FITB - Earnings call transcript Q4 2024

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Matt Curoe, Senior Director of Investor Relations. Please go ahead.

Matt Curoe

everyone. morning, Good Third's Fifth XXXX Call. Earnings Welcome Fourth to Quarter and Spence; an and This outlook. of morning, Brian Tim CEO Chairman, and results provide our CFO, President, Preston, fourth quarter our overview will

Greg Chief the These which materials and about of the as can non-GAAP Schroeck, XX, of to Our and Third's found review Officer, well has joined speak our Q&A call. Please as our for statements in measures statements Third statements regarding XXXX, undertakes January presentation. results, in use the no contain also update the cautionary be information portion only the forward-looking materials, release Credit obligation reconciliations Fifth Fifth of These performance. to GAAP as them. and earnings

will that, for open up remarks prepared Following the let to Tim. turn we questions. With it over by Tim Brian, me call and

Timothy Spence

through peers ratio XX.X%. thus for Core first quarters, for business the X% adjusted good great release, believe return achieved equity reported details while and on excluding perform several share have outlined by in and on items ones. far. Revenues highest obsessing on $X.XX adjusted Third, Matt, PPNR the how operations by in morning, day-to-day sheet of banks benign call. certain adjusted over who investing an improved distinguish morning, and the how Page balance for environments, time everyone. XX.X%, a quarter $X X Fifth we including they all not or positioning mix, long provided guidance but to reported among rather billion grew efficiency by navigate in At earnings earnings exceeded sequentially the year-over-year. term. This we Thanks, certain we the in X% achieved they this our themselves per diversified the of and defensive our We third We the quarter

this, the markets the and we year all changed fourth capped interest Despite capital and was significantly. activity loan predictable growth, results. industry regulation for The delivered outlook quarter rates, strong

of return guidance efficiency X on of of top expenses, achieve all full NII, AOCI, XX.X%, few of X.XX% an for XX%, and were on charge-offs excluding peer PPNR that the a net equity, year provided was only Our ratio to return banks group. We our among in full year fees, assets in January. tangible back common finished

difficult also for exceedingly we how points. Competitive of to of build XX more sustained barriers time. year, a of Our said them NIM capital our is inflected resumed quarter as are dividend over said total second in CETX a it only shareholders, we the banking share year-over-year second by our build increasing invest the inflected the business. The as fourth We would. repurchases on both in third raised we a We we the the we said would. the a would. positive to number $X.X period limited and first to in strategies quarter. it basis sequential continuously In in quarter returned leverage and billion as returned than in we while way ratio in the in quarter to basis, to our operating NII quarter know

we are strategies the well now. growth in results and XXXX evidenced have several for been accolades impact reflected Their Our years is known third-party and our that year. during consistent in the received

deposits. to in granular drive low-cost differentiated outsized to our growth investments and in momentum platform Southeast our banking branch footprint Our expand continue

balanced head over set Banking middle region. strong the J.D. year-over-year among and platforms. In deposit count from the of a uptick retail also manager we on grew household Fifth should a to sequentially strong basis. We by well without second our reached open XX% also novo or CIB to and the verticals or middle opened #X award originations the On generate compromising and branches XXXX XXXX. in than to Satisfaction a and loan end-of-period including consecutive we we market market XX% loans share. On the in on from increasing over product auto the and diversified The X% course providing Southeast, HA. by finish. production growth investments sequential in saw loan XX new a expect market, XXXX, and our more and to we generated gain for X.X% to year-over-year Growth commercial over through-the-cycle faster we to Power's [indiscernible] de the in granular measured was our relationship banks and middle in pricing basis, and up X-year locations year-over-year, the the Fourth For the modest contributed of all than dividends a us and growth Third gaining across our Florida growth lending, and XX% risk C&I growth in year, the Southeast punctuated continue deposit we won market bit X% utilization. and in large expanded high, year throughout production tech Retail branch markets XX Southeast cap expansion a the categories, quarter X% business, consumer key continued from was commitment between momentum

we and of at the another are RM fees, head our heading course On Our $XX commercial in year. X% revenues business add levels volume. to the in record we into to XXXX, to processed X% and in payments grew trillion by C&I expect pipelines middle XX% fee over count market XXXX,

attached. led growth XX% the relationships Our all offerings payments Newline of nearly managed and no new commercial and way services on have credit

start Fintech and this for and expanded Care innovation. year, new line awards from addition, billion ramp total all roughly and the Trustee, management to on a relationships recognize won $XX including the Stripe during In Asset up us head XXXX. In Finance grew week Wealth give total The technology will new with Management, and Global sheet, billion under AUM. $XX strong in XX% year-over-year, and assets

for performance, Wealth launched conversions Finance. Last, all business progress Third Bank continued the modern year by consecutive strong modernizing Private and Third sixth to during Securities Best the core. operating Fifth Global year make platform units our and as recognized a completed Third we Private Advisors on and delivered term Fifth cloud Our were we general Bank, We Fifth deposits platform. on clearing good ledger and

more in Our improve have and quality growth cross-functional investments and count achieved These annualized savings execution to $XXX lean funding declined the value million for strategies. head continue than streams in our X% year-over-year. initiatives provide

direction The also steepness complex and the shift The more may that reasons in optimistic The economy and is we rates setup quite front-end is about of in are which is new combination to ahead things are to economy XXXX. time. We about about very a adaptive seen, banking opportunities. constructive they With underlying many world had curve modern and Looking the systems the ways. in in has most regulation, good shift were react solid system cusp unexpected the recent a sector. business some to there of the could change quickly. most yield more the owners optimistic said, than feel that history complex can is XXXX unlock some than above be X on XXXX, and reminder a ever have

in with achieving Somewhat year across remain range leverage interest our positioning We the of a well, are of positive full pleased confident delivering XXXX record operating and rate we NII in company. environments.

proactively understood. and remains and portfolio diversified are the well managed risks credit Our well

stability, to order on balanced continue positioning, and long to that the in stay profitability with mind. while will focus growth and term We in in our investing

and our I Before our communities it way the Brian, say to customers X% our and support I you turn to to thank over getting better commitment for day. you want to for every employees your

it special the Brian provide XXXX. the quarter our company details additional You make will is. With outlook our place that, and for on

Bryan Preston

thank and to Tim, today. you joining Thanks, us everyone

our company. a income ongoing basis. resilient streams, sequential quarter adjusted results balance increase in an of a X% momentum revenue. achieved expense resulted sequential ongoing net That discipline, our growth revenue quarter in in strength With we the diversified sheet Our and combined pre-provision fourth performance, adjusted fourth on revenue X% demonstrated the and with

capital share of us in our target the quarter. repurchase billion return our consistent end-of-period $X mentioned, shareholders XX.X%. delivered loans with operating in fourth As growth executed over profitability our CETX and ratio in the to of strong our allowed including sequential $X.X million Tim billion near-term $XXX XXXX, of We to maintained

These last of deposits regions, up were broad-based We across accelerated saw in a as rate in the quarter, were interchange balances by stock yield banking maintained due in in out realized deposit of peaked and Chicago, provided to our their items. resulting book growth include performance, In period-end continued billion by to points. This Even in Period-end X% in par. the combined sequentially. meet points. the expect down offset the period cash period by the The from by income our balances checking purchased the end well continued increases year with benefits assessment year. Highlighted balance core securities related continued up portfolios. Shifting investment rate commercial. of benefits securities core loans reduction sequentially, X% from basis net we strength to in foundation, basis increasing special December, decrease the the same an release, positions production our deposits interest month XX position benefit X% led share, repricing have and estimate repricing on loan per year-end on in average increasing the core in a seasonality. Average book the and increasing previous improved contribution these our on related growth X.X% positive to tax Carolinas Interest-bearing flows deposits. up inclusive FDIC elevated value and increase Average borrowings. wholesale XX X.XX% interest a loans to rates, to costs state and the mortgages. flexibility management in for core unrealized for corporate loans and higher our its interest prior with resolution middle also than us stable. down million the book asset in our along which allowed the X% our X%, in and rebound benefit $X.X pull expected the average short-term higher-cost margin $X.X for the to cost in we and some were locked our August, representing loss at of known cash bullet were investments increased of will treasury an floating X since impacted classes assets the as driven rate X the loan Indiana, indirect tangible the consumer billion X% item. Net fixed assets. Loan XX-year as XXXX, sequentially by were rate commercial basis Visa-MasterCard horizon. sheet addition partially beta $XXX offset Both of to prior by to the to reduce over available the with quarter of saw AOCI market point on front yield increases a us resulted improving further strategy back with Proactive our that verticals. end with to in in our on litigation and results more These December, Page certain upper despite targets portfolio these focus to residential sequential Georgia were in deposits and growth beta the through impact the our position, deposits. were in relatively deposit with sale of point, and X%, core of actions, in fixed improvement Utilization we strong reflecting increased footprint, a auto as momentum, continue XXs. Total reported updated a interest-bearing normal nearly

our a focus while strong funding always, position. prudently managing on As costs total liquidity remains maintaining

XX are in We basis liability interest-bearing pleased sequential costs. decrease the with very point

stable consistent a an rate balanced to record and will deposit flexibility both into remained to as need Balances core to our provide trajectory another with us NII continue approach average XXXX, basis deposit compliance end-of-period at ratio the of over quarter. XX% up We percent X% stable on balances quarter, rates the Our environment. Demand continue XXX% prior be compared and XX%, were to core We the expectations. a uncertain Category to believe are term. our short-term this the X be near with relatively balance the from full was ended loan likely at quarter will LCR maintained as third level growth during deposits as our with head we quarter. to

Moving to fees.

commercial business fourth activities, appendix to provides the line payments income updated During on addition and noninterest significant more items. caption income we better the our captions our which detail quarter, statement changes. the the capital on of The most includes align our to of presentation disclosures markets

by Visa the the and Excluding commercial swap, same compared X% to and all year. Capital losses gains securities quarter the impacts the the wealth in return and adjusted increased last delivered of strategic markets, income fourth revenue. payments Markets noninterest total Capital quarter strong prior personnel. growth sales syndications, sustained advisory in over markets fee results, investments the and year, capital with our driven increases M&A grew products in loan and XX% debt

previously AUM to commercial We $XXX TAM customer hedging The activity pay in prior year the year, brokerage was in deposits, prior levels increased up by net XX%. included activity and sponsorship grew increased growth, fees. In and was service earnings Third million charges below caption processing were that see year which growth to Fifth revenue. Compared commercial transactional wealth, XX% and fee X%, equivalent in our due and driven card the commercial and fees that and new continue to payments revenue treasury card prior institutional on to at fees revenue over credits Securities. reported management includes previously

We management nonqualified $X of losses deferred products the compensation million our compensation from were continue acquire line. The mark-to-market services treasury of and and is new to plan, impact in managed in which securities our expense. in offset clients primarily new

Moving to expenses.

$XX items $XX previously mark Page noted $X release, up the increases of mentioned sequentially. in and the and X% the quarters, ago year was million million deferred The quarter expense to from adjusted expenses of our X ago prior noninterest million Excluding our expense the year reduced for respectively. decreased and quarter on by X% compared compensation

deferred X% and X%. of was growth mark, Excluding expense comp sequential the Year-over-year the impact expense was growth

points. of expense our The efficiency ratio continue to credit. in the up solar points While line to partially card were X fourth these our points, sales auto down broader X continued data, XXXX with drive investments experienced XX charge-off to uptick which in points, seasonal stream indirect to days over and the basis X consumer RV increases, the in basis points see basis quarter we Consumer portfolios. have for seasoning personnel the as by technology, as Consistent basis sequentially. the our down vintages expectations value quarter industry well portfolios normal with and charge-offs branches will XXXX and increased generated decade. near XX a other origination to and be in levels stage through costs basis periods. Early have the appears basis remained and modest lowest XX past to relative funded was continue Commercial our the X were be due, underperformer reflects primarily the net XX delinquencies last only point and programs. Shifting we savings charge-offs vintage

and the basis increased charge-offs stable of increase XX a $XX points. continues XX Our quarter X well Commercial, portfolio basis prior the our [indiscernible] NPA contributed net to with million ratio up points. quarter ratio CRE to $XXX NPAs no only Commercial and to basis the from during were perform consumer NPAs points million. Within NPA

$XXX decreased during reduction Additionally, million, the X% total quarter. an by criticized commercial assets

the attributable allowance for losses. build in a for scenarios. quarter million build a period-end was the the in macroeconomic strong This credit our to expense modest Moody's resulted and growth provision loans $XX Our primarily deterioration in in

ACL made X.XX%, during the changes the from Our We our basis no to down quarter. was coverage third X point scenario weightings ratio quarter.

X.X% a with We CETX consistent ended significantly near-term minimum our ratio Moving exceeding the quarter to and XX.X%, our buffered capital. target. of of with

of losses CETX anticipate in year-over-year. securities a in our high portfolio AOCI We that flow in the to cash including forma AFS XX continued portfolio, improvement are lockout structures, principal is our the pro up basis portfolio which X.X%, Our unrealized ratio, impact securities the of securities degree our or the certainty rate in expectations. XX% bullet of given approximately provides fixed points

securities forward before XX% future considering back book is of the of X% increasing will by into realized, AOCI the any curve approximately by the the Assuming to per value accrete end share related earnings. losses equity XXXX, tangible

$XXX During quarter, count X.X share shares. million by our reduced repurchase million our the share

achieve our and ability balance and year NII Moving confident XXXX leverage. entered sheet to a and our to We strong outlook. current momentum record remain positive in with resilient operating full

to year forward the increase a cuts and expect in January, X% NII which point no guidance of would not assumes if outlook even the rate XX We This we NII start X%. October. change occur. We cuts will that full for to our March at uses basis curve XXXX, assume

loans XXXX, the driven improvement to expect We increase in the primarily full year by continued total be loans. compared to X% X% up broad-based C&I in growth auto combined with average to with

relatively securities asset year revolver up of remain muted payments, continued cash XXXX. Full We and to lease TRA throughout growth impact business, wealth X%, all to offset position, capital the reflecting environment markets are the is revenue the revenue assuming rate X% adjusted continued runoff income the portfolio stable final and in be year-over-year commercial management. originations and and given that XXXX. mortgage utilization commercial operating partially noninterest expected by the in the occurring of

expect year X% to be We to X% noninterest adjusted full expense up to XXXX. compared

assumes sales Our to production our closer markets in guide our force in full grow additions branch wealth strategic commercial and to to X% to outlook X% in X%, high-growth our Southeast the support continued initiatives. growth expense increase positive middle adjusted up to X% In payments capacity accelerated year to and to and range PPNR market, X%. be operating revenue leverage total, openings implies

credit. Moving to

XX We expect basis net to charge-offs XX XXXX points. be and between

million loan the changes provision to due and build Assuming to growth. $XX we expect in between no macroeconomic million forecasts, $XXX

quarter. outlook Moving first the our for to

the and repricing fewer expect fourth of We XXXX growth, liabilities the impact benefits should quarter the in with the fixed be of interest-bearing as the loan to X continued of asset flat cost days. offset NII reduction rate of

due in to momentum continued the first increase and total in quarter We loan C&I balances X% to expect average auto.

of the expect TRA, spend, markets impact revenue. the be to noninterest capital activity to X% Excluding normal to in seasonality X% fourth compared commercial quarter, down the card income we banking other due mainly to and

quarter fourth X% First the noninterest adjusted up quarter. be is compared to expense to expected

our items and by seasonal the associated of As payroll are first is always the quarter case, awards taxes. impacted expenses with timing compensation

Excluding the first the of flat approximately would in $XXX expenses quarter. be million, seasonal items

to million charge-offs the and $XX be quarter XX to million the first point loan XX expect to expect We range in ACL will growth. build due $XX basis to be

the $XXX of million in execute we dependent first with repurchases to the Finally, growth. loan future share in on level share repurchases expect quarter quarter

credit continue our XX.X% future to strong of revenue it year clarity ratio target our more with investments, me returns to operating that, Q&A. is regulations. In to management, be capital shareholders. With we sheet, and will balance leverage positive around We and and while risk turn the around over CETX expense and streams continuing our the other and a rules await to summary, NII, let the disciplined for Matt long-term resilient XXXX set of record for call open diversified

Matt Curoe

Thanks, Brian.

Q&A, the we ask start X follow-up that have open and X questions. Operator, question call this we and given to Before additional have you then we the you if queue the to limit time please return Q&A. yourself morning, for

Operator

[Operator Siefers Instructions] the Piper come Our Scott Sandler. of question with first from will line

Robert Siefers

demand Maybe was you how year. as context or a just more to see Tim provide loan hoping could little Brian, I through the developing you

I'd recently, encouraging. say Your much it's been commentary more

You pipelines, things et like the line, robust cetera. discussed commercial commercial

developing. on color maybe additional things you how see So just some

Timothy Spence

see fourth grad, a a we see I for but a Ohio happy salt of needed mean, about in Scott, the sort in we on to did. No get that would the We that know in like board channels through And because sometimes it diversified loan could Obviously, think pipeline needed most early we've of bit building sources to that origination talked didn't, just sales additions because I I the just start the can little some problem. of the the while. to of fourth going we demonstrate wound a election as up the points to us were year. I importance it a to force quarter. isn't activity having work lot others for will up when quarter, with largely the look, only Yes. pull the the this channels through. nicely. Like state are think put some set Miami in with along continued

year. the On strong the auto consumer year is of us all last for side equation,

the we we business, we other several why lot but it's at about think it we're cyclical, certain asked points beneficial. were be were it there were quite the of one and it's committed where I can fact great banks And in cycle. a out the when to those talked at getting that of points

fintech this moderately have had the we'll year, continue think a strong and equity, year. coming good there. we grow both Home things think platforms finish we'll the into to So to I

growth additions weeks a roughly basis, On of a quarter. definitely last worth pipeline We in benefit little the That X bit mortgage the regions got force started of equation, I of sales side backlog a the that finance, of get And really characteristics production a support above-market a level particular, election in in clear saw would areas out the year. the commercial the sequential by the and like following verticals that and quarter's still supported was think the the showed XX while made in market. pipeline on on we XX trade growth during X sitting we to underlying about broad-based. as the and record is the X growth. We're middle seasonality, the we from warehouse of did

market in them of utilization, they dozen year. talk they M&A There's X/X which them I that's about always investments, clients, increased got than those feel just about And support they accelerating we so the inflation is or than here new You or following biggest those at got can said front. The optimism the [indiscernible] flights encouraging. We for availability indicated of to XXXX more they this in Labor XX% of tariffs. more just lot planned a chain indicated XXXX. is from to to a About point were More they on how optimistic through the even middle X the about. than rates see were or were that about we interest the what tied facilities. half since in single clients utilization pickup hear X% going think investments that supply were I election, asked credit issues clients numbers. definitely the to concern worry we more about

encouraging think as I with just reminded want an last And quarter the at end it's don't of victory the game [indiscernible] outlook. rally, overall, So night you either. us declare late to the names, first

Robert Siefers

Perfect. in in agnostic change And characterize you there. then it, you'd want And changes where versus Brian, cuts, guessing just your I'm guide pretty all to it rate the your analogies would rates. think I like now implies How would the you but you're, pretty you based I much it's had or thoughts. wouldn't sensitivity appreciate where be? suggested I fewer you to more on guess, like

Bryan Preston

on lot that well we're we our as happy inherent right of to on asset platforms Yes, right depending loan modest the gives sheet as We're of bit pretty the sensitive origination flexibility sensitive, diversification little little as neutral -- are. environment about, fairly balance our the liquidity be a where a liability Tim provides. letters now. provides. bit the It And what us a talked

this positioning So in environment we right like now. that

Operator

Mayo comes the Our next Wells Mike of with question from line Fargo.

Michael Mayo

Are are around you for positive. you calling the confidence to your That's seems not turn level a Third? ask XX loan markets and pipelines for verticals X% have have picked growth up, really looking industry? to is for both? just it it Are customers for X short you're a record your of up. what's talking picked like calling And calling utilization, you higher going Are that? I'm about answer. XX that middle more for the loan X Look, question, commercial long market, Fifth It

Timothy Spence

customer, If in the prepared you I system. simulation It is XXX I been. change my points a over benefit a basis regulation. than always want is the I more rate economy then pretty think cuts worry more answer, uncertainty, is remarks, certainty backdrop has maybe. travel Like have my right? Mike, unpredictably. The pretty and complex a direction you're it a the in short favorable have said about you answer, it resistant is of you can thing that on

have more immigration, going we're to going to lot the to a I and much related on we on and don't see they deportations watch yes, availability there the to clarity those should and if discussions come labor we have think market see short we had chain think the big continue expansion labor questions disruption, to on otherwise, portfolio. of order. And things C&I in supply some relatively we're about

please, in don't annualized into Just bake your Third. for models Fifth XX% growth,

Operator

next the with RBC. question from Cassidy line of Gerard Our comes

Unknown Analyst

Letty Thomas in standing is This for Gerard.

in deposit in drop in your just good what a rates little on saw quarter. You finished is deposit Fed fourth color the the XXXX, outlook more cutting? for us Could a you give assuming is rates

Bryan Preston

at to Yes. We'll continue cost this get of a little Fed done is bit out if point. the

this we'll cut. in quarter bit get the full little a of as first tailwind some quarter space impact have benefiting of December We

some That's CDs almost a flexibility right to in of have billion X.X% at rate the we Additionally, weighted first going maturing average $X quarter. now. of us That's well. as about give

do if really If is on year potentially, we becomes a it little loan -- But to that, it's be good feel deposit growth we Beyond could more robust dependent bit. think up tick it loan about in growth. general, a our going positioning. competition

position, But a did spot improve lot we take of fund -- quarter. we have loan we where we the ratio loan-to-deposit our with some and cash, flexibility that bit needed actually that like navigate loan little costs. we're excess down With growth of this those our if to in could to, cash a a

Unknown Analyst

in uptick nonaccruals color helpful. That's And we give saw Okay. any then C&I on this just quickly, can quarter? the you us

Greg Schroeck

Yes, it's Greg.

average. average a an geographic trends, million. our commercial driven So points by We amongst was of or about No no the basis few increase or discernible $XX within really concentrations remain industry borrowers. commercial XX-year loan above size

of the XX-year like reduction these we're experiencing or We captured either inflows example pay based to the or this beneficial. NPA from risk, full NPA debt year, I borrowers credits, of working specific either it's in results, financial half and know, of largest payoff. how get pay within average quarter assess is our through with off of through credits the financial down said, flat you results a stress each individually evaluated. great that a a So to are relatively the mutually a outcomes are as or expected reserve those first And reach perspective. And charge-off. The those on the

Operator

Poonawala Our comes next from the Ebrahim of question of America. Bank line with

Ebrahim Poonawala

I start in maybe going to morning. the Good of in branches, where back investments Tim, Southeast. guess terms just you consistent

that you remind ago. around had branches X Just years payoff the us from X, X, opened

again, I about if outperforms on investments. we As these industry, that's we Fifth of -- deposit up that loan for Third someone loan and growth think the mean, given should think growth as great, picks

a give maybe even is as the markets, specific like areas you the what of So And us measure talk planned. new XXXX sense -- about where for any growth has the investments? these been payoff

Timothy Spence

Yes, talk Brian I'll let pay off, of I'll take to the second half the of the first this. that. half

Bryan Preston

age to X is now, Yes. Southeast $XX still and the of XXXX. where now, build The are average right innings, our branches we new right? early average another the we're It's in in on weighted going especially years builds are million

average in ramp perspective. sense still And so the an from we're periods early

driver of seen acquisition it performance. perspective continue you've will position So customer couple NII us over last growth, a what significant to of big from drive and that similar can a us then be the years, where to puts drive deposit and in a we from the

years. head middle the more as to related we've force count middle that of increased in couple increase markets new the side well that the we've XX% making. just of sales The over that we've sheet, teams On the market last we've hired in the market additions count sales it's head been that -- asset as

So will from an strong be NII will those for tailwinds us perspective. all be

Timothy Spence

about growing back that degree And have which really engines flexibility. give talk we I to when liquidity we is drive margins. a us these ability it nice to that here call the we the deposits think Yes. does what or back between want do manage The toggle to we is about great the lot to having online thing leveraging

was are, the Brian decisions based make those environment needs balance we sheet what of So the on the as and saying.

can we've you waves in of that think sort markets, the terms In done about a of few here. what

North wave, builds when at were Florida. all Central year Southeast Nashville, North Broward this and along the think the year. this concentrated next year. wave material North, in we you in see increase first Southwest branch South next with branches in disproportionately our Florida Coast, online Carolina. County, Birmingham here Florida, Dade coming and The branch look not activity will and a in new The so Carolina, branch but And I opened first get The

going in other a to pick to so area. in and the The big time nice see that XXXX, in is X- up in frame, X-year we're Atlanta driver a less Atlanta

several be branches have that there. We will coming only

Ebrahim Poonawala

those we look X, But as don't Got of kind it. is That's growth peers. your some X Slide revenue And helpful. a actually client that as maybe acquisition? And of -- the franchises, deeper markets. loan quick a those one just or you view of we I on sheeting of balance Maybe any at have wealth, just when . are should us for capital fees. dependent tool growth give on guess for loans? payments, markets sense How

Timothy Spence

Yes.

it question. business. Okay. take by just Great I'll

So dependent not on wealth, sheeting balance loans.

every We $X that $XX really have AUM focused in management franchise. all. and for wealth in is It It loans. balance in of dependent at every not AUM $X something sheet like sort what, is a in like for fiduciary or $X deposits

every added last new payment We of almost sort led, new X the have it's say I number Payments, gave there attached payments the has digit, that been new on commercial it. reliant credit low line in right? And platform, an where certainly, it important no of particular, what not Commercial double-digit relationship It's is driver high that relationship year direction. balance did. But that relationships rates. single growth sheet supports the we the we to that there. just for XX% half-half, added another

roughly of is more market happen clients side do capital much built would activity, who to use the what sheet. The commercial We as On the inside in that market That essentially is activity cross-selling M&A we balance principally middle existing great really the clients. opposed house make there. M&A strong growth certainly, want, franchise. And attachment that come of of banking what equation, the you right? space our monetizing commercial It's half as franchise, the independent, being to for to The engagements mechanism lending the from hedging the relates point of go just full believe business. to have strategy, does a is the to way business. on which penetration out we book the markets existing get link. I there to long to really focus of our capital get CIB we it the a inside

a ability balance exceeds rate by continue to our markets sheet fees at I'm pretty a grow in the that healthy margin. So capital to confident

Operator

line comes question of the Morgan with Gosalia from Stanley. next Manan Your

Manan Gosalia

at capital, to here in looking CETX, question long end curve. is operate the The range. we to reported on There you volatility here the how I some AOCI, of are the On thinking operating your X% peers XX% on that about was some or are know including of CETX XX.X%. keeping

a thinking So for from I about are AOCI? and management guess how you And CETX, have buybacks the capital question target you including is, do here?

Bryan Preston

is it would We CETX now to that look we would inclusive now. And on that portfolio right the now, is about right duration portfolio. with investment par Yes. do It's the The to X.X the continue time expect moved price sensitivity curve. expectation X. to keep of the be portfolio you the significantly. to of The if -- of pull X% belly north of of AFS the right has increase AOCI the but in portfolio, below at actually in over

on which and perspective, dependent we AOCI dividend to good the accretion our growth, from then couple are whatever that capital over here, to confidence next gives with we that buybacks. really seeing about to years, be no the the be continue maintaining capital supporting may of buyback So time. From rules issues be, feel going priorities us going should a organic have a strong over meeting we're that

so And that where level deliver the the will each end-of-period growth ultimate that triangulates loan we quarter. level XX.X% what buybacks be of around and

Ken Zerbe

it. Got

that will that any stage? you AOCI. that some at level which Is So on there diets you drive it loan -- including growth, accrete keep CETX, the hear through -- you RWA I -- it at impact could

Gerard Cassidy

at anything situation this an see create don't perspective. meaningfully from a we would would back where RWA that We pull point

Operator

Brian Your next Securities. Foran with of the Truist from line question comes

Timothy Spence

Brian. back, Welcome

Unknown Analyst

you. Thank

all that feel are X% kind commercial away XX% giving got the peers, on? little of think an for like at Are So any on us what's breaking stand I a pack. gave payments, pulling of have it's up disclosure look led. Do area the a out if first higher? metric higher? you you lot we we and know thank from more couple you've out you're main where your And us disclosure. you year-over-year, of of and of you all, the sense a relationships commercial payments I fees invested When of new think you would kind like XX% from it you the times you being

Timothy Spence

Yes, great question.

I begin with the that is is changed to reporting because confusing reason it say So will to see we our it.

and us was the a for per a you like NACHA more EY it own, is. commercial ratio that So does can a you for total sources calculates on or for of think the I confusing public, higher ratio, Nielsen otherwise. look or I because It's report peers. The they turnover they're and essentially of here your can comparison like from at utilizing previously. business dollar confusing turnover payment-centric the metrics as And volumes and that you the are transparent data deposits. And do study lot benchmarking

have of And to would point because, the benchmarking look roughly data think the I major as rails to that commercial just if is than So product I individual we're definitely Like faster know C&I industry at look on overall we're growth we have industry share the you others. X.Xx lending nationally we overweight triangulation. payments the this business categories got again, market at were we a growing in rates. relative in to

business from active helpful actually us Corte software because when the is going rate to been relationships terms in number, players of I'm grows think new a the of we top in that's FI developers, their one in the good terms traditional for have we lending whatever, there. or individual when us of [ when this Toast, third-party to a Associates. It markets. because like cetera, bit penetration Stripe et working And suggests sort treasury exact data gap mid-XXs market Granite our we in they get management counterintuitively, penetration ] is it's beneficiary thing Breks, share or a group outgrow other peer partners with Trustly, number little with have I we're the but for nonbanks not Nova, customers.

and sort but to relative know. the be would able So you'd our of reckoning, be it everybody to then debt adopted great captions would to others, I our if position way try like that's triangulate

Unknown Analyst

all I going could on your going the of comments XX. that. Definitely if few and Maybe appreciate would. very is the on hit your mention way to a in It to that follow-up Page guidance sneak guidance on out banks lines XXXX did

assuming you're a the here. fairway plan So us giving down

on you there kind what X you just or highlight You've the downside but for it the up, upside kind all touched and individual . of if us? was maybe about within X would were year, you've risks of line thinking items, given wrapping everything

Bryan Preston

Yes.

a a certainly will the is deposit going growth loan costs think be question. question be to I and

half nervous that activity treasury from going market feel I certainly background, good we then always overall XXXX, trajectory soft think we're volatility. are XXXX perspective. on. And you the my I'm to about see We So in of about not one that a just fee the just businesses had those We're but be with a but NII, some expecting in market-based always to markets. could coal fairly first repeat where

Operator

question next Your line from John the of Pancari comes with Evercore.

John Pancari

scale? also but you Tim. both -- in top then given the a dividend capital, here, get on priorities, thinking just Washington about and -- front, nonbank the M&A the for deployment Just your on updated regime back whole is want How to bank M&A change perspective posture perspective, still need hear organic in you there, in the priority thoughts buybacks. Just to for from I the and changing regulatory M&A your on are --

Timothy Spence

happy the the the Sure. to U.S. the I is tier matters, has believe the I the U.S. right? the And Like mean in sector system -- consolidated No, do banking in system happy least economy. also least next world. consolidated banking it.

floodwaters. back holding I consolidation be Eventually, going space, the it's bit to in and little like appropriate. a it's more there's So think

wants competition Our in been he his for more testimony the pretty banks. larger was Treasury Secretary clear that

pretty case, have we our confident the in to prior gotten could have this I'm math and to deal year. think could a year, we work prior I made approved this

different the an on take appropriate our can because don't compete. We've regard. I what compete now, in to going was the with X, and believe in going a density levels, in we're inside lot balance some coming look is this it tech have growth of there people don't the down to think we franchise. for the the able of overfocused as in to I I what's way We having I just everybody but at had is the value make any easier having and Valley in be franchise have are those the that can guys regulatory not at like pursue is capacity back the that, any markets rates of that persist energy well. And we when addition where the scale and absolute the to weeks all we're the cost, to to say you be you ability investment M&A. it to value We're that issues that, in I don't who of in pike prepared diversification tech to that. grow believers administration, to doing need foster do human in the see terms So never lowering but we've what native believers without and about of banks X know clear just think going in the and I out that's mean, innovation on. I people to advantage to the capital mean, to get been ago the is

the to want right materialize. as there decisions opportunities And make so the we

in front, the the nonbank in commercial we and we On services managed the payments. to the be continue interested capacity have to adding that

product so active. We're lacking proven an is company of a that they traded is do off of but blow capital are where the that tech So fit, you businesses product we've looking big bunch properties, way. But area to buy core real there's on be and as big essentially the find again been buyers to when you're to you're distribution publicly product don't us getting a in for acquiring in buy where not we talent-driven are and that some every same X way a and when in occasion, value the of doesn't that that like X more in have exist you those franchise businesses. years things tech then proven because people market

John Pancari

it. Got

of Okay. guys the your earlier noted And many then of your it's separately, terms That's call in your helpful. executing clear than you hitting growth had as been better peers certainly your as you in have returns and well. targets, and

XX% As XX% in here. return we look at teens, high tangible equity here your broader returns, on the to I common mean, you're

the mid-XXs in You're ratio. efficiency

for XXXX, do efficiency As where you is profile are the operating looking you and as year returns a Third, return even view ROTCE do think Fifth beyond the we a look How the you which then you're at backdrop. that, in at and where year for few towards? some possibly macro heading expect and improvement underlying

Timothy Spence

place believe I you're a a what would pride chain where to I can we're think excess reach Like of of achieve we the in of to have the order take return what in targets places in our get company. in don't mean, of we of say. terms in Yes. fact equity. great you cost logic here's that returns within long like are confident to that deductive good our run kind to or I

there's ALM about and mean basis we an credit. terms existing be needs proud context it that lot is We're The there. defensive than piece on of quarter dollar-weighted neutrally were I example. portfolio. the done our production actually a an in from positioned perspective fourth better of like don't like of to stability, that. profitability think the you in growth, work and a if predictability the the of think business. I of So We're

XX% sort closer of Brian next have all in as isn't it's goal to I that the it an the in year be if we we we'll efficiency what common or That leverage We'll again plays your was So we to find XX% of got sort a produce. But leg year high sustain the efficiency that ratio return ratio per in to like teens then expect, that and pretty where question. book feel right? to think focus get X% the tangible the return more to operating assuming get good in that tangible terms out and the way return said, is the of setup to as grow XX% to really really to probably mid-XXs feels franchise, a good. of try this level on mid- the there. At a has equity the in value terms profitability, the backdrop for share, us benign

Operator

question Deutsche comes from of the line Matt next Your with O'Connor Bank.

Matthew O'Connor

they're itself? or any pipelines into these turning offset of finally plan, nonfit And some point? hopeful should the little the of help A it, question, they are highlighting they kind that is what's customers, bit Or market to volumes. But that's you actual with labor. that of said some in of at mentioned still some have that's Are any? demand since maybe challenges that assume kind impacting biggest will they some guess I if you trying of dislocation I solve that challenges would -- but loan thing kind of middle that tech

Timothy Spence

advance. question. great that I say mean a depends right? that's let it by No, of in sort Yes. So sector, me

of in pickers the tactic. I've gains when including of to the more and productive. that order wholesale in getting that warehouses are robots, question high-volume by some no of more move overnight on book, that picking hopeful and there's as morning of facilities so based SKUs or done the manufacturing the forward we in example, they you're manufacturing racks facilities they're so the items, On logistics, said business, the robots can side we'll the in an shared a lot retooling your support that distribution get they that in, restack examples that actually place come put around

of So that. there is some

personally on factors for in rely and nursing unless for the overtakes here a our health open a demand that. hope there's care, think can companies, graduating point like classes clients, optimistic they're that and care otherwise I that and health schools but they from there at less travel little some the the nursing that

labor like people pyramid a Like And than the millennials. of year travel size we have in -- the sectors, right of workforce. retail lot on the every of -- that's rate structural versus construction have and productivity the we In and think a U.S. And the think we generation the the the the other entering there otherwise, retiring boomer a technology. the now services, baby reality unless have demographic and Xs a I that the gets with because just of can is direction you and we negative birth I have boost is more problem around because better don't concern

U.S. labor suggesting those or in integration but happening. jobs hear clients the maybe there's all documented the talk when functioning not that's would wait have market we labor you optimism additional a mix So and program of some a on you things to And accrual, just to that support the not that reports whether see

Matthew O'Connor

That's themes corporate you you guess? just your if bringing you it labor? C&I guys done. corporate you large had by this all different interesting it are about or year there think you color. think -- of as will between together, think more balanced, growth, pressure And and about there then large And And market middle as the be large meaning to pretty thne less I'm then kind think, Are in middle market. corporate, I are driven

Timothy Spence

Yes. I'll take the second one first.

want, of more an granularity, we gotten We goal the time, Third. balance. we Like think important some which made over on strategy was I is the granular. Fifth have here of progress part

banking of to a ideally a banking, sort outgrow was on for expect market the within bit granularity that plan will don't corporate balance So banking. I good corporate and corporate grow middle focus small that business, the market. segment, matter. meaningfully faster banking, consistent than including little business set that to there,

Bryan. a You want the other good It's it, part of question.

Bryan Preston

We mean navigated I have general, some right to a that in ability companies a to middle banking little also different with a labor investment they their labor able that we just has of do think lot costs be pass pricing better that the -- could in likely theme markets, to through have businesses to in I so capacity, more do expect the provide to they pressures, tend their just and corporate bit their market. than automation, is be to to ability think continue. A that power that's labor. more bit larger the general, the to shift invest flexibility to the little and tends attract to had Yes.

think we talk we matters with corporate banking, it we in about banking, mean, that. portfolio the think So I the as matters, C&I I it scale agree and in well,

Operator

Your comes of from Najarian Erika the next question with line UBS.

L. Erika Penala

Just you share X expect Brian, we could have a we normalized interest do net if margin traject neutral you us from questions. Third with as quick that think margin income scenario? interest you rate, X for have And under follow-up Fifth X% that the be about would the XX. a outlook, how net view what to

Bryan Preston

Yes.

driver the on we quarter, we're improve good cash shape curve will the each there's getting quarter. as associated kind that this mix a actions. to management individual that point down achievable some balance quarter XXs due Obviously, X of in to of this been with increase is a into in the year. rate both it for the talking is improve feel as that the Certainly, well we quarter in continue margin the be basis big year. of to though, about and coming that. position growth liability X throughout wildcard position trajectory now in continue We've We to to loan for partly environment expect was the few any us. Certainly, throughout attributable saw the going and that the basis to But that the points sheet NIM NII a while a back each big cash

L. Erika Penala

to it. as you capital your in X.X% that buffer? follow-up And we believe cycle the off it received for if think the sheet, risk revisit was participate stressed embedded is worth next it's buffer I'm Got the year. I last maybe to that think balance capital question wondering, about the Tim. stress

Timothy Spence

because it Yes, constraint great optimistic Erika. transparency am for us to question. binding more I sense going No, for to that us we're of today, get just it's out not it make a BPI, the doesn't or and capital But X.X% it and given helpful. quite be really, from tests was that the X.X% that subsequently, Fed's do doesn't the or stress today, will matter. X.X% whether announcement litigation filing buffer the stress

Operator

Scott. will question Janney final Marinac Our of Christopher from with line the come Mongomery

Gerard Cassidy

downgrade as from any utilization as upgrade trends criticized the classified. and about additional Just wanted to C&I well ask

Michael Mayo

Yes.

C&I in of in it's utilization that XX% the range significant the to up stable. On on utilization the it this then the point [indiscernible] about year at change throughout any front, and of We're range And expect moved X end the not be to to it in at beginning has the stayed -- quarter. forecasting rest relatively and quarter

Terence McEvoy

Yes.

were relates down to [ million ] in crip the it $XXX Brian the As fourth we as quarter. mentioned,

Our XX ratio NPAs including the was of down just over X%, our portfolio, criticized are current.

we've on progress last said So the I feel call. really about made. We this good quarter

to bit, assets. a work through continue reduce see expected We troubled to criticized those little

It feel good mix, balance limit the about portfolio. a the good continues feel I trend. concentration great I about maintain disciplines. So to strong

feel good current the asset So I quality. about

Timothy Spence

signaling matters It Thanks. me on way out. the to we're that

based been built are of up I'm fortunate And a in rest in Fifth relate of wanted my say me worked a there. California it's know we from there, XX% people have grew nearly out It's those grandparents been who've in the equation outstanding. I'm quickly banking our will It's I from dad and Third and rebuilt, our do the and to and rate, Before its continue the directly too, my compound going Altadena, like communities self-funded. clients. personal we've just thoughts been really -- what to all growth middle on to employees, corridor haven't impacted well. Matt? clients really market Pasadena several the those I past connection the the annual that over as really part help been part the special be to as my communities that's there. We've go, with to I by years. partners wildfires commercial and presence proud California who especially heard folks

Matt Curoe

contact everyone, any now call. interest Please Regina, Third. department in may have Thanks, Tim. your follow-up the for Fifth And you Investor thanks, the you Relations if questions. disconnect

Operator

can all disconnect. now That will you you call. today's conclude for joining, Thank

Fifth Third Bancorp (FITB) 21 Jan 252024 Q4 Earnings call transcript