Fifth Third Bancorp

Good day, ladies and gentlemen. This is your conference operator. At this time, I would like to welcome everyone to the fifth third Bancorp first quarter 2019 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, Simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Chris Dahl, Director of Investor Relations. You may begin your conference.

Thank you, Lori. Good morning and thank you for joining us. Today we'll be discussing our financial results for the first quarter of 2019. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain reconciliations to non-GAAP measures, along with information pertaining to the use of non-GAAP measures, as well as forward-looking statements about Fifth Third's performance. We undertake no obligation to, and would not expect to, update any such forward-looking statements after the date of this call. This morning, I'm joined by our President and CEO, Greg Carmichael, CFO Typhoon Tuzun, Chief Operating Officer, Lars Anderson, Chief Risk Officer, Frank Forrest, and Treasurer, Jamie Leonard. Following prepared remarks by Greg and Typhoon, we will open the call out for questions. Let me turn the call over now to Greg for his comments.

Thanks, Chris, and thank all of you for joining us this morning. Over today, we reported first quarter 2019 net income available to common shareholders of $760 million, or $1.12 per share. Our reported EPS included a positive 49-cent impact from several items shown on page three of our release. Excluding these items, adjust the first quarter earnings for 63 cents per share. I think we'll discuss unique items in greater detail in his prepared remarks. But the most notable items impacting our report results were merger-related items associated with the acquisition of MB Financial and the gain from the sale of our remaining stake in WorldPay. The sale of our final WorldPay stake during the first quarter marks the end of a chapter for Fifth Third. Since a joint venture in 2009, we have realized approximately $7 billion in pre-tax income for our shareholders, with an additional $900 million remaining in TRA cash flows. And a new chapter for us was our successful closing of the MB Financial acquisition this quarter. On March 22nd, the acquisition added nearly $20 billion in assets. 86 full-service banking centers, over 185,000 new clients, and 2,600 new team members to fit a third. We are excited to leverage the enhanced capabilities of our company to better serve our clients. In addition to broadening customer and banking capabilities, this acquisition generates symphony scale in Chicago, a market we entered nearly 20 years ago and know very well. In fact, Chicago has been our largest retail market for the last 12 years in terms of total deposits prior to this transaction. With the addition of MB's balance sheet, we will rank number two in middle market relationships and number three in retail banking in the Chicago market. We look forward to successfully converting the majority of all the systems and processes in early May. After the May conversion, MB customers will have access to fifth-thirds expanded products and services, including our advanced digital capabilities, sophisticated commercial and wealth client solutions, and access to our expanded network of over 50,000 fee-free ATMs. After the previously announced branch consolidations, our retail customers will have access to nearly 200 branches on the largest networks in the Chicago area. We believe that Fifth Third Chicago is now in a significant position of strength that allows us to generate stronger deposit, household, and revenue growth moving forward. As we have mentioned previously, the vast majority of the core systems are migrating to fifth-third technology, which reduces the complexity of the conversion. We have run three very successful mock conversions over the past several months involving more than 600 people from both companies. We are confident that the conversion process will continue to proceed smoothly. As previously committed, we expect to fully realize the $255 million in expense synergies by the end of the first quarter of 2020. We will provide quarterly updates on our progress toward achieving our expense targets. We have a tremendous opportunity to leverage the complementary products and capabilities of the two franchises. We will leverage MB's expertise in lower middle market lending, asset-based lending, and leasing, while offering our new clients from MB more sophisticated fifth-third digital banking, treasury management, capital markets, and advisory products and services. We remain very confident in the growth prospects of the combined company, To date, we have experienced no material attrition of key leaders, relationship managers, or clients. Furthermore, seven of the 13 key leaders in our Chicago region are former MB employees, leading areas such as commercial middle market, equipment finance, and asset-based lending. We also continue to expect to generate meaningful revenue synergies from the acquisition of growing to approximately $60 to $75 million in annual pre-tax income, none of expenses, in 2022. While we have devoted a significant amount of energy on the MB acquisition to make sure we deliver for our clients, employees, and shareholders, we have also remained very focused on executing on our key strategic priorities to produce strong financial results. Our first quarter financial performance was strong. During the quarter, loan growth Fee growth and NII exceed our previous guidance on a standalone basis. Expenses were also favorable to our prior guidance, excluding the impacts of the NB financial transaction. We generated year-over-year core positive operating leverage every quarter in 2018, and we have continued that momentum in the first quarter of 2019, again achieving year-over-year positive operating leverage. Credit quality metrics also remain solid. Net charge-offs were 32 basis points, including just 11 basis points in our commercial portfolio, which is at the lowest level in 20 years. And the NPL, NPA, and criticized asset ratios all remain near their multi-year low levels. Economic conditions remain generally stable, but consistent with other banks, our clients continue to be cautious with respect to their growth plans. We remain steadfast in our disciplined approach to client selection. We will not chase loan growth for the sake of growing, but rather maintain our focus on balancing credit quality and profitability. Now moving on to our strategic priorities. At Fifth Third, we are positioned to drive improved profitability while continuing to manage our risk exposures prudently. First, we continue to leverage technology, including our data analytics capabilities, to accelerate our digital transformation while continuing to minorize our systems and infrastructure. We are committed to delivering a digital banking experience that is simple, seamless, and secure. We are investing in digital technologies that will deliver innovative and convenient solutions that will enhance our customers' ability to meet their financial goals. Our new Dobot app is one example of this, which helps users set goals and save through small automated transfers. Since the launch at the beginning of the year, we have had over 37,000 downloads of the app across 48 states, with users setting saving goals of over $150 million. In addition, we are investing so that the majority of our core products can be originated digitally within the next 24 months. Leveraging our buy, partner, build approach, we will continue to deliver digital solutions that will enhance our customers' financial lives. Second, we continue to invest in our business to drive profitable, organic growth. We have made several recent investments in technology and talent to support our growth plans, These investments include key additions to our sales teams and strategic areas of the company, such as middle market lending. We have added high-quality RMs in our new geographies, including Southern California and Texas. In fact, we now generate approximately 15% of our middle market originations outside of our 10-state retail footprint. Wealth and asset management, which had a record year last year. Corporate banking, with revenues increasing 27% from the first quarter of 2018. including growth in capital markets, which was up 19% from a year ago quarter. And in our retail franchise, we continue to generate solid household and deposit growth at two times the market average. All of these provide evidence that we are delivering on our commitments to diversify revenue and accelerate growth. Our third priority is to expand our market share in key geographies. With the acquisition of MB providing the necessary scale in the Chicago market, we are continuing to optimize our branch network to support our faster-growing Southeast markets while also rationalizing our legacy footprint. Lastly, we are focused on maintaining our disciplined approach to credit, expense, and capital management throughout the company. Credit discipline remains as important now as ever. We are focused on maximizing our returns through the full cycle rather than generating lower-quality loan growth, We continue to expect a generally stable environment throughout the rest of 2019 and are not wavering in our approach to managing our exposures. We have demonstrated our ability to diligently manage our expenses while investing in areas of strategic importance. We remain focused on generating positive operating leverage in all environments. We continue to stay disciplined on capital allocation. We believe our current capital levels are elevated relative to our risk profile. And we prioritize capital deployment strategies based on what we believe will achieve the highest long-term return for our shareholders. Our clearly defined set of strategic priorities are designed to enhance revenue growth as well as generate expense efficiencies in order to meet our financial and strategic objectives. We have achieved significant expense efficiencies over the last two years as reflected in our ability to consistently generate positive operating leverage. We continue to generate solid financial results in the first quarter with adjusted PPNR of 19% since the first quarter of 2018, adjusted efficiency ratio of 61%, decreasing over 3.5% year over year, and continued stability in our credit quality metrics. We remain very confident in our ability to achieve our financial targets and outperform through the cycle. I'd like to once again thank all of our employees for their hard work, dedication, and for always keeping the customer at the center. I was pleased that we were again able to deliver strong financial results when we were delivering the outcomes as planned. With that, I'll turn it over to Tycoon to discuss the first quarter results and our current outlook.