Fifth Third Bancorp

If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Matt Churro, Senior Director of Investor Relations. Mr. Churro, please go ahead.

Good morning, everyone. Welcome to fifth, third, second quarter 2025 earnings call. This morning, our Chairman, CEO, and President, Tim Spence, and CFO, Brian Preston, will provide an overview of our second 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 reconciliations to the GAAP results, as well as forward-looking statements about Fifth Third's performance. These statements speak only as of July 17, 2025, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Tim and Brian, We will 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. In a period of tariff negotiations, cross-currents and interest rates, and significant regulatory change, Fifth Third continues to deliver excellent profitability, strong credit trends, and accelerating revenue growth. This morning, we reported earnings per share of 88 cents or 90 cents, excluding certain items outlined on page two of the release, exceeding consensus estimates. Adjusted revenues grew by 6% year over year, led by 7% growth in NII. Adjusted PPNR increased 10%, and we delivered 250 basis points of positive operating leverage, our third consecutive quarter of positive operating leverage. Our key profitability metrics continue to be very strong and among the best of all peers who have reported thus far. Our adjusted return on assets was 1.2%. Our adjusted return on tangible common equity was 18%. And our efficiency ratio was 55.5%. Our credit metrics were strong and improved as we said they would. At 45 basis points, net charge-offs were at the bottom of our guidance range and improved over the prior year. NPAs declined 11% sequentially, led by an 18% decline in commercial NPAs. Early stage delinquencies declined again and are near historical lows. As a result of our strong financial performance and the positioning of our balance sheet, tangible book value per share increased by 18% over the prior year and by 5% sequentially. The strategic investments we have made over the past several years drove our results in the quarter. In a quarter where uneven CNI loan demand and a soft housing market made loan growth tepid for the industry, our diversified loan origination platforms produced average loan growth of 5% over the prior year. We grew loans in CNI, CRE, leasing, mortgage, home equity, auto, and both our provide and dividend FinTech platforms. Investments we've made should continue to support strong loan growth in future quarters. Commercial relationship manager headcount increased by 11% year over year, and provide had record production in the first half of the year. In our home equity business, we were number two market share in our footprint, and first half production growth was third best in the country. Both provide and home equity are examples of the benefits we have achieved from digitally enabled lending channels combined with one bank collaboration. Our investments in the Southeast also continue to produce strong results across business lines. Our consumer bank grew net new households by 6% over the prior year in the Southeast. The granular deposit growth those households provide has provided flexibility to continue to manage deposit costs even as the Fed paused on rate cuts. In the second quarter, our average cost of consumer and small business deposits in the Southeast was 191 basis points, a 250 basis points plus spread to Fed funds. We have added 10 branches year-to-date in the Southeast and will open another 40 before year-end, bringing us to nearly 400 branches across all our Southeast markets. In commercial banking, our Southeast regions have contributed more than half of total middle market loan growth over the past year, with North Carolina, South Carolina, Georgia, and Alabama producing the strongest results. New middle market relationship production has also accelerated across the Southeast, where our teams have added 50% more new quality relationships year to date than they did over the same period last year. In wealth management, our Southeast markets grew assets under management by 16% year-over-year to nearly $16 billion in total AUM. Advisor headcount is up about 15% in the same markets, which should support future growth. We also continue to see benefits from our investments in innovative, tech-enabled products. In consumer, J.D. Power recently recognized the fifth-third mobile app, as number one in user satisfaction among regional banks. And we also launched an initiative to provide free wills to every fifth-third customer through an exclusive partnership with FinTech Trust and Will. We will begin to embed AI-enabled functionality into our mobile app in the second half of this year, which should further improve the user experience and reduce volumes in higher-cost service channels. In commercial payments, our investments in our New Line embedded payments platform led to 30% revenue growth compared to last year and an increase of more than $1 billion in commercial deposits connected to New Line services. We continue to win more business from existing clients and to see transaction migration from legacy ACH to modern instant payments rails. During the quarter, Rippling selected New Line to be their payments infrastructure provider. joining our existing roster of blue chip fintech customers. In my annual letter to shareholders this year, I reminded readers that the global economy is a complex adaptive system and that complex systems react to change in unexpected ways. These days, we are witnessing a lot of change in a short window of time. While we continue to be hopeful about the prospects for the second half of the year, we are also positioned to perform well in a broad range of environments. Our business mix is naturally resilient, our balance sheet is defensively positioned, and we have the flexibility to react quickly as conditions change. Brian will provide more detail on our outlook, but I want to emphasize that we do not need a change in the interest rate environment or a material change in market activity to continue to produce strong profitability and organic growth. We are raising our full-year guidance on NII given the strong first half performance. We remain very confident in achieving record NII in 2025, even if there are zero rate cuts for the remainder of the year. We will deliver 150 to 200 basis points of full-year positive operating leverage, even if the capital markets do not recover, given the strong first half performance and the expense levers we have at our disposal. We will resume share repurchases in the third quarter. Our capital priorities continue to be funding organic growth, paying a strong dividend, and share of purchases in that order. Our operating priorities will also remain unchanged, stability, profitability, and growth in that order. Before I hand it over to Brian, I want to say thank you to our employees for your dedication to your clients. Your commitment to getting 1% better every day is why Fifth Third was recently recognized by USA Today as a top workplace and by Forbes as best employers for new grads. And I love being part of your team. With that, Brian will provide more detail on the quarter and our outlook for the second half of the year.