Fifth Third Bancorp (FITB)

Regional banking company Fifth Third Bancorp (NASDAQ:FITB) announced better-than-expected revenue in Q3 CY2025, with sales up 8.2% year on year to $2.31 billion. Its GAAP profit of $0.91 per share was 5.9% above analysts’ consensus estimates.

Company Overview

Named after the merger of Third National Bank and Fifth National Bank in 1908, Fifth Third Bancorp (NASDAQ:FITB) is a financial services company that provides banking, lending, wealth management, and investment services to individuals and businesses across the Midwest and Southeast.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Fifth Third Bancorp competes with other regional banks such as PNC Financial Services (NYSE:PNC), Huntington Bancshares (NASDAQ:HBAN), and KeyCorp (NYSE:KEY), as well as national banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) in its operating regions.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Regrettably, Fifth Third Bancorp’s revenue grew at a tepid 2.5% compounded annual growth rate over the last five years. This was below our standards and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Fifth Third Bancorp’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Fifth Third Bancorp reported year-on-year revenue growth of 8.2%, and its $2.31 billion of revenue exceeded Wall Street’s estimates by 0.8%.

Net interest income made up 65% of the company’s total revenue during the last five years, meaning lending operations are Fifth Third Bancorp’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last four years, Fifth Third Bancorp’s efficiency ratio has swelled by 2.6 percentage points, going from 60% to 57.4%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q3, Fifth Third Bancorp’s efficiency ratio was 54.9%, falling short of analysts’ expectations by 37.6 basis points (100 basis points = 1 percentage point). This result was 3.3 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Fifth Third Bancorp to maintain its trailing one-year ratio with a projection of 56.5%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Fifth Third Bancorp’s EPS grew at an astounding 10.8% compounded annual growth rate over the last five years, higher than its 2.5% annualized revenue growth. However, we take this with a grain of salt because its efficiency ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Fifth Third Bancorp, its two-year annual EPS declines of 2.4% mark a reversal from its (seemingly) healthy five-year trend. These shorter-term results weren’t ideal, but given it was successful in other measures of financial health, we’re hopeful Fifth Third Bancorp can return to earnings growth in the future.

In Q3, Fifth Third Bancorp reported EPS of $0.91, up from $0.78 in the same quarter last year. This print beat analysts’ estimates by 5.9%. Over the next 12 months, Wall Street expects Fifth Third Bancorp’s full-year EPS of $3.35 to grow 6.1%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Fifth Third Bancorp’s TBVPS declined at a 1.2% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 25.4% annually over the last two years from $13.76 to $21.66 per share.

Over the next 12 months, Consensus estimates call for Fifth Third Bancorp’s TBVPS to grow by 12% to $24.26, top-notch growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Fifth Third Bancorp has averaged a Tier 1 capital ratio of 10.5%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Fifth Third Bancorp has averaged an ROE of 12.4%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Fifth Third Bancorp.

It was good to see Fifth Third Bancorp narrowly top analysts’ tangible book value per share expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $40.78 immediately following the results.

Updated: December 3, 2025 at 11:48 PM EST

When considering an investment in Fifth Third Bancorp, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Fifth Third Bancorp isn’t a terrible business, but it doesn’t pass our quality test. To begin with, its revenue growth was weak over the last five years. And while its estimated net interest income growth for the next 12 months is great, the downside is its TBVPS has declined over the last five years. On top of that, its net interest income growth was weak over the last five years.

Fifth Third Bancorp’s P/B ratio based on the next 12 months is 1.5x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $50.25 on the company (compared to the current share price of $44.67).