Fifth Third Bancorp

Good morning. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the fifth third Dan Corp first quarter 2022 earnings conference 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 followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. Thank you. Chris Dole, Director of Investor Relations. You may begin your conference.

Thank you, Operator. Good morning, everyone, and thank you for joining us. Today we'll be discussing our financial results for the first quarter of 2022. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain reconciliations and 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 update any such forward-looking statements after the date of this call. This morning, I'm joined by our Chairman and CEO, Greg Carmichael, President Tim Spence, CFO Jamie Leonard, and Chief Credit Officer Richard Stein. Following prepared remarks by Greg, Tim, and Jamie, we will open the call up for questions. Let me turn the call over now to Greg for his comments.

Thanks, Chris, and thank all of you for joining us. Earlier today, we reported first quarter net income of $494 million, or 68 cents per share. Our reported EPS included a negative two-cent impact from the visa-to-return swap and a mark-to-market impact of our debit exchange holdings. Excluding these items, adjusted first quarter earnings were 70 cents per share. During the quarter, we generated strong loan growth, including average C&I growth of 8%, excluding PPP. We grew core deposits once again, with strength in consumer transaction deposits of 4%, reflecting our success generating quality household growth, which increased 3% on a year-over-year basis. We also took advantage of attractive market entry points for deploying our excess cash and grew our securities portfolio by approximately $5 billion on an average basis. As a result of our interest-earning asset growth, net interest income increased 1% sequentially, excluding PPP. We had yet another quarter of benign credit quality reflecting our disciplined approach to client selection and underwriting. This resulted in near record low charge-offs of just 12 basis points. In addition to our immediate credit losses, NPAs remain stable, and our commercial cross-size assets continue to improve. As many of you saw last week, I now plan to retire as CEO and transition to Executive Chairman, effective July 5th. As part of our thorough succession planning process, I'm excited and proud to announce the board has unanimously appointed Tim Spence to succeed me as our next CEO. I believe this is the right time for a transition, given Fifth Third's tremendous financial health and performance. Shareholders who have followed Fifth Third for a while know that when I became CEO, I made a commitment that we would generate strong financial results and perform well through the various business cycles. When we formalized our plans under Project North Star, we articulated several key strategic priorities to generate strong and sustainable long-term financial results, including optimizing our balance sheet, differentiating our customer experience, growing and diversifying our fee revenues, building on our legacy of digital innovation, and maintaining expense discipline. I am very proud of what we achieved. We transformed our approach to credit risk management centralizing credit underwriting with geographic, sector, and product-level concentration limits. We exited commercial relationships that had a skewed risk-return profile to only $7 billion, focusing on high-quality relationships with more diversified and resilient businesses. We deliberately reduced our leveraged lending exposure down more than 6% since 2015. We remain cautious with respect to our CRE portfolio with the lowest CRE as a percentage of capital among peers. We maintain our expense discipline, taking actions when necessary, including exiting non-core businesses, which allow us to prioritize our investments in areas of strategic importance. We invested heavily in our treasury management systems, shifting our focus to building managed service platforms. As a result, we now have the highest TM fees as a percentage of revenue and commitments, and we are the fastest growing among our peers. We made significant investments in technology to improve our resiliency and better serve our customers. We're building a consumer business that has consistently added households far in excess of our peers in the U.S. average, while also taking our customers' satisfaction scores from below peer median in 2015 to top quartile today. We grew market share organically in the southeast and west coast and established a leading position in Chicago through the strategic acquisition of MB Financial. We also invest in strategic non-bank acquisitions like Provide, Dividend, Coker Capital, H2C, Franklin Street, and more that accelerate growth and broaden our capabilities. We structure our securities portfolio to generate stable, predictable cash flows that has allowed us to extend our earnings advantage versus peers. And we focus on generating sustainable value for all stakeholders, including customers, employees, and communities. From day one, my focus was to build a franchise that would perform well through the cycle, while generating consistent and quality earnings quarter after quarter, year after year. While some of these decisions impact the near-term profitability at the time, all of these proof points highlight the actions we have taken over the past seven years to improve Fifth Third and set us up for long-term outperformance through various business cycles. Furthermore, we expect our intentionally asset-sensitive balance sheet to perform extremely well relative to peers in this rate environment. While the revenue benefits of higher rates are obvious, we are mindful that there are likely to be elevated risks in the overall U.S. economy if the Fed aggressively tightens monetary policy to curb inflation, combined with the existing supply chain constraints and labor shortages. However, because of our actions and positioning, Fifth Third is as strong as ever and well positioned for long-term outperformance. I would just like to say that being the CEO of Fifth Third has been an honor of a lifetime. I am grateful for the support of the board and all of our employees, and I am incredibly proud of what we've accomplished. Fifth Third is in great shape, and Tim is well prepared to lead Fifth Third into the future. Tim is an outstanding entrepreneur. and visionary leader, has been an integral part of Fifth Thirds Leadership Team since 2015, helping develop strategies and vision that we are executing with excellence through innovation and technology. Before I hand it over to Tim, this is my 29th and final quarterly earnings call. I can honestly say that I have enjoyed almost all of these discussions about our financial performance and outlook with the analyst investor community. I want to say thank you for your confidence that you have given me during my tenure. Also, I want to thank our entire leadership team. I have been extremely fortunate to work with such a great seasoned team, which I believe is the best in the industry. What we have accomplished together has been nothing short of remarkable. Thank you. I know that under Tim's leadership, you will continue to do great things, inspire others, and improve the lives of our customers and well-being of our communities. With that, let me turn it over to Tim.