Fifth Third Bancorp

Ladies and gentlemen, thank you for standing by, and welcome to the Fifth Third Bank fourth quarter 2019 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star one on your telephone keypad. If you require any further assistance, please press star zero. I will now hand today's conference over to Mr. Dole. Please go ahead.

Thank you, Nikitria. Good morning, and thank you all for joining us today. Today we'll be discussing our financial results for the fourth quarter of 2019. Please review the cautionary statements on 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, and 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 for questions. Let me turn over the call now to Greg for his comments.

Thanks, Chris, and thank all of you for joining us this morning. Earlier today, we reported record full-year 2019 net income of $2.5 billion, or $3.33 per share. Full-year adjusted net income of $2.1 billion, was also a record for the bank. As I reflect on the past year, I am very pleased with the significant progress we made, positioned fifth third for long-term success. In addition to the record net income, we generated our best full-year core return on tangible common equity, excluding AOCI, in over a decade, up 120 basis points from last year. We produced our lowest efficiency ratio in over a decade, which decreased 160 basis points from last year. We generated peer-leading household and deposit growth, all while reducing deposit costs during the year. Also during the year, we successfully integrated MB Financial. We had a significant scale in the Chicago market and expect to generate even stronger deposit, household, and revenue growth going forward. We successfully navigated the evolving interest rate environment as our full-year 2019 Core Net Interest Margin expanded five basis points after expanding 18 basis points the year before, which is at the higher end of our peer group. We generated record fee income, including corporate banking, as our capital markets business generated double-digit revenue growth for the second consecutive year. We also generated record revenue in wealth and asset management, while generating positive inflows every quarter during the year. Net charge-offs and other key credit metrics remained at or near historically low levels throughout the year. We generated nearly half a billion dollars of excess capital through WorldPay transactions in 2019, which has yet to be deployed. And we returned over 110% of adjusted earnings to shareholders in 2019 through a 27% increase in our dividend and through share repurchases. In summary, we are extremely pleased with the progress we have made and expect to build on our strong performance in 2020 and beyond. For the fourth quarter, net income available to common shareholders was $701 million, or 96 cents per share. Report results included a positive 28 cents, primarily from the successful WorldPay tax-receivable agreement transaction completed during the quarter. Since the spinoff of our processing business 10 years ago, we have generated over $7 billion in pre-tax value for our shareholders, with another $195 million remaining in TRA income, which will be fully realized over the next five years. I think we'll discuss the fourth quarter TRA transaction in more detail. Our fourth quarter financial results were very strong, reflecting our prior North Star investments to further diversify our revenue streams, proven balance sheet management, continued expense discipline, and our success in achieving the targeted financial outcomes from the MB financial acquisition. We generated very strong fee revenue, including a new record in capital markets. Our net interest income results once again reflect our ability to successfully manage the balance sheet despite the lower rate environment, which led to strong net performance in the quarter. We continue to manage our expenses diligently. This reflects our continued focus on the bank while still investing in high-priority areas to support revenue growth. We remain on track to achieve the $255 million in annual savings from the NB acquisition by the end of the first quarter of 2020 and are excited about the revenue synergies that are emerging. Loan growth during the quarter was consistent with our previous guidance, reflecting the generally subdued macroeconomic environment. Total commercial loans were stable and consumer loans were up 1% sequentially. Following our trend, we successfully generated strong core deposit growth while proactively reducing deposit costs more than our previous guidance. Our average loan-to-core deposit ratio of 90% is the lowest in over 15 years. Credit results during the quarter were partially impacted by our conversion to a national charter. Excluding this impact, net charge-offs were up just one basis point sequentially, with consumer flat and commercial up two basis points. Provision was primarily impacted by growth in specific reserves related to a couple of commercial loans. Before I turn over to Typhoon to discuss our results and outlook, I'd like to once again emphasize our strategic priorities to outperform through the cycle and generate long-term shareholder value. As I mentioned, we have been very successful in executing our priorities throughout 2019 and have delivered on our targeted outcomes as expected. We will continue to focus on these priorities going forward, including leveraging technology to accelerate our digital transformation, investing in talent, capabilities, and process improvements to generate relationship growth and improve profitability, continue to expand our presence in select geographies, focusing on high-growth markets. We are investing in the Southeast footprint with better deposit growth trends, higher expected population growth, and greater market vitality. And lastly, we are focused on maintaining our disciplined approach throughout the company. To that end, our capital allocation priorities are organic balance sheet growth, fee-generating non-bank acquisitions, paying a strong dividend, and share repurchases. Bank acquisitions are not a priority. Our medium-term CET1 capital target remains at approximately 9.5%. We plan to increase our dividend another $0.03 this quarter. Subject to Board approval, we expect to execute our remaining buybacks from CCAR 2019. Our clearly defined strategic growth priorities, our proactive balance sheet management, and our ongoing discipline throughout the bank position us well for the future. We continue to focus on striking the appropriate balance in order to generate positive operating leverage this year while continuing to invest for long-term performance. I'm pleased to report that we were again able to deliver strong financial results. Our strong performance this quarter was a direct result of our employees' hard work and dedication to keeping the customer at the center of everything we do. With that, I'll turn it over to Typhoon to discuss our fourth quarter results and our current outlook.