Fifth Third Bancorp

Ladies and gentlemen, thank you for standing by. Welcome to the Fifth Third Bancorp 1Q20 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telethon. If you wish to remove yourself from the queue, please press the pound key. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your host, Mr. Crystal. Sir, the floor is yours.

Thank you, Laura. Good morning, and thank you all for joining us. Today we'll be discussing our financial results for the first quarter of 2020. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain reconciliation for non-GAAP measures, along with information pertaining to the use of non-GAAP measures, as well as forward-looking statements about Fifth Thirds 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, TFO Typhoon Kazoon, Chief Risk Officer Jamie Leonard, and Chief Credit Officer Richard Stein. Following prepared remarks by Greg and Typhoon, we will open the call 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. Given the unprecedented nature of the current environment, I will focus most of my commentary on the practice steps we are taking to navigate this crisis due to the pandemic. And Typhoon will provide more details related to the quarterly financial results in his remarks. As all of you are aware, the events over the past couple of months related to the COVID-19 health crisis and the resulting economic Fallout has led us to reprioritize our focus. We are taking significant and ongoing actions to serve our customers, protect our employees, and assist our communities. We believe these proactive steps will ultimately deliver long-term sustainable value for all stakeholders, including our shareholders. Starting in early February, the executive team and the board began actively planning and prioritizing the organization's response efforts. We quickly mobilized our workforce to accommodate remote access for a large number of employees. Currently, more than 50% of our workforce is working remotely across the company, and for many groups, that number is over 95%. For employees who are not able to do their job remotely, we have established social distancing and enhanced cleaning measures based on CDC guidelines. Throughout these uncertain times, We have been proactively communicating with our customers and employees. We have issued more than a dozen press releases, several fact sheets, and numerous proactive outreaches to our customers in addition to ongoing updates on our website. We have also significantly increased the frequency of communications with our employees in order to keep them informed of the latest developments, recommendations, and health precautions. From a customer perspective, We are leveraging the strength of our balance sheet to help address the economic challenges many of our customers are facing. We are prudently extending credit to customers who support economic activity. In March alone, we extended $13 billion of new credit, including approximately $8 billion from C&I line draws. In addition to keeping our traditional lending channels open, We are also participating in government-sponsored programs established as part of the CARES Act, such as the SBA PPP, and the forthcoming Main Street Lending Program. With respect to PPP, we assisted approximately 10,000 clients, employing over 300,000 employees, totaling nearly $3.5 billion. To maximize our support, we recently announced we suspended share repurchases. And as Typhoon will discuss in greater detail, we continue to have strong capital and equity levels to weather a prolonged downturn. In addition to utilizing our strong balance sheet, we are directly supporting consumers and businesses by keeping 99% of our branches open and fully operational with modified health protocols and amended hours as appropriate. We continue to process over 100,000 branch transactions per day, underpinning our role as an essential service provider. And for many other banking needs, we continue to encourage our customers to use our highly rated digital platforms in addition to our network of approximately 53,000 fee-free ATMs. Furthermore, we continue to proactively engage with our customers. Our bankers have personally connected with 2 million customers over the past month to see how they are doing under these circumstances, both personally and financially. and to offer assistance as needed under our extensive financial hardship relief programs. In March, we began providing relief in the form of payment deferrals and forbearances to customers across a wide array of lending products. We also suspended vehicle repossessions and home foreclosures. Since the rollout of our assistance programs, we have processed over 96,000 hardship requests, which represents approximately $1.5 billion in fifth-third loan balances, in addition to $6 billion from our mortgage servicing portfolio. As I mentioned, taking care of our employees is a top priority. In addition to our safety measures, we have announced special payments of up to $1,000 per employee for those providing essential banking services. These measures have helped maintain call center operations and branch personnel at appropriate levels. For our communities, we recently committed nearly $9 million in philanthropic funds to help address the effects of COVID-19 pandemic. We will continue to take proactive and aggressive measures to help mitigate the effects of the downturn. From a macro perspective, while we do not know the duration or severity of the crisis, we have spent many years preparing for a downturn by strengthening our balance sheet through a disciplined approach to credit, and by increasing our capital and equity levels. We have also improved and diversified our revenue streams in our loan portfolios. Finally, we evaluate our firm-wide resilience through stress testing our balance sheet under a range of conditions worse than the last crisis and more severe than a regulatory-run stress test. Since the financial crisis, we have taken several steps which have put us in a very strong position. We transformed our overall approach to credit risk management centralized credit underwriting, and added stringent geographic sector and product level concentration limits. We exited certain commercial real estate segments and remained disciplined in our existing CRE portfolio. The client selection focused on top-tier developers and virtually no land loans. We also continue to maintain an underweight position relative to our peers. We exited businesses such as commodity trader lending and mezzanine lending. Three years ago, we exited $5 billion in commercial loans given the risk-return profile. This has helped reduce our leveraged lending exposures by over 50%. We have also reduced our indirect commercial leasing portfolio by almost $2 billion over the past two years, which has significantly lowered our exposure to certain assets such as commercial aircrafts and rail cars. Lastly, we have maintained our credit discipline and our consumer portfolio with a weighted average FICO score above 750. We have consistently communicated our through-the-cycle principles of disciplined client selection, conservative underwriting, and an overall balance sheet management approach focused on long-term performance horizon. Our unwavering adherence to these principles and our balance sheet strength gives us confidence as we navigate this environment. Our first quarter operating results reflect the strength of our franchise and strategic decisions we made in managing our balance sheet, our interest rate risk, and our liquidity risk exposures, in light of the rapid and widespread economic deterioration we saw towards the end of the quarter. Non-interest income, interest margin, non-interest income, and expenses all performed in line with or better than our January guidance, with the net charge-off ratio also consistent with our previous expectations. Typhoon will discuss the changes in our allowance in more detail. Similar to what you have seen from many of our peers, our reserves reflect the CECL adoption, the economic impacts of COVID-19, lower oil prices, and the impact of loan growth during the quarter. As I mentioned earlier, we believe that we are in a very strong position from both a capital and liquidity perspective. We are continuing to evaluate potential economic scenarios, but we currently believe our capital position is strong enough to maintain our current dividend if these conditions persist through the end of the year or remain well-capitalized. Before I turn it over to Typhoon to discuss our results and our outlook, I'd like to once again thank our employees. I am very proud of the way you have responded in extraordinary ways to support our customers, our communities, and each other as we navigate these unprecedented times. With that, I'll turn it over to Typhoon to discuss our first quarter results and our current outlook.