Fifth Third earnings improved in the third quarter of 2026 as Comerica integration savings and higher revenue lifted profitability. The bank reported diluted earnings per share of $0.90 on October 19, up from $0.83 in the second quarter, while adjusted earnings reached $1.13 per share and adjusted return on tangible common equity rose to 20.6%.
Key Takeaways
- Adjusted pre-provision net revenue increased 8% sequentially to about $1.5 billion as revenue rose and expenses declined.
- Average core deposits grew 3%, although Comerica sweep-balance migration contributed to the increase.
- Management projected further fourth-quarter operating improvement and $200 million–$300 million in share repurchases.
Table of Contents
- Fifth Third earnings improve as integration lowers costs
- Deposit growth strengthens funding but carries costs
- Credit losses remain near the prior quarter
- Fourth-quarter outlook rests on remaining savings
- Conclusion
Fifth Third earnings improve as integration lowers costs
Net income available to common shareholders reached $828 million, compared with $763 million in the second quarter and $608 million a year earlier. Diluted earnings per share nevertheless remained below the year-earlier $0.91.
The bank’s third-quarter 2026 earnings release identified $0.23 per share of adjustments, including merger-related charges, interchange litigation matters and technology-related asset impairments. The resulting $1.13 adjusted EPS is a non-GAAP measure, distinct from reported earnings.
Adjusted revenue increased 2% sequentially, while expenses excluding certain items and non-qualified deferred compensation declined 2% to $1.82 billion. Lower compensation and benefits helped drive the reduction. Merger-related charges recognized in noninterest expense totaled $215 million for the quarter.
That combination lifted adjusted pre-provision net revenue, which measures revenue less expenses before credit-loss provisions, by 8%. The adjusted efficiency ratio improved to 54.6% from 57.1%; a lower ratio indicates less expense for each dollar of revenue.
| Item | Details |
|---|---|
| Wealth and asset management revenue | $259 million; up 1% from Q2 2026. |
| Commercial payments revenue | $256 million; up 1% sequentially. |
| Capital markets fees | $147 million; down 5% sequentially. |
| Mortgage banking net revenue | $47 million; up from $39 million in Q2. |
| Common equity Tier 1 capital ratio | 10.02%, compared with 9.93% in Q2. |
Deposit growth strengthens funding but carries costs
Average core deposits rose 3% sequentially to approximately $236 billion, outpacing 1% growth in average portfolio loans to $179 billion. The period-end loan-to-core-deposit ratio fell to 76% from 77%, and average wholesale funding declined 10% to $23 billion.
Not all deposit growth represented new customer balances. Chief Executive Officer Timothy Spence said roughly 45% of the quarter’s deposit growth came from moving former off-balance-sheet Comerica investment sweep balances onto the balance sheet. Some could move back into other liquidity products following conversion.
Net interest income on a fully taxable-equivalent basis increased $56 million to $2.28 billion, supported by higher market rates, fixed-rate asset repricing and loan growth. But the net interest margin narrowed two basis points to 3.34%, as conversion-related cash balances weighed on the ratio. Total deposit costs reached 1.64%.
The distinction matters: a larger earning-asset base and asset repricing increased interest income even though the margin narrowed. The bank also said higher deposit costs partly offset those benefits.
Credit losses remain near the prior quarter
Net charge-offs were $139 million, or 31 basis points of average loans, compared with $135 million and 30 basis points in the second quarter. The credit-loss provision declined to $122 million from $129 million.
Credit indicators were mixed rather than uniformly stronger. The nonperforming-asset ratio increased to 0.64% from 0.60%, while loans 30–89 days past due declined. Management guided fourth-quarter net charge-offs to the same 30–35 basis-point range used for the third quarter.
Fourth-quarter outlook rests on remaining savings
Fifth Third completed the Comerica systems conversion with strong client and banker retention, management said. The bank expected remaining expense synergies to be realized in the fourth quarter and guided adjusted pre-provision net revenue to increase 9%–10% sequentially.
Chief Financial Officer Bryan Preston said fourth-quarter share repurchases were expected to total $200 million–$300 million, depending on organic loan growth. That is planned capital deployment, not a completed buyback. The quarterly common dividend was raised 5% to $0.42 per share.
Conclusion
The fourth-quarter results will test management’s guidance for further expense savings and adjusted pre-provision profit growth. Deposit pricing and the persistence of migrated sweep balances will also help determine how much of the third quarter’s funding improvement carries forward.
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