Company: FITBI
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0000035527-25-000212
Chunk: 229

Company: FIFTH THIRD BANCORP
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 1
Chunk 229
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 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.

September 30, 2025 ACL

The ACL as of September 30, 2025 decreased $70 million from December 31, 2024 primarily driven by impacts of changes in loan portfolio mix. As of September 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 September 30, 2025, the Bancorp assigned an 80% probability weighting to the Baseline scenario and 10% to each of the Upside and Downside scenarios. The Baseline scenario used in the September 30, 2025 ACL assumed that inflation rates peaked at around the same level and time as in the scenario used for the June 30, 2025 estimate. This reflects recent data and continued uncertainty that has arisen from changes in U.S. fiscal, tariff and immigration policies. This scenario assumed a peak rate of inflation of 3.6% in the third quarter of 2026, gradually returning to target in early 2027 and averaging 3.4% and 2.7% in 2026 and 2027, respectively. In response to fiscal tightening and high interest rates, this scenario also assumed that real GDP growth would be below trend until at least 2027 and the unemployment rate will increase modestly. The Baseline scenario assumed an average annual real GDP growth rate of 1.8% for 2025, followed by 1.5% in 2026 and 1.8% in 2027. The Baseline scenario also assumed an average unemployment rate of 4.2% for 2025, followed by 4.6% in 2026 and 4.7% in 2027. The Treasury rate environment is expected to be relatively stable with the 10-year yield remaining within a narrow projected range of 4.2% to 4.3% through 2027. Credit spreads are projected to expand from an average of