Fifth Third Bancorp

To withdraw your question, press star 1 again. We kindly ask callers to limit themselves to one question and one follow-up. I would now like to turn the conference over to Matt Curo, Senior Director of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to Fifth Third's Fourth Quarter 2024 Earnings Call. This morning, our Chairman, CEO, and President, Tim Spence, and CFO, Brian Preston, will provide an overview of our fourth quarter results and outlook. Our Chief Credit Officer, Greg Schreck, has also joined for 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 to the GAAP results, as well as order booking statements about Fifth Third's performance. These statements speak only as of January 21st, 2025, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Kim and Brian, we'll open up the call for questions. With that, let me turn it over to Tim.

Thanks, Matt, and good morning, everyone. At Fifth Third, we believe great banks distinguish themselves not by how they perform in benign environments, but rather by how they navigate uncertain ones. They achieve this through a diversified business mix, defensive balance sheet positioning, and by obsessing over the details in day-to-day operations while investing for the long term. This morning we reported earnings per share of 85 cents or 90 cents, excluding certain items outlined on page two of the release, exceeding the guidance we provided in our third quarter earnings call. We achieved an adjusted return on equity of 13.7%, the highest among all peers who have reported thus far. Revenues for the quarter grew 2% sequentially and 2% year over year. Core adjusted PPNR exceeded a billion dollars for the first time in several quarters and our adjusted efficiency ratio improved at 54.7%. The fourth quarter capped the year where the industry outlook for interest rates, loan growth, regulation, and capital markets activity all changed significantly. Despite this, we delivered strong and predictable results. Our full year return on assets of 1.17%, return on tangible common equity excluding AOCI of 14%, an efficiency ratio of 57.1%, all finished among the top in our peer group. We were one of only a few banks to achieve full-year guidance for NII, fees, expenses, PPNR, and net charge-offs that was provided back in January. Our NIM inflected in the first quarter as we said it would. NII inflected in the second quarter as we said it would. We returned a positive operating leverage in the fourth quarter on both a sequential and a year-over-year basis as we said we would. We resumed share purchases in the second quarter and raised our dividend in the third quarter. In total for the year, we returned $1.6 billion of capital to our shareholders while also increasing our CET1 ratio by more than 20 basis points. Competitive barriers are exceedingly difficult to build in the banking business. The only way we know how to build them is to invest continuously in a limited number of strategies over a sustained period of time. Our growth strategies are well-known and have been consistent for several years now. Their impact is evident in our 2024 results and reflected in the third-party accolades that we received during the year. Our investments to expand our southeast branch footprint and in our differentiated momentum banking platform continue to drive outsized growth in granular low-cost deposits. For the second consecutive year, Fifth Third was number one among all large banks in year-over-year retail deposit growth, measured on a capped deposit basis. We generated year-over-year household growth of 2.3%, punctuated by 6% growth in the southeast. And we also won J.D. Power's Retail Banking Satisfaction Award for the Florida region. The 31 de novo branch locations we opened in 2024 and the 60 new branches we expect to open in the southeast in 2025 should set us up well to continue to gain market share. On lending, our investments to generate granular diversified loan originations without compromising on pricing or risk gained momentum throughout the year and contributed to a strong finish. On a sequential end of period basis, we grew loans 3% or a bit more than 1% faster than the A chain. Growth was balanced between consumer and commercial and across product categories. including from our through-the-cycle commitment to the auto business, strong CNI production from the middle market and key CIB verticals, and continued growth from our provide and dividend FinTech platforms. In the middle market, we expanded our relationship manager headcount by 25% in the southeast and in our expansion markets over the course of 2024. Fourth quarter middle market loan production reached a three-year high, increasing over 50% sequentially and over 70% year-over-year. and we also saw a modest uptick in utilization. Our CNI pipelines and middle market are at record levels heading into 2025, and we expect to add another 5% to 10% to RM headcount over the course of the year. On fees, our commercial payments business grew fee revenues by 8% in 2024, and we processed $17 trillion in volume. Our managed services offerings and new line led the way on growth. and nearly 40% of all new commercial payments relationships had no credit attached. In addition, CareSheet, Global Finance, and This Week in FinTech all recognized New Line with awards for technology innovation. The ramp from new and expanded relationships won during the year, including Strife and Trustly, will give us a head start on a strong 2025. In wealth and asset management, total assets under management grew 17% year-over-year, up roughly $10 billion to $69 billion in total AUM. Our Fifth Third Private Bank, Fifth Third Securities, and Fifth Third Wealth Advisors business units all delivered strong performance, and we were recognized for the sixth consecutive year as Best Private Bank by Global Finance. Last, we continued to make good progress on modernizing our operating platform. We completed general ledger and clearing platform conversions during the year and launched term deposits on a modern cloud core. Our cross-functional lean value streams have achieved more than $150 million in annualized savings and headcount declined 1% year over year. These initiatives continue to improve execution quality and provide funding for the investments in our growth strategies. Looking ahead to 2025, there are many reasons to feel optimistic about the banking sector. The underlying economy is solid, and most business owners are more optimistic about 2025 than they were about 2024. The combination of front-end rates above zero and some steepness in the yield curve is a more constructive setup than we have had in quite some time. We may also be on the cusp of a shift in the direction of regulation, which could unlock new opportunities. With that said, recent history is a good reminder that things can shift very quickly. The modern economy is the most complex, adaptive system the world has ever seen, and complex systems react to change in unexpected ways. Come what will, we are pleased with the positioning of our company. We remain confident in achieving record NII in 2025 and delivering full-year positive operating leverage across a range of interest rate environments. Our credit portfolio remains well diversified and proactively managed, and the risks are well understood. We will continue to focus on stability, profitability, and growth in that order and to stay balanced in our positioning while investing with the long-term in mind. Before I turn it over to Brian, I want to say thank you to our employees for the way you support our customers and our communities and for your commitment to getting 1% better every day. You make our company the special place it is. With that, Brian will provide additional details on the quarter and our outlook for 2025.