FIFTH THIRD BANCORP (FITB) FY 2023 MD&A

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. banking agencies

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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

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the average daily volume-weighted average price of the Bancorp’s common stock during the term of the repurchase agreement. 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.

(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:

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:

The Bancorp considers various measures when evaluating capital utilization and adequacy, including the tangible equity ratio and tangible common equity ratio, in addition to capital ratios defined by the U.S. banking agencies. These calculations are intended to complement the capital ratios defined by the U.S. banking agencies for both absolute and comparative purposes. As U.S. GAAP does not include capital ratio

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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:

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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

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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. 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

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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. 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.

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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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

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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.

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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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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(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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(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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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:

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

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.

(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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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:

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:

(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

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deferred compensation expense. 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:

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:

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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:

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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:

(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

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the year ended December 31, 2022 primarily driven by increases in allocated expenses and FDIC insurance and other taxes. 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:

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:

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.

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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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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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:

(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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(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:

(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:

(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

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growth, partially offset by lower average balances per consumer customer account. 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:

(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:

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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The following table summarizes the components of average borrowings:

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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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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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:

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.

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):

(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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(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:

(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:

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

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with current conditions and trends. The qualitative factors include adjustments for changes in policies or procedures in underwriting, monitoring or collections, economic conditions, portfolio mix, lending and risk management personnel, results of internal audit and quality control reviews, collateral values and geographic concentrations.

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

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:

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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: