Good morning. My name is Rex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp second 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. I would now like to turn the conference over to Chris Doll, Director of Investor Relations. You may begin your conference. Good morning, everyone. Welcome to Fifth Third second quarter 2022 earnings call. This morning, our President and CEO, Tim Spence, and CFO, Jamie Leonard, will provide an overview of our second quarter results and outlook. Our Chief Credit Officer, Richard Stein, and Treasurer Bryan Preston have also joined for the Q&A portion of the call. Please review the cautionary statements on 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 21, 2022, 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 thank you all for joining us. With this being my first earnings call as CEO, I'd like to say what an honor it is to follow a great leader like Greg Carmichael. Let's jump right in. Earlier today, we reported a solid second quarter reflecting our focus on profitability, organic growth, and through the cycle returns. We generated record adjusted revenue and maintained our expense discipline, producing adjusted PPNR growth of 11% compared to last year. We extended our track record for strong organic growth, adding new quality relationships in commercial and new households in consumer. Both our recent acquisitions, Dividend Finance and Provide, achieved record originations. Charge-offs remained low, NPAs and early-stage delinquencies improved sequentially, and we saw no decline in the liquidity buffers that our consumer households built during the pandemic. With that said, there is no question in my mind that the economic outlook is blurrier today than it was at the start of the year. Due to the potential forward economic challenges, we are maintaining a prudently cautious view on credit as reflected in our reserve coverage. Turning to the balance sheet, loan growth was solid and diversified across our franchise. Average commercial loan growth was driven by C&I, which included a 1% increase in utilization on revolving lines of credit. We generated robust loan growth in nearly all our corporate banking verticals, and our Chicago, Cincinnati, North and South Carolina, and Florida regions led the way in middle market lending. Average consumer loans grew in almost all categories. Our results include a small benefit from a mid-May closing of Dividend Finance. We're very excited about Dividend Finance as rising energy costs and the trend of homeowners improving their existing homes versus trading up only enhances our market opportunity. Switching to deposits, our second quarter results were in line with our prior commentary, with average balances intentionally down $6 billion sequentially and stable from the prior year as we focused on margins over volume given our overall liquidity position. We have a very strong deposit base with a higher allocation to consumer deposits in the stable retail category than any institution that reports as part of the LCR rule. Consumer transaction deposits grew 1% sequentially and increased 7% on a year-over-year basis, driven by continued growth in Momentum Banking and double-digit deposit balance growth in our Southeast markets. Commercial transaction deposits were down sequentially, partially reflecting the anticipated movement of excess balances to higher-yielding alternatives combined with some seasonal impacts. As of yesterday, total deposit balances have remained stable since mid-May despite the Fed rate hikes that occurred late in the second quarter. As a result of our loan growth and deposit pricing discipline, net interest income increased 12% sequentially or 15% excluding the impacts of PPP, Ginnie Mae, and the securities prepayment penalty income. As we indicated in the investor conference last month, fees were softer for the quarter, reflecting the impact of market conditions on debt capital markets, mortgage, and wealth management. I am, however, quite pleased with the strength and diversification of our underlying fee growth engines. In payments, our gross treasury management revenue increased 7% and credit card spend grew 10%, both compared to a year ago quarter. In capital markets, financial risk management revenue increased 18% and M&A advisory revenue grew 30%, the majority of which was sourced from existing middle market relationships. In wealth management, despite the market volatility, personal asset management revenue was up 3% year to date, and we generated our fourth consecutive quarter of positive net AUM flows. We continue to manage expenses very diligently throughout the bank, reflecting our multi-year continuous improvement discipline, which has funded a significant portion of our organic growth and tech modernization strategies. Looking forward, our proactive actions over the past several years with respect to our minimum wage and other employee retention strategies should provide us a buffer against inflation relative to peers. With respect to capital, we recently announced our 2.5% stress capital buffer requirement from the Fed stress test exercise, the minimum under the regulatory capital rules. Our top priorities for capital deployment remain funding organic growth and paying a strong dividend. We recently announced our ability to increase the quarterly dividend by up to $0.03 in September, subject to board approval and economic conditions. Given our robust loan growth and our desire to run the bank slightly above our capital targets in the current environment, we do not anticipate executing share repurchases for the remainder of the year at this time. While credit quality remains benign, we remain cautious of the impact that the Fed's continued aggressive monetary policy and geopolitical dynamics could have on the economy. Over the past several years, we have built Fifth Third to be resilient and to produce strong results under any market environment. We have been consistent in our strategic priorities and have had the discipline to fund investments in geographic expansion, product innovation, and technology through continuous improvement and pruning non-core businesses. We have continually improved the granularity and diversification of our loan portfolio with a focus on high-quality commercial relationships and on homeowners, which are 85% of our consumer portfolio. We maintain the lowest overall portfolio concentrations in commercial real estate and in non-prime borrowers among our peers, and 93% of the mortgages on our balance sheet are fixed rate. We have protected NII through a series of actions, including our securities portfolio positioning, adding cash flow hedges to protect the down rate scenario for the next decade, and by maintaining a strong deposit franchise with a focus on primary relationships. Through the Dividend Finance and Provide acquisitions, we added fixed rate loan origination platforms that will be especially powerful in a lower rate environment. Our allowance for credit losses provides greater loss absorbency than virtually any of our peers. Under my leadership, you should expect us to continue to make decisions with the long term in mind, to hold ourselves accountable to what we say we are going to do, and to invest in product and service innovations that generate sustainable long-term value for customers and shareholders alike. In closing, on behalf of the entire leadership team, I'd like to say thank you to our employees who are listening today. As you know, banks inhabit a special place in the communities where they operate, and with that comes a special responsibility to be a proponent for positive change. You work hard every day to live our purpose, including delivering 8 million meals to fight hunger across our footprint as part of Fifth Third Day, as well as positioning us to achieve our new $100 billion environmental and social finance commitment. I also want to thank you for the myriad of small things you do every day to improve our customers' lives. With that, I'll turn it over to Jamie to provide additional detail on our second quarter financial results and our current outlook. Thank you, Tim, and thank all of you for joining us today. Our second quarter results were solid. We generated strong loan growth in both commercial and consumer categories, deployed excess liquidity into securities at attractive entry points, and remained disciplined in managing our deposit costs. Expenses were once again well controlled even though we continue to reinvest in our businesses. Fees did underperform our April expectations due to the market volatility, but even with that softness, we generated core PPNR growth of 11% on a year-over-year basis. As a result, we achieved a sub 55% efficiency ratio and generated 7 points of positive operating leverage from the second quarter of 2021. The ACL ratio increased 5 basis points sequentially to 1.85%, which includes a 4 basis point impact from the Dividend Finance acquisition. Combined with $62 million in net charge-offs, we recorded a $179 million total provision for credit losses. Moving to the income statement. Net interest income of approximately $1.3 billion increased 12% sequentially and 11% year-over-year. As Tim mentioned, the underlying NII growth was around 15% compared to last quarter, of which approximately half of the growth was attributable to higher market rates and half from the combination of investment portfolio growth and loan growth, primarily in C&I. Our interest-bearing core deposit costs were well controlled at just 9 basis points this quarter, up just 5 basis points sequentially, and helped drive the 33 basis points of NIM expansion during the quarter. Total reported non-interest income decreased 1% sequentially and increased 3% on an adjusted basis. Compared to the prior quarter, we generated improved financial risk management, card and processing, gross treasury management fees, and private equity income, which was partially offset by weaker performance from our market-sensitive businesses, including commercial capital markets and mortgage, and the impact of higher treasury management earnings credit rates. Non-interest expense decreased 9% compared to the prior quarter, driven by a decline in compensation and benefits expense from the seasonal peak in the first quarter. Lower incentive-based comp in the current quarter due to market dynamics that impacted fees and overall continued expense discipline throughout the company. Expenses in the quarter included a $27 million benefit related to the mark-to-market impact of non-qualified deferred compensation, which has a corresponding offset in security losses. This compares to a $12 million benefit in the prior quarter. Excluding the non-qualified deferred compensation impacts from both periods, total non-interest expense decreased $95 million or 8%. Non-interest expense decreased 4% compared to the year-ago quarter. Moving to the balance sheet. Total average portfolio loans and leases increased 4% sequentially. Including held for sale loans, total average loans increased 3% compared to the prior quarter. Average total commercial portfolio loans and leases increased 4% compared to the prior quarter, primarily reflecting growth in C&I loans. Commercial loan production remained robust throughout the franchise, outperforming our original expectations. Our production and pipelines are the result of our strategic investments and talent as we continue to see strength in new quality relationship generation during the second quarter. With muted payoffs and a 1% increase in the revolver utilization rate to 37%, period-end commercial loans increased 3% sequentially and 12% compared to the year-ago quarter. Average total consumer portfolio loans and leases increased 3% compared to the prior quarter, driven by residential mortgage and the Dividend Finance acquisition, which are recorded in other consumer loans. This growth was partially offset by a decline in home equity. At quarter end, total Dividend Finance loan balances were $650 million, reflecting our decision to hold some loans the Dividend would have otherwise sold, combined with their post-close production volume. Average core deposits were stable compared to the year-ago quarter and decreased 4% compared to the prior quarter, including the impact of the intentional runoff of excess and higher cost commercial deposits. This runoff was in line with our expectations and reflects our pricing discipline from our strong overall liquidity position. Compared to the year-ago quarter, average commercial transaction deposits decreased 8% and average consumer transaction deposits increased 1%, reflecting our continued success growing consumer households. Given the improved entry points during the first and second quarters, we deployed cash into the securities portfolio, which resulted in second-quarter average securities balance growth of approximately $12 billion. We completed net purchases of $6 billion in securities during the second quarter compared to $13 billion in the prior quarter. The higher than previously expected security purchases in the second quarter were the result of accelerating planned second half of 2022 purchases given the attractive entry points in late May and June. We currently expect security portfolio balances to remain generally stable through the rest of the year. We have continued to focus on adding duration and structure to the investment portfolio to provide stable and predictable cash flows. Consequently, our overall allocation to bullet and locked out structures increased from 64% to 67% at quarter end, and our duration increased from 5.4 to 5.7. Moving to credit. As Tim mentioned, credit remained healthy and in line with our previous expectations. The NPA ratio of 47 basis points improved 2 basis points sequentially with net charge-offs of just 21 basis points. The ratio of early-stage delinquencies, 30-89 days past due relative to loans, was stable in the second quarter, and the amount of loans 90 days past due is less than half of what it was a year ago. We continue to closely monitor the same areas we have previously discussed, such as central business district hotels, senior living, and office CRE. We are also monitoring exposures where inflation and higher rates may cause stress, including the impact of changing consumer discretionary spending patterns, as well as the ongoing monitoring of the leveraged loan portfolio. Our ACL build this quarter was $117 million, of which approximately 75% was from strong loan growth, including the $53 million ACL impact from the Dividend acquisition, and the remaining 25% was attributable to worsening economic projections relative to March, net of reductions in certain pandemic-related qualitative adjustments. Given the incremental clarity on the economy's ability to withstand geopolitical tensions and the pandemic fallout with vaccine efficacy and other measures, we elected to return to our standard approach for scenario weights of 80% to the baseline and 10% to the downside and upside scenarios. We believe our models are better suited to appropriately evaluate economic scenarios and outcomes from monetary tightening on our loan portfolio than on humanitarian crises such as pandemics and wars. Despite the scenario weight change, we increased our reserves in specific portfolios such as CRE, where we continue to believe there are elevated risks. Our baseline scenario assumes the labor market remains relatively stable, with unemployment ending our three-year reasonable and supportable period at around 3.8%, which is slightly weaker than our previous estimate. Additionally, GDP growth and home price forecasts have weakened relative to our March forecast in both our baseline and downside scenarios. Our expectations incorporate several key risks that could exacerbate existing inflationary pressures and further strain supply chains, including aggressive rate hikes and quantitative tightening and labor supply constraints becoming more binding than originally anticipated. Our June 30 allowance incorporates our best estimate of the economic environment. Moving to capital. Our CET1 ratio ended the quarter at 9% compared to 9.3% in the prior quarter. The decline in capital was primarily due to strong RWA growth, reflecting robust organic business opportunities and the impact of the Dividend Finance acquisition. We expect to accrete capital to the 9.25% area by year-end, given our strong earnings capacity, and we will evaluate resuming buybacks after that time. Moving to our current outlook. For the full year 2022, we continue to expect average total loan growth between 5%-6% compared to 2021 or around 10% excluding PPP and Ginnie Mae impacts, reflecting strong pipelines and stable commercial revolver utilization rates over the remainder of the year. Dividend Finance is generating strong origination volumes. We expect loan originations of around $1.3 billion in the second half of 2022, which is 30% more than our original estimates. Similarly, Provide loan production remains strong as we expect over $1 billion in total production in 2022. Dividend Finance and Provide together are expected to contribute a little more than 1% of the total average loan growth for the year. We expect average commercial loan growth of 9%-10% or 14%-15% excluding PPP. We expect total average consumer loans to be stable in 2022, reflecting our decision to lower auto loan production to enhance our returns on capital. We expect around $7 billion in auto and specialty production for the full year, which will still result in double-digit growth in average indirect consumer secured balances in 2022. Our outlook also assumes growth of approximately 15% in other consumer loans reflecting the benefits of Dividend Finance. Shifting to the income statement. We continue to expect full year adjusted revenue growth of 7%-8%, which will be a record year of revenue for Fifth Third. Given our outlook for earning asset growth combined with the implied forward curve as of July 1, which assumes a Fed funds rate of 3.25% by year-end, we expect full year NII to increase 17%-18%. Our outlook incorporates the impacts from runoff of the PPP and Ginnie Mae portfolios. Excluding those portfolios, NII growth would be around 20%. Our current outlook assumes average deposit balances decline a couple billion dollars in the third quarter, reflecting the full quarter impact of the second quarter runoff of excess and higher cost commercial deposits and seasonality, and then return to growth in the fourth quarter. Since the onset of the rate hikes, our deposit betas have been muted at low single digits for the cycle to date. We expect increases to our interest-bearing core deposit costs to accelerate over the next two quarters due to the timing, impact of deposit repricing lags from earlier hikes, and continued aggressive rate hikes from the Fed. We continue to expect a 25% deposit beta on the first 225 basis points of rate hikes and a marginal beta of around 45%-50% on the next 75 basis points of rate hikes. The ultimate impact to NII of incremental rate hikes will be dependent on the timing and magnitude of interest rate movements, balance sheet management strategies, including securities growth and hedging transactions and realized deposit betas. We expect full year adjusted non-interest income to be down 7%-8% in 2022, reflecting softer second quarter performance combined with the high probability of continued market volatility reflecting a more aggressive rate outlook, including lower wealth and asset management, mortgage and capital markets revenue, as well as higher earnings credit rates offsetting strong gross treasury management fee growth. Despite the expected decline in capital markets revenue, we expect full-year capital markets revenue to be up nearly 50% from the pre-pandemic 2019 levels, which highlights the success we've had over the past few years in growing a diversified capital markets business. We expect full-year adjusted noninterest expense, including the impacts of Dividend Finance, to be stable to down 1% compared to 2021, an improvement from our previous guide of up 1%-2%. We continue to strategically invest in our franchise, which should result in low double-digit growth in both technology and marketing expenses. Our outlook also assumes we add 20-25 new branches, primarily in our high-growth Southeast markets in 2022. Our guidance also incorporates the minimum wage increase to $20 per hour that went into effect on July 4. We expect these investments in our people, platforms, and franchise to be offset by the savings from our process automation initiatives, reduced servicing expenses associated with the Ginnie Mae portfolio, a decline in leasing expense given our LaSalle Solutions sale, and our continued overall expense discipline throughout the company. As a result, our full year 2022 total adjusted revenue growth, combined with our expense outlook, should generate 4 points of improvement in the efficiency ratio and positive operating leverage of around 8%. Full year adjusted PPNR growth is expected to be 17%-19%, which is an improvement to the range compared to our April estimate, reflecting the strong NII and expense outcomes, partially offset by the market-related fee headwinds. Our outlook for significantly delivering on our positive operating leverage commitment reflects the benefits of our ability to grow our customer base combined with our strong balance sheet management and expense discipline. For the third quarter of 2022, we expect average total loan balances to increase 1% sequentially, reflecting 1%-2% growth in commercial and stable consumer balances. We expect our average securities portfolio to increase $2 billion-$3 billion, reflecting the full quarter impact of purchases made during the second quarter. Shifting to the income statement. We expect third quarter adjusted revenue growth of 8%-9% compared to the second quarter. We expect NII to be up 11%-12% sequentially, reflecting strong loan growth, the impact of securities purchases, and the benefits of our balance sheet positioning. We expect adjusted non-interest income to be down 3%-4% compared to the second quarter. We expect total adjusted non-interest expenses to be up 4%-5% compared to the second quarter or up 2% compared to the year-ago quarter due to the acquisitions of Provide and Dividend Finance. Excluding the second quarter NQDC benefits on expenses, we expect non-interest expenses to increase around 2% sequentially. We continue to expect third quarter and full-year 2022 net charge-offs to be in the 20-25 basis point range. In summary, with our balance sheet positioning, PPNR growth engine, and disciplined credit risk management, we believe we are well positioned to continue to deliver strong performance in this type of environment. With that, let me turn it over to Chris to open the call up for Q&A. Thanks, Jamie. Before we start Q&A, given the time we have this morning, we ask that you limit yourself to one question and a follow-up and then return to the queue if you have additional questions. Operator, please open the call up for Q&A. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Betsy Graseck. Your line is open. Hi, good morning. Morning, Betsy. Two questions. One on the buyback. I just wanted to understand the thought process around when the reinstatement would be. Is that a function of a certain CET1 that you're looking to achieve? You know, should we take it to mean that you'll restart it in 1Q? Thanks. Yeah, Betsy, it's Jamie. Given the environment that we're operating in, we, as you can tell from our results, are clearly positioning to be a little more cautious in this environment. We think accreting capital for the remainder of the year would be appropriate, and then we'll evaluate resuming the buybacks in the first quarter of 2023. Certainly, that would be outlook dependent, but that's the current plan as we sit here today. Okay. On the deposit side, I know you mentioned that deposits have been stable since the middle of May, and it's interesting that you didn't see that, you know, deposit outflow continue in June. I'm just wondering, is there a certain kind of depositor that you think will be that the outflow came from a type of depositor that will not be incented when the Fed, you know, raises rates next week? The, you know, corollary here is if you have deposits stable, but loan growth continues to be robust as you're indicating, how are you thinking about funding that? What type of borrowings are you looking to access? Thanks. Yep. A great question, and I'll start and turn over to Bryan for some additional color. Actually, I think it was at your conference in early June that we talked about our plans on managing the balance sheet from a deposit standpoint. Frankly, you know, for the past year and a half, we said, you know, we'd like to see about $10 billion of the deposits run off. Fortunately, this quarter, we were able to really manage the balance sheet almost exactly as we had intended. Again, at your conference, I think we said we'd end the quarter at a loan-to-deposit ratio of 74%, and we finished at 74.7%. I do feel good about how we positioned the balance sheet and our ability to right-size it. Maybe with that, turn it over to Bryan to give a little more color on what we've seen on the outflows. Yeah, absolutely. You know, we made the deliberate decision to not match market rates on certain high beta, lower relationship depth customers. As we've said all along, we estimated about $10 billion in excess balances in our commercial deposit book that we believed may not be sticky. We do not have a lot of appetite for 100 beta balances that want to be priced at Fed funds or Fed funds plus. We were in a position to let about $5 billion of these balances find a new home. We've not lost customer relationships. We know what it would take from a pricing perspective to get these balances back. A decent amount of these funds ended up in our liquidity portal, which gives our customers access to money market investments. We also saw some heightened seasonality this year, Betsy, as it relates to tax payments that were a little bit larger. We estimate the tax payment impact was another $4 billion-$5 billion of the runoff. Our commercial balances, as we said, were stable since mid-May. Our consumer balances continue to be very stable and sticky. Overall, we're pleased with our cost of total interest-bearing core deposits of 9 basis points, up only 5 basis points from the first quarter. In terms of how we're thinking about funding balance sheet growth from here, you know, we're always going to be focused on being core deposit funded. We have a lot of levers that we can continue to pull to grow deposits from here, and we're confident in our ability to do that. That being said, we will use short-term borrowings as a mechanism to help us manage volatility in the balance sheet month to month, quarter to quarter. That includes funding opportunistic investment portfolio purchases that we've done. Additionally, over time, you know, we've obviously run down our long-term debt portfolio. We'll be looking to reenter the banknote market. We do think it's important for us to get some structure back into our liability framework, and so that's something that we'll use as well. You know, we continue to be confident with our ability to be core deposit funded. You know, we're still sitting here at a 75% loan-to-deposit ratio, and so we feel very good right now about our overall positioning. Okay. Thank you. The next question comes from the line of Scott Siefers. Your line is open. Morning, guys. Thanks for taking the question. I guess wanted to ask a follow-up question on deposits. It sounds like exclusive of the continued impact of the decisions you made in the second quarter, we'd see sort of stable deposits or growth otherwise. Jamie, what are you thinking in terms of what will grow, you know, are those consumer or commercial deposits as we look like for the year? Talking on the consumer side first, obviously, we have a great retail franchise with tremendous products, with momentum and the de novo plan and the Southeast build-out. Retail deposits, we would expect to continue to grow in the back half of the year. On the commercial side, you know, as I said in my prepared remarks, we'll probably see a little bit more runoff, $2 billion in the third quarter before we experience a return to growth in the fourth quarter. Again, that'll be driven by our treasury management business, where, you know, I think we've presented at different conferences talking about how our TM business is best in class in the regional bank space in terms of TMPs as a percent of revenue or TMPs as a to loan commitments to help show that share of wallet. I think Bryan's comments, you know, are very important to realize that these weren't lost relationships. This was just excess money going to a better home, and we expected it. You know, from here, it'll just be business as usual. I think if I could add one thing there that, maybe has been less fully appreciated. I think to Jamie's point, we've talked a lot about momentum banking, we've talked about treasury management, but among our investor peers, we also have the highest percentage of our branch network that has been open less than five years. The majority of that time has not been in an environment where we were focused on deposit gathering out of those locations so much as we were household growth and otherwise. The byproduct of that is we think there's a lot of latent new deposit generation power that will come out of the, call it, 70 de novos that have been opened in the Southeast and the 20 in addition that are going to come between the second half of this year and the first quarter of next year, that will provide an additional kick in terms of core deposit generation above and beyond what we're getting out of Momentum Banking and the treasury management business. Okay. Perfect. Thank you. If I could ask a separate one. Just maybe give me your thoughts on sort of drivers of the continued weakness in fees in the third quarter. I think some of them are probably. I think logically what they would be, but would just be curious to hear your thoughts on sort of puts and takes. Yeah. I think in this environment, the accelerated rate hikes and magnitude of the rate hikes just continue to weigh on the rate-dependent fee businesses. The outlook for mortgage, capital markets, and TM earnings credits are the biggest drivers of the change in our fee outlook. You know, as Tim mentioned in the prepared remarks, you know, the fee equivalent growth has actually been very strong. It's just, you know, as we get that additional NII benefit from the rate hikes, we give a portion of it back and the rates paid on earnings credits. You know, from here, I would expect the strong consumer household growth to help carry the day on a combination of card and deposit service charges. As a reminder, we are implementing or did implement July first, the elimination of the NSF fee. That'll weigh a little bit on the back half of the year fee guide. Then on wealth and asset management fees, we've done a great job of new customer acquisition as well as our AUM net inflows. Obviously, the market headwinds have an impact on the fee revenue there. That again is in the updated guide. Then commercial banking is really a fascinating tale of two cities where our ability to help customers manage different exposures that they want to hedge, whether it's rates, commodities, or FX, along with our institutional brokerage business is just, you know, growing, you know, 30%+. The disruption in the capital markets having a big impact on the corporate bond fees and loan syndication fees. We don't really, in our outlook, expect significant improvement in the capital markets activity in the back half of the year. I guess when you add up our fee outlook in total, you know, we made about $1.4 billion in the first half of the year. We're saying we'll make, you know, ±$1.5 billion a little bit in the back half of the year. The TRA of that $100 million of growth, the TRA is half of it. At least for now, that's how we see the back half of the year play out. Okay. Perfect. Thank you guys very much. Your next question comes from the line of Gerard Cassidy. Your line is open. Thank you. Hi, Tim. Hi, Jamie. Hello. For the organization. Can you share with us? Gerard, I apologize. You cut out right at the beginning there. Can you start the question over? Yeah. Sure. Can you hear me now, Tim? We can. Yep. Okay. Thank you. Jamie, you pointed out some very strong loan growth numbers for the commercial and industrial portfolio. Can you guys share with us where you're seeing this growth both geographically and by industry? In addition to that, I assume you're probably going to expect to see utilization rates go up as well as that growth comes in. Yeah. I'll take the second part of the question first. When it comes to the line utilization, I'm glad you asked the question. What we saw in the second quarter was that in total, line utilization moved up a point, and we're guiding for the rest of the year for that to actually be stable. We'll see how things play out. In the second quarter, the movement in the line utilization, the biggest group that moved was actually the middle market group, was up several points. That was nice to see. From a production standpoint, it was pretty widespread and again, a very strong quarter of middle market production. I think Tim mentioned, you know, several geographies in his prepared remarks, but, you know, Cincinnati, Carolinas, Florida. It's a consistent story for us where, you know, a little bit of softness in East Michigan, Northern Ohio is more than offset by strong performance in the rest of the Midwest, and the Southeast. Then from a vertical perspective, you know, the renewables team and energy continues to go very robust as well as our TMT business. We feel good about, frankly, the ability to acquire new customers in this environment. The sales teams with the RM expansion play out west as well as in the southeast has worked very well. We're just mindful of what appears to us to be a slowing economy, and therefore, you know, we're trimming a little bit on the edges. You know, frankly, the core is performing very well, and you see that in the results this quarter. Very good. Then as a follow-up question and pivoting to credit quality for a moment. Obviously, you guys have very strong credit quality, and you built up the reserves, as you pointed out in this quarter. I understand that with the numbers being so small with you and your peers, one or two loans can move the numbers. With that as a backdrop, can you give us some color on two questions in the commercial portfolio? First is the transfer to non-accrual status. That was an increase of about $100 million this quarter versus $47 million in the prior quarter. Just any color there. Second, I believe you had a higher charge-off number in that category as well at $45 million versus $1 million in the prior quarter. Again, I emphasize the numbers. One loan can move those numbers since they're so low, but I'm just curious. Yeah. Hey, Gerard. It's Richard. Thanks for the question. You described it in your question what's happening. We're at levels that are so low, there's a little bit of bouncing along the bottom, porpoising, if you will. The change in both NPA and in charge-offs was a handful of loans that have just finally rolled to the place where we needed to take a more direct action in terms of making them non-accrual and charging them off. I think overall, the portfolio continues to form, as you point out very well, well inside our appetite. You know, we're very pleased about where we sit today, both today and then also with the outlook in front of us. Thank you. Your next question comes from the line of John Pancari. Your line is now open. Morning, guys. Morning, John. As a follow-up to Gerard's question on credit, you know, the increase that you just talked about in the non-accruals and charge-offs in the commercial side, you said it was a handful of loans. Any commonality in terms of industries or businesses that would help give us a little bit of color there? And then separately, are you seeing any signs of emerging stress anywhere within your portfolio worth noting? I know you're keeping an eye on commercial real estate and your leverage portfolio as well. Thanks. Yeah. No commonality by industry in those names. I think certainly the economic headwinds of inflation, labor supply chain were elements. Those were the common elements, but different industries, different segments. They ultimately put pressure on cash flow and that caused us to, like, as I said, take different action. Broadly, in terms of pressure, I mean, it's the same thing we've talked about. We've talked about office. That continues to be challenged. Senior living, again, that's another place where you see a disconnect between cost inflation and what they can get from a reimbursement rate perspective. What we're watching are places where changes in consumer behavior are shifting, whether it's from durables and discretionary to consumables and nondiscretionary. No large segments. There's a little bit of idiosyncratic movement across the portfolio, but nothing major that causes us any concern. Okay. All right, great. My follow-up is somewhat related on credit to a degree. Your rationale to pull back in auto, I know you've been talking about that. Can you just give us a, you know, kind of a reminder of the reason to pull back what you're seeing? Is it more just about the competition in the space, or are you seeing something on the credit front that is driving that decision? Because we're hearing some other banks talk about that pullback as well. Then separately, don't know if you have your criticized asset trend or change that you can give us color on for the quarter. Thanks. Yeah, sure, John. Thanks for the question. In terms of auto, when we started the year, our forecast was about $11 billion in total production for a combination of auto plus the specialty business RV/marine. We're now expecting to do about $7 billion in total in that asset class. The four billion of reduction is solely driven by the returns dynamic in that sector, where several large players have certainly, you know, if it's not irrational, it's certainly very aggressive pricing, and therefore, we don't want to compete on an indirect asset class at such low spreads. Spreads have dropped to levels that were reminiscent of when we did the pullback, you know, five or six years ago. The good news for us is we keep the dealer relationships. We're continuing to monitor performance. We have spreads back up towards our target level and, you know, feel good about the production from a credit quality perspective as well as the spreads. You know, it's just not an asset class you wanna grow. It's single digit or returns on capital. In terms of the CREs, they were fairly stable in the quarter. Not a lot to report there. Great. All right, Jamie, thank you. Your next question comes from the line of Ken Usdin. Your line is open. Hey, guys. Good morning. Yeah, just following up on the deposit side. You know, hearing your earlier comments about the purposeful outflows. Just wondering if you can give a sense of, like, are we at the right bottoming spot or on the non-operational side? You know, given the good start to deposit betas where your interest-bearing costs were only up, you know, five basis points. Can you just give us updated thoughts on how you're expecting betas to trend from here relative- Sure. To prior exposures? Thanks. Yep. Yeah, I think from an end of period perspective, we've accomplished what we wanted to accomplish on the non-operational excess deposits. Again, there'll be an average effect in the third quarter, but overall, you know, we said, you know, a year and a half ago we'd like to get $10 billion of the excess out. I think we've done that. You know, frankly, year-over-year deposits are flat, so it shouldn't be a big surprise to people that we were able to right size it. Again, the loan- to- deposit ratio at 74.7%. You know, would love to get it into the mid-80s over a period of several years, but that would certainly be driven more by continued loan growth as opposed to any more deposit runoff. In terms of the betas, it is difficult, I think, to track betas by quarter when the Fed is moving in such big chunks. How we see it playing out is that we'd have a fourth quarter beta of 23%. The month of December, it'd be 28%. Then by the time we get to, you know, midyear next year, the tail effect. Because in our forecast we have the Fed going to 3.25% and then stopping for a little bit longer than normal period of time. Therefore, there'll be a little bit of that drift effect as the lag catches up so that the ultimate beta ends up being 30% on those 300 basis points of rate hikes. From a rates paid perspective, it looks something in the area of, you know, the 9 basis points this quarter, goes to mid-40s in the third, mid-70s in the fourth, and then drifts to the mid-90s by the second quarter of 2023. That's how we think this will play out and then, you know, continue to see deposit growth beginning in the fourth quarter and thereafter. All right. Thanks a lot. Your next question comes from the line of Mike Mayo. Your line is open. Hi. I really like your slide 4. Your NIM's up 33 basis points, linked quarter, and 19 is due to rates. I get that. 16 is due to securities. It looks like your timing was good in late May and June. Only 1 basis point due to loan growth. You know, I guess I think about the remixing of the portfolio into higher yielding securities, yes, but even higher yielding loans, which doesn't show up. I guess on the one hand, you know, your deposits are down 7%, period end. What was the margin on those deposits? Like, I guess you've been saying that's really low margin stuff. You're not staying around for, you know, 100% deposit beta deposits. I get that. That's probably helping you running that off. On the other hand, why don't you have more pickup from loan growth? Are you just originating low yielding loans or what? No, I wouldn't say we're originating low yielding loans. You know, the mix of a lot of our loan growth in our C&I book, just given the floating rate nature of that portfolio and where it's been pricing in, has been relatively neutral in terms of a NIM impact. But it does drive a decent amount of NII. Some of the consumer assets that we've been talking about, especially the Dividend Finance assets in particular, it's just a late quarter impact. So you'll start to see some pickup from those, in the future, as those balances have a bigger average balance impact. But overall, you know, we do expect to see some pickup. We will continue to see NII benefits just because of the asset sensitivity of our commercial floating rate portfolio. We'll see some nice kind of drive from here. Our NIM will continue to increase throughout the year. You know, we would expect to end the year in a, you know, kind of a 3.30%-3.35%-ish range from a NIM perspective in the fourth quarter. A lot of earnings power still to come. In terms of your expense control, Tim, this is your, I guess, as you said, your first earnings call as CEO, so you probably want to get the guidance right. You guys are guiding third quarter for 8% higher revenues and only 2% higher core expenses. Actually, if you look at first quarter to third quarter, your run rate NII should be going up by one-fourth based on your guidance, even while your expenses and your guide is to be lower. I guess, you know, how confident are you in that? And what is your incremental profit margin, and why would it be so much better than your existing profit margin? Yeah, Mike, thanks for the question. I mean, to answer narrowly, very, in terms of our level of confidence on our ability to manage expenses. I think the driver here when you think about our business, right, people costs are a huge share of our overall expense base. We've been, I think, very public about the efforts that we have made over the course of the past few years to drive not only a culture of continuous expense discipline, but also a real focus on leveraging the technology investments we have been making to drive automation, and reduce the unit costs associated with core processing activities. Our FTE count, on a, you know, is down about 600, right now, which is a big driver of the savings, in terms of expense management, and that's helping us. It's less a dynamic around the margin on the incremental business, so much as it is us continuing to make progress on the fixed cost base and the variable costs associated with our existing business activity. Mike, I would, you know, say yes, your math on the NII is very good, and we are highly confident in that. I would say if there are two things Fifth Third is extremely good at, one is balance sheet management, and you see that in the NIM expansion, and as Bryan mentioned, the continued expansion over the course of the year. We're also very efficient from an expense standpoint. What you have happening is that as there is fee weakness, back to your profit margin question, as there is fee weakness, you know, fees have a higher cost of delivery than obviously NII. NII for the most part is dropping straight to the bottom line. That's certainly an element of helping the efficiency ratio. In addition to that, all of the expense savings initiatives we have going on in the company, as Tim mentioned, year-over-year, we're down 600 people if you exclude the acquisitions and dispositions. Just sequentially, we're down 260 people, exclusive of the acquisitions and the dispositions. That's, you know, rightsizing our mortgage business, closing one of our fulfillment sites, rightsizing the indirect auto and specialty business, given the slowdown in volumes. Then all of the RPA enhancements with reducing IT and ops and the branch closure benefits from the first quarter. We have a lot going on underneath, to help provide those tailwinds on expenses. Then we're very mindful of continuing to invest. In the third quarter, in the guide, you have an increase in technology and marketing, and then a little bit of noise from the NQDC, assuming it comes out at 0 in the third quarter, which is the driver of why expenses will be up 4%-5% sequentially. Overall, feel very good about our ability to deliver an efficient balance sheet and an efficient income statement. All right. Thank you. Thank you. Your next question comes from the line of Erika Najarian. Your line is open. Hi. Just two follow-up questions for me, please. Jamie, how should we think about how you're thinking of the securities portfolio from here? Do you feel like that's something that you will continue to build, especially after deposit growth comes back? Or, you know, do you think this could be a source of funding, you know, as deposit pricing accelerates? Yeah. I would expect the investment portfolio to be stable from here. I would not expect to be selling down the portfolio to fund loan growth. It obviously, in a crisis, could be a great source of liquidity, but that would probably be through more collateral usage at FHLB or, you know, backstopping public funds deposits. But overall, I'd expect it to be stable, and the yield, you know, our guide for the back half of the year on yield is 2.80%, both for the third quarter as well as on a full year basis so that, you know, that yield guide is up a bit, as Mike pointed out, with some fortuitous timing on the additional leverage we've added. Got it. Maybe this is for Richard. I'll give you the CECL question near the end of the hour. Could you remind us when you built your ACL to $241 in 2020, what was the unemployment rate that you were assuming? The reason I ask this is at $185 ACL, if we think about the different scenarios of charge-off outcomes in a mild recession for Fifth Third, you know, taking into account the thing that's been going on, it feels like in a mild downturn, your ACL is in the right place. Any guidance on this would be great because obviously everybody's now anticipating some sort of downturn sooner rather than later. Hey, Erika, it's Jamie. I'll take that one. I'll answer your question a little bit differently than how you asked it because the only piece of data I have on the history is the unemployment level versus day one. Our current scenario for the baseline has unemployment, you know, at 3.4%, 3.5%, 3.7% versus the day one reserve in years one, two, and three were 3.6%, 4.3%, and 4.4%. Versus day one, unemployment is a little better, but the big driver of our variance to day one reserves is that the GDP outlook and collateral values both for housing and auto are worse. Then obviously the rate environment is significantly worse, which in the modeling puts pressure on corporate profits. You know, we're sitting a little bit elevated over the day one levels. To your point, we think that is a prudent place to be. Frankly, versus last quarter, you know, the scenarios are certainly worse. You know, GDP erosion, housing prices, is worse, interest rates higher. From our standpoint, when you have a period of strong loan growth like we did in the second quarter, you have eroding economic forecasts, you should have a CECL build. On top of that, we have the Dividend Finance acquisition effect, which, you know, that $50 million or so of the ACL build related to the Dividend Finance production is something that will continue as we commented on strong production expectations for Dividend Finance until that portfolio reaches a state of maturity. You know, those ACL builds ultimately we'll see what the loss content is to your question on should there be a mild recession. The Moody's baseline scenario that we utilize while worse is not a broad-based persistent decline in economic activity that would result in a recession. Again, it's certainly worse than last quarter and certainly worse than the day one build. Yeah. I think with that being said, if we sound more cautious, right? I think we probably are, just based on what I read and hear. We've tried to be really consistent, especially as it relates to the alignment of, you know, what we talk about worrying about and how that's reflected in the actions and how we run the company, and to try to be realistic about what's in front of us. Like Jamie said, you know, you look at what's going on in the current environment, Erika, and there's a lot of things to feel optimistic about. In our particular portfolio, not only do we, you know, as credit obviously has been great and NCOs are low and NPAs and delinquencies actually came down, the ratios there came down quarter-over-quarter. We are very mindful of the broader backdrop in attempting to gauge how to position the company for the next, you know, 18 to 24 to 36 months. At least from my point of view, if the goal is to have a company that's great through the cycle, you always have to be asking yourself what happens if you're wrong, right? If we're wrong in this case and we're being too cautious, maybe we miss a point or two of loan growth that we otherwise could have gotten, right? That's against a backdrop where we've done very well on that measure. Maybe we buy back stock a quarter or two later than we would have otherwise, and then the ACL drifts down naturally as the scenario outlook changes, right? But if we're right to be cautious, on the other hand, the actions we've taken as it relates to the securities portfolio, the swaps, the total loss absorption that Fifth Third has relative to peers, and the fact that we did not take the benefit that we're getting from NII and spend it in the form of different sorts of investments and otherwise are gonna pay off very handsomely in terms of performance. One way or the other, like, you know, even against this backdrop, I think our return metrics look really good on a relative basis. PPNR is gonna be up, you know, high teens on a year-over-year basis. I think we feel really good about how the bank is positioned. Got it. Thank you so much. Your next question comes from the line of Matt O'Connor. Your line is open. Good morning. Obviously, bought a lot of securities, and added some swaps this quarter and hear you on keeping securities relatively flat rest of the year. Just kind of as you step back, would you consider yourself fully invested, as you think about, I guess, you know, securities plus mortgage plus swaps, or you know, holding deposits flat, obviously? Yeah, I would say the investment portfolio is well-positioned and at the level that we would like to manage it long term. Now, with that said, if we see great opportunities, could we pull forward one quarter or two quarters of cash flow, you know, which is currently running about $1 billion a quarter? You know, I'm not gonna tie my hands and say I wouldn't take advantage of great opportunities. But as I sit here today and what rates have done, we feel really good about, you know, just stability from here. Okay. All right. Yeah, seems like you had pretty good timing with the spike in rates in the quarter. Thank you. Thanks, Matt. Your final question comes from Christopher Marinac. Your line is open. Thanks. Good morning. Wanted to ask about the need to protect for lower interest rates. Jamie, is that something that you spend much time thinking about, and is that something that's in place? Yeah, that's the story of my life right now because, you know, in our outlook, we expect that, you know, the Fed hikes to the 3.25% level. Then, you know, I saw a research piece the other day that talked about, you know, on average or the median of, the Fed cuts begin, you know, four months after the last hike. Now we expect the Fed to, in order to tamp down inflation, you know, is really focused on slowing the economy, so they probably hold for a longer period of time than that median and hold at that, you know, whatever the peak level is. So frankly, you know, that could tip things over into a recession, maybe not. At a minimum, there will be, you know, rate cuts down the road. Rate cuts are ultimately the most detrimental activity to a bank's balance sheet if left unprotected. Therefore, everything we've done over the past couple of years has been, you know, building for that time that the Fed does move, and we have a rate decline. We've added duration to the portfolio again this quarter. It's up to 5.7. We increased the bullet locked out cash flows to 67%. We grew the portfolio to $55 billion. We added $10 billion in swaps. Then as Tim pointed out in his comments, you know, we've added some fixed rate loan platforms to our business model, and that should also be helpful should rates decline. Yes, we spend a lot of time on that, and I think we have a very, very good team, to be able to help manage through that environment. Certainly deposit generation activities are very helpful, especially from the retail footprint, as those are the low-cost stable funding that banks like to enjoy. Well, that's great color. Thank you very much for walking us through that. Thanks for all the information this morning. Thank you. Thanks, everyone. Please feel free to reach out to the investor relations department if you have any follow-up questions. Thank you for your interest in Fifth Third. Operator, you can now disconnect the call. This concludes today's conference call.