Fifth Third Bancorp

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp Fourth 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 star one. Thank you, Chris Dahl, Head of Investor Relations at Fifth Third Bancorp. You may begin your conference.

Good morning, everyone. Welcome to Fifth Third's fourth quarter 2022 earnings call. This morning, our President and CEO Tim Spence and CFO Jamie Leonard will provide an overview of our fourth quarter results and outlook. Our Chief Credit Officer Richard Stein and Treasurer Brian Preston have also joined the Q&A portion of the call. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain information regarding the use of non-GAAP measures and reconciliation of the GAAP results, as well as forward-looking statements about Fifth Third's performance. These statements speak only as of January 19, 2023, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Tim and Jamie, we will open the call up for questions. With that, let me turn it over to Tim.

Thanks, Chris, and good morning, everyone. To start, I would like to thank our employees for the job they did supporting our customers, communities, and shareholders in 2022. You really held true to our core values and our vision to be the one bank people most value and trust. Just Capital and CNBC recently released their annual study of America's most just companies, a comprehensive ranking that recognizes companies who do right by all stakeholders as defined by the American public. Fifth Third ranked 23rd out of the roughly 1,000 companies covered in the study and was the highest ranked Category 4 bank. It's a great achievement. Thank you for it. Earlier today, we reported financial results for the fourth quarter and full year 2022. The strength and quality of our franchise are evident in the numbers. We generated record full year revenue of $8.4 billion, up 6% over the prior year. We managed expenses down 1% year over year, producing positive operating leverage of 700 basis points and an efficiency ratio of 56%. Net charge-offs for the year were below 20 basis points. As a result, we achieved a full-year return on tangible common equity, XAOCI, of 16.5%, which places us in the top quartile of our peer group. Just as importantly, we did what we said we were going to do. We have a culture of accountability at Fifth Third, and it makes me proud that our full year results exceeded the guidance we provided you last January in every major caption, including total revenue, expenses, and net charge-offs. As a result, PPNR increased 18% compared to our original guide of 7%. We also made important progress on our growth strategies in 2022. We grew consumer households at a peer-leading organic growth rate of around 2.5%, led by our Southeast markets at 7%, and surpassed last year's record for new quality relationships in our commercial segment. We opened 18 new branches in the Southeast in 2022, bringing our three-year total to over 70 new branches in those markets. During the year, we also made meaningful progress in our technology modernization initiatives, and enhanced our peer leading digitally enabled treasury management managed services and our Momentum banking product offerings. You may have seen that most recently we extended Momentum's early pay feature to include income tax refunds. Our FinTech platforms, Dividend Finance and Provide, continue to scale and achieve top national market shares with Dividend ranking third and Provide ranking second in their respective markets. Our fee-generating businesses are better diversified than most peers and continue to be a key focus for investment. Strong performance in our capital markets business related to helping client hedging activities, mortgage servicing, and treasury management all help to offset market headwinds that all banks faced, as did continued net AGM inflows in our wealth management business. During 2022, we remained focused on delivering stable long-term results instead of chasing short-term murderings. We maintained our discipline in our credit underwriting with continued focus on granularity and diversification. The outcomes of this are evident in our NPA, NPL, and early-stage delinquency ratios, all of which have remained well-behaved and well below normalized levels. Our balance sheet management approach remains centered on providing strong and stable NII performance across various rate environments. We extended our advantage in our securities yield by waiting to deploy excess liquidity until we were able to earn positive real yields, and we added derivatives to provide hedge protection through 2031. These actions will provide significant long-term benefits in the event of a lower rate environment. With respect to capital, given our strong PPNR growth and benign credit losses, we exceeded our target CET1 ratio in the fourth quarter and resume share repurchases. Our capital priorities for 2023 are to maintain a 9.25% CET1 ratio and support organic balance sheet growth, pay a strong dividend, and continue our share repurchase program. We expect repurchases to steadily increase each quarter for a total of approximately $1 billion during the year. Jamie will provide you with the detail on our financial outlook for 2023, but it is a strong one that is consistent with our priorities of stability, profitability, and organic growth. We expect to produce another year of strong revenue growth and operating leverage, with full-year PPNR growth in the mid to high teens, a return on tangible common equity, XAOCI, exceeding 17%, and an efficiency ratio below 53%. We will continue to invest in organic growth and efficiency initiatives. We'll add another 30 to 35 branches in our southeast markets, including our first three in Charleston, South Carolina, and several more in the Greenville-Spartanburg, South Carolina corridor. We'll continue to increase investments in marketing and product innovation to accelerate household growth, and we'll invest in scaling dividend and provide. Lastly, we'll make significant progress on our tech modernization journey and begin to realize savings and improve the client experience by leveraging these investments to drive automation into our most labor-intensive processes. You have my commitment that we will continue to make decisions with the long-term in mind to invest where we can strengthen the value and resiliency of our franchise and to hold ourselves accountable for doing what we say we will do. With that, I'll now turn it over to Jamie to provide additional detail on our fourth quarter financial results and our current outlook for 2023.