not compile pieces of information from several sources and assemble them together in any manner in an attempt to circumvent a violation of his or her confidentiality obligations to the Company or attempt to demonstrate thereby that any of the Confidential Information is in the public domain.
E.Under the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Employee’s attorney in relation to a lawsuit for retaliation


against Employee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
F.Employee understands that nothing contained in this Grant Agreement limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Grant Agreement does not limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

SECTION II.    COVENANT PROHIBITING COMPETITION AND SOLICITATION OF CUSTOMERS
Confidential Information and Trade Secrets of the Company gained by Employee during employment is developed by the Company through substantial expenditures of time, effort, and financial resources, and constitutes valuable and unique property of the Company. Employee acknowledges, understands, and agrees that the foregoing makes it necessary for the protection of the Company’s business that Employee does not divert business of the Company’s customers from the Company and that he or she maintain the confidentiality and integrity of Confidential Information and Trade Secrets. Therefore, Employee agrees that during his or her employment and for a period of one (1) year thereafter he or she will not:
A.Enter into an ownership, consulting or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company in any territory to which Employee was assigned and/or for which Employee was responsible for during the twenty-four (24) month period preceding Employee’s departure from the Company;
B.Solicit, divert, entice, or take away, or attempt to solicit, divert, entice or take away any customers in the Covered Territory with whom Employee had contact, involvement, or responsibility or regarding which Employee received Confidential Information (as defined in Section I.A. above) during the last two (2) years of employment with Fifth Third (the “Look Back Period”) (such customers to be referred to as “Customer(s)”) for the sale or provision of any product or service that competes with a product or service offered by Fifth Third and/or as to which Employee had material-involvement or about which Employee received confidential or proprietary information during the Look Back Period. “Covered Territory” is the geographic territory where Employee worked, to which Employee was assigned and/or for which Employee was responsible at any time during the Look Back Period;
C.Directly or indirectly solicit, divert, entice or take away any potential customer or business identified, selected or targeted by the Company in the Covered Territory with whom he or she had contact, involvement or responsibility during his or her employment with the Company during the Lookback Period, or attempt to do so for the sale of any product or service that competes with a product or service offered by the Company and as to which Employee had material involvement or about which Employee received Confidential Information during the Look Back Period; or
D.Accept or provide assistance in the accepting of (including, but not limited to, providing any service, information or assistance or other facilitation or other involvement) business or orders from customers or any potential customers of the Company in the Covered Territory with whom he or she has had material contact, involvement, or responsibility on behalf of any third party or otherwise for his or her own benefit.
Nothing contained in this Section shall preclude Employee from accepting employment with or creating his or her own company, firm, or business that competes with the Company so long as his or her activities do not violate any of the terms of this Agreement.
If Employee is located in either Nebraska or Oklahoma, the provisions of this Section II.(C). concerning potential customers shall not apply.
If Employee is located in Colorado, any choice of law, jurisdiction or venue provision in this Agreement does not apply with respect to any claims relating to Sections I-III.  Such claims (and only such claims) will be governed by Colorado law and may be adjudicated in the state or federal courts of Colorado.
SECTION III.    COVENANT NOT TO SOLICIT EMPLOYEES
Employee agrees that during his or her employment with the Company and for a period of one (1) year thereafter, he or she will not directly or indirectly, recruit, hire or attempt to recruit or hire, directly or by assisting others, any other employee of the Company, nor encourage any such employee to leave the employment of the Company. Among other things, this paragraph means that Participant agrees not to engage in discussions with any officer, manager, employee, or independent contractor of the Company in an attempt to induce or encourage the individual to end his or her relationship with the Company, not to share any Company officer, manager, employee, or independent contractor’s name or contact information with any other person or entity so that the person or entity can speak to the Company’s officer, manager, employee, or independent contractor about potentially leaving the Company, and not to participate in any interviewing or hiring of a Company officer, manager, employee, or independent contractor.




SECTION IV.    EMPLOYEE WARRANTIES
Employee represents and warrants that his or her employment with the Company and the performance of this Grant Agreement will not violate any express or implied obligation to any former employer or other party. Employee further represents that he or she has not brought with him or her and will not use or disclose during his or her employment with the Company any information, documents, or materials subject to any legally enforceable restrictions or obligations as to confidentiality or secrecy. Furthermore, Employee shall not make any agreements with or commitments to any person, firm, or corporation that would prevent, restrict, or hinder the performance of Employee’s duties and obligations under this Grant Agreement. In addition, Employee agrees that he or she shall share a copy of this Grant Agreement with any subsequent employer in order to ensure that there is no violation hereof, and Employee consents to the Company sharing a copy of this Grant Agreement with any such employer.
SECTION V.    OTHER PROVISIONS
A.Forfeiture and Clawback: If Employee breaches any of the terms of the restrictive covenants in Sections I., II., or III. of this Grant Agreement or if, at any time within the two (2) years after Employee separates from employment with the Company for any reason, Employee enters into an ownership, consulting, or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company, (a) the terms of Sections I., II., or III. of this Grant Agreement will be extended by the period of the breach, (b) any and all Restricted Stock Units granted under this Grant Agreement that are not yet vested shall be immediately and irrevocably forfeited, and (c) the Company shall have the right to clawback all restricted stock units awarded under this Grant Agreement (as well as any Shares (or the cash value of such Shares, if sold by Employee) or cash received by Employee in settlement of any vested restricted stock units. This paragraph does not constitute the Company’s exclusive remedy for any violation by Employee of his/her restrictive covenant obligations set forth in Sections I., II., or III. of this Grant Agreement, and the Company may seek additional legal or equitable remedies, including injunctive relief, for any action by Employee as described in this Section V.(A).
B.Governing Law and Arbitration: This Grant Agreement and all the rights, duties and remedies of the parties hereunder shall be governed by the laws of the state of Ohio. The parties expressly consent that any action or proceeding relating to this Grant Agreement or any other agreement entered into with respect to this Grant Agreement will be brought solely through binding arbitration pursuant to the terms and conditions of the Executive Severance Benefits Plan Mutual Agreement to Arbitrate entered into by the Company and Employee.
C.Severability: If any provision of this Grant Agreement is declared invalid or unenforceable, such provision shall be deemed modified to the extent necessary and possible to render it valid and enforceable.
D.Waiver/Modification: No waiver or modification of this Grant Agreement will be valid unless in writing and duly executed by the party against whom enforcement is sought. Failure of the Company to enforce any provision of this Grant Agreement shall not be construed as a waiver of such provision or of the right of the Company thereafter to enforce each and every provision.
E.At-Will Nature Of Employment: Employee understands that nothing in this Grant Agreement requires him or her to continue employment with the Company for any particular length of time or requires that the Company continue to employ him or her for any particular length of time.
F.Successors/Assigns: The terms and provisions of this Grant Agreement shall be binding on and inure to the benefit of the successors and assigns of the Company (including but not limited to any corporate successor of The Company) and Employee’s heirs, executors and personal representatives. As part of this provision, Employee understands and agrees that should Employee become employed by another entity owned or otherwise affiliated with Fifth Third Bancorp (such as its subsidiaries, divisions or unincorporated affiliates), the obligations of this Grant Agreement follow Employee to such other entity automatically and without further action, and that entity becomes the “Company” within the meaning of this Grant Agreement.
G.Obligation To Comply With Other Laws: The duties Employee owes the Company under this Grant Agreement shall be deemed to include federal, state and common law obligations of employees to their employers. This Grant Agreement is intended, amongst other things, to supplement the provisions of state trade secret law and duties Employee owes the Company under common law, including but not limited to the duty of loyalty, and does not in any way supersede any of the obligations or duties Employee otherwise owe the Company.
H.Entire Agreement. This Grant Agreement sets forth the entire agreement between the Company and Employee, and fully supersedes any and all prior agreements or understandings, whether written or oral, between Employee and the Company concerning the subject matter of this Grant Agreement. Notwithstanding the foregoing, this Grant Agreement does not alter the Fifth Third Bank, National Association Executive Severance Benefits Plan or the Fifth Third Bancorp Executive Change in Control Severance Plan, each of which shall survive in accordance with their respective terms.
I.Other Agreements: This Grant Agreement is in addition to and not in lieu of other non-solicitation, non-disclosure, and non-competition obligations Employee may owe to the Company.
J.Attorney’s Fees: If the Company must enforce any of its rights under this Agreement through legal proceedings, Employee agrees to reimburse the Company for all reasonable costs, expenses, and attorney’s fees incurred by it in connection with the enforcement of its rights.


K.Injunctive Relief: Employee acknowledges that should Employee violate any of the provisions of this Agreement, the Company will suffer irreparable harm and not have adequate an adequate remedy at law. Accordingly, Employee agrees that the Company may seek injunctive relief to restrain any such violation, as well as equitable relief, in a court of competent jurisdiction.
L.Counterparts: This Agreement may be signed in counterparts.
THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. They further acknowledge that they have exercised due diligence in reviewing this Agreement, and that each has been advised to, and has had adequate opportunity to consult with legal counsel or other advisors to the extent that each deemed such consultation necessary.




EX-10.77 7 fitb-123123xexx1077.htm EX-10.77 Document

Exhibit 10.77

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Restricted Stock Unit Grant Agreement


[Participant Name]

Fifth Third Bank, NA (the “Company”) would like to acknowledge your important role and the value you bring to our organization. As an expression of our commitment and desire to retain you, it is my pleasure to inform you that you are hereby granted the opportunity to earn an award of Restricted Stock Units (“Grant”), subject to the terms and conditions contained in this Grant Agreement, the applicable Long-Term Incentive Compensation Program Overview (“Overview”) and the terms of the Fifth Third Bancorp 2021 Incentive Compensation Plan (the “Plan”) (collectively, the Grant Agreement, Overview, and Plan shall be referred to herein as the “Grant Terms”). In addition, you understand and agree that as a condition of accepting this award, between the date of acceptance of this Grant and March 3, 2025, the Company may determine the need to place you in another role within the organization, based on business need. In such an event, your acceptance of this Grant further requires acceptance of the role and that you be available to assist with and otherwise fully cooperate with the transition of any required duties as needed.

Grant Date of Restricted Stock Units     [GrantDate]
Total Number of Restricted Units Granted [QuantityGranted]
Performance Goals Adjusted Return on Tangible Common Equity (ROTCE)
                                                                                     and Annual Risk Performance Evaluation Rating of
                                                                                     “Effective” or Above


The Restricted Stock Units subject to this Grant will vest on the third anniversary of the Grant Date, contingent on you continuing to perform your assigned duties in a satisfactory manner, as determined in the sole discretion of the Company, and remaining employed in your current position (or any later assigned positions) with the Company, through March 3, 2025.
Separation from employment prior to March 3, 2025, impacts the vesting and earning of this Grant. For details on the impact of employment separations, please review the Grant Terms. However, during this period between the acceptance of the Grant and March 3, 2025 because the Grant is given to you as a special retention incentive, notwithstanding anything to the contrary in the Grant Terms or elsewhere, the concept of “Retirement” or of resignation or termination for “Good Reason” (or any like term or concept) will not apply to the Grant, meaning that no further earning, vesting or any other beneficial treatment will apply to the Grant upon any separation that would otherwise qualify as “Retirement” or resignation or termination for “Good Reason” (or any like term or concept) under the Grant Terms, the Fifth Third Bank, National Association Executive Severance Benefits Plan, the Fifth Third Bancorp Executive Change in Control Severance Plan, or any other plan, agreement or arrangement of the Company or any of its affiliates.
Any bonus, commission, compensation, or awards granted to you under the Plan is subject to recovery, or “clawback” by the Company in such amount and with respect to such time period as the Committee shall determine to be required by policy, applicable law, rules, or regulations if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or as otherwise required by law. In addition, all executive compensation plans and awards are automatically amended as necessary to comply with the requirements and/or limitations under any other laws, rules, regulations, or regulatory agreements up to and including a revocation of this Grant.
Acceptance of the benefits set forth in this confirms your agreement to the Grant Terms except as modified herein, copies of which were delivered with this Grant Agreement, including the Confidential Information and Non-Solicitation Agreement located on the following pages. In the event of any conflict between the terms of this Grant Agreement, the Overview and the Plan, the terms of the Overview shall control, followed by this Grant Agreement and then the Plan.


In addition, you confirm that you have received, or have access to, the 2021 Incentive Compensation Plan Prospectus.

This Award will expire by its own terms unless accepted within 60 days of the grant date.
For Fifth Third Bancorp:
image_4.jpg                                        [GrantDate]                                                                    
    
    
Tim Spence
President and Chief Executive Officer

[AcceptanceDate]
[Signature]


        

































This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended.




CONFIDENTIAL INFORMATION AND NON-SOLICITATION AGREEMENT
This Confidential Information and Non-Solicitation Agreement (“Agreement”) is made by and between Fifth Third Bancorp (which includes its subsidiaries and/or affiliated entities, hereinafter collectively referred to as “the Company”) and the undersigned Employee.
RECITALS
A.The Company is a diversified financial services company that operates three main businesses - Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management.
B.The Company has informed Employee herein that the execution of this Agreement, being in the best interests of the Company, is a condition of employment of the Employee or, in the case of an existing employee, to the continued employment of the Employee by the Company.
C.The Company has informed Employee herein that the execution of this Agreement is a condition of the receipt of any Long-Term Incentive Award issued under the Fifth Third Bancorp 2021 Incentive Compensation Plan.
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants contained herein, it is mutually agreed as follows:
AGREEMENT
SECTION I.    COVENANT NOT TO USE CONFIDENTIAL INFORMATION
A.As a necessary function of Employee’s employment with the Company, Employee will have access to, use, receive, and otherwise acquire various kinds of customer, business, and technical information relating to the Company’s business that is of a confidential nature to the Company, whether or not such information is specifically labeled as “confidential”. Employee agrees that such confidential information includes, for example, the following:
Current, prospective and former customer names and information, including but not limited to contact, financial and account information; product information; compensation plans and arrangements, including incentive compensation plans; performance specifications; pricing, profit margin, and other financial information; product specifications; vendor information; Company training, reference and/or educational materials; Company forecasts/plans/pipelines; objectives and strategies; quality control and/or compliance standards; business referrals, suppliers, and customer lists; unpublished works of any nature whether or not copyrightable; business plans; Company research and/or development materials relating to the Company’s business; information contained in pending patent applications; inventions, technical improvements, and ideas; and all other information and knowledge in whatever form used or useful in management, marketing, purchasing, finance, or operations of the Company’s business and any compilation of such information and all other similar information used by the Company that is not available to those outside of the Company (hereinafter collectively referred to as “Confidential Information”).
B.Employee also understands that he or she will occupy a position of confidence and trust with respect to the Company’s Confidential Information during his or her employment. Employee acknowledges and agrees that such Confidential Information is not generally known outside of the Company, that the Company has taken measures to guard the secrecy of its Confidential Information, that such information is extremely valuable and an essential asset of the Company’s business, and that such information, if disclosed without authorization to a third party or used by Employee for purposes other than conducting the Company business would cause irreparable harm to the Company and/or its customers.
C.Employee further agrees that, during Employee’s employment with the Company and following his or her termination for whatever reason, Employee will not disclose or use, directly or indirectly, or authorize or permit anyone under his or her direction to disclose to anyone, any Confidential Information of the Company that he or she obtains during the course of his or her employment relating to or otherwise concerning the business of the Company, whether or not acquired, originated, or developed in whole or in part by Employee.
D.The obligations set forth herein shall not apply to any trade secrets or Confidential Information that has become generally known to competitors of the Company through no act or omission of Employee, nor shall the obligations set forth herein apply to disclosures made pursuant to the Sarbanes-Oxley Act of 2002. However, Employee agrees that after termination of employment he or she will not compile pieces of information from several sources and assemble them together in any manner in an attempt to circumvent a violation of his or her confidentiality obligations to the Company or attempt to demonstrate thereby that any of the Confidential Information is in the public domain.
E.Under the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to Employee’s attorney in relation to a lawsuit for retaliation


against Employee for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
F.Employee understands that nothing contained in this Grant Agreement limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). Employee further understands that this Grant Agreement does not limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.

SECTION II.    COVENANT PROHIBITING COMPETITION AND SOLICITATION OF CUSTOMERS
Confidential Information and Trade Secrets of the Company gained by Employee during employment is developed by the Company through substantial expenditures of time, effort, and financial resources, and constitutes valuable and unique property of the Company. Employee acknowledges, understands, and agrees that the foregoing makes it necessary for the protection of the Company’s business that Employee does not divert business of the Company’s customers from the Company and that he or she maintain the confidentiality and integrity of Confidential Information and Trade Secrets. Therefore, Employee agrees that during his or her employment and for a period of one (1) year thereafter he or she will not:
A.Enter into an ownership, consulting or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company in any territory to which Employee was assigned and/or for which Employee was responsible for during the twenty-four (24) month period preceding Employee’s departure from the Company;
B.Solicit, divert, entice, or take away, or attempt to solicit, divert, entice or take away any customers in the Covered Territory with whom Employee had contact, involvement, or responsibility or regarding which Employee received Confidential Information (as defined in Section I.A. above) during the last two (2) years of employment with Fifth Third (the “Look Back Period”) (such customers to be referred to as “Customer(s)”) for the sale or provision of any product or service that competes with a product or service offered by Fifth Third and/or as to which Employee had material-involvement or about which Employee received confidential or proprietary information during the Look Back Period. “Covered Territory” is the geographic territory where Employee worked, to which Employee was assigned and/or for which Employee was responsible at any time during the Look Back Period;
C.Directly or indirectly solicit, divert, entice or take away any potential customer or business identified, selected or targeted by the Company in the Covered Territory with whom he or she had contact, involvement or responsibility during his or her employment with the Company during the Lookback Period, or attempt to do so for the sale of any product or service that competes with a product or service offered by the Company and as to which Employee had material involvement or about which Employee received Confidential Information during the Look Back Period; or
D.Accept or provide assistance in the accepting of (including, but not limited to, providing any service, information or assistance or other facilitation or other involvement) business or orders from customers or any potential customers of the Company in the Covered Territory with whom he or she has had material contact, involvement, or responsibility on behalf of any third party or otherwise for his or her own benefit.
Nothing contained in this Section shall preclude Employee from accepting employment with or creating his or her own company, firm, or business that competes with the Company so long as his or her activities do not violate any of the terms of this Agreement.
If Employee is located in either Nebraska or Oklahoma, the provisions of this Section II.(C). concerning potential customers shall not apply.
If Employee is located in Colorado, any choice of law, jurisdiction or venue provision in this Agreement does not apply with respect to any claims relating to Sections I-III.  Such claims (and only such claims) will be governed by Colorado law and may be adjudicated in the state or federal courts of Colorado.
SECTION III.    COVENANT NOT TO SOLICIT EMPLOYEES
Employee agrees that during his or her employment with the Company and for a period of one (1) year thereafter, he or she will not directly or indirectly, recruit, hire or attempt to recruit or hire, directly or by assisting others, any other employee of the Company, nor encourage any such employee to leave the employment of the Company. Among other things, this paragraph means that Participant agrees not to engage in discussions with any officer, manager, employee, or independent contractor of the Company in an attempt to induce or encourage the individual to end his or her relationship with the Company, not to share any Company officer, manager, employee, or independent contractor’s name or contact information with any other person or entity so that the person or entity can speak to the Company’s officer, manager, employee, or independent contractor about potentially leaving the Company, and not to participate in any interviewing or hiring of a Company officer, manager, employee, or independent contractor.




SECTION IV.    EMPLOYEE WARRANTIES
Employee represents and warrants that his or her employment with the Company and the performance of this Grant Agreement will not violate any express or implied obligation to any former employer or other party. Employee further represents that he or she has not brought with him or her and will not use or disclose during his or her employment with the Company any information, documents, or materials subject to any legally enforceable restrictions or obligations as to confidentiality or secrecy. Furthermore, Employee shall not make any agreements with or commitments to any person, firm, or corporation that would prevent, restrict, or hinder the performance of Employee’s duties and obligations under this Grant Agreement. In addition, Employee agrees that he or she shall share a copy of this Grant Agreement with any subsequent employer in order to ensure that there is no violation hereof, and Employee consents to the Company sharing a copy of this Grant Agreement with any such employer.
SECTION V.    OTHER PROVISIONS
A.Forfeiture and Clawback: If Employee breaches any of the terms of the restrictive covenants in Sections I., II., or III. of this Grant Agreement or if, at any time within the two (2) years after Employee separates from employment with the Company for any reason, Employee enters into an ownership, consulting, or employment arrangement with, or render services for, any individual or entity rendering services or handling products competitive with the Company, (a) the terms of Sections I., II., or III. of this Grant Agreement will be extended by the period of the breach, (b) any and all Restricted Stock Units granted under this Grant Agreement that are not yet vested shall be immediately and irrevocably forfeited, and (c) the Company shall have the right to clawback all restricted stock units awarded under this Grant Agreement (as well as any Shares (or the cash value of such Shares, if sold by Employee) or cash received by Employee in settlement of any vested restricted stock units. This paragraph does not constitute the Company’s exclusive remedy for any violation by Employee of his/her restrictive covenant obligations set forth in Sections I., II., or III. of this Grant Agreement, and the Company may seek additional legal or equitable remedies, including injunctive relief, for any action by Employee as described in this Section V.(A).
B.Governing Law and Arbitration: This Grant Agreement and all the rights, duties and remedies of the parties hereunder shall be governed by the laws of the state of Ohio. The parties expressly consent that any action or proceeding relating to this Grant Agreement or any other agreement entered into with respect to this Grant Agreement will be brought solely through binding arbitration pursuant to the terms and conditions of the Executive Severance Benefits Plan Mutual Agreement to Arbitrate entered into by the Company and Employee.
C.Severability: If any provision of this Grant Agreement is declared invalid or unenforceable, such provision shall be deemed modified to the extent necessary and possible to render it valid and enforceable.
D.Waiver/Modification: No waiver or modification of this Grant Agreement will be valid unless in writing and duly executed by the party against whom enforcement is sought. Failure of the Company to enforce any provision of this Grant Agreement shall not be construed as a waiver of such provision or of the right of the Company thereafter to enforce each and every provision.
E.At-Will Nature Of Employment: Employee understands that nothing in this Grant Agreement requires him or her to continue employment with the Company for any particular length of time or requires that the Company continue to employ him or her for any particular length of time.
F.Successors/Assigns: The terms and provisions of this Grant Agreement shall be binding on and inure to the benefit of the successors and assigns of the Company (including but not limited to any corporate successor of The Company) and Employee’s heirs, executors and personal representatives. As part of this provision, Employee understands and agrees that should Employee become employed by another entity owned or otherwise affiliated with Fifth Third Bancorp (such as its subsidiaries, divisions or unincorporated affiliates), the obligations of this Grant Agreement follow Employee to such other entity automatically and without further action, and that entity becomes the “Company” within the meaning of this Grant Agreement.
G.Obligation To Comply With Other Laws: The duties Employee owes the Company under this Grant Agreement shall be deemed to include federal, state and common law obligations of employees to their employers. This Grant Agreement is intended, amongst other things, to supplement the provisions of state trade secret law and duties Employee owes the Company under common law, including but not limited to the duty of loyalty, and does not in any way supersede any of the obligations or duties Employee otherwise owe the Company.
H.Entire Agreement. This Grant Agreement sets forth the entire agreement between the Company and Employee, and fully supersedes any and all prior agreements or understandings, whether written or oral, between Employee and the Company concerning the subject matter of this Grant Agreement. Notwithstanding the foregoing, this Grant Agreement does not alter the Fifth Third Bank, National Association Executive Severance Benefits Plan or the Fifth Third Bancorp Executive Change in Control Severance Plan, each of which shall survive in accordance with their respective terms.
I.Other Agreements: This Grant Agreement is in addition to and not in lieu of other non-solicitation, non-disclosure, and non-competition obligations Employee may owe to the Company.


J.Attorney’s Fees: If the Company must enforce any of its rights under this Agreement through legal proceedings, Employee agrees to reimburse the Company for all reasonable costs, expenses, and attorney’s fees incurred by it in connection with the enforcement of its rights.
K.Injunctive Relief: Employee acknowledges that should Employee violate any of the provisions of this Agreement, the Company will suffer irreparable harm and not have adequate an adequate remedy at law. Accordingly, Employee agrees that the Company may seek injunctive relief to restrain any such violation, as well as equitable relief, in a court of competent jurisdiction.
L.Counterparts: This Agreement may be signed in counterparts.
THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. They further acknowledge that they have exercised due diligence in reviewing this Agreement, and that each has been advised to, and has had adequate opportunity to consult with legal counsel or other advisors to the extent that each deemed such consultation necessary.

EX-19 8 fitb-123123xexx19.htm EX-19 Document
Exhibit 19
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Enterprise Insider Trading and Ethical Investing Policy

1.Policy Statement
This Policy sets forth standards of conduct applicable to all directors and employees of Fifth Third whenever you or any of your Family Members (defined below) are conducting securities transactions, whether on behalf of yourself or others. “Family Members” include (a) your spouse and any other relatives who reside in the same household as you, and (b) any trust or other entity controlled by you.

2.Background
Federal and state laws prohibit you and your Family Members from buying, selling, recommending or making other transfers of securities if you are aware of material, nonpublic information (“MNPI”) about the issuer of the securities. These laws also prohibit you from disclosing this information to others, including Family Members, who may trade in those securities. The consequences of an insider trading violation can be severe, both for you and for Fifth Third. Fifth Third has adopted this Policy to protect you and the Bank from serious penalties and reputational harm that can result from violations of the insider trading laws.

3.Prohibition Against Trading While in Possession of MNPI
You may, from time to time, have access to MNPI concerning Fifth Third, its customers or suppliers, or other companies. The following statement regarding the use and disclosure of this information applies to all your activities, whether related to your official duties for Fifth Third or to your personal affairs:
 
Neither you or any Family Member, who is aware of MNPI about Fifth Third may, directly or indirectly (1) buy or sell securities (other than in compliance with this Policy and any applicable supplemental policies), (2) engage in any other action to take personal advantage of that information, or (3) pass that information on to others either inside or outside Fifth Third, except on a reasonable need-to-know basis that furthers a legitimate business purpose of Fifth Third or the subject company in accordance with the Enterprise Information Wall Policy (available in the Policy Center). This prohibition includes offering trading recommendations or strategies based upon MNPI.

In addition, neither you or your Family Member who learns MNPI about a company with which Fifth Third does business, including a customer, vendor or entity with which Fifth Third is negotiating or has negotiated a transaction, such as a merger, or acquisition, may directly or indirectly trade in that company’s securities until the business day after the information becomes public or is no longer material.
 
4.Material, NON-PUBLIC Information
MNPI is information that a reasonable investor would consider important in deciding whether to buy, sell or hold a company’s securities and has not been fully disclosed and made available to the general public (in other words, if the information is reasonably certain to have an effect on the price of the securities, whether such effect is positive or negative). Fifth Third generally considers information nonpublic until the expiration of one business day following a press release, a public filing with a relevant securities regulator, e.g., the Securities and Exchange Commission, or the appearance of an article in a newspaper or other publication of general circulation.



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Enterprise Insider Trading and Ethical Investing Policy


Some examples include:
•quarterly or annual earnings or operational results
•information about changes in financial conditions, forecasts or projections
•new securities offerings, buy-backs or splits
•significant restructuring plans
•defaults under a credit agreement
•changes in senior management
•the awarding or cancellation of a major contract
•significant events in the company’s securities (e.g. large activist investment)
•a proposed merger, acquisition or divestiture
•changes in auditors and agreements/disagreements with auditors
•pending or threatened litigation
•significant cybersecurity risks or incidents

If you are unsure as to whether a piece of information would be considered MNPI, please consult the Securities Team in the Legal Department (“Legal Department”) or the Control Group.
5.Speculative Trading
You may not engage, directly or indirectly, in speculative trading or hedging strategies with respect to Fifth Third securities. This generally prohibits short sales and trading in puts, calls and other options or derivatives on Fifth Third securities unless the transaction is for legitimate non-speculative purposes and you have obtained prior approval for such transaction from the Control Group. It also prohibits the use of margin or leverage/credit to purchase Fifth Third securities.
6.Holding Period
You and your Family Members are prohibited from selling any Fifth Third security within 30 calendar days of its purchase.

This 30-day restriction does not apply to (a) the sale of shares vested from awards issued under Fifth Third Incentive Compensation Plan (e.g., restricted stock units), (b) the exercise of options to purchase shares of Fifth Third issued stock and the immediate sale of the same or identical shares (including "cashless exercise transactions” applicable to options or stock appreciation rights), or (c) the sale of shares purchased as part of the Employee Stock Purchase Program.

7.Ethical Investing
Short-term speculative trading and excessive trading are strongly discouraged. Personal trading that interferes with your job responsibilities is prohibited. You are prohibited from trading in any company for which you have coverage responsibilities or participating in initial public offerings of securities without written consent from the Control Group and your manager. Additionally, where you have responsibility for specific industry group coverage, you are discouraged from trading in the securities and associated derivatives of companies in that industry group, vertical or in any other sector in which you may have coverage responsibilities that could provide you with information not generally available to the public.

You may not execute trades for your own accounts in advance of a client or proprietary order in the same security, financial instrument or a derivative based on that security or financial instrument.


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Enterprise Insider Trading and Ethical Investing Policy


If requested by the Control Group, you must provide copies of trade confirmations or account statements to ensure compliance with this Policy.

8.Individual Responsibility
You are responsible for complying with this Policy on behalf of yourself and your Family Members. You must never engage in investment practices that violate securities regulations or the letter or the spirit of this Policy, that are illegal, improper, or unethical or that present a potential or actual conflict of interest. Furthermore, Fifth Third encourages you to invest in a responsible manner with a view to achieving long-term financial goals.

9.Consequences of Violations
Violation of any portion of this Policy constitutes grounds for disciplinary action, including termination of employment. Violations also may result in serious civil and criminal penalties including substantial fines, jail terms or sanctions against you, your Family Members or Fifth Third.

10.Supplemental Policies
This Policy should be read in conjunction with the Enterprise Information Wall Policy applicable to all employees. Additionally, there are further supplemental policies (collectively referred to as the “Supplemental Policies”) applicable to departments or groups within Fifth Third, which, because of their specific activities, may have enhanced access to, or an enhanced risk associated with, MNPI (each, a “Designated Unit”). It is your responsibility to become familiar with, understand and comply with all supplemental policies that relate to your area of responsibility. The Supplemental Policies generally are designed to (i) prevent the flow of information from employees in units that may receive MNPI about issuers of securities to employees in units that buy, sell or recommend securities to fiduciary and non-fiduciary accounts and (ii) address other issues raised by the specific activities of each Designated Unit. The Supplemental Policies also may impose additional restrictions on personal securities transactions.

In addition, please refer to Appendix B for Frequently Asked Questions relating to this Policy.
 
11.Overview & Control
Any exception to this Policy must be granted by the Control Group in writing. If you have knowledge or information regarding a possible violation of the Policy, you have a responsibility to immediately report it to your manager and the Control Group.

It is the responsibility of management, Compliance, the Legal Department and the Control Group, to administer and enforce this Policy.

12.Reference Materials and Related Policies / Procedures
Related Reference Materials:

N/A




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Enterprise Insider Trading and Ethical Investing Policy


Related Policies & Procedures:
•Enterprise Information Wall Policy
•FTS Designated Broker Dealer Policy (as part of the WSP)
•Supplemental Policy for Access Persons
•Supplemental Policy for Restricted Employees



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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees



Appendix A
List of Approved Broker-Dealers
Bank of America Merrill Lynch
Charles Schwab
Fidelity Investments
Fifth Third Securities / Fifth Third Bank (PCS and IM&T)
Edward Jones
TD Ameritrade




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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees


Appendix B
Insider Trading
Long Term Incentive Compensation Awards
Frequently Asked Questions

ACCOUNT RELATED
Q1: I need to transfer my account to an approved broker. Are there any brokers on the list that cover transfer fees?
A: Most brokers have various programs that cover transfer fees if you ask them. Please reach out to the broker for more information.
Q2: Do I need to disclose my account held directly with a Transfer Agent?
A: Yes. You must disclose all accounts held directly with Transfer Agents.
Additional guidance for Transfer Agent accounts:
•Fifth Third Employee Stock Purchase Plan (ESPP) through American Stock Transfer – no requirement to transfer, however sales must be pre-cleared.
•Employment benefit related account with a Transfer Agent (not Fifth Third) – no requirement to transfer, however sales must be pre-cleared.
•DRIP or direct purchase account with Transfer Agent – currently, employees must disclose the account and pre-clear sales.
Q3: I’ve had a relationship with my broker for a very long time and they are not on the approved broker list. What options do I have?
A: In order to maintain your account with the unapproved broker, you have the option of changing the account to a fully managed account. This type of account would provide the money manager full discretion for investment selections in the account, without your prior consultation. You can also switch the account to be a mutual fund only account (a mutual fund only account is a brokerage account that does not permit purchases of securities). Otherwise, the account will need to be transferred to an approved firm.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees
Q4: The Policy requires that I disclose the accounts of all family members of my household; however, my household includes an adult son or daughter that makes their own investment decisions. What options do I have?
A: The Policy strictly requires that the accounts of immediate family members living in the same household must be disclosed. The family member could consider other non-brokerage investment options (mutual fund only account).
Q5: Do 401k accounts at a previous employer or in the name of a spouse or partner need to be disclosed?
A: Prior employer 401k accounts that have been moved to a brokerage account (e.g., Self-Directed or Managed IRA) need to be disclosed. Prior employer 401k accounts that are still with the previous employer and are limited to investments chosen by the 401k provider do not need to be disclosed, unless the plan allows for a segregated directed or managed participant account.
Q6: If I have a brokerage account that has zero dollars in the account or only hold mutual funds currently do I need to disclose it?
A: Yes. If the account is still open and permits the ability to buy stock or any other required securities subject to pre-clearance.
Q7: May I continue to retain physical stock certificates?
A: Yes, however once you decide to sell the shares, you must pre-clear the sale through an approved brokerage account.
Q8: Do I need to disclose the Fidelity account that Fifth Third Bank opened on my behalf so I can receive LTI?
A: Yes, you are required to disclose all brokerage accounts that are not considered to be an exempt account.





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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees


LTI AWARD STOCK
Q1: Am I subject to Fifth Third’s Insider Trading Policy?
A: All employees are subject to Fifth Third’s Insider Trading Policy, which prohibits trading in Fifth Third securities while in possession of material non-public inside information (“MNPI”). Information is MNPI if a reasonable investor would consider the information relevant to an investment decision in the company’s securities. The Insider Trading Policy can be found under the Resources tab > Policy Center on the Fifth Third Employee Center intranet website. All employees should familiarize themselves with this policy. In addition, please note that you may also be subject to supplemental policies based on your job function. Please contact the Control Group by email or phone if you need to confirm which supplemental policies are applicable to you and where to find them.
Q2: Am I subject to Fifth Third’s blackout calendar?
A: The blackout calendar is intended to identify those dates surrounding Fifth Third’s quarterly earnings when MNPI regarding Fifth Third’s performance is available but not disclosed to the public. Individuals on Enterprise and others designated as “access persons” (also commonly referred to as “insiders”) are prohibited from trading in Fifth Third securities during these dates. If you are an insider or access person, you will have been notified of this status and you will have received a copy of the blackout calendar. Note that the blackout calendar is subject to change without advance notice. Please contact the Control Group if you want to confirm whether you are designated as an insider and to obtain a copy of the current blackout calendar. In addition, please note that you may never trade in Fifth Third securities while in possession of MNPI regardless of whether there is a blackout.
Q3: Do I need to preclear my trades of Fifth Third stock?
A: Individuals designated as insiders are required to preclear trades of Fifth Third securities, including exercises of SARS and options. If you are an insider, you will have been notified.
If you have not been designated as an insider, but you are subject to the preclearance requirement, you are required to preclear trades of Fifth Third securities including the sale of FITB shares from exercising SARS or RSUs.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees
Please contact the Control Group if you want to confirm whether you are subject to a pre-clearance requirement.
Q4: Are my equity compensation awards subject to insider trading rules and blackout periods?
A: Sales of Fifth Third securities may not occur when you are in possession of MNPI. RSU vestings (including share settled withholdings) and other equity award vestings are not subject to these restrictions.
Q5: How can I monetize my equity awards or otherwise transact in Fifth Third securities given that I do not control when I may have access to MNPI (through quarterly blackouts, special blackouts, etc. that may be applicable to me without advance notice or defined end points)?
A: Special blackouts can occur without prior notice and can last for extended periods. In order to comply with insider trading regulations, it is important to plan ahead if you have a future need to monetize your existing awards. If you are not in possession of MNPI, you can establish a non-discretionary plan during an open window period that permits sales of Fifth Third stock during quarterly and special blackout periods. This is referred to as a 10b5-1 plan (see Q6 for more information). Please contact your broker if you would like to establish a 10b5-1 plan. Additionally, if you are not also a Section 16 Officer, you may place your Fifth Third securities in an account for which you have no discretion over the trading (a “Managed Account”) with the approval of Control Group.
Q6: Under what circumstances is an instruction to Fidelity to automatically exercise or sell Fifth Third shares compliant with 10b5-1?
A: Generally speaking, a compliant 10b5-1 plan must be made in advance of the prospective trade and during an open window when the insider is not in possession of MNPI. In addition, the instruction must (a) specify the amount, the price and the date on which securities are to be purchased or sold, (b) include a written formula, algorithm, or computer program, for determining the amount, price and date for each sale or purchase and (c) not permit the employee to exercise any subsequent influence over how, when or whether to effect purchases or sales. Additionally, for any individual, other than Access Persons, a Rule 10b5-1 Plan must include a mandatory cooling-off period of at least 30 days after the adoption of the plan.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees


See Supplemental Policy for Access Persons regarding the required cooling-off period for Access Persons. An individual may not use multiple overlapping Rule 10b5-1 plans and may only have one single-trade plan during any consecutive 12-month period. Any individual entering into a Rule 10b5-1 plan is required to act in good faith. As Rule 10b5-1 has complex requirements, a Fifth Third broker can work with a member of Fifth Third’s Securities Legal Department to assist you to ensure your instructions are compliant.
Q7: Am I allowed to place standing or limit orders with respect to my Fifth Third securities?
A: Unless the standing or limit order is executed under an approved Rule 10b5-1 plan, such trades must be pre-approved and pre-clearance approvals generally expire at the end of the calendar day following the approval date. Thus, Good-til-Cancelled (standing) and limit orders are discouraged because they may not coincide with the pre-clearance time limits.
Q8: Can a Fifth Third broker view and manage my Fifth Third LTI grants for me?
A: Yes. You can elect to give your Fifth Third wealth planner/broker various levels of access and discretion over your Fidelity account.
Q9: How and when can I transfer shares from my Fidelity account to my Fifth Third brokerage account?
A: You are able to transfer the share proceeds from vests and/or exercises as soon as the shares settle in your Fidelity brokerage account. To transfer shares from Fidelity to Fifth Third, you will need to contact your Fifth Third broker to assist in completing the steps involved.

TRUST ACCOUNTS
Q1: My parent has me listed as a beneficiary on their account for estate planning purposes, or, I am a remainder beneficiary of a trust. Do I need to disclose these accounts? For example, a parent or relative that has established a trust will distribute in part or all to you upon their death.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees
A: No. If you are only listed on the account as a death remainder beneficiary and have no other control over the account or trust, you do not need to disclose the account. If you have any type of current interest or responsibility as it relates to the trust it should be disclosed.
Q2: I am a successor trustee for a trust account. Do I need to disclose the account?
A: Not at this time. You will need to disclose the account once you become a trustee or co-trustee for the account.

SPOUSE IS A BROKER
Q1: My spouse works at a broker dealer that requires our accounts be held at that broker dealer due to regulations. What am I supposed to do in this case?
A: You should disclose the existing unapproved brokerage account in PTA and contact the Control Group for additional guidance specific to your circumstance.

OPTIONS TRADING
Q1: Do Option Exercises need to be pre-cleared?
A: Yes. Prior to exercising, a pre-clearance request should be entered into PTA to sell the underlying symbol and equivalent share amount.
Q2: Do I need to pre-clear when an option is assigned to me?
A: No. The investment decision was made when the option position was established.

PLEASE NOTE
-If you have disclosed a Fidelity brokerage account, please watch for an Alert from Fidelity which requires you to authorize the electronic feed of trade confirms to Fifth Third Bank. This does not apply to employees who are registered with Fifth Third Securities.
-Recorded training sessions for Access Persons are available for your review on Legal’s intranet page under the Corporate Law tab. Training sessions for Restricted Employees are located on Compliance Risk Management’s intranet page.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees


1.0Introduction
This Supplemental Policy for Restricted Employees (“Policy”) is a supplement to the Enterprise Insider Trading and Ethical Investing Policy (the “Insider Trading Policy”), which is incorporated herein. All defined terms not otherwise defined herein are as defined in the Insider Trading Policy.
2.0Restricted Employee Personal Trading Requirements

1.1Restricted Employee

You are receiving this Supplemental Policy because you have been designated as a Restricted Employee due to your potential access to third party MNPI in your job function. You will have additional requirements and monitoring of your personal trading in order to ensure compliance with applicable securities law.

1.2Required Disclosures

You are required to disclose all Personal Securities Accounts except for certain Exempted Accounts as defined below. Restricted Employees are obligated to update this information with any change as soon as possible. If a Restricted Employee is required to move an account(s) to a Designated Broker Dealer (reference Appendix A to the Insider Trading Policy) they must cease all trading activity in their current account(s) (liquidations may be allowed with prior Control Group approval) and complete the account transfer as detailed in the notification. If any equity or debt securities are held in certificate form, liquidations must be transacted in an account that has been disclosed and approved by the Control Group, in accordance with the Designated Broker Requirement as defined in the Policy.

1.3Personal Securities Accounts

A "Personal Securities Account" includes any securities account in which a Restricted Employee or his/her Affiliate has beneficial ownership, including, but not limited to, the following:

•Investment accounts in the name of the Restricted Employee;
•Investment accounts in the name of the employee's spouse or domestic partner, children of employee or employee's spouse that live with the employee, or in certain circumstances other individuals who are financially dependent on the employee (please contact the Control Group for further guidance);
•Investment accounts in which the employee, spouse, domestic partner, or dependents have a financial or beneficial interest or "influence or control," including, but not limited to, investment clubs, joint accounts or partnerships, trusts, IRAs and other self-directed retirement accounts.
•Note: "Influence or control" means any account for which the employee, or their Affiliates have an ability to prompt, induce or otherwise effect transactions in the account. "Influence or control" encompasses a wide variety of factual situations.





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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees
1.4Exempted Accounts

An “Exempted Account” is any of the following type of account(s) and does not require disclosure:

•An account that has been exempted from any or all requirements of this Policy by written consent of the Control Group;
•529 Plans;
•Employee Benefit Plans; Accounts established for participation in an employee benefit plan without the ability to trade or hold individual stocks. For example, a 401k plan from a previous employer if they cannot transact in individual stocks;
•Securities held directly in the following circumstances when not held in brokerage accounts:
oMutual fund positions held directly with the issuing mutual fund company
oDirect Obligation of the U.S. Government when held directly with the Federal Reserve Bank in book entry form or in certificate or bearer form
oMoney Market Instruments such as banker acceptances, CDs, repurchase agreements or commercial paper, when held directly with the issuer
•Mutual Fund-only accounts: accounts that are operationally restricted to trade in mutual funds only. Documentation may be required by the Control Group, including but not limited to a letter from the broker dealer signed by Compliance, Legal or a Designated Manager attesting that the account is restricted to Mutual Funds only.
•Annuities

Note that any exception or designation as “Exempted Account” is at the discretion of the Control Group.

1.5Managed Accounts

A “Managed Account” is an account consisting of money or securities that a client entrusts to a manager, who makes all investment decisions. The client is normally charged a management fee and has no investment discretion over the account. All investment decisions are made without the prior knowledge or consent of the client and non-managed assets are not permitted in the account.

While Managed Accounts are not required to be held at an approved Broker-Dealer, they must be disclosed to the Control Group upon opening a new account or upon coverage notification and disclosure. You may be asked to provide a copy of the executed investment management or advisory agreement.  Additionally, Access Persons may not hold or trade any Fifth Third stock in any Managed Account, without the approval of Legal, as detailed in the Supplemental Policy for Access Persons. The Financial Advisor managing any managed account on behalf of the employee may not be an Affiliate or immediate relative of the Employee. Robo Advisors (e.g. Wealthfront, FidelityGo, OptiFi and Betterment) are considered Managed Accounts, and must be disclosed to the Control Group. 

If an account is Managed and subsequent changes are made which permit you or your Affiliates to direct trades in the account, you may be required to move to an approved broker dealer.

1.6Designated Broker Dealer Requirement

Restricted Employees and their Affiliates are required to maintain their Personal Securities Accounts with one of the designated broker dealers noted in Appendix A to the Insider Trading Policy, unless it is an Exempted Account or a Managed Account.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees



Duplicate Trade Confirmations and Statements

Upon request, all Restricted Employees are responsible for ensuring that duplicate trade confirmations and account statements (or their equivalent) for Personal Securities Accounts held outside of the approved broker dealers are forwarded to the Control Group. The request may be for ongoing statements to be provided for a specific time period and may include statements for Managed Accounts.

Acknowledgement of this policy by the employee shall serve as express consent for the Control Group to receive electronic feeds of trading activity (e.g., trade confirmations and statements), as appropriate from the employee’s broker.

1.7Pre-Clearance Requirement

Subject to the exceptions set forth below, Restricted Employees are required to obtain pre-approval for every self-directed purchase or sale of a Security executed in a Personal Securities Account. This procedure also applies to trades executed by Affiliates of Restricted Employees. Restricted Employees should enter details of the trade request into the PTA system. Shortly after submitting the trade request, the system will provide an in-browser response whether the request has been approved, denied, or is pending review. Restricted Employees and their Affiliates are prohibited from placing orders to trade a security until approval is received.

Restricted Employees who are traveling or do not have access to the intranet may contact the Control Group for pre-clearance requests.

All trade approvals expire at the end of the following calendar day. Restricted Employees are responsible for obtaining pre-clearance, as noted above, until the trade is executed. Good-till-canceled (“GTC”) limit orders are strongly discouraged. Restricted Employees who place a GTC limit order are solely responsible for obtaining pre-clearance approval as noted above, until the trade executes. If a GTC/Limit order is executed subsequent to the inclusion of the security on the Restricted List, it may be reported as a violation which could result in a trade reversal or other disciplinary actions.

Note Regarding Approvals Received on Fridays and/or before Market Holidays. Trade Approvals are valid through the end of the next calendar day. If a request is submitted on a Friday or the day before a market holiday, the approval is no longer valid the next trading/business day.

1.8Exemptions from the Pre-Clearance Requirement

Certain Restricted Employees may not be subject to the pre-clearance requirement as stated in their Business Unit Procedures and will be notified of their exemption.

Transactions by Restricted Employees in the following are exempt from the pre-clearance requirement noted above:

•Transactions effected in an Exempted Account;
•Transactions in a Managed Account;


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Restricted Employees
•Employees who are restricted solely by virtue of their access to AmTrust;
oNote: this exemption does not apply to employees who are otherwise considered Above the Wall
oNote: Employees of affiliated Registered Investment Advisors (“RIA”) should follow the requirements set forth in RIA’s applicable policies
•U.S. Treasury and other Government Agency Obligations such as mortgage-backed securities issued by the Government National Mortgage Association;
•Municipal securities;
•Broad based Index securities, including other securities that track a broad-based index;
•Futures and options on futures. However, a proposed trade in a "single stock future" (a security future which involves a contract for sale for future delivery of a single security) is subject to this Policy's pre-clearance requirement;
•Commodities;
•Sovereign securities;
•Foreign exchange contracts;
•Currency transactions;
•Transactions effected pursuant to an Automatic Investment Plan. Note this does not include transactions that override or otherwise depart from the pre-determined schedule or allocation features of the investment plan;
•Mutual funds (open-end and closed-end);
•Unit Investment Trusts (“UlTs”); and
•Exchange-traded funds (“ETFs”) and Exchange-traded notes (“ETNs”).

3.0Definitions

"Affiliate" includes a family or household member, such as a spouse or domestic partner or dependent children that live with the Restricted Employee or any other person who derives his or her primary means of non-employment financial support from the Restricted Employee.

"Restricted List" is a list of securities, maintained by the Firm, in which certain transactions are restricted or prohibited


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Access Persons


1.Introduction
This Supplemental Policy for Access Persons (“Policy”) is a supplement to the Enterprise Insider Trading and Ethical Investing Policy (the “Insider Trading Policy”), which is incorporated herein. Please note that most “Access Persons” (defined below) will also be designated as “Restricted Employees,” subject to the Supplemental Policy for Restricted Employees. If you have been designated as a Restricted Employee, you will be notified by the Control Group. All defined terms not otherwise defined herein are as defined in the Insider Trading Policy.
2.Access Persons and Section 16 Officers
Fifth Third will designate certain individuals as Access Persons. “Access Persons” include: (1) all Fifth Third Bancorp directors and executive officers designated as “Section 16 Officers” using the guidelines set forth under Section 16(a) of the Securities and Exchange Act of 1934; (2) all members of Bancorp’s Enterprise Committee, (3) other employees designated by the Legal Department or the Control Group, and (4) their Family Members. Access Persons may also be referred to as “insiders”. Fifth Third will notify you if you are designated as an “Access Person” and provide you with a copy of this Policy. In the event that you have a question regarding your status as an Access Person, please contact the Control Group.
Section 16 Officers are subject to additional insider trading controls due to their enhanced access to MNPI. Fifth Third will notify you if you are designated as a “Section 16 Officer.” If you have a question regarding your status as a Section.
3.Restricted Periods and Preclearance
Quarterly Blackouts. If you are an Access Person, you may only conduct trading in Fifth Third securities during open “Window Periods”, provided that (1) you do not have material non-public Information (“MNPI”) and (2) you have received clearance for the transaction in accordance with this Policy. Window Periods typically open one business day after Fifth Third releases its quarterly or annual earnings to the public and close on the third Tuesday of the third month of every calendar quarter. However, the Window Period is subject to change without advance notice, and you must inquire from the Control Group whether the Window Period is open as a part of your request for pre-clearance.
MNPI is information that a reasonable investor would consider important in deciding whether to buy, sell or hold a company’s securities and has not been fully disclosed and made available to the general public. For additional details on what constitutes MNPI, including common examples, please refer to the Insider Trading Policy.
Preclearance Requirement. If you are an Access Person, you must preclear any transaction in Fifth Third securities, including any exercise of SARS or options. If you are granted preclearance to trade, you must execute the proposed transaction in Fifth Third securities within the following calendar day, provided you are not otherwise in possession of MNPI regarding Fifth Third. If for any reason the trade is not completed within the following calendar day after preclearance is granted, a new preclearance must be obtained.
Special Blackouts. From time to time, Fifth Third may deny your request for preclearance in connection with a special, event-driven “Blackout Period.” You may be directly notified of an event-specific Blackout Period or you may be denied preclearance without prior notice when you attempt to initiate your trade.


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Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Access Persons


Since the existence of an event-specific Blackout Period may not be announced to all Fifth Third employees or all Access Persons, you are prohibited from communicating the denial of your preclearance request to any other Fifth Third employee. If you inadvertently inform someone of an event-driven Blackout Period to which they were not already subject, please inform the Control Group immediately.
Pension Fund Blackouts. The Sarbanes-Oxley Act of 2002 requires Fifth Third to prohibit all purchases, sales or transfers of Fifth Third securities by Section 16 Officers during a pension fund blackout period. A pension fund blackout period exists whenever 50% or more of the plan participants are unable to conduct transactions in their accounts for more than three consecutive days. These blackout periods typically occur when there is a change in the retirement plan’s trustee, record keeper or investment manager.
All Access Persons who are not Section 16 Officers may obtain pre-clearance through the PTA system, or by contacting the Control Group.
All Section 16 Officers may obtain pre-clearance, or confirm information relating to restricted periods, by contacting the Legal Department.
Please note that you may suffer monetary loss as a result your inability to effect transactions in Fifth Third securities during certain periods as set forth in this Policy. Fifth Third is not liable for any losses incurred in connection with your adherence to the Insider Trading Policy and this Policy.

4.Approved Brokerage Accounts
All Access Persons (except non-employee Access Persons) are prohibited from maintaining investment accounts at broker-dealers that have not been approved by Fifth Third, unless all trading is done through an approved “Managed Account” (defined below). The set of approved broker-dealers is found on Appendix A to the Insider Trading Policy. Upon request, all Access Persons are required to provide to the Control Group proof of compliance with the broker restrictions set forth in this Policy.
5.Exemptions to Trading Prohibitions1
Rule 10b5-1(c) of the Securities Exchange Act provides a defense from insider trading liability if trades occur pursuant to a pre-arranged trading plan that meets specified conditions. Under this rule, if an individual enters into a binding contract, provides instructions or adopts a written plan to purchase or sell securities that specifies the amount, price and date on which securities are to be purchased or sold, and these arrangements are established at a time when such individual is not aware of MNPI, then a defense to insider trading liability may be claimed for transactions occurring under the trading plan. Additionally, for trading plans entered into by Access Persons to qualify for the affirmative defense under Rule 10b5-1(c), the plan must include a mandatory cooling-off period of the later of (1) 90 days following plan adoption or modification or (2) two business days following disclosure in a periodic report of Fifth Third’s financial results for that fiscal quarter; in any event, the required cooling-
1 Note to Fifth Third: please note that the definition of Access Person is more inclusive than directors and officers that are required to have such an extended cooling-off period.


image_2.jpg

Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Access Persons


off period need not exceed 120 days. Should Access Persons adopt or modify a Rule 10b5-1 plan, they are required to provide certification that they were unaware of any MNPI about Fifth Third at the time of adoption or modification and that the Rule 10b5-1 plan was made in good faith.
Thus, Access Persons may effect transactions in Fifth Third securities during closed Window Periods, Blackout Periods, or anytime when in possession of MNPI, if such transactions are pursuant to an approved 10b5-1 plan or an approved Managed Account. Access Persons must obtain preclearance from the Legal Department prior to establishing a 10b5-1 plan or a Managed Account. Fifth Third reserves the right to bar any transactions pursuant to a 10b5-1 trading program or Managed Account in Fifth Third securities if it determines that such a bar is in the best interests of the Bancorp.
A “Managed Account” is an account consisting of money or securities that an individual entrusts to a manager, who makes all investment decisions. Such individual generally has no investment discretion over the account. All investment decisions are made without prior knowledge or consent and non-managed assets are not permitted in the account.
The prohibitions regarding transactions during closed Window Periods, Blackout Periods or while in the possession of MNPI do not apply to (1) ordinary course vesting of equity awards, (2) the forfeiture of shares to pay taxes upon vest of such awards or (3) purchases under the Employee Stock Purchase Plan (“ESPP”) pursuant to periodic payroll contributions.
6.Section 16 Officer Reporting Obligations
Section 16 Officers are subject to reporting obligations with respect to their transactions in Fifth Third securities pursuant to Section 16(a) of the Exchange Act.
Form 3
If you have been designated as a Section 16 Officer, you will be required to file a Form 3 with the SEC to establish your status as a Section 16 Officer. The Form 3 must be filed within 10 days after your appointment as a Section 16 Officer.
Forms 4
If you have been designated as a Section 16 Officer and there is any change in your ownership of Fifth Third securities at any time, other than through certain exempt benefit plans, you must file a Form 4 with the SEC reporting the change. This includes transactions pursuant to a 10b5-1 trading plan or a Managed Account. A Section 16 Officer is required to indicate by checkbox on the Form 4 whether a reported transaction was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Additionally, bona fide gifts of stock must be reported by the Section 16 Officer. The Form 4 must be filed no later than the second business day following the execution date of the transaction or gift.
Forms 5
Section 16 Officers are also required to report certain exempt transactions to the SEC at year-end on a Form 5. A Section 16 Officer is required to indicate by checkbox on the Form 5 whether any reported transaction was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The number and types of transactions eligible for Form 5 reporting are very limited.




image_2.jpg

Enterprise Insider Trading and Ethical Investing Policy – Supplemental Policy for Access Persons


Preparation and Filing of Forms
Under SEC rules, the preparation and filing of Section 16(a) reports is the responsibility of all Section 16 Officers. However, because of the complexities of compliance with the Section 16(a) filing requirements and to help prevent inadvertent violations of the short-swing profit rules (see below), Fifth Third will provide assistance in preparing and filing all relevant reports.
Specifically, the Legal Department can assist you in preparing, reviewing and filing all Forms 3, 4 and 5. A Form 3 initial report has been filed for all current Section 16 Officers. All transactions and changes in ownership of Fifth Third securities should be reported to the Legal Department no later than the execution date of the transaction. This is necessary notwithstanding the receipt of preclearance because Fifth Third will not know whether the transaction was effectuated until the Legal Department is provided with the exact dates, prices and other relevant information. The Legal Department will contact you each January to coordinate preparation of Form 5s (if necessary).
The consequences of a late filing or the failure to file required Section 16 reports are significant:
•public embarrassment to you and Fifth Third from required disclosures in the proxy statement and Form 10-K;
•potential SEC enforcement actions against you, such as a cease-and-desist order or injunction against further wrongdoing; and for egregious or repeated violations, possible criminal penalties of up to $5,000 per day for each filing violation or even imprisonment.

7.Section 16 Trading Prohibitions
Short Swing Profits. If you are a Section 16 Officer, you are also prohibited from profiting from “short swing transactions”. Short swing transactions are matching transactions (e.g., a sale and purchase or purchase and sale of Fifth Third securities) within a period of less than 6 months. Similarly, any profits realized upon a trade during a pension blackout period are recoverable by Fifth Third (whether or not there is a “matching” transaction in contrast to short swing trading). Appropriate utilization of the preclearance process will enable you to avoid inadvertently violating such prohibitions, as the Legal Department monitors and matches trades prior to preclearance.
Collateral. If you are a Section 16 Officer, you are also prohibited from using Fifth Third securities as collateral.






EX-21 9 fitb-123123xexx21.htm EX-21 Document

Exhibit 21
FIFTH THIRD BANCORP SUBSIDIARIES
As of February 15, 2024
Name   
Jurisdiction
of
Incorporation
Fifth Third Financial Corporation    Ohio
Fifth Third Bank, National Association    United States
53 AMRC Solar Trust Delaware
53 ANEE Solar Trust Delaware
53 APA Solar Trust Delaware
53 BR Solar Trust Delaware
53 GEC Solar Trust Delaware
53 GSE Solar Trust Delaware
53 GSE Solar Trust 2 Delaware
53 HS Solar Trust Delaware
53 HS Solar Trust 2 Delaware
53 KE Solar Trust Delaware
53 KS Solar Trust Delaware
53 NR Solar Trust Delaware
53 RCE Solar Trust Delaware
53 SP Solar Trust Delaware
53 SS Solar Trust Delaware
53 TGE Solar Trust Delaware
Ashland Management Agency, LLC Delaware
Dividend Finance, LLC Delaware
Dividend Solar, LLC Delaware
DS Global Holdings LLC Delaware
Dividend Solar Depositor 2017-1 LLC Delaware
Dividend Solar Loans 2017-1 LLC Delaware
Dividend Solar Depositor 2018-1 LLC Delaware
Dividend Solar Loans 2018-1 LLC Delaware
Dividend Solar Depositor 2018-2 LLC Delaware
Dividend Solar Loans 2018-2 LLC Delaware
Dividend Solar Depositor 2019-1 LLC Delaware
Dividend Solar Loans 2019-1 LLC Delaware
Figtree Company, LLC California
Figtree PACE Bond Holdings LLC Delaware
Fifth Third Auto Leasing Trust Delaware
Fifth Third Commercial Funding, Inc.    Nevada
Fifth Third Community Development Company, LLC Delaware
5/3 14th & Main Investment Fund LLC Ohio
5/3 AVW Investment Fund LLC Ohio
5/3 BS IV Investment Fund LLC
 Ohio
5/3 CityLink Investment Fund LLC Ohio
5/3 Keyer Row Investment Fund LLC Ohio
5/3 mHub Investment Fund LLC Ohio
5/3 Meyer Lofts Investment Fund LLC Ohio
5/3 Paramount Launch I Investment Fund LLC Ohio
5/3 Warsaw Creative Investment Fund LLC Ohio
5/3 Willkommen Investment Fund LLC Ohio
5/3 Willkommen Investment Fund 2 LLC Ohio
 



5/3 YWCA Van Antwerp Shelter Investment Fund LLC Ohio
BBIF Investor Fund LLC Ohio
Boss Cox Investment Fund LLC Ohio
Canal Place Investment Fund LLC Ohio
Carver Loan Pool Investment Fund LLC Ohio
Fifth Third New Markets Development Company II LLC Ohio
Fifth Third SUB-CDE 1 LLC Ohio
Fifth Third SUB-CDE 2 LLC Ohio
Fifth Third SUB-CDE 3 LLC Ohio
Fifth Third SUB-CDE 4 LLC Ohio
Fifth Third SUB-CDE 5 LLC Ohio
Fifth Third SUB-CDE 6 LLC Ohio
Fifth Third SUB-CDE 7 LLC Ohio
Fifth Third SUB-CDE 8 LLC Ohio
Fifth Third SUB-CDE 9 LLC Ohio
Fifth Third SUB-CDE 10 LLC Ohio
Gads Hill Investment Fund LLC Illinois
HostDime Investment Fund LLC Ohio
HostDime Investment Fund 2, LLC Ohio
Life Connection Investment Fund LLC Delaware
PSII Investor LLC Ohio
Score Small Business Loan Pool, LLC Illinois
Score Small Business Loan Pool 2, LLC Illinois
Score Small Business Loan Pool 3, LLC Illinois
Score Small Business Loan Pool 4, LLC Delaware
Fifth Third Holdings, LLC    Delaware
Fifth Third Holdings Funding, LLC    Delaware
Fifth Third Auto Trust 2023-1 Delaware
Fifth Third Insurance Agency, Inc.    Ohio
Fifth Third International Company    Kentucky
Fifth Third Securities, Inc. Ohio
Fifth Third Wealth Advisor LLC Ohio
FTB SR Solar Trust Delaware
GNB Management, LLC    Delaware
GNB Realty, LLC    Delaware
Mainstreet Investment Advisors, LLC Illinois
MB1200 Corporation Illinois
1208 N Ocean Boulevard LLC Florida
Acquisition Properties II, LLC Illinois
MB876, LLC Illinois
MB878, LLC Illinois
Scherston Real Estate Investments, LLC Illinois
MB Financial Center, LLC Delaware
MB Financial Center Land Owner, LLC Illinois
MB Financial International, Inc. United States
Fifth Third Business Capital Canada, Inc. Canada
Old Kent Mortgage Services, Inc.    Michigan
Fifth Third Mortgage – MI, LLC Delaware
PCR MB, LLC Illinois
Summit MFR Leasing, LLC Delaware
Summit MFR Leasing II, LLC Delaware
Walnut & Vine Holdings, LLC    Delaware
Fifth Third Acquisition Holdings, LLC Delaware
 



Big Data Healthcare LLC Delaware
Franklin Street Advisors, Inc. North Carolina
Franklin Street Trust Company North Carolina
Hammond Hanlon Camp LLC Delaware
H2C Securities, Inc. Illinois
Walnut & Vine Properties II, LLC Delaware
Fifth Third Capital Holdings, LLC Delaware
Fifth Third Community Development Corporation Indiana
Community Loan Fund New Market II, LLC Ohio
Community Loan Fund New Market III, LLC Ohio
Fifth Third New Markets Development Co., LLC Ohio
Fifth Third Investment Company Ohio
Fifth Third Global Services, Inc. Ohio
Fifth Third Mauritius Holdings Limited Mauritius
First Charter Capital Trust I Delaware
First Charter Capital Trust II Delaware
Vista Settlement Services, LLC Delaware
















    
 


EX-23 10 fitb-123123xexx23.htm EX-23 Document


Exhibit 23



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements on Form S-3, Form S-4, and Form S-8 of our reports dated February 27, 2024, relating to the consolidated financial statements of Fifth Third Bancorp and subsidiaries (the “Bancorp”) and the effectiveness of the Bancorp’s internal control over financial reporting, appearing in this Annual Report on Form 10-K for the year ended December 31, 2023:

Form S-8
Form S-3
No. 33-34075    
 No. 33-54134
No. 333-52182    
 No. 333-165689
No. 333-52188
No. 333-187546
No. 333-58249    
No. 333-210429
No. 333-58618
No. 333-230568
No. 333-72910    
No. 333-263894
No. 333-114001
No. 333-116535
Form S-4
No. 333-119280
No. 333-225761
No. 333-147192
No. 333-232335
No. 333-147533
No. 333-157687
No. 333-158742
No. 333-175258
No. 333-197320
No. 333-214542
No. 333-215865
No. 333-217354
No. 333-227468
No. 333-225761
No. 333-230486
No. 333-230900
No. 333-251914
No. 333-255215
No. 333-274775
    
    

/s/ Deloitte & Touche LLP

Cincinnati, Ohio
February 27, 2024


EX-31.I 11 fitb-123123xexx31i.htm EX-31.I Document

Exhibit 31(i)

CERTIFICATION PURSUANT
TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Timothy N. Spence, certify that:

1.I have reviewed this report on Form 10-K of Fifth Third Bancorp (the “Registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
February 27, 2024

EX-31.II 12 fitb-123123xexx31ii.htm EX-31.II Document

Exhibit 31(ii)

CERTIFICATION PURSUANT
TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Bryan D. Preston, certify that:

1.I have reviewed this report on Form 10-K of Fifth Third Bancorp (the “Registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ Bryan D. Preston
Bryan D. Preston
Executive Vice President and Chief Financial Officer
February 27, 2024

EX-32.I 13 fitb-123123xexx32i.htm EX-32.I Document

Exhibit 32(i)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fifth Third Bancorp (the “Registrant”) on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy N. Spence, Chairman, Chief Executive Officer and President of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
/s/ Timothy N. Spence
Timothy N. Spence
Chairman, Chief Executive Officer and President
February 27, 2024


EX-32.II 14 fitb-123123xexx32ii.htm EX-32.II Document

Exhibit 32(ii)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Fifth Third Bancorp (the “Registrant”) on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan D. Preston, Executive Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Bryan D. Preston
Bryan D. Preston
Executive Vice President and Chief Financial Officer
February 27, 2024

EX-97 15 fitb-123123xexx97.htm EX-97 Document

Exhibit 97

image_05.jpg


Compensation Clawback and Disclosure Policy

1.General Purpose:

To appropriately align the interests of executive officers and other employees of the Company and its subsidiaries and affiliates (together, the “Company) with those of the Company and to ensure that Company incentives appropriately balance risk and reward (the "Policy"). This Policy consists of a Mandatory Policy (as defined and set forth in Section 4 hereof) and a Discretionary Policy (as defined and set forth in Section 6 hereof).

2.Administration:

This Policy shall be administered by the Human Capital and Compensation Committee (the “Committee”). Any determinations made by the Committee shall be final, conclusive and binding on all Covered Executives and Other Covered Person subject to this Policy.


3.Covered Executives and Other Covered Persons:

This Policy applies to the Company's current and former executive officers, as determined by the Committee in accordance with 17 C.F.R. §240.10D-1 and the listing standards (the “Listing Standards”) of any national securities exchange or national securities association on which the Company's securities are listed (the “Exchange”) (the "Covered Executives"), and such other individuals as the Committee may deem appropriate ("Other Covered Persons").

4.Mandatory Policy in the Context of Accounting Restatements

4.1 General. The policy described in this Section 4 is referred to herein as the “Mandatory Policy.” The Mandatory Policy is adopted in accordance with, and is intended to comply with, the applicable Listing Standards and 17 C.F.R. §240.10D-1, which require listed companies to adopt and comply with a compensation recovery (“clawback”) policy.

4.2 Statement of Policy. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws (including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period) (an “Accounting Restatement”), then the Company will recover reasonably promptly the amount of all Erroneously Awarded Compensation received by a Covered Executive:
1



a.    After beginning service as a Covered Executive;

b.    Who served as a Covered Executive at any time during the performance period for that Incentive-Based Compensation;
c.    While the Company has a class of securities listed on a national securities exchange or national securities association; and

d.    During the three completed fiscal years immediately preceding the date that the Company is required to prepare the Accounting Restatement and any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years. For purposes of this Policy, a transition period between the last date of the Company’s previous fiscal year and the first day of its new fiscal year that comprises a period of nine to twelve months would be deemed a completed fiscal year. The date that the Company is required to prepare an Accounting Restatement shall be determined pursuant to 17 C.F.R. §240.10D-1 and the Listing Standards.

Notwithstanding the foregoing, this Mandatory Policy shall only apply to Incentive-Based Compensation Received on or after October 2, 2023 (the “Effective Date”).

The Company’s obligation to recover Erroneously Awarded Compensation pursuant to this Mandatory Policy is not dependent on when the restated financial statements are filed.

4.3 Incentive-Based Compensation. For purposes of this Mandatory Policy, “Incentive-Based Compensation,” pursuant to 17 C.F.R. §240.10D-1(d) and the Listing Standards, is any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

4.4 Financial Reporting Measure. For purposes of this Mandatory Policy, a "Financial Reporting Measure,” pursuant to 17 C.F.R. §240.10D-1(d) and the Listing Standards, is a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures. Stock price and total shareholder return are also Financial Reporting Measures. A Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC

4.5 Erroneously Awarded Compensation. The amount of Incentive-Based Compensation subject to the Mandatory Policy (“Erroneously Awarded Compensation”) is the amount of Incentive-Based Compensation received that exceeds the amount of Incentive Based-Compensation that otherwise would have been received had it been determined based on the restated amounts and shall be computed without regard to any taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an accounting restatement: (1) the amount shall be based on a reasonable estimate of the effect of the accounting restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received; and (2) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the Exchange.
2



4.6 Recovery and Certain Exceptions. The Company shall recover reasonably promptly any Erroneously Awarded Compensation except to the extent that the conditions of paragraphs (a), (b), or (c) below apply. The Committee shall determine the repayment schedule for each amount of Erroneously Awarded Compensation in a manner that complies with this “reasonably promptly” requirement. Such determination shall be consistent with any applicable legal guidance, by the SEC, judicial opinion, or otherwise. The determination of “reasonably promptly” may vary from case to case and the Committee is authorized to adopt additional rules to further describe what repayment schedules satisfy this requirement.

(a) Erroneously Awarded Compensation need not be recovered if the direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered and the Committee has made a determination that recovery would be impracticable. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company shall make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the Exchange.

(b) Erroneously Awarded Compensation need not be recovered if recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company shall obtain an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a violation and shall provide such opinion to the Exchange.

(c) Erroneously Awarded Compensation need not be recovered if recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

4.7 Application to Other Covered Persons. In addition to the Covered Executives, the Mandatory Policy shall apply to any Other Covered Persons, as if they were Covered Executives. The Committee shall have the discretion to decide whether to require reimbursement or forfeiture of Erroneously Awarded Compensation by an Other Covered Person and to determine the amount and form of such recovery.

5.No Indemnification:

Notwithstanding anything to the contrary in any other policy of the Company or any agreement between the Company and a Covered Executive, no Covered Executive shall be indemnified by the Company against the loss of any Erroneously Awarded Compensation.

6.Discretionary Policy:

1.1 General. The policy described in this Section 6 is referred to herein as the “Discretionary Policy.” The Discretionary Policy is in addition to the Mandatory Policy and shall not limit the Mandatory Policy in any manner.

1.2 Covered Events. The following events shall constitute “Covered Events” for purposes of this Discretionary Policy as determined by the Committee:
3


a.termination of employment for cause;
b.fraud, illegality or misconduct;
c.violation of any Company and/or Subsidiary code of ethics, conflict of interest, insider trading or similar policy or code of conduct;
d.breach of any noncompetition, non-solicitation, confidentiality or other restrictive covenant;
e.engaging in Detrimental Activity, as defined in section 6.6, by the Covered Executive or Other Covered Person
f.failure to comply with or satisfy risk management requirements or objectives resulting in a Significant Adverse Effect to the Company; or
g.failure to comply with requirements of applicable laws, rules or regulations or any applicable Listing Standards, including, but not limited to, as required by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act resulting in a Significant Adverse Effect to the Company.

1.3Statement of Discretionary Policy. If (i) a Covered Event relating to a Covered Executive or an Other Covered Person occurs, and (ii) the Covered Executive knowingly or negligently engaged in misconduct, knowingly or negligently failed to prevent the misconduct, or is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 (and not otherwise exempted) then, the Company may require reimbursement of compensation received by the Covered Executive or Other Covered Person during the three completed fiscal years immediately preceding the date that the event occurred, and in accordance with applicable policy, law, rules or regulations. In addition, Company may require forfeiture of compensation granted that has not yet vested as described in compensation agreements. Compensation subject to clawback will be restricted to Incentive-Based Compensation as defined in section 6.4 of the Discretionary Policy.


1.4Incentive-Based Compensation. For purposes of this Discretionary Policy, “Incentive-Based Compensation,” is any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

1.5For purposes of this Discretionary Policy, a "Financial Reporting Measure,” is a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures. Stock price and total shareholder return are also Financial Reporting Measures. A Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC.

1.6Detrimental Activity means any activity that, in the Company’s judgment and sole discretion, causes, or could reasonably be expected to cause, harm to the Company’s performance or reputation. Examples of conduct that could rise to the level of “Detrimental Activity” include but are not limited to significant violation of Company policy and significant poor performance that continues after warning of such performance.
4



1.7Significant Adverse Effect means any activity that causes, or could reasonably be expected to cause, individually or in the aggregate, material harm to Company’s assets, financial condition, operations or reputation.

Notwithstanding the foregoing, this Discretionary Policy shall supersede any other discretionary clawback policy that has been in place.


7.Disclosure:

The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the U.S. Federal securities laws, including the disclosure required by the applicable SEC filings. In the event the Company requires reimbursement or forfeiture of any Incentive-Based Compensation of any Covered Executive who is or was designated as an officer of the Company under Section 16(a) of the Exchange Act, the Company intends to disclose such action in the Company’s annual proxy statement to shareholders provided that the underlying event giving rise to the recoupment has already been publicly disclosed in the Company’s filings with the SEC, through a Company press release or other public communication. The Company intends to include in its disclosure a general description of the circumstances giving rise to the Incentive-Based Compensation recovery and the aggregate amount of Incentive-Based Compensation recovered. The Company may limit its disclosure if it could reasonably be expected to result in or prejudice the Company with respect to any existing or threatened regulatory action, litigation, arbitration or proceeding against the Company, or could potentially violate any applicable privacy requirements.

8.Interpretation and Amendments:

The Mandatory Policy shall be interpreted to comply with the clawback rules found in 17 C.F.R. §240.10D-1 and the related Listing Standards of the Exchange, and, to the extent this Policy is any manner deemed inconsistent with such rules, this Policy shall be treated as retroactively amended to be compliant with such rules.

9.Other Recoupment Rights:

The Committee intends that this Policy will be applied to the fullest extent of the law. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, incentive compensation plan or any other legal remedies available to the Company. Nothing in this Policy shall be viewed as limiting the right of the Company or the Compensation Committee to pursue recoupment under or as provided in any law, rule or regulation (including, without limitation, Section 304 of the Sarbanes-Oxley Act of 2002).



10.Agreement to Policy by Covered Executives and Other Covered Persons:
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The Committee shall take reasonable steps to inform Covered Executives and Other Covered Persons of this Policy and obtain their agreement to this Policy, which steps may constitute the inclusion of this Policy as an attachment to any award that is accepted by the Executive Officer or Other Covered Person.
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