2Q26 Earnings: EPS Beat, but Growth Weaker with Light 3Q Guide

Research evidence excerpt

2Q26 Earnings: EPS Beat, but Growth Weaker with Light 3Q Guide

e forward curve and now embeds a 25 bp *Adj EPS

rate hike in September. The upward revision was also supported by a repositioning of $4.5 bn *Rev.Source:(MM)Visible Alpha

of securities and the addition of $3 bn of swaps. Deposit costs are guided to remain stable to Source: Visible Alpha

modestly higher going forward. Fee income guidance was raised and narrowed to $4.06–$4.16 bn

(from $4.0–$4.2 bn), while expense guidance was lowered and narrowed to $7.22–$7.26 bn (from

$7.2–$7.3 bn); loan (avg) guide was essentially unchanged at $174–$176 bn (vs. prior mid-$170

bn), and NCO guide now points to the bottom half of the prior 30–40 bps range. CET1 operating

target remains 10.0%–10.5%, and the company expects to resume quarterly buybacks in 2H26,

with repurchase pacing guided to a lighter $50–100 mn in 3Q (reflecting merger-related charges)

before returning to a normalized $200–300 mn run rate in 4Q. The $850 mn of annualized run-rate

synergies tied to Comerica remain on track for 4Q, anchored by the systems conversion over Labor

Day weekend. Longer term, the company remains on track to exit 2026 at profitability and efficiency

levels consistent with its prior targets (ROTCE of 19% and efficiency of 53%), and loan and deposit

growth are both expected to trend in the MSD range over the medium to long term.

Estimate changes and recommendation. We are raising our 2026/2027 core EPS estimates to

$4.15/$4.95 from $4.10/$4.90, owing to lower provision assumptions. We maintain our BUY rating,

which is based on FITB's strong growth outlook for loans and net interest income, its diversified fee

income businesses, and its expansion in lucrative Southeast and Texas markets.

David Chiaverini, CFA * | Equity Analyst