Fifth Third Posts Strong Q3 Earnings, Beats Estimates Yet Sales Miss, Highlights Comerica Integration Gains

FITB reported third-quarter earnings per share of $0.90, or $1.13 excluding certain items, a result reported as topping estimates. Adjusted pre-provision net revenue rose 8% from the second quarter to $1.5 billion, as adjusted revenue grew 2% and adjusted expenses fell 2% on merger savings. Adjusted return on tangible common equity was 20.6% and the adjusted efficiency ratio 54.6%. Not every line beat: Yahoo Finance reported that sales came in below analyst estimates, and shares were little changed on the day.

The quarter's milestone was the Labor Day weekend conversion of Comerica's systems, which CEO Tim Spence called the largest integration in the bank's 168-year history, onboarding about 600,000 accounts and 293 banking centers. CFO Bryan Preston said gross synergies reached the low $900 million range, beating the $850 million target. Merger charges were $215 million in the quarter and about $1.1 billion year to date, out of roughly $1.3 billion expected in total.

Balance sheet trends were steady. Average loans rose 1% to $179 billion and core deposits 3% to $236 billion, with retail deposits in Dallas and Houston up more than 20% year over year. Net interest income rose $56 million to $2.28 billion, but net interest margin slipped 2 basis points to 3.34% and deposit costs rose 9 basis points to 1.64%. Net charge-offs held at 31 basis points, and capital-markets fees fell 5% to $147 million.

For the fourth quarter, Fifth Third guided adjusted PPNR up 9% to 10%, net interest income up 2.5% to 3.5% and a margin at or above 3.40%, an outlook that assumes a 25 basis point rate increase in December. It plans to buy back $200 million to $300 million of stock and to open 150 new branches in Texas over three years, and will give its 2027 outlook in January.