Fifth Third Bancorp (FITB)

Regional banking company Fifth Third Bancorp (NASDAQ:FITB) met Wall Streets revenue expectations in Q4 CY2025, with sales up 4.9% year on year to $2.34 billion. Its GAAP profit of $1.04 per share was 4.9% 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.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Over the last five years, Fifth Third Bancorp grew its revenue at a sluggish 3.3% compounded annual growth rate. This fell short of our benchmark for the banking sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Fifth Third Bancorp’s recent performance shows its demand has slowed as its annualized revenue growth of 1.4% over the last two years was below its five-year trend. 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 grew its revenue by 4.9% year on year, and its $2.34 billion of revenue was in line with Wall Street’s estimates.

Net interest income made up 64.6% of the company’s total revenue during the last five years, meaning lending operations are Fifth Third Bancorp’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last four years, Fifth Third Bancorp’s efficiency ratio has swelled by 3 percentage points, going from 60% to 57%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q4, Fifth Third Bancorp’s efficiency ratio was 55.8%, falling short of analysts’ expectations by 145.5 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects Fifth Third Bancorp to maintain its trailing one-year ratio with a projection of 57.5%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Fifth Third Bancorp’s EPS grew at a remarkable 14.1% compounded annual growth rate over the last five years, higher than its 3.3% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

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 growth of 4.9% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Fifth Third Bancorp reported EPS of $1.04, up from $0.85 in the same quarter last year. This print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Fifth Third Bancorp’s full-year EPS of $3.54 to shrink by 8.3%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

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. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Fifth Third Bancorp’s TBVPS was flat over the last five years. However, TBVPS growth has accelerated recently, growing by 13.2% annually over the last two years from $17.64 to $22.60 per share.

Over the next 12 months, Consensus estimates call for Fifth Third Bancorp’s TBVPS to grow by 7.8% to $24.36, paltry 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 10.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Fifth Third Bancorp has averaged an ROE of 12.5%, healthy 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. On the other hand, its net interest income slightly missed. Overall, this was a mixed quarter. The stock remained flat at $49.35 immediately following the results.

Updated: January 20, 2026 at 7:21 AM EST

Before deciding whether to buy Fifth Third Bancorp or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

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 growth was weak over the last five years. On top of that, its projected EPS for the next year is lacking.

Fifth Third Bancorp’s forward price-to-sales ratio is 0x. The market typically values companies like Fifth Third Bancorp based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $54.71 on the company (compared to the current share price of $49.35).