Cincinnati, Ohio-based Fifth Third Bancorp is adding 19 de novo branches in the Southeast in its fourth quarter as the region drives growth.
Luke Sharrett/Bloomberg
This news is developing. Please check back here for updates. Fifth Third Bancorp beat expectations on core operations in the third quarter, pulling fee income levers and using its market expansion as it prepares for falling interest rates.
The Cincinnati-based bank is leaning on noninterest income from businesses like commercial payments and wealth management amid economic and political uncertainty. Fifth Third is also building its market share in the Southeast, where about 30% of its branches are now based, with plans to rapidly scale over the next several years.
The bank reeled in $573 million of net income in the third quarter, it announced Friday morning, marking a 13% drop from the year prior. Although Fifth Third's earnings per share of 78 cents missed consensus analyst expectations of 83 cents, per S&P data, the bank met those forecasts when excluding expenses related to legal fees, a swap of Visa shares and the costs of layoffs.
"Fifth Third achieved another quarter of strong and consistent performance driven by our resilient balance sheet, diversified and growing revenue streams, and disciplined expense management," CEO Tim Spence said in a prepared statement.
Total revenue for the third quarter was $2.14 billion, compared with $2.16 billion in the third quarter of last year.
Spence said that the bank's "strategic growth priorities" are boosting results. Fifth Third's expansion in states like Florida, Tennessee and North Carolina contributed to a 16% rise in deposits over the last year. The bank plans to open 19 new branches in the fourth quarter, and to accelerate the pace of openings through 2028.
In the bank's wealth and asset management business, assets under management grew 21% from the year prior.
Overall, noninterest income, excluding one-time charges, rose 2% from the year-ago quarter, to $748 million.
The bank's acquisition of embedded finance firm Rize Money and collaboration with open banking firm Trustly will enable the bank to grow real-time processing, account-to-account transfers and address emerging compliance challenges.
However, at Fifth Third, and across most of the industry, loan growth remains stalled. Net interest income in the third quarter came out better than expected, as the average yield on its assets ticked up, but Fifth Third is preparing for rate cuts to squeeze that upside.
While the bank is projecting noninterest income to increase by 3% to 4% in the fourth quarter, net interest income is expected to rise about 1%, Fifth Third said.
"With our strong core deposit franchise and liquidity, we are well positioned for the declining interest rate environment and volatility driven by the economic and regulatory uncertainty," Spence said.
Analysts at both Piper Sandler and Citigroup wrote in Friday notes that Fifth Third's third quarter was solid, due to better-than-anticipated fee income and net interest income. Its stock was down 3.6% Friday, trading at $43.73 by mid-morning.
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