Fifth Third Bancorp

Ladies and gentlemen, thank you for standing by. And welcome to the fifth, third, bank court, second quarter 2021 conference call. At this time, all participants are on a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Chris Dahl, Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, operator. Good morning and thank you for joining us. Today, we'll be discussing our financial results for the second quarter of 2021. 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, as well as information pertaining to the use of non-GAAP measures, as well as forward-looking statements about Fifth Thirds performance. We undertake no obligation to update any such forward-looking statements after the date of this call. This morning, I'm joined by our CEO, Greg Carmichael, CFO Jamie Leonard, President Tim Spence, and Chief Credit Officer Richard Stein. Following prepared remarks by Greg and Jamie, we will open the call for questions. Let me turn the call over to Greg now for his comments.

Thanks, Chris, and thank all of you for joining us this morning. Earlier today, we reported second quarter net income of $709 million, or $0.94 per share. On an adjusted basis, we are at $0.98 per share. Once again, our financial results were very strong. Continuing to pause momentum from the past several quarters. During the quarter, we generated sequential PPNR, growth of 15% on an adjusted basis, and growth of 6% compared to the year-ago quarter. Commercial loan production increased 10% from last quarter, which strengthened middle market across our footprint, as well as in corporate banking. We generated strong consumer household growth of 4% compared to last year. And we also experienced historically low net charge-offs of 16 basis points, reflecting improvement in both our commercial and consumer portfolios. We generated an adjusted ROTCE of nearly 20% for the second consecutive quarter, reflecting strong business and credit results across the franchise. Our results were supported by our continued improvement in our diversified businesses. In fact, we achieved record results in several of our fee-based businesses, including commercial banking and wealth and asset management. Despite continued pressure from low interest rates, net interest and income increased 3% sequentially, and the underlying NIM increased two basis points. We believe that our disciplined approach to managing the balance sheet, including in our securities and hedge portfolios, will continue to generate differentiated performance relative to peers. We also continue to maintain our expense discipline while still investing for long-term outperformance. As a result of our strong revenue growth combined with our expense management, we've generated positive operating leverage on a year-over-year basis with an adjusted efficiency ratio of 58%. We are prioritizing investments that drive further operational efficiencies to improve our resiliency, generate household growth, and improve the customer experience. To that end, we recently announced an expanded partnership with FIS to modernize our core deposit and wealth systems to the cloud, which will enable us to further our digital transformation. This will significantly improve the flexibility and scalability of our technology infrastructure and accelerate our speed to market. Combine this agreement with the renegotiation of our existing payment processing relationship allows us to modernize our platforms while maintaining an efficient overall cost structure. From a commercial standpoint, loan production this quarter was the highest since before the pandemic, with significant sequential improvements in technology, renewable energy, and manufacturing. However, our strong production was once again offset by elevated paydowns and PPP forgiveness. While we continue to retain the customer in their core banking relationship, loan growth remains muted due to the environment. Our commercial lending production trends, pipelines, and retention of the client relationship all continue to support the potential for improved loan growth once supply and labor constraints normalize. We currently expect our 31% commercial revolver utilization rate to increase 1% by year end. On the consumer side, As I mentioned, we once again generated robust household growth. This strong performance reflects our ability to acquire new customers, combined with low attrition, both of which were supported by our branch and digital investments. Our recent southeast de novo branches have helped contribute to our household growth. On the digital side, we continue to leverage technology and data analytics to deliver solutions that improve the customer experience, increase revenue, and drive efficiencies. We recently launched fifth-row momentum banking across our footprint, a banking value proposition unparalleled in our industry. Momentum combines the best of a traditional bank offering with several leading fintech capabilities, including early pay, which gives customers free access to their paycheck up to two days early, extra time, which allows customers to cure an overdraft until midnight the following business day without a fee, My Advance, which gives customers short-term on-demand liquidity advances, smart savings, and other features, all provided with no monthly fee. Our strategy to keep the customer at the center has significantly reduced our reliance on punitive consumer deposit fees, including overdrafts and ATM fees, where Fifth Third has been among the lowest compared to peers for several years. Fifth Third Momentum Banking accelerates our efforts to help customers avoid unnecessary fees. As I mentioned, during the quarter, we recorded a net benefit to credit losses, reflecting historically low net charge-offs combined with a stronger economic outlook. Our strong credit performance reflects disciplined client selection, conservative underwriting, and continued support from fiscal and monetary government stimulus programs. In addition to historically low credit losses, our criticized assets and MPAs once again improved this quarter. Criticized assets declined another 16%, and our MPA ratio declined 11 basis points sequentially. Our balance sheet and earnings power remained very strong. Our CET1 ratio of 10.4% was relatively stable compared to last quarter, despite sharing purchases of $347 million in the second quarter. As we have said before, we remain focused on deploying capital into organic growth opportunities evaluating strategic non-bank opportunities, dividend increases, and share repurchases. Additionally, our capital position and earnings capacity support an increase in our common dividend starting in the third quarter. We currently expect to request a $0.03 increase to our quarterly dividend in September, subject to board approval and economic conditions. We also expect to execute share repurchases totaling approximately $850 million in the second half of 2021 and continue to target a 9.5% CET1 by June 2022. We recently announced the strategic acquisition of Provide, a fintech healthcare practice finance firm. Provide focuses on the dental, veterinarian, and vision segments and delivers digital capabilities which support a best-in-class experience and speed to close. PROVIDE previously utilized and originated the SELL model. As a result, the closing of the acquisition will not include a transfer of loan balances. However, post-close, FITTHOR will retain all loan originations. We currently hold around $400 million in loans generated by PROVIDE and have non-credit relationships with over 70% of these borrowers through deposit and or treasury management products. The acquisition is expected to close in early August and will utilize approximately 20 basis points of capital. In summary, we believe our balance sheet strength, diversified revenues, and continued focus on discipline throughout the company will serve us well this year and beyond. We remain committed to generating sustainable long-term value and consistently producing top quartile results. I would once again like to thank our employees. I am very proud of the way you have continually risen to the occasion to support our customers. Our commitment to generate sustainable value for stakeholders is evident in our second annual ESG report published in June. This expands on last year's report with increased transparency, including enhanced disclosures on priority topics such as inclusion and diversity, our climate strategy, and our commitment to fair and responsible banking. We remain guided by our purpose, vision, and core values and expect to continue delivering strong results over the long term. With that, I'll turn it over to Jamie to discuss our second quarter results and our current outlook.