Company: FITBI
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000035527-25-000171
Chunk: 218

Company: FIFTH THIRD BANCORP
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 1
Chunk 218
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 ALLL, the Bancorp maintains a reserve for unfunded commitments recorded in other liabilities in the Condensed Consolidated Balance Sheets. The provision for unfunded commitments is included in the provision for credit losses in the Condensed Consolidated Statements of Income. 

For more information about the Bancorp’s methodology for determining the ACL, refer to the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024, including the Critical Accounting Policies section and Allowance for Credit Losses subsection of the Risk Management section of MD&A and Note 1 of the Notes to Consolidated Financial Statements. 

At both June 30, 2025 and December 31, 2024, the Bancorp used three forward-looking economic scenarios during the reasonable and supportable forecast period in its expected credit loss models to address the inherent imprecision in macroeconomic forecasting. Each of the three scenarios was developed by a third party that is subject to the Bancorp’s Third-Party Risk Management program including oversight by the Bancorp’s independent model risk management group. The scenarios included a most likely outcome (Baseline) and two less probable scenarios with one being more favorable than the Baseline and the other being less favorable. The more favorable alternative scenario (Upside) depicted a stronger near-term growth outlook while the less favorable outlook (Downside) depicted a moderate recession.

The Baseline scenario was developed such that the expectation is that the economy will perform better than the projection 50% of the time and worse than the projection 50% of the time. The Upside scenario was developed such that there is a 10% probability that the economy will perform better than the projection and a 90% probability that it will perform worse. The Downside scenario was developed such that there is a 90% probability that the economy will perform better than the projection and a 10% probability that it will perform worse.

June 30, 2025 ACL

The ACL as of June 30, 2025 increased $72 million from December 31, 2024, driven by deterioration in the economic forecasts used to calculate the ACL, an increase in specific reserves on individually evaluated commercial and industrial loans and higher period-end loan and lease balances. As of June 30, 2025, the Bancorp’s macroeconomic scenarios included estimates of the expected impacts of changes in economic conditions caused by forecasted interest rates and higher tariffs.

At June 30, 2025, the Bancorp assigned an 80% probability weighting to