Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2024 Fifth Third Bancorp Earnings conference call. Today's conference is being recorded. 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 the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Matt Curoe. Please go ahead. Good morning, everyone. Welcome to Fifth Third Second Quarter 2024 Earnings call. This morning, our Chairman, CEO, and President, Tim Spence, and CFO, Bryan Preston, will provide an overview of our second quarter results and outlook. Our Chief Credit Officer, Greg Schroeck, has also joined for the Q&A portion of the call. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain information regarding the use of non-GAAP measures and reconciliations to the GAAP results, as well as forward-looking statements about Fifth Third's performance. These statements speak only as of July 19, 2024, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Tim and Bryan, we will open up the call for questions. With that, let me turn it over to Tim. Thanks, Matt, and good morning, everyone. At Fifth Third, we believe great banks distinguish themselves not by how they perform in benign environments, but rather how they navigate challenging ones. In that context, I am very pleased with how we are executing as a company in what continues to be an uncertain economic and interest rate backdrop. Our focus on stability, profitability, and growth, in that order, have produced consistent predictable results and strong profitability since the bank failures last spring, and we remain confident in our ability to deliver PP&R and earnings outcomes in line with or better than our original expectations for the full year in 2024. This morning, we reported earnings per share of $0.81 or $0.86, excluding certain items outlined on page two of the release, which exceeded the guidance we provided in our first quarter earnings call. Our resilient balance sheet, diversified fee revenues, and expense discipline continued to produce strong profitability. Our adjusted return on tangible common equity of 15.1% and adjusted return on assets of 1.22% over the last 12 months rank as the best of all peers who have reported so far and the most stable when compared to the same period last year. The second quarter marked the first sequential growth in NII since 2022, and NIM improved for the second consecutive quarter. That trajectory, along with the benefits we are seeing from strategic investments and continued expense discipline, should allow us to return to positive operating leverage in the fourth quarter of this year and carry over into next year. Strategically, our investments in the Southeast and middle market expansion markets, in commercial payments and in wealth and asset management, continue to produce strong growth and market share gains. We grew consumer households by 3% year-over-year in the second quarter, punctuated by 6% growth in our Southeast markets. Middle market loan production and new quality relationships were the strongest in Indiana, the Carolinas, Texas, and California. In our industry verticals, production was strongest, where federal government spending has had an outsized benefit, including in aerospace and defense contractors and with manufacturing and infrastructure construction firms. Commercial payments revenue grew 12% year-over-year, driven by our investments in our software-enabled managed services and Newline, our embedded payments business. Commercial payments is a scale business for us. In the first half of 2024 alone, we processed more than $8 trillion in volume. Nearly half of all new treasury management relationships we added year to date were payments-led and have no credit extended. Wealth and asset management fee revenues grew 11% year-over-year, and total assets under management grew to $65 billion, a 10% increase compared to the same quarter last year. Fifth Third Securities, The Private Bank, and Fifth Third Wealth Advisors, the RIA platform we launched in 2022, all generated strong performance. Digital Banker and Global Private Banker recognized us again as the best private bank for high-net-worth clients for the third consecutive year. Turning to capital, our strong profitability allowed us to resume share repurchases during the quarter while also increasing our CET1 ratio to 10.6%. The Federal Reserve stress test results highlighted our strong capital levels, consistent profitability, and simple yet well-diversified business model. Importantly, we maintain the capacity to increase our Dividend, support organic growth, and continue share repurchases. As we look ahead to the rest of the year, we remain cautious due to the wide range of potential economic and geopolitical scenarios that could unfold. As a result, we will remain disciplined and will not chase loan growth at the expense of our return targets. We'll continue to maintain flexibility by staying liquid, neutrally positioned, and broadly diversified while investing in the long term. Before I hand it over to Bryan to provide additional details on our second quarter results and our outlook for the remainder of the year, I want to express my gratitude to our employees for the consistent hard work, innovation, and passion for service that you bring to our customers. This morning, Euromoney named us the best superregional bank in the U.S. as part of their 2024 awards for excellence. I'm honored to be part of your team. With that, Bryan, over to you. Thanks, Tim, and thank you to everyone joining us today. Our second quarter results were strong, reflecting our balance sheet strength, diversified revenue streams, and disciplined approach to expense and credit risk management. For more than a year, we have emphasized the importance of maintaining balance sheet strength and flexibility in an uncertain economic and interest rate environment. This approach has proven effective as the market's expectations on rate cuts changed dramatically from the start of 2024. Despite this change in rate outlook, our NII has been consistent with the performance trajectory we discussed back in December, increasing sequentially during the second quarter from the first quarter bottoming, and NIM has increased for two consecutive quarters from the fourth quarter low. Additionally, our full year 2024 NII outlook remains unchanged. As Tim mentioned, our profitability remained strong and stable, which allowed us to resume share repurchases early and grow our CET1 ratio to 10.6%, up 13 basis points. As noted on page 2 of our earnings release, our reported results were impacted by certain items, including the valuation of the Visa total return swap, an update to the FDIC special assessment, and the impact of certain legal settlements and customer mediations. Excluding the impact of these items, adjusted net interest income for the quarter increased 1% from the prior quarter to $1.4 billion, and adjusted net interest margin improved 3 basis points compared to the prior quarter. Increased yields on new loan production contributed to this improvement and offset the impact of increased interest-bearing core deposit costs, which were well managed and increased only 4 basis points compared to the prior quarter. While total average portfolio loans and leases were flat sequentially, we continue to benefit from fixed-rate asset repricing led by our Indirect Auto business. Average total consumer portfolio loans and leases were flat sequentially, primarily reflecting the increase in Indirect Auto originations offset by a decrease in other consumer loan balances. Average commercial portfolio loans decreased 1% due to lower demand from corporate banking borrowers. Period-end commercial revolver utilization remained at 36%, consistent with the prior quarter. Middle market loan production increased 2% compared to the prior quarter, driven by strong performance in our Southeast markets, primarily in the Carolinas, Georgia, and Florida, as well as continued success in Indiana, Texas, and California. The pipeline for the second half of the year is improving, and we are continuing to invest in our middle market banking teams, including our recently announced expansion in the Alabama market. However, we remain cautious on commercial loan growth expectations in the second half of the year as customer demand for credit remains muted. Our investment in analytics continues to help us optimize deposit outcomes, demonstrated by our strong deposit growth in 2023 and prudent management of deposit costs in 2024. Our strong track record of liquidity management, combined with data-driven analytics, will aid in maintaining pricing discipline and optimizing liability costs. Average core deposits were flat sequentially, driven by higher CDs and consumer savings in money market balances, offset by lower interest checking and commercial demand balances. Our current focus remains on prudently managing deposit costs with the Fed on hold and preparing for potential rate cuts later this year. By segment, average consumer deposits increased 2% sequentially, while both commercial and wealth deposits decreased 2%. The Southeast branch investments are driving both strong household growth and granular insured deposits. Demand deposit balances as a percent of core deposits were 25% as of the end of the second quarter, stable with the prior quarter, as migration of DDA balances continues to slow. Consistent with our prior expectations for a higher-for-longer rate environment, we expect DDA mix to fall below 25% during the third quarter and stay around 24% for the remainder of the year. We ended the quarter with full category one LCR compliance at 137%, and our loan-to-core deposit ratio was 72%. We are well positioned to continue to grow net interest income, and our balance sheet provides flexibility to navigate the evolving economic and interest rate conditions. Moving on to fees. Excluding the impacts of security gains and the Visa total return swap, adjusted non-interest income decreased $32 million, or 4% compared to the year-ago quarter. This year-over-year decrease is attributable to a $34 million private equity gain recognized in the second quarter of 2023. Within our businesses, Commercial Payments and wealth and asset management fees continued to deliver strong results, both achieving double-digit revenue growth over the prior year, driven by our continued strategic growth investments in products and sales personnel. These areas are not only fast-growing but are sizable contributors to fee income and profitability today, given our strength and scale in these businesses. We expect these businesses to continue to deliver strong revenue growth. Our market-sensitive businesses, such as mortgage and commercial customer hedging, have been impacted by the higher rate environment, the reduced demand for credit, and reduced market volatility. The combined impact for these businesses was a $20 million decrease versus the prior year. Leasing business revenue was down $9 million versus the prior year due to our decision to de-emphasize operating leases, but it is offset by a $9 million decrease in leasing business expense. The securities gains of $3 million reflected the mark-to-market impact of our non-qualified deferred compensation plan, which is more than offset in compensation expense. While we have continued to invest in strategic growth initiatives and technology, we managed our adjusted non-interest expense flat to the year-ago quarter due to our focus on expense discipline and the ongoing benefits from the process automation efforts. Adjusted non-interest expense decreased 7% sequentially, primarily due to seasonal items during the first quarter related to compensation awards and payroll taxes. Moving to credit, consistent with our guidance, the net charge-off ratio was 49 basis points, up 11 basis points sequentially, driven by two commercial credits for which we had previously established specific reserves. Consumer charge-offs were 57 basis points, a reduction of 10 basis points sequentially, primarily due to improvement in our indirect consumer-secured portfolio. Other credit metrics showed strong sequential improvement, with the ratio of early-stage delinquencies 30 to 89 days past due decreasing 3 basis points to 26 basis points, which is near the lowest levels we have experienced over the last decade. NPAs decreased by $100 million, or 13%, during the quarter, and the NPA ratio decreased 9 basis points to 55 basis points. In commercial, our credit discipline is grounded in generating and maintaining granular, high-quality relationships and by managing concentration risks to any asset class, region, or industry. We continue to see no material signs of broad-based industry or geographic weakness and believe potential future commercial credit losses will be idiosyncratic in nature. In consumer, our focus remains on lending to homeowners, which is a segment less impacted by inflationary pressures. We have maintained our conservative underwriting policies and will continue to evaluate our positioning as economic conditions change. Our ACL coverage ratio decreased 4 basis points to 2.08% and included a $47 million reserve release driven by the previously mentioned specific reserves. We continue to utilize Moody's macroeconomic scenarios when evaluating our allowance and made no changes to our scenario weightings. Moving to capital, we ended the quarter with a CET1 ratio of 10.6%, significantly exceeding our new buffered minimum of 7.7%, reflecting strong capital levels. As we assess our capital priorities, we believe that 10.5% is an appropriate near-term operating level. During the quarter, we completed $125 million in share repurchases, which reduced our share count by 3.5 million shares. Our pro forma CET1 ratio, including the AOCI impact of the securities portfolio, is 8.0%. We expect continued improvement in the unrealized securities losses in our portfolio, given that 61% of the AFS portfolio is in bullet or locked-out securities, which provides a high degree of certainty to our principal cash flow expectations. Assuming the forward curve is realized, approximately 26% of the AOCI related to securities losses will accrete back into equity by the end of 2025, increasing tangible book value per share by 10% before considering any future earnings. 62% of the securities-related AOCI will accrete back to equity by the end of 2028. Moving to our current outlook. While the rate environment and customer credit demand have played out differently than we were expecting at the start of the year, we remain confident in our ability to deliver PP&R and earnings outcomes in line with, or better than, our original expectations for the full year. We expect full-year NII to decrease 2%-4%, consistent with our guidance from January. This outlook assumes the forward curve as of early July, which projected 2 rate cuts in the second half of the year, September and December. We also believe we can deliver this NII outcome with no interest rate cuts and no loan growth in the second half of 2024. Given the year-to-date trends in customer activity, we now expect full-year average total loans to be down 3% compared to 2023. Average total loans in the fourth quarter of 2024 are expected to be stable to up 1% compared to the fourth quarter of 2023, with similar performance in both the commercial and consumer portfolios. Customer demand is the primary driver of this change, given the interest rate environment and other economic uncertainties. If there's more economic optimism in the second half of the year, we would expect to see loan growth in line or better than market growth. We are forecasting fourth-quarter average core deposit growth of 2%-3% when compared to the fourth quarter of 2023. Our forecast also assumes commercial revolver utilization, and our cash and other short-term investments remain relatively stable throughout the remainder of 2024. We expect full-year adjusted non-interest income to be stable to down 1% in 2024, reflecting the impact of weaker-than-previously-expected credit demand and customer hedging activities. We expect strong growth in commercial payments and wealth and asset management revenue to continue. In response to this expectation of lower customer activity in the second half, we expect to manage full-year adjusted non-interest expense stable to 2023 levels. Our expense outlook assumes continued investments in technology, with tech expense growth in the mid-single digits, and sales additions in middle market, commercial payments, and wealth. We will open 30-35 new branches in our higher-growth markets and have already closed a similar number of branches in 2024. Our outlook still projects an efficiency ratio of around 57% for the full year. For full-year 2024, the net charge-off outlook remains in the 35-45 basis points range. While we expect to resume provision builds in connection with loan growth and mix in the second half of 2024, we expect the second-half build to be less than the first half of 2024 release. Therefore, we expect full-year provision to be a $0-$10 million release, assuming no change to credit quality of the portfolio or projected economic conditions. Moving to our quarterly outlook, we expect NII and NIM growth to continue in both the third and fourth quarter. We expect NII in the third quarter to be up 2% sequentially, reflecting the impact of slowing deposit cost pressures and the continued benefit of our fixed-rate asset repricing. Our current outlook assumes interest-bearing core deposit costs, which were 295 basis points in the second quarter of 2024, to increase just 4 basis points sequentially if we see no rate cuts. We expect average total loan balances to be stable to up 1% from the second quarter. We expect modest middle market, auto, and solar production to offset continued low credit demand from corporate banking customers. We expect third quarter adjusted non-interest income to be up 1%-2% compared to the second quarter, largely reflecting strength in commercial payments and wealth and asset management and a modest increase in commercial banking revenue. We expect third quarter total adjusted non-interest expenses to be up 1% compared to the second quarter due to the impact of the previously discussed investments in branches, technology, and sales personnel. Third-quarter net charge-offs are projected to be in the 40-45 basis point range. As mentioned in the full-year outlook, loan growth and mix are expected to drive a provision build, which should be around $25 million in the third quarter, assuming no change to the economic outlook. The trajectory of our income statement performance should deliver positive operating leverage in the fourth quarter 2024 and a net interest income exit rate for the year that positions us for record results in 2025, assuming no major economic or interest rate outlook changes. Finally, moving to capital. With our consistent and strong earnings, we expect to execute share repurchases of $200 million per quarter in the second half of 2024, assuming a stable economic and credit outlook and capital rules that are no worse than the current NPR. In summary, with our well-positioned balance sheet, disciplined expense and credit risk management, and diversified revenue streams, we are positioned to generate sustained top-quartile profitability and deliver long-term value for our shareholders, customers, communities, and employees. With that, let me turn it over to Matt to open the call up for Q&A. Thanks, Bryan. Before we start Q&A, given the time we have this morning, we ask that you limit yourself to one question and one follow-up, and then return to the queue if you have additional questions. Operator, please open the call for Q&A. Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press Star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star 1 again. We'll take our first question from Ebrahim Poonawala at Bank of America. Hey, good morning. Good morning. Maybe first question, Tim, for Bryan, just looking at slide 49 in the deck around rate sensitivity, it implies that rate cuts should benefit NII. So you talked about the second-half guide, I think, as we think about 2025. But just talk to us around the comfort level. I think it says 75%-80% effective betas on the downside. Just talk to us in terms of the deposit beta assumptions, what's contractual within your deposit mix that should reprice lower, and is it fair to assume that rate cuts are positive for Fifth Third? Thank you, Bryan. We certainly believe that rate cuts are positive for Fifth Third. If you look at slide 42, we actually give a little bit more detail on the mix of the interest-bearing deposit book. 64% of our book right now would be classified in kind of the higher beta categories. This represents our index deposits, which are up to $35 billion. The CDs that we have in place, we've done a nice job of managing the maturities of the CD buckets so that most of our CDs will mature by the end of the year. That's another $14 billion of balances and our promotional balances as well. So we have a lot of captions within that book that we're going to be able to reprice down. Overall, that's about 64% of the deposits. We certainly have some lower-rate buckets still that we think that the betas are effectively zero. We have a high amount of confidence, though, that we're going to be able to get cost out and be able to manage. We really only need to be in a kind of mid-50s to low-60s beta to be able to be neutral to liability-sensitive, and we're confident we can deliver that. That's clear. And I guess maybe one for you, Tim. I think you put it back in terms of loan growth much earlier this cycle. As you think about recrediters, your comments on reserve outlook, is it all clear if we get rate cuts? Do you just worry less about something really bad happening systemically on credit quality for Fifth Third? And then the other side of that is, what's the trigger that leads to that growth? I heard you say you should have above-average loan growth if things pick up. What's the catalyst we should be watching for? Thanks. Yeah. Good question. I think that's the million-dollar question for the industry right there. There's no question that if we see some relief on rates, it's a positive, both for loan demand and for credit quality. Jamie Leonard and I have been out in several of the markets this quarter doing market visits, and we've been running a straw poll on where rates need to be before activity picks up. The wisdom of the crowds, at least inside Fifth Third at the moment, is about 4.5%, the median, where we'll see a pickup in more activity. That said, while rates would be constructive, I mean, I continue always to worry about the broader macro issues. I mean, we got land wars in two volatile regions in the U.S. right now. We have an election that's upcoming. We have massive fiscal deficits in the U.S. We have a ton of Treasury issuance that's going to be required to reload the TGA at some point here, and they're going to have to term that out, and that's going to put pressure on the long end of the curve. And while I think we have some stability here, I'm uncomfortable with the level of support that the federal government is having to provide to keep GDP growth at where it is at the moment. I mean, the jobs numbers in this most recent batch, unless I'm mistaken, a third of the new jobs that were created were created by the government. When we look at our footprint and we look at where the activity is, where there's federal stimulus, we're seeing robust activity. Everywhere else, we had a client in Tennessee tell us that the current environment was, quote, "half-speed ahead," right? We will continue to be mindful about that. I am a believer that in uncertain environments, you have to focus on getting growth from the businesses that you know and the strategies that are proven. You're not going to see us stretching into categories we don't know or doing things that we're uncomfortable with from a credit perspective and where we have to bet on a favorable macro to bail us out in terms of getting repaid. That's great, Colin. Thank you. We'll go next to Scott Siefers at Piper Sandler. Good morning, everyone. Thanks for taking the question. Let's see. Actually, Bryan, I was hoping you could speak a little bit about the fee trajectory. You discussed sort of the second quarter softness a month or so ago. It feels like it might persist a bit into the third quarter, but I imagine we're still feeling like that'll rebound. Just hoping you could maybe share some thoughts on sort of when and how that ends up looking. There's just a little more color on the fee trajectory, please. Yeah, absolutely, Scott. The second or third quarter increase, we're talking about not too aggressive of a fee growth perspective. We continue to expect continued performance out of our wealth and asset management business as well as commercial payments. Payments have been ticking along at $3-$4 million a quarter increases, and we expect that to continue and feel really good about it. We're also going to see some seasonal impacts actually come out associated with our mortgage business. We've benefited a lot from the servicing portfolio. All the servicing assets that we did right at the end of the low-rate cycle have benefited us and generated a lot of great income. But there is a seasonal headwind, Q1 to Q2 that we felt that was about $7 million. That's not going to repeat. So we're set up really well for that Q2 to Q3 growth that we've laid out. And then in the fourth quarter, we'll get some additional seasonal benefit out of the MSR. The payments and card spend will continue to pick up, especially the seasonal card spend and consumer. We'll get the $10 million TRA benefit. And then we always see some pickup in both commercial banking and leasing in the fourth quarter. That should both generate some additional income as well. That gets us to that little bit higher growth rate trajectory that you could see that's implied from 3Q to 4Q. Perfect. Okay. Good. And then maybe switching gears just a second, something you might be able to sort of put into context, the CFPB news from earlier this month, that just based on my read, kind of felt like we closed the book on the account issues from a few years ago, which is good. But then there were the auto-related items. So I know there are just sort of questions floating out there about sort of cost to comply, cost to remediate, what's within the existing outlook. Could you maybe address those kind of broadly, please? Yeah. Scott, it's Tim. I'm happy to do that. I think you hit on the most important thing here, which is the best thing for you to do is focus on the statements of fact as opposed to the press releases on this one. I think that by the bureau's own statements of fact here, these were old issues. So one was nearly five years old. The other was nearly 10 years old, respectively. There are things that we identified and reported. And in case of auto, we completely canceled the program before they ever even started their investigation. And I think while, of course, we always take anything that impacts customers seriously at Fifth Third, the size of the fines, which are a fraction of what you've seen in other places, probably speak for themselves in terms of the limited scope of the issues here. We elected to close these things out because given the fact that they were small in the past, it just didn't make sense to continue to spend more money litigating than it was going to spend to settle. So we put them in the rearview mirror. We have the one-time expense this quarter, and that's where it's going to stay. You shouldn't expect any incremental ongoing expense because these are issues that are so old. Anything that needed to be done was already done from an ongoing operational. Okay. Wonderful. Good. Thank you for taking the questions. Yeah. Thank you. Our next question comes from Mike Mayo at Wells Fargo. Hey, Mike. Hi. I'm up on re-queue. Sorry. We'll go next to re-queues. We'll go next to Ken Usdin at Jefferies. Hey, good morning, guys. On the deposit side, I heard your comment about 4 basis points increase in 3Q with no cuts. And I'm just wondering, you talked about the mid-50s to 60 downside beta. Can you give us a little bit of context on how that starts and then how that moves forward? And you talked about having a good two-thirds of your deposit-based high beta. But just wondering how you kind of expect some of the pricing stuff you've been doing to grow deposits in the Southeast to juxtapose against that downside beta. Thanks. Yeah, absolutely. Thanks, Ken. Great question. What we would tell you is that what it'll create is it'll create some opportunity to be a little bit more aggressive on some of the rate cuts associated with the CDs and the promo portfolios that we've seen. Historically, when we've navigated through these down rate cycles, those first couple cuts on the consumer side do have a pretty decent impact on customer mentality and sentiment and your ability to create some sticky balances. We've been through this a few times now where we've seen the ability to convert those balances into a lower rate balance and cause them to stick around. On the other side of that, the commercial balances, in particular, the index balances, those are immediate impacts, and it'll just move with the market. We have really no concern around that index strategy. It's another one that we've executed in prior cycles. I think we've done a nice job of kind of navigating and managing those balances up in those index portfolios as we've reached the grades. It gives us a lot of confidence in the ability to very quickly get those costs out. Okay. Got it. And then just following up on your comments about record 2025 versus 2023 NII, can you just talk just about how much of that do you expect to be growth-related and how much of that do you expect to be just the outcome of rate scenarios? I would actually tell you that most of it is just the natural transition of the balance sheet and the business today. I think our NII story is actually pretty simple. Right now, it's the continued fixed-rate asset pricing and slowing deposit cost. And if you look at just the trends that we're laying out, we're adding about $8 million a quarter right now just on the natural repricing of the existing balance sheet. And you think with we've talked a lot about $4 billion of fixed-rate asset repricing that's happening at about 200 basis points. That's $20 million a quarter. Then the deposit cost up 4 basis points this quarter on a $120 billion interest-bearing book. There's your 12 basis points of incremental costs to take us down to that net 8 basis points. We get a little bit of continued slowing on the deposit cost side. That can approach $10 million, $15 million, $20 million a quarter. Day count, we're going to pick up $10 million here in the third quarter. And then that sets us up for an exit rate where if you just take the 4 times the fourth quarter math, you're right around what is our record NII of 58.52. Throw on a little earning asset or loan growth on top of that, and the path is there for us. That's what gives us confidence. The big wildcard, like we always talk about, is just how competitive deposit pricing ultimately ends up being. But if we start to see rate cuts, we would expect to see some decent relief on the liability side. Yeah. Ken, it's Tim. We talked a while ago, and maybe we haven't been doing enough of this recently, but about the power of having these intermediate duration fixed-rate loan origination platforms was. And by that, I really mean you think about Provide, you think about the auto business, you think about Dividend. If you just look at the yields on the indirect auto and specialty business year-over-year, we've added almost 100 basis points to the yield in the portfolio. And if you look at the solar product, it's north of 200 basis points that we have been able to add year-over-year. And that just speaks to the power of both, one, the sort of origination capacity that exists there that we can dial up in an environment where spreads widen and it makes sense for us to do it. And two, the fact that these are asset classes that are going to reprice a lot faster than the 3% mortgages that were originated at the low point in the rate cycle and that are going to persist much longer than the jumbo mortgages and the other fixed-rate product that you see being available to banks out in the market today, which are all likely to prepay if we get any sort of meaningful movement out of the Fed. So that will be an important part of the way that we continue to drive outcomes, even in an environment where you don't get a meaningful improvement in loan demand across the industry. Got it. Thank you for that, Colin. Yep. We'll go next to Gerard Cassidy at RBC. Hi, Tim. I'm Bryan. Morning. Tim, Bryan, can you give us a little color? On slide 29, the transfers to non-accrual status of loans fell nicely this quarter. And when you go back, you give us the data back to the second quarter of 2023, and it's a meaningful drop from those levels. Any color that you can give us on what led to that drop? And then second, and I apologize if you addressed this already, on the commercial loan charge-off number that jumped in the quarter, were there any specific idiosyncratic loans that caused that to happen? Gerard, hey, it's Greg. Great question. So I'll answer the second one first. So yeah, we had the two names that Bryan mentioned that were two different industries. We're not seeing any thematic concerning trends emerging out of the commercial portfolio geographically by product. But we talked about lumpiness on the commercial side, and that's what we experienced this quarter. We're normalizing off very low loss rates. And so when we have one or two of these episodic events, they're going to get highlighted, and that's what we saw. But as Bryan mentioned, they were not a surprise. We had reserves against those two loans, and so we think we're through those. The overall credit metrics remain really solid. Our delinquencies were down quarter-over-quarter. The NPAs that you referred to were down 13% quarter-over-quarter at 55 basis points. That's below our ten-year average. We're up one basis point year-over-year on NPAs, and it's really across the board. We had about $80 million in commercial losses this quarter, but we are down almost $100 million. So we're working the portfolio very hard. We're working out of some of the NPA loans without experiencing the loss rates, but it's really across the board. Where we're not seeing the NPAs are in the commercial real estate portfolio. We had about $3 million in NPAs there. So that portfolio continues to perform very, very well. We've had virtually no delinquencies in that portfolio. So it's really across the board where we're seeing the improvement in our NPA numbers. Got a little bit on the consumer side. Most of it's being driven on the commercial side. Very good. Thank you for the color. And then second, when you look at your shared national credit portfolio and you give us good details once again on slide 25, the financial services slice of that portfolio, how much, if any, is in sectors that is considered private equity or private credit? Because as we all know, it seems like the banking industry has been de-risked since the financial crisis, and the private equity, private credit side of the equation might be taking on more of that risk. Do you guys have many loans to the Blackstones or the Carlyles or any of those types of companies where there might be indirect exposure to that industry? Yeah. Yeah. Another great question. So we've got subscription lines to some of those type of companies, highly rated borrowers. But as you know, those are mostly predicated on an underwritten over-collateralized to the LP capital. But we're not in that leverage-on-leverage space. We're not active there. We've got a couple direct lending lines of credit. They total about $30 million, so about $15 million apiece. So we're not active in that space. Good. Okay. Good. Thank you again. Thank you. Thank you. We'll move next to Bill Carcache at Wolfe Research. Thank you. Good morning. I wanted to follow up on your credit commentary and ask for your thoughts on the longer-term trajectory of charge-offs given what you're seeing in both consumer and commercial. Crystal clear on all the sources of uncertainty that you highlighted, Tim. But if we assume that the soft landing scenario materializes and think about the loss content implicit in your loan book today, would you expect Fifth Third's NCO rates to level off from here, drift a little bit higher, revert to 2019 levels? I know you can't give 2025 guidance, but any help on how you're thinking about that long-term trajectory would be super helpful. Yeah. It's Greg again. So yeah, certainly, as Tim mentioned, any kind of rate cut is going to help us from an overall asset quality. It will on the consumer side. It will on the commercial side. It takes a little while for those rate cuts to play through the portfolio. So as Bryan mentioned in his prepared remarks, we still feel good about the 40-45 basis points for the rest of this year. Then we'll see how the rest of the market plays out. But as I just mentioned in the previous question, we still feel really good about the overall metrics of the portfolio. Our MPA rates is a good indicator of potential loss rates moving forward, and those numbers continue to come down and improve. And so I think even without rate increases, we still feel really good about our portfolio. Get a little bit of goodness from the rates. And yeah, I think it certainly helps as we get into 2025. Thanks. That's helpful. And then separately, you talked about some of the variables impacting the curve. Can you discuss how Fifth Third's position for either a flatter or a steeper yield curve environment? Yeah, absolutely. Typically, our normal business is about two-thirds sensitive to the front end of the curve. I would tell you with our current cash position, we're probably closer to 75% sensitive on the front end of the curve. So relief on the front end is part of what would be the big driver from an asset sensitivity perspective. The interesting thing about how this environment could play out is we could potentially get some of that relief on the front end of the curve and still benefit from the fixed-rate asset repricing that we're expecting over the next couple of years. Because what's rolling off right now is a lot of that loans that were originated in those periods of really low interest rates. So even if you see a little bit of lower rates on the longer end of the curve, you would still have a nice pickup relative to the front book-back book dynamic. So that front-end relief, and as Tim mentioned around our concerns around continued treasury issuance, if that's the scenario that were to play out, it would be one that would be a nice situation from an NII perspective. But it would probably continue to the longer end of the curve could cause some additional challenges for the economy from a growth perspective. Understood. Very helpful. Thank you for taking my questions. Thank you. We'll go next to Erika Najarian at UBS. Hi. Erika. Hey. Just a few follow-up questions. Your cash position was twice that of last year. As we think about, obviously, that makes you more sensitive to short rates coming down. How do we think about how you're managing that cash position from an interest rate standpoint versus an anticipation of liquidity rules coming standpoint? And maybe give us a sense of how much is there sort of supervisory encouragement today to keep "liquid liquidity" as we anticipate new rules? Yeah. I would tell you that we are very focused internally on maintaining plenty of liquidity to deal with any uncertainty associated with potential rules as well as the market. So that has just been a big driver of our positioning and why we've done that. But the other thing that it allows for us, yes, it is a good liquidity risk management tool, but it does allow us to have a little bit more confidence on the interest rate risk management side as well because we can be more aggressive on our liability management actions because of that cash position. So it really is the combination of that liquidity and liability management benefits that we are focused on and why we continue to keep those levels that we have. As rates come down and as we get through that environment and see stability in the market from a liquidity perspective, we would have an ability to take that down over time. As you pointed out, it was a big increase year-over-year. The year-over-year increase was a 20 basis point impact on our NIM. So getting back to more normalized levels would be a nice trend for us from a NIM perspective. Got it. And I'll follow up with Matt on the liability side later. But so I wanted to squeeze in a second question. And this is for you, Tim. Tim, I think that you and management and the board have done such a great job in terms of the makeover of Fifth Third. And now investors essentially take for granted and see you as a high-quality bank among your peers. To that end, it seems like the CFPB stuff in terms of your response to Scott's question is in the rearview mirror. The one question I keep getting from investors is, are you still the proper owner for Dividend? And it made sense in terms of when you did the deal. And obviously, solar is the future, but it's clearly something that is a product that's sold, not bought. And given all the litigation against you, it just doesn't feel on-brand from a quality perspective in terms of how you've rebuilt Fifth Third. So how are you thinking about it? It's so small, but it comes up in conversations often, right? So the impact to your stock, it feels like more than the impact to earnings. So love your thoughts here. Sure. So just to make sure that I'm clear, and I know you were, but I mean, dividend has nothing to do with the CFPB. So those are two separate issues. Right. Right. Right. Okay. Yeah. Look, on the dividend front, we are believers that the best way to get growth is to attach yourself to long-term secular trends. So the focus on the Southeast was to get the bank linked to the demographic migration that was going to support the growth in that market. The focus on commercial payments has been about attaching ourselves to this trend of digitization in general and, in particular, the intermediation of these legacy workflows with software. In the case of Dividend and what we've elected to do on the project finance on the commercial solar side of the equation, the focus is on both the diversification of energy sources with a focus on renewable. I think, in particular, in the case of Dividend, the need that we're going to have across the country to have more distributed power generation and storage if we're going to avoid rolling brownouts and other sorts of issues that come from the fact that we have a very old energy infrastructure. In particular, now with the explosion in data centers that are going to be required to support AI and otherwise, a lot of very power-intensive commercial applications. So we view the residential solar and battery storage as an important part of the way that our customers and people we don't do business with today are going to be able to meet their power needs in the future. And I actually think that for products like this with an intermediate duration and a super prime credit risk profile, banks are the best source of liquidity, not the worst. The focus is just making sure that you do business with the best. Because you're right, the same way that in auto, we're reliant on the quality of care that the dealer provides to ensure that our borrower has a good experience, we're relying on the quality of the installer. And the actions that we took shortly after acquiring Dividend or refocused the business on the 150 best installers in the portfolio are going to continue to be, we think, a very viable and high-quality way to go to market. And just to follow up here, I'm sorry that I'm taking up a third question. Are you confident that after the vendor changes that you've made, that Fifth Third is not going to be in the news with some older lady saying she got sold solar panels she can't afford, right? That's the risk. I totally get the secular trend. And everything that you have said makes so much elegant sense. But I think that's the risk that investors are trying to make sure that it's not embedded in your stock, which is obviously not an EPS impact necessarily, but a reputational litigation impact. Sure. There were some installer failures as interest rates rose because the volume went down. I think as a matter of policy here, we take care of the customer. So if an installer is unable to complete a job, we complete it on behalf of the installers. We have done that in every case where we had an installer who was unable to complete a project and get it to PTO. And you would expect that we you should expect that we're going to continue to do that. That's the standard of care that we would provide for any customer inside the bank, regardless of the channel that they came through, regardless of the product. And so as those installer failures work their way through the system, we're going to take care of the customer. Thank you so much, Tim. We'll go next to Manan Gosalia at Morgan Stanley. Hey, good morning. Morning, Manan. I just wanted to follow up on your comments on the level of cash. You noted that the LCR is at 137%. Is there room to take on a little bit more duration and deploy some of this excess liquidity? Because you really need to be that far above the 100% threshold? No, I think the other issue that you're facing right now is you're actually not getting paid to extend your duration given the inversion of the yield curve. I mean, the 10-year rate this morning is 4.2%, but we're earning 5.5, 5.40, 5.5% on the front end of the curve. And given our rate outlook, we just don't think it makes sense at this point to be adding duration, giving up earnings today when we think over the horizon that we're not sure that 4.20 is a good entry point. Got it. And then, Bryan, at our conference last month, you noted that you were seeing some competition driving loan spreads lower across the industry. That's not necessarily a level that you're always comfortable with. Has that continued since then? And if yes, I know you don't want to lean in here, but with deposit costs coming down, is there some more room to lean in there and do? Yeah. We're looking for the spots where. Makes sense to continue to evaluate where loan growth should come from. As Tim talked about, we're certainly not going to sacrifice on earning appropriate returns as part of this. But just given some of the confidence that we have in terms of that we think we are going to see a cut this year, that we are going to start to see some relief, and we are starting to see a little bit of the animal spirits in the market start to build. Our pipelines are looking better than where they were three months ago, six months ago. So we think there's going to be opportunity to continue to see some growth in those areas and feel good about the positioning. Great. Thank you. We'll move next to Matt O'Connor at Deutsche Bank. Hey, Matt. Hey, guys. There was an article earlier this week just talking about risk in the commercial bond market. And you guys have commercial real estate bond market, that is. You guys have a good slide 43, just reminding all of us that a lot of it or most of it is agency. Can you talk to the non-agency CMBS and I guess kind of almost like dumb down what these? You cut out there right at the end. Could you repeat the end of the question? Just a line of questions. Just a standard. Okay. Thank you. Thanks for your protection there. Thanks . Yeah. So we obviously have had a very cautious outlook from a commercial real estate perspective for a really long time. We do think that there is some value in participating in the market. And so where we've chosen to do that is in that non-agency portfolio in structured form because we do think those structural enhancements create a lot of credit protections for us. The article that you were mentioning this week was in regards to a specific structure called a SASB, a single asset, single borrower structure, which, funny enough, basically every commercial real estate loan is a single asset, single borrower structure. But in our case, for our broader portfolio, we have very little SASB within our portfolio. I had mentioned about a month ago at Morgan Stanley that that amount was about $150 million for us. And all of our bonds in that structure continue to be performing very, very strongly. The broader structure, we have nearly 40% credit enhancement that is in front of us from a first loss perspective. And the weighted average loan to value on the non-agency portfolio is still around 60%. We use some advanced analytic tools that the industry has available, and we stress the portfolio regularly. As part of our process, our credit underwriting team underwrites and evaluates the top 10 loans in every structure to make sure that we are comfortable. We monitor the portfolio very closely and continue to have no concerns on what we're seeing. Okay. Perfect. That's helpful. Thank you. We'll go next to Christopher Marinac at Janney Montgomery Scott. Thanks. Good morning. Wanted to ask about the commercial criticized and the fact that you had some of the charge-offs this quarter. Would that improve those? And do you see any other kind of upgrade trends that could happen in future quarters? I mean, yeah. I mean, charge-offs are going to be both of those loans and overall charge-offs are coming out of the criticized. So yeah, anytime we're going to have commercial charge-offs, it's going to improve. We were pretty stable quarter over quarter in our criticized, and we're starting to see it level off. And so I'm not overly worried that we're going to see continued increases based on what we know today, based on unforeseen economic conditions. Yeah. I think the trend in criticized in general has actually been encouraging from my perspective. Greg, you may want to talk about this, but the only real growth we've seen in criticized are a few ABL facilities. If you look at it over the last 12 months, and we're well secured there and well within the collateral. Exactly right. That was the driver of our first quarter increase in criticized assets, about 16% of our criticized assets are in that ABL fully conforming. We're not doing sofas. We're within assets. So I think the loss content. Now, that said, it could have a weakness or well-defined weakness that we'll work out of. But I feel good about the trending that we've seen. And for the rest of this year, again, based on what I know today, I would expect stable criticized levels. Great. Thank you both for the background. I appreciate it. And we'll go next to Gerard Cassidy at RBC. Hi, Tim. Welcome back. Thank you. I got a follow-up for you. Talking about loan growth, I noticed there was a small uptick in growth in the home equity portfolio. I think it was slide 35. You guys showed this data. What's the opportunity for you? Because one of your Bank of America are an uptick as well in home equity lending. In view of the fact that people are not refinancing their houses because of where rates are, but there's a ton of equity in houses, have you guys considered looking at this and maybe as an area of potential growth? I know the home equity has got a bad reputation from what happened in 2008, 2009, but obviously, the world is different today. Any of your thoughts here? Yeah. I tell people here all the time that the first rule of holes is that you have to stop digging. So it is nice after many years of having brackets around the change in balance number for home equity to see a turn of the tide there. I would not anticipate that it's a big driver of our loan growth over the course of the next few quarters. Not because we wouldn't like it to be, but if you look at the amount of spending and home improvement in general right now, just look at the big home improvement retailers, you'll see that that's a category that remains pretty depressed. That said, I do think that the right strategy here for homeowners who have these 3% fixed-rate mortgages is going to be to improve where they are as opposed to moving. And home equity is a great way to do that. So we would like to see more growth in home equity. We like the credit quality there. It's going to be slow and steady here in terms of the pickup. Great. Appreciate the color. Absolutely. And that does conclude our Q&A session. I will now turn the conference back over to Matt Curoe for closing remarks. Thank you, Audra. And thanks, everyone, for your interest in Fifth Third. Please contact the investor relations department if you have any follow-up questions. Audra, you may now disconnect the call. Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect.