Good morning, everyone. Welcome to Fifth Third's third quarter 2026 earnings call.

This morning, our Chairman, CEO and President, Timothy N. Spence and CFO, Bryan D.

Preston, will provide an overview of our third quarter results and outlook. 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 10/19/2026, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Timothy and Bryan, we will open up the call for questions.

With that, let me turn it over to Timothy.

Hello, everyone, and thank you for joining us. it is my custom to start these calls with a comment on great banks and navigating uncertainty.

But today, I want to start with something else that distinguishes great banks. Their people.

This quarter was a defining moment in the history of our company. I am humbled by and exceptionally grateful for the commitment our people showed to our clients, our shareholders, and to 1 another.

We announced the acquisition of Comerica 1 year and 13 days ago. And throughout that time, all our people hustled and collaborated to complete the largest and most complicated conversion in our 168-year history.

Following legal day 1, you welcomed new colleagues onto your teams, introduced Fifth Third to new communities. you made the tough decisions necessary to achieve our expense commitments, and worked together to identify and pursue revenue opportunities.

you invested more than 4 million hours in preparation for conversion, and you gave new meaning to the word labor in Labor Day weekend when you onboarded approximately 600 thousand accounts and 293 banking centers while decommissioning 82 others. Since then, you have continued to work tirelessly to welcome new customers to the bank to get their accounts configured the way they want them and to ensure customers experience the benefits of banking with our combined company.

Your advice is what improves our clients' personal lives in their businesses. Your creativity is what wins awards for innovation.

And your commitment to excellence is what produces peer leading financial results. Thank you for keeping our customers at the center of everything you do.

This morning, we reported earnings per share of 90¢ or $1.13 excluding certain items outlined on page 2 of the release. Adjusted PPNR grew 8% over the 2nd quarter, as adjusted revenue grew 2% while adjusted expenses fell 2%.

In an increasingly competitive environment, core deposits grew 3% sequentially and loans grew 1%. Net charge offs remained stable at 31 basis points.

Despite the conversion occurring a full 10 weeks into the quarter, we have already exceeded 2 of the 3 2027 profitability targets spelled out in our deal announcement. Adjusted return on tangible common equity was 20.6%, Our adjusted return on assets was 1.41%.

And our adjusted efficiency ratio was 54.6%. Even with the largest acquisition in our company's history and the 10 year treasury increasing 114 basis points in the past year, Our tangible book value per share grew 2% year-over-year, and our TCE ratio was flat.

With technical conversion and the work on expense synergies now behind us, our primary task going forward is to leverage the power of our combined company to drive organic growth and market share. The FDIC summary of deposits dataset is 1 mechanism we use to measure progress and the 2026 release became available in September.

Using a cap branch deposit methodology to focus on retail deposits, I am pleased that Fifth Third ranked No. 1 in our retail footprint and No.

3 nationally in year-over-year retail deposit growth. In Texas, we came straight out of the chute in February, Retail deposits in Dallas and Houston grew more than 20% over the prior year, and we gained more than 40 basis points of market share.

We now rank No. 7 and No.

8 in Dallas and Houston respectively. And that is prior to opening any of our 150 de novo branches in Texas over the next 3 years, starting with the first 1 in the 3rd quarter next year.

In our Southeast footprint, we again ranked No. 6 in retail market share.

Retail deposits continue to grow at a rate more than 5x the rate of the Southeast overall. And they have grown at an 11% compound annual rate over the past 5 years.

Our Southeast de novo program continued to be a big part of the growth story but it is not all of it. We ranked No.

2 in total new branches built and No. 2 in average deposits per branch after 3 years.

We are also No. 2 in same branch deposit growth for legacy branches over the same period.

Our total cost of So consumer deposits remains 207 basis points below Fed funds. We have already opened 35 additional branches in the So in 2026, and remain on track to open the full 55 that we committed for the full year.

1 other strategic item I would like to note from the quarter the formal launch of Fifth Third I Banking. A business focused on start up and growth stage companies, their founders, and the investors who back them.

i-banking pairs Comerica's 34 year old tech and life sciences vertical with Fifth Third's payments, digital, investment banking, and wealth management capabilities. It will be built around hub cities where venture capital flows are concentrated, and the industry verticals where we can bring unique expertise starting with our recently launched fintech vertical.

We will spend more time dimensioning this business for you in the coming quarters, but we see it as $10 billion deposit opportunity by 2030, in addition to other avenues for revenue growth. Now let me close where I usually begin.

At Fifth Third, we believe great banks distinguish themselves not by how they perform in benign environments, but by how they navigate uncertain ones. While our clients tell us the underlying economy remains strong, this is a fluid operating environment as evidenced by the recent sharp spike in interest rates.

When things change, the factors that dictate success change along with them. Discipline and optionality become very important.

In this environment, our priorities are to be strongly differentiated in core deposit growth, broadly diversified in loans and other earning assets, with limited exposure to unproven high growth categories and the interest rate sensitive borrowers. Balanced across recurring fee businesses and less exposed to market sensitive revenue streams.

And to have the profitability to sustain the long term investments in growth and AI without compromising return targets. While we will always have opportunities to get 1% better, I feel great about how Fifth Third is positioned and in our ability to deliver an even better 2027.

With that, I will hand it over to Bryan to provide more detail on the quarter. And on our outlook for the remainder of the year.

Thanks, Timothy, and good morning. Our third quarter results show the profitability of the combined company.

Even with the expense synergies not yet fully in the run rate. The conversion over Labor Day weekend was the last major step of the technical integration and the remaining expense synergies will follow.

Additionally, the rate environment tested the balance sheet. James moved sharply higher in the quarter, That weighed on capital markets fees and on AOCI.

It will drive NII growth and provide attractive entry points to reduce the increased asset sensitivity we have carried since closing the acquisition. Through the conversion and the rate volatility, the businesses kept growing in both the Fifth Third and Comerica footprints.

And credit performance remained stable. As Tim mentioned, adjusted PPNR grew 8% to $1.5 billion.

Of the $113 million sequential increase, over half came from revenue. With net interest income up 3% and fees up 1%.

The realization of expense synergies was the primary driver of the $45 million decrease in adjusted expenses. Page 2 of our release details the certain items excluded from these adjusted figures.

The PPNR growth drove the approximately 160 basis point improvement our adjusted ROTCE and the 250 basis point improvement in our adjusted efficiency ratio. The step up in profitability is sustainable.

In the fourth quarter, the expense base comes down further. As the remaining expense synergies are realized.

And revenue continues to grow organically. With the systems conversion complete, and the expense base where it will be, the fourth quarter gives you the first full view of the combined company's profitability and the baseline from which we will grow.

Net interest income was $2.28 billion up $56 million from the second quarter. The increase was driven by organic loan growth, investment portfolio activity, and continued fixed rate asset repricing.

Partially offset by higher deposit costs, and tighter spreads in C&I and auto. Net interest margin was 3.34%, down 2 basis points.

In order to simplify certain conversion-related activities, we intentionally migrated Comerica off balance sheet investment sweep products onto the balance sheet into deposit products. Which resulted in elevated cash.

As a result, average short term investments rose $3.1 billion and reduced net interest margin by approximately 4 basis points but had no material impact on NII. Excluding this cash build, the margin would have expanded about 2 basis points over the prior quarter.

The higher market rates during the quarter provided attractive entry points to begin reducing our asset sensitivity. We added $2.5 billion to the held to maturity portfolio at an average yield of 4.9% and we added $7 billion of received fixed cash flow hedges.

The third quarter taxable securities yield increased 13 basis points to 3.68%. As a result of the investment portfolio actions, period end short term investments declined $2.8 billion Even with these actions, we remain asset sensitive and expect to benefit from further potential rate hikes.

Loan growth in the quarter was commercial led. With production diversified across the combined footprints and verticals.

Total commercial loan production in the third quarter was double the production generated in the year ago quarter. Among regions, Chicago, I, and Michigan continue to generate meaningful activity in the Midwest.

While The Carolinas and Florida were the standout regions in the Southwest. While vertical production was also very broad based, consumer retail, health care, energy and renewables, media and entertainment, FIG, and dealer finance all delivered strong production growth both sequentially and year over year.

Our gross production pipelines remain at record levels as we enter the fourth quarter, Average portfolio loans increased 1% sequentially to $179 billion and period end loans were also up 1% to $180 billion. Average commercial loan growth of approximately $1.5 billion was concentrated in C&I and construction, Commercial line utilization was 38% down 50 basis points from the prior quarter.

Partially offsetting the production. Average consumer loans were stable, as home equity grew 3% and resi mortgage grew 1%.

Offsetting runoff in solar and modestly lower auto balances. The mix remains consistent with our strategy.

Relationship based commercial growth and consumer categories where we have long underwriting experience and attractive risk adjusted returns. Core deposits funded the quarter's loan growth, and continued to replace wholesale borrowings.

Average core deposits increased 3% sequentially to $236 billion led by retail deposit campaigns and payments linked operational deposit growth. The previously mentioned migration of Comerica investment sweeps onto the balance sheet added $3 billion in deposits.

additional, we simplified some of Comerica's legacy deposit products into more modern interest checking product structures. Resulting in a shift from commercial savings and money market into interest checking.

which grew 6%. Money market still grew 5%, thanks to the success of our retail deposit campaigns.

While savings and retail CDs each declined 2%. Consumer deposit growth was 5% sequentially in the Southeast, and 23% in the Southwest.

At the end of the first quarter, the Southwest represented 7.6% of our consumer deposits. At September 30, that increased to 10.4% of our consumer deposits.

When we announced the merger last year, we believe our consumer deposit growth strategies would be replicable in new markets. Our early campaign performance continues to support our belief in this $10 billion plus growth opportunity in the Southwest.

Average noninterest bearing deposits were up slightly sequentially, and represent 27% of core deposits. Total deposit costs rose 9 basis points sequentially, to 1.64% reflecting promotional pricing from the successful retail campaigns and the impact of the Comerica investment suite migration to the balance sheet.

Excluding the investment sweep impact, deposit costs rose 7 basis points. The deposit growth allowed us to reduce average wholesale funding 10% including a $1.3 billion reduction in long term debt and a $1.1 billion reduction in FHLB advances.

With that mix shift, the rate on total interest bearing liabilities rose 6 basis points and only 4 basis points, excluding the Comerica investment sweep's impact. Our loan to core deposit ratio was 76%, down 1% from the prior quarter.

Our approach has not changed. Granular deposit funding, meaningful liquidity buffers, and active management of overall funding costs.

Shifting to fees, Adjusted noninterest income, excluding the items listed on page 4 of the release, was $1.05 billion up 1% sequentially and 33% from the prior year. Sequential growth in wealth commercial banking, and mortgage more than offset a $7 million decline in capital markets fees.

The late quarter rate move pushed out some expected capital markets activity as well as having a negative impact on mortgage fees. Wealth and asset management revenue was $259 million up 1% sequentially, reflecting higher institutional trust and personal asset management revenue.

Total assets under management were a $125 billion at quarter end. Retail brokerage revenue was $60 million in the quarter, up 7% from a year ago.

Commercial payments revenue was $256 million up 1% sequentially with growth in deposit fees partially offset by higher earnings credits. Capital markets fees were a $147 million down 5% as lower M&A advisory and loan syndication activity more than offset higher corporate bond fees.

Commercial banking revenue rose 2% to $128 million, on higher leads for marketing and syndication revenue, mortgage banking revenue was $47 million. Up $8 million as the prior quarter loss on net servicing valuation did not repeat in the third quarter.

Consumer banking revenue was $158 million down 2%. With 5 key categories each generating more than $500 million in annual run rate revenue, and each representing at least 10% of our total fees.

Our diversified fee engines kept total fees growing. Despite the 5% decrease in capital markets.

Now to expenses. The integration progress shows most clearly.

Adjusted noninterest expense was $1.82 billion down 2% sequentially. Driven by lower compensation and benefits expense, as synergies were realized.

Adjusted expenses exclude certain items listed on page 2 of our release, and the nonqualified deferred compensation mark to market. The adjusted efficiency ratio improved 250 basis points and we generated approximately 54 basis points of sequential positive operating leverage.

Remaining synergies will be realized from the system decommissioning, staffing changes, and branch consolidations that followed conversion weekend. in the 82 banking centers consolidated and will take effect in the fourth quarter.

Merger related charges recognized in noninterest expense. $215 million in the quarter, primarily associated with the systems conversion, and total approximately $1.1 billion year to date.

Consistent with our integration timeline. We continue to expect total merger related charges of approximately $1.3 billion with substantially all remaining charges anticipated in the fourth quarter.

On credit, performance remained in line with our expectations. Net charge offs were a $139 million or 31 basis points.

Up 1 basis point sequentially and at the low end of our 30 to 35 basis point range we guided to in July. Commercial net charge offs were 22 basis points, up 1 basis point, while consumer net charge offs improved 1 point to 52 basis points.

The NPL ratio increased 1 basis point to 59 basis points. The NPA ratio increased 4 basis points to 64 basis points, reflecting the impact of a $58 million increase in branch and other corporate real estate that were consolidated as part of the integration.

Excluding this merger related real estate impact, the NPA ratio was up 1 basis point. Early stage delinquencies improved with the 30 to 89 day balances down $21 million sequentially.

To 30 basis points. Driven by improvement in the commercial loan portfolio.

The allowance for credit losses was $3.1 billion or 1.74% of portfolio loans. Down 2 basis points sequentially.

Reflecting stable loss performance, and improvement in the commercial portfolio risk profile. The allowance covered nonperforming loans, 294%, nonperforming assets, 271%.

Provision expense was a $122 million compared with a 129 million in the second quarter we made no changes to our macroeconomic scenario ratings during the quarter. Our baseline and downside cases assume unemployment reaching 4.7% and 8.3%, respectively, in 2027.

Credit results are consistent with a disciplined and diversified portfolio construction Timothy described. We are focused on limiting exposures most sensitive to higher rates, and continue to grow in categories where we have long underwriting histories, and structural protections.

Our exposure to nondepository financial institutions, was 8% of total loans at quarter end. Concentrated in subscription and capital call facilities, corporate facilities to traditional financial institutions, and secured lending to mortgage related entities.

With private credit exposures representing less than 1% of total loans. Moving to capital.

CET1 ended the quarter at 10%, up 9 basis points. As earnings more than offset risk weighted asset growth of 1%, and the impact of $211 million of after tax charges related to the integration and other items.

That places us within our 10 to 10 and a half percent operating range. The increase in longer term interest rates impacted AOCI by $1.6 billion during the quarter.

Given the bullet locked out structure in the investment portfolio, which represents approximately 57% of fixed rate securities and available for sale, We have a high degree of certainty into the timing of the AOCI accretion back into capital, given the scheduled nature of the principal cash flows. Using the forward curve at the start of October, we project AOCI accretion to generate 27 basis points of marked CET1 and 4% growth in tangible book value per share, by year end 2027, before considering any future earnings contributions to capital.

We estimate our fully phased in Basel III capital ratio to be 9.2%. Given the speed and magnitude of rate increases during the quarter, we deferred restarting our share repurchase program.

Which delayed a small repurchase plan for September. Future share repurchase activity will be based on capital needed to support organic loan growth and overall industry capital levels.

In September, we raised the quarterly common dividend 5% to 42¢ per share. Our capital return priorities are unchanged.

Pay a strong dividend, support organic growth to deliver the best long term returns for our shareholders and then share repurchases. Moving to our outlook.

Timothy highlighted we grew across the combined footprint, and delivered returns ahead of the targets we set for 2027 in the third quarter. Those trends should continue in the fourth.

We expect average loan growth of 1% to 2% sequentially led by continued commercial loan growth, primarily in C&I and CRE. We expect net interest income to be up 2.5% to 3.5% sequentially driven by higher yields, on floating rate loans, a full quarter impact of the securities deployment, and continued fixed rate asset repricing, partially offset by higher deposit costs.

This outlook reflects the forward curve at the start of October, which assumes a 25 basis point rate hike in December. With the current rate outlook, we see fourth quarter net interest margin at or above the 43 level.

Adjusted noninterest income is expected to be up 2% to 4% reflecting seasonally strong capital markets activity and continued growth in wealth and commercial payments. We expect the remaining synergy realization to take adjusted noninterest expense down 2% to 3% partially offset by compensation associated with seasonal fee strength and occupancy expense growth associated with fourth quarter branch openings.

In total, our guide implies adjusted PPNR to grow 9% to 10% from the third quarter. It also places net interest income and the implied PPNR for the full year to be at the high end of the range we provided back in January for the combined company.

The fourth quarter is typically our best quarter for ROTCE and the efficiency ratio. Even after adjusting for normal seasonal strength, our guide delivers the 26 exit rate profitability at or better than the 19% ROTCE and 53% efficiency ratio we set at the deal announcement.

And on the timeline we committed to in January. As is our custom, we will provide our full 2027 outlook in January on the fourth quarter earnings call.

For credit, we expect net charge offs of 30 to 35 basis points in the fourth quarter. On capital, we expect CET1 to remain within our 10% to 10.5% operating range and we expect to repurchase $200 to $300 million of stock in the fourth quarter dependent on the strength of our organic loan growth.

The third quarter showed the profitability of the combined company. With the synergies not yet fully realized The fourth quarter brings the rest of the synergies into a business that already growing.

We exit 2026 as 1 bank. With the value of the Comerica combination no longer a projection, but a run rate, And with the organic growth momentum, that carries it from here.

With that, let me turn the call over to Matt to open it 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 1 question and 1 follow-up.

And then return to the queue if you have additional questions. Operator, please open the call for Q and A.

Hey. Good morning, guys.

Hey. America's new No.

1 JJ McCarthy fan, Ryan Nash. I am ready.

Thankfully, NBA season kicks off tomorrow. May.

Maybe just to kick off where Bryan had left off regarding, you know, the 2027 expectations of 53 efficiency in 19 ROTCE. Obviously, a lot of things have moved around.

I know that we will get an update in January, but maybe just broad strokes on how you are thinking about some of the key drivers, what is really changed since the initial guide came out. And also, just how we think about, you know, reinvestment in the versus letting maybe some of the upside hit the bottom line?

Thanks, guys.

Yeah. I mean, I think the adage in my household, Ryan, is good things come to those who wait.

So we are we are not gonna talk about 27, guidance today. But, Bryan, I have walked through a few of the moving parts in the script, and I am gonna let him talk a little bit about just the framework we are using to think through as we see revenue growth.

Based on sources and otherwise what it means for efficiency and reinvestment.

Yeah. Thanks, Timothy.

Hey, Ryan. The main thing I would tell you that has changed since the deal model is just the rate environment.

Obviously, you know, we have had them carried out a massive sensitive balance sheet that is benefiting quite a bit from the changing rate outlook. I.

you know, no 1 was anticipating a 100 plus basis points of hikes over the 24 month horizon post the deal when we close the deal. So certainly, that has been a big difference that is created a lot of earnings power for us as a company, which we are feel very good about, from a positioning perspective.

We have, you know, we have been able to deliver on the. In $150 million synergy target.

We have actually outperformed that a bit from a gross perspective. That number is really low 9 hundreds from a gross perspective, but we have used some reinvest back in the business, whether it is marketing expense to grow households or even just continuing to accelerate Salesforce hiring, in the newly expanded market.

Those are the main areas that we are looking at from a reinvestment perspective. From a longer term perspective, 53% efficiency is where we want to run the company.

We think that is a good prudent place and a gonna allow us to deliver those 19% ROTCEs that we have been talking about. But we also recognize that we do want to continue to invest in growth.

And we are gonna do that in a very, very prudent way. But when you see the kind of rate environment changes we have seen, there is never.

you know, we are not gonna have the ability to invest as quickly, as you may like with those changing rate environment changes. So for.

There is an opportunity for us to outperform that 53% sum in the near term. Gotcha.

And then Agreed. Timothy, hello.

Go for it.

No. I just was saying agreed.

On everything Bryan said.

Gotcha. you guys had really successful deposit growth this quarter.

Maybe just unpack some of the growth, how much is due to the campaigns you have been running across the So markets? And now that the conversion is behind you, how do you think this changes the curve in terms of deposit gathering?

Yeah. Good 1.

I said I said it is fun right now to spend time thinking about the deposit franchise. I.

The old adage here at Fifth Third was loans are for show, deposits are for dough. Right?

We went through a period where the. Both in terms of the shape of the curve and absolute levels of interest rates, Loans were show and dope.

But we are back to a place where I think the ability to grow high quality, low cost is gonna be, like, the determinant of your ability to generate really strong returns in an environment where you know, as they. I.

If the economy continues to clip along at you know, 6, 7% nominal GDP, we should have pretty good loan growth across the board. And the composition of deposits at Fifth Third is so radically different today, than what it was previously.

Mike, if you look at the breakdown now, the balances are, like, 50% Midwest, 25% coming from the high growth So and So. Markets, and then 25% national, whether that is corporate banking or deposits we are able to source via our fintech platforms.

Provide and otherwise. As Bryan referenced in his remarks, about 45% of the deposit growth in quarter was the decision we made to move Comerica sweep deposits back on balance sheet.

I do expect that some of those deposits may go back into you know, other forms of liquidity now that we are through the conversion. And things are stable.

But we also had some more modern hybrid account structures that I think will be appealing to some of those clients. I.

The unique thing now is gonna be where the growth comes from forward. Right?

I think we have seen in the last couple of quarters folks have varying degrees of success in driving the growth. And our view is if you are going to get low cost deposits, it has to come from some structural investment that accumulates over time.

And whether that is the continued power of the build out of the So which we have talked about as a. In excess of a $10 billion incremental opportunity.

Or the $10 billion opportunity we think exists in Texas To anything, I think we are probably more emboldened on given the early success that we have had here. Or the success that we continue to have driving operating accounts and small business and from commercial payments, and then now the innovation banking platform, which is at a minimum a $10 billion opportunity in the next handful of years.

Those are gonna be the places that we go to find the incremental growth. Thanks and send my best to Dex and Lawrence.

you got it.

Welcome back. Good morning, guys.

Hey. Thank you.

I appreciate that. Thank you very much.

So I guess, you know, now that the cost savings look increasingly like a lock I think the market's focus sort of begins to shift more visibly to the revenue side. you know, you have had I guess, the benefit of even more time since the close and conversion.

Maybe if you could speak sort of broadly about how you are feeling about the revenue synergies you guys have articulated in the past. And as you sort of think about timing and magnitude, which of these at this point feel like sort of the easiest pickings, which could take more time to marinate or require more investment, etcetera?

Yeah. Done.

Bryan and I were commenting this morning, Scott, that 1 of the fun things about this acquisition is, like, pretty much everywhere where we thought there was opportunity. We are finding opportunities.

So I. What I think we have said from the outset was the revenue synergies that we could get out with structural levers were gonna be the ones that would materialize the fastest.

The stuff that involved either teaching people new products and services or building new connectivity inside the company would be the sort of intermediate and then the stuff that required you know, at the investment in physical plants, like the branches would be what took us the longest. that is more or less how it is playing out.

Mike, you know, that obviously, the success we had with the deposit campaigns in the second quarter and carrying over to the beginning of the third quarter. Is evidence of the ability for us to deploy the tactics that we have utilized to drive consumer deposit growth through Comerica's So markets.

And I only anticipate that will get better as we get now a checking account. And marketing online with the technology conversion.

Behind us. So quite excited about our ability to even grow faster than the 8% household growth that we generated in the Southeast in the third quarter.

I am sorry, Southeast and the Southwest in the third quarter. And second structural lever was just balance sheet capacity as we talked about for commercial lending.

So when we announced the acquisition, the big question we got was would we be able to maintain Fifth Third's prior pace of growth? I think CMI growth last year annualized out to something on the order.

I would in the third quarter last year, like 4, 4.5% for Fifth Third. Was 4.7% in the third quarter this year.

So asked and answered in terms of our ability to get that Comerica's specialty verticals, and markets running at the pace of growth that Fifth Third legacy. Was doing.

And I think there should be more upside from there, you know, as we add bankers. We actually have more bankers in Texas today than we did in February 1st, when the deal closed.

Just as, as an example. And that is just now.

We are just now scratching the surface on our ability to utilize the ABL products, the leasing products. So the other things that third had in the specialty lending categories through Comerica's markets.

Lastly then, I think, wealth. Really nice early progress there.

I. We expected wealth to materialize a little more slowly because we have to repaper all of those clients.

And, typically, you gotta get through a conversion before you can do a lot of deepening. But we have already seen about a $100 million in new AUM added from Comerica private banking clients and a $100 million in mandates, for our institutional business.

From commercial clients who are moving retirement plans and pensions over onto these new platforms. So very excited about the energy that, you know, now that we are through conversion, and that we can focus on new business and not just taking care of existing client relationships.

About what we are gonna be able to do.

Perfect. Thank you for that.

And then and, Bryan, you know, appreciate the fourth quarter repurchase commentary, and I know how you think about capital management sort of thematically from your from your remarks. But you know, as I think about things, there is just gonna be so much capital creation over know, especially the coming year.

Even if you. As.

Or as you reinvest, there should still be a lot of excess developed over time. Any thoughts to maybe help kinda narrow the cone of potential magnitude as we look out a few quarters?

Thanks, Scott. I think I think you are right.

The profitability of the company is driving a lot of capital creation every quarter. I mean, rough math is north of $1 billion a quarter just from earnings to the company, about 45 basis points, on average.

Think about a third of that goes into the dividend. So that is still 30 basis points of capital, every quarter then to support growth of share repurchases.

And you think a normal growth rate, we talk a lot about high single digit, normal GDP plus a point or 2 from a growth perspective. that is only, you know, 250, $405 billion of capital.

From a retention perspective, which leaves 3 to $500 million a quarter available for share repurchases if we wanna. If we were wanting to execute that.

So there is a lot of optionality on that. And even with the higher rates, yes, the higher rates has an impact on AOCI, it also helps us generate more income and more profitability over that same horizon.

So we have got a lot of capital flexibility from here. As we continue to navigate this environment.

Yeah.

Perfect. Alright.

Thank you for that color. Appreciate it.

Thanks, Scott.

Hey, Manan. Good morning, all.

Hey. Good morning.

Timothy, a lot of conversation and debate through the quarter on the potential risk to deposit from AI driven cash optimization tools. I was wondering if you can give your perspective on what that could mean for the banking and how, Fifth Third might choose to respond over time.

Yeah. Sure.

We maybe make a broad comment. I will.

I just. I will give you some data on we see because I think there is more sorting that goes on in the banking sector today than, you know, people maybe broadly appreciate.

My own view on this 1 is that this is the right question to ask. Mike, every time you have a new technology platform, that either reduces friction or increases transparency.

you should be asking the question, about what that means for margins. I just think that you are asking it about the wrong companies.

Mike, what the. What history has shown us over and over again is that the groups that are most exposed to this sort of change are the ones that have nothing but pricing defining their value propositions.

Which can, I think, in our world, in the case of deposits, would mean the online only banks who have to lead with rate or who do not have any distribution? And therefore have to buy liquidity through aggregators.

Or the wealth platforms that are, you know, pricing sweep deposits at inferior yields to market rates. you know, where there are equivalents and not the folks who have either distribution or product advantages or relationship advantages as I certainly believe you know, that we do.

Because those are the things that justify incremental margins. you know, it is just.

it is the sweep deposits of the world, the online only deposits are gonna go from being low margin products to even lower margin products. And I think for the rest of us, there is enough interplay here whether it is proprietary, Mike, we have been building across the So and the So through the direct marketing capabilities we have.

And then the unique value that is embedded in the product themselves or in broader relationship pricing on both the consumer and the commercial side of the equation. So our estimate is that something on the order of 2 and a billion dollars of deposits on our platform are sorted every month.

K? Melissa.

Meaning, they either move from a, you know, a paycheck that comes into a deposit account or out of the equities markets into cash. Or come off of promotional pricing, or a.

In a MMDA or move out of a CD product. And then move somewhere else.

K? In our case, we have been successful in retaining about 80% of those deposits.

90% of that tends to go back into a deposit. About 10% of it gets a liquidity portal, either on the consumer or the commercial side of the equation.

Or goes into an investment. Account.

So the mechanisms that need to be in place to ensure that money that is there for investment and it rests versus money that is in motion, like, basically, money that is on a layover. In a checking account because it came in through a paycheck and then it is gonna move out.

In the next 2 to 4 weeks in the form of some sort of expenses. Settles in the accounts, you know, where it should settle.

I. The advantage banks like us who have, these branch networks and the checking led proposition on the consumer side of the equation, and then a heavily operational commercial deposit base led by all the stuff that we do in commercial payments, is that the money is operational.

It needs to be here. The median checking account at the third is, like, $3.1 thousand.

Right? So they.

there is just not a lot of value, you know, there. I think the last point I just wanna make sure that, you know, I make it.

it is like, every time you have a new platform like this, the battle for a market comes down to whether incumbents get the innovation faster than the insurgents get distribution. I think that is an old and recent Horowitz line.

it is definitely not mine. But we are gonna take every valuable service that you can get done on use.

Whether that is looking at subscriptions and finding opportunities to generate savings, or budgeting or otherwise. And we are all gonna build them into our apps.

Mike, the. And the benefit you will get then is, you know, investment grade or bank grade information security.

As a perimeter. And know blending you know, between the information that you.

Exists in your financial graph. We, you know, with the information that exists in your social graph, which today is by basically selling you to third parties for ad purposes.

And otherwise. And I just think that incumbents have a lot of leverage here.

Provided that we respond.

that is that is great color. I really appreciate entire response.

Bryan, may. Maybe to switch over to the other side.

I think you noted that loan pipe pipelines are at record levels right now. Are you seeing any impact from higher rates at all?

Is that part of the conversations? Are there any projects that clients are pulling back on in the high rate environment?

Or, you know, on the flip side, are you reducing your appetite to lend in any specific industries or for any projects?

Yeah. I mean, clients are still very, very productive in their conversations right now.

you know, certainly, as people talk about high rates, it influences how they think about the world. But I think in general, the feedback that we are hearing overwhelmingly is that it is still a growing economy.

And high rates are not the meaningful, driver of from here. it is like they need investment because they are worried about continued inflation and input costs and things where they know they need to make this investment they wanna go ahead and get it done.

Another 50 to a 100 basis points on rates does not impact their view. They do worry about demand from here if there were a broader slowdown because of rates.

But in general, most of our clients are saying that they are gonna continue to move forward with, investments. The things that we are focused on right now, clearly, consumer discretionary is a category that we are paying a lot of attention to.

Between the combination of the rate environment and continued inflation. And anything that we think is interest rate sensitive, we are paying particular attention to.

We have continued to be very on leverage lending. Our leverage portfolio continues to be a very small, portion of our balance sheet at about 2%.

that is not an area that we have been looking to grow. And we just think that there is areas where, the unproven asset classes or continuing to be very cautious around.

So in general, most of the core middle market banking that we have been doing and the industry specialties where we have real expertise we are seeing a lot of opportunity at, and that is the spot where we are gonna continue to lean into.

Perfect. Thank you.

Hey. Thank you.

So maybe first question, Bryan, just wanted to hit him. Just wanted to circle back.

I think you mentioned the efficiency ratio long term still 53%. Seems like a number you like with the balance between investments.

And efficiency is kind of what management is targeting could be lower in the near term. But 1, just wanna make sure I heard that right.

But maybe bigger picture, just about areas of investment spend. And when we think about AI you are adding scale and density.

Should we expect the bank to be incrementally more efficient? Either you look at it unit cost economics or medium term efficiency ratio, would that be headed towards a 50%?

Or is that just unreasonable given the investment spend that you have ahead? Thanks.

Yeah. I think you know, certainly, there is going to be opportunity to leverage AI.

To get the company more efficient over time. That is something that I think is a little bit longer term out.

And, you know, obviously, if. That is the you know, the big question as we are sitting here talking about news and the impact on deposit cost.

you know, AI is so effective that it actually gives you the ability from a cost effective perspective to optimize low balance deposit accounts. it is gonna create a lot of for us to get efficiency in how we operate as a company.

So those are all the trade offs we are thinking about from a longer term perspective. And, you know, as cost structures change and those opportunities come, we will take advantage of it.

But it does take near term investment. To get there.

Near term investment and compete compute capacity and infrastructure associated, with deployment of AI. I would tell you that from a near term perspective, when we talk about investing, it is a continuation of the strategies that you have heard us talk about for a long time.

it is investment in retail distribution and marketing to grow households. it is investment in middle market bankers and product partners and capital markets, and treasury management, and wealth, and its investment in product, and product from a consumer banking perspective, continuing to advance our, momentum banking consumer product as well as continuing to invest in our payments business.

that is such an incredible portion driver of future growth for us, both from a deposit and operational deposit perspective, well as fees. And so those are the near term places that we are looking at.

That keep us in that kind of 53% range. But certainly, as technology and other structural investments change, it does give us an to continue to evolve our expense base.

Yeah. If I can just put a point on a couple of things there.

you touched on it and, admittedly, I have not done this analysis in a while. But historically, average deposits per branch were basically the 1 metric that positively correlated with the efficiency ratio.

Agreement was never scale. you know, again, at least to some for some of the oddities that are out there in terms of business mix.

So as we get more dense, you should expect the existing business to continue to improve its efficiency. The question is just always where you get the leverage on the marginal dollar.

Mike, are we better off where we are positioned at this level of profitability trying to grind out a little bit more in the way of return? Are we better off trying to compound tangible book value per share?

And we have done that math recently. And we just are of the belief that sustaining peer leading returns and driving up TVB per share growth is a more powerful lever for long term investors.

Than trying to go from peer leading returns to even more peer leading position.

Got it. And maybe just sticking with sort of density deposits per branch, So, Comerica seems to have gone relatively smoothly.

you have a playbook on bank M&A. As we think about the next 6, 12 months, like, how do you think about potential opportunities that could accelerate some of what you plan to achieve through De Novo branch openings?

Via an acquisition.

Yeah. I thought we might get that 1.

So I spent some time staring at the data that comes out of my Oura Ring this morning. And it says I am still operating with a moderately high sleep deficit.

So I think from Fifth Third's perspective, we gotta get back into balance you know, on sleep deficit and otherwise. you know, before we would look at anything.

Else. I we have a lot of opportunity in front of us organically.

I think the playbook has worked well, but part of the reason that the playbooks worked well is because we had discipline in terms of what we elected to do. And then we committed ourselves to getting it done entirely.

Before we got distracted with the next thing. And, you know, that ethos is just an ethos here.

Whether it is organic investment or inorganic investment.

Right. That accuracy of the Oura Ring is as you might be sleeping better than you think.

Thank you.

Well, I still wanna see a crown before I get too excited about anything.

All good. Thank you.

Yeah. Thank you.

Hi, Timothy.

I am Brad.

Hey, Gerard,

Morning. Morning.

Question for you both. On the investment portfolio, you folks have about 70% in available-for-sale and 30% in held-to-maturity.

And when we think about Basel III endgame when it is finalized, we all know about the AOCI being included in CET 1. Can you guys give us some thoughts on how you might change that mix over the next couple of years to manage the AOCI volatility?

Yes. Hey, Gerard, Thanks.

Greg question. There is no doubt as the capital rules are finalized, we will be using more HTM as part of our investment portfolio.

The thing that we have been cautious around is. Has honestly been waiting for the final liquidity rules.

Because we wanted to make sure that we were not making this decision without understanding if there were gonna be limits on the amount of HTM securities that would qualify as liquidity. But I think it is fair to say that as long as there is nothing meaningfully unexpected in those rules that we are probably gonna be operating at a closer 50.

Split between AFS and HCM going forward. So we do think as we continue to invest cash flows over the next couple of years, you are going to see that mix continue to head into the HCM direction.

And what from a broader balance sheet perspective and what will happen is the AFS portfolio will manage with a slightly lower duration than the HCM portfolio. And that in general, our balance sheet has needed a security portfolio with a 4- to 5-year duration And so we will try to blend that with a little bit longer duration stuff in HTM now.

and manage that capital volatility risk.

Very good. Thank you, Bryan.

Timothy, I might regret asking this question, especially for somebody like me. Credit quality for you folks and your peers is very good.

it is been very resilient. Maybe surprisingly so, for all of us to see.

And here's maybe the regrettable question. Has the credit picture for the industry and you guys specifically changed in the sense that either you are better underwriters or more conservative underwriters.

We know what is happened post financial crisis with the derisking of the industry. Is it just the economic environment is much better than we all thought?

And do not get over your skis to think that, you know, the banking industry is smarter now on credit.

I think that is the first time I have ever gotten a question where the app expressed regret twice. We got to the end of it.

Listen. I think there are a few things that are that are going on here.

I. there is no question that coming out of the financial crisis, there was a huge investment made inside the banking sector.

To get smarter on credit. And in particular, I think to get smarter on early warning signals.

I. Certainly, that is the case here at Fifth Third.

there is an apparatus around early warning that supports the continuous monitoring that we do in commercial there is a lot more behavioral data utilized in the underwriting process, in consumer and then in small business and otherwise, which has proven to be you know, very useful. As a compliment to, you know, conventional scored.

Underwriting. And so I think we have gotten better.

I. Clearly, the.

Some of the risk has migrated out of the banking system just given the growth in the NDFI. World.

Now that obviously has come back in through back leverage and otherwise, but with enhancements that did not exist. Previously.

So I do think that the higher leverage points the more rate sensitive borrowers and otherwise are you know, more prominently supported by non banks today than certainly they were in the past. So those things are good.

That said, like, I you know this better than I do. The history is that the big credit cycles are not driven by the sort of normal economic cycle in mature industries.

They are driven by relatively not well understood high growth asset classes. Or new channels that turn out to drive negative select.

you know, or otherwise. So while I think we are better, at the stuff we have always known, I.

As you know, we tend to be a little bit more reticent to dip our toe into areas of the credit markets that are, you know, not proven or where it is it is hard for us to see that they are being accurately priced. Mike, that is the reason that we have essentially sat out the you know, data center construction lending to the data center sponsors It is the reason that, you know, I think we have the lowest exposure combined that.

With our combined balance sheet. To private credit and BDCs.

you know, relative to the others. It may well be that we were you know, wrong there to be worried about credit and right to be worried about just being priced appropriately.

But I. In my mind, those are 2 sides of the same coin.

So, yes, I think we are better. And new risks will continue to materialize as long as human beings are continuing to find you know, new ways to take risk.

Very good. Well said.

Thank you, Timothy.

Thank you.

Oh, great. Good morning, everyone.

Timothy, in the past, you have talked you have talked about the Midwest being 1 of the more competitive markets, whereas I think some of your peers have talked about the Southeast. You gave an interesting stat in your prepared remarks.

I think it was the So was, I think, a little over 200 basis points The pricing was a little bit 200 below the Fed funds. Do you have those same stats by market?

Mike, I guess what I am after is deposit. I deposit costs by your 3 big markets?

Thanks.

Yeah. Yeah.

Hey, Chris. it is Bryan.

Know, what I would tell you on that front is you have to be careful when you look at those numbers because the seasoning of the book matters as well. And so what you are gonna see is that the Midwest market is our highest margin market because it has the oldest book.

And part of that is the legacy checking accounts in particular or just higher balance on average. The Southeast has a higher percentage of promotional offers then as a percentage of the deposit book.

And even with that, you still have 200 basis points of spread relative to the Fed funds rate. And then the So book, will have the absolute highest rate of promotional offers as a percentage of their book So it will have the lowest margins right now, relative to that In general, I do not have the exact numbers in front of me for the Midwest and the So, but I would I would expect that the Midwest at this point is probably about 50 basis points better.

Than the So. And the So is going to be, probably 50 to 100 basis points worse.

But it is it is just a function of the percentage of promo offers as a percentage of the aggregate deposit book.

It. And then the measure of competition in my in my mind is not, but sort of, like, what is the price on the season portfolio?

it is what does it cost to grow the marginal deposit in each of those markets. So when we talk about the Midwest being more competitive, it is at the margin if you wanted to grow another dollar of deposits.

It is tougher to do it. Just when you look at the promotional offers that are in the market, in the Midwest than it is in the Southeast today.

I think the other dynamic that is worth mentioning is that, more consolidated market structures tend to be less competitive in terms of the bleeding edge offer, the less consolidated market structures. And the So and the So have both historically been more consolidated market structures.

Than you see in the Midwest, which is part of the other reason you know, that work think, quite optimistic about our ability to continue to gain share. In both of those places.

And to, you know, that frankly that the tactics that have worked so well over the past several years in the So are portable to the So. Just 1 simple statistic, 4 out of the 5 largest banks by market share in Dallas as an example, do not offer a totally free checking product.

Right? And that is, I think, 4 out of the 5 the largest banks by market share in literally every Midwest market.

Would have a totally free checking product.

Okay. it is interesting.

Thank you for that. And then a comment or an update on DirectXpress.

Post conversion. Thanks.

Yeah. I.

Thank you. Good progress.

There. As you will remember, we launched our new platform in the.

At the beginning of the second quarter. Every 1 of the participating agencies inside the federal government is issuing cards.

On that platform. And we got through the period of hyper care that we always run when we launch a new product.

And we are very pleased with the outcomes. you can see it just in the.

Whether it is the digital channel usage or, Direct Express customers taking advantage of some of the functionality that is built into the mobile app. To support things like paying rent, and otherwise.

We also made some changes to policies whether it was ATM or in the branches to enable Direct Express customers to do things more easily than they were able to do. At Comerica, and then that is a huge benefit associated with just having a you know, a broader branch network in terms of the way that we service those folks.

We anticipate initiating the full conversion of the legacy program this winter moving into next. Spring.

So, there is lots of work underway to ensure that is a seamless transition. This is just by definition.

A population that tends to need a little bit more hand holding and therefore we have been very concerned about executing the conversion in a way that produces the least disruptive. Disruption for our clients.

But fiscal inside the US Treasury has been a wonderful partner here. We are very excited about the platform that Fifth Third and Fiserv offer.

To be able to, you know, turn this program really from a funds disbursement model for the federal government into a tool for financial health. For the population that it serves.

So. Okay.

That business continues to plug away We continue to see it as a nice growth engine the company.

Greg. Thank you very much.

Thank you.

Hi. My general question is simply for more granularity on what is taking place in Texas.

you said you have added bankers, but deposit costs are 50 to 100 basis points more. So it seems like some crosscurrents there.

So my long shot question is it seems like your return on assets firm wide, it is 1.4 it is probably a lot less for the So. What is it in the So or Texas and what sort of gap is there?

And I am not expecting an answer, but I thought I would try since you are a line of business company. So an easier question if you cannot answer that.

you know, what time frame were you referring to? you said So deposits were up 23%.

How households were up 8%, Dallas, Houston, Austin deposits are up over 20%. Is that year over year?

And if you can just give some of those types of metrics for loans, businesses, and anything else. Thank you.

Yeah. Sure.

Let me start on that, Mike, and I will try to answer both of your questions. And then we will we will transition.

So the ROAs in the business are best in markets where we have a really strong middle market commercial banking franchise. That is essentially self funded or even a net liquidity provider back to the bank.

With low cost sort of checking incurred consumer deposits. So we have a very nice middle market business in Texas through the combination of the sort of legacy Comerica which was a very strong you know, sort of top 5 market position in core middle market in its Texas markets.

And then the expansion market that Fifth Third had built there. What we do not have yet is the retail deposit funding base that we will have as we build out the branch network.

So I. you know, I.

The branches in Texas, like, the average branch deposits consumer small business are, I think, a little bit less than half what we would have in our Midwest markets just as a point of comparison. And about in line with what we have in the Southwest.

Despite all the branches in Texas being seasoned already. And very few of the branches in the Southwest.

As a percentage of the total being seasoned and still seasoning on their own. So we expect the ROAs in Texas to go up from here not to go down as we are doing the construction and as we continue to add talent in the market.

So as it pertains to the statistics that I provided on retail small business, it is year over year pro form a. So we added Fifth Third and Comerica together, which in, you know, retail in Texas was Comerica something fifth or nothing a year ago, and then the combined company today.

And then we cap the individual branches at 250 million to get the headquarter and wholesale deposits. Out.

And the 20%, the greater than 20% growth rates across the 4 MSAs that you mentioned are year over year. They would also be greater than 20% if you cap the branches at $500 million So the.

It. there is no game playing there.

it is just you have to draw the line somewhere. So we did.

The 8% household growth is year over year household. So it is Comerica, households a year ago.

it is Comerica plus the new households we have been able to generate across the So. This year.

And I anticipate that the growth rate there should be double digit. Because that is what we have demonstrated repeatedly.

We are able to do in markets where we are adding to the branch footprint, where we are adding direct marketing support. Mike, we got a 8% with no checking marketing.

you know, across the Southwest. In terms of where we are going.

No. I think the 1 other, like, staff that you did not but that I will give you is that.

We have added I think, something on the order of 80 or 85 middle market relationships. In Texas this year from February 1st forward.

that is a pretty good clip. you know, for us down there, and it is a faster clip.

it is about at 2x the pace, per middle market banker that Comerica was adding them in the last few years. So you can see the acceleration there from both the impact of the combined teams and the additional balance sheet capacity and the new solutions that we are bringing to the market.

And that 80 to 85 middle market is off to what sort of base? Is that kinda small, or is that meaningful?

it is meaningful growth. I do not have the total number off the top of my head here, but we will be happy to share that.

And then just when you say 2x faster per banker, in that footprint, I mean, how does that happen? I mean, because you have more balance sheet, because you told them to work harder, you have more accountability.

I mean, it is hard to just flip the switch and make that happen. So what did you-- what are you doing differently that is helping them?

Yeah. It.

I mean, what you hear when you talk to the bankers is they have more attachment points. So when you are in the markets and you talk to Comerica, like, seasoned Comerica bankers as we were actually across the Southwest.

Over the course of the last couple of months. The anchor products Comerica had to lead with were C and I lending or maybe a personal loan through the private bank to the owner of the business historically.

The average C&I loan tenure most banks is like 18 or 19 years just when you look at the average length of a relationships. you have to wait a long time if that is the only attachment point you have.

Whereas at Fifth Third is we have talked about in the past, C&I remains the primary attachment point in the middle market. But our folks lead with lease lines through the equipment leasing.

Platform. They lead with hedges like commodity hedges.

you know, or currencies. Through our capital markets platform.

And then they have the commercial payments business which is. I think we have shared repeatedly adds almost 1 new relationship that is payment led.

For every relationship that it adds that is attached to a new C&I facility on an annual basis. What you hear from the bankers is they just have more arrows in the quiver.

And if they cannot move, you know, the working capital line, that there is a lot of other things that they can do to initiate new relationships with clients. So that is part of it.

I think the other big part of it as we have talked about it in the past, is Comerica was going out of its way to ensure that the liquidity and the capital that were available to support lending principally supported the growth of existing relationships which is absolutely the right thing to do. If that is a constraint.

In our case, we have a larger balance sheet. That we.

As evidenced by the sequential growth during the quarter even when you strip out the incremental deposits that came from moving Comerica's suite product on balance sheet. We have ample liquidity to support more lending activity.

And therefore, it is allowed them to be more front footed. In terms of what they can add.

To grow.

Alright. Thank you.

Thank you.

Good morning. Just wanted to clarify, Bryan, your response to Ryan's question, like, an hour ago.

Did you say when the rate the rate environment changed a lot since the deal, so you do not have the ability to invest as quickly Did you say it gives you a better chance to outperform the 53% efficiency, or it is tougher to outperform the 53%. I just wanted to make sure we got that right.

Yeah. Yeah.

it is it is a. It gives you a better chance to outperform because the idea is that with the assets since it generates profitability at a clip when rate changes happen and it pays faster than we typically plan and deploy investments.

you think about the sales hiring and the branch builds, like, those are multiyear strategies that we are executing. So from a near term perspective, it is gonna give us an opportunity to outperform the deal targets.

Got it. Thank you.

I am glad I clarified that. And just as a follow-up, you know, obviously, especially after Comerica, your balance sheet is more short rate sensitive.

But there is also movements in the, you know, in the portfolio. you talked about, you know, taking down FHLB.

you know, you also, you know, brought on a bunch of off balance sheet deposits that may come back off. As we think about the forward curve, and we think about maybe the 10 year not come.

Going you know, hopefully not testing 3, anymore. How should we think about the net interest margin trajectory from that 3.40-plus exit rate in 4 q, assuming the forward curve.

Yeah. I mean, it is a you know, obviously, we are positioned to be benefiting from continued rate increases, but there is a lot of big questions.

Further out, just in terms of what the loan environment and the deposit environment looks like in 2027, and we will give you a. We will give you more clarity on that.

At the beginning of next year when we get full guidance.

But statically, it sounds like it should be a net positive, assuming no changes in mix and modest growth? Yeah.

I mean, all else being equal, the rate environment is beneficial. And we have obviously continued to generate fixed rate asset repricing.

The opportunity on that 4 or 5 billion a quarter of repricing that occurs is actually gotten better again closer to a 100 basis points. We are sensitive to the front end so the higher rate outlook is beneficial to us.

The wildcard on all these things is just where it is deposit competition over time, but certainly a very productive environment with what we are seeing right now.

Okay. Greg.

Thank you so much.

Thank you.

Hey, John.

I will try to be quick. Just on the.

Related to the last question. Maybe just to another way to go at it with the deposit side.

I mean, can you just help us with the trajectory of your expected trend in deposit costs here into fourth quarter? And into 2027?

And what beta are you assuming in the up rate environment? it is a could that differ from the downgrade data or previous upgrade betas that you are seeing now that you have got the Comerica balance sheet on board?

Thanks.

Yeah. you know, the beta is on right now from a near term perspective is a mid fifties beta.

For just a hike or 2. Certainly, that if you were to see more persistent hikes, that could start to drift up a little bit.

And you see this in, as Timothy was referencing earlier, the overall deposit cost, new money cost in the consumer business. That used to be a Fed funds plus 15 ish, from a promo perspective.

That has a couple quarters, shifted up closer to a Fed funds plus 50. Now part of that is just the outlook from a rate perspective.

And when we talk about the relative competitiveness of markets, it is that Fed funds plus 50 number that we are focused on when we say the Midwest is more competitive. you are typically in a plus or minus 10 or 15 basis point range across markets on that new market, but new money pricing.

If we were to see a lower expectation of hikes, if we are only to get 1 or 2 more, I think you are gonna see that start to because, certainly, people are acting at far rates. With that, new money continues to come on that rate, I think you would see a continued deposit cost migration.

That looks similar to our migration that you saw from Q2 to Q3, excluding the impact of the on bal. The off balance sheet sweeps that we brought on balance sheet, because we do intend to continue to keep growing deposits, but we will also be able to do some things to reprice some of the prior vintages of promos to offset some of that cost.

it is that same strategy that we have used. Continuously on reinvesting interest expense, recycling it, in different areas to allow us to continue to grow.

And even with that, where we price things down, we are still keeping in the range of 80 of balances, somehow in the framework of our company, either between deposit book or in some of our off balance sheet investment products. So we do retain a fair amount of dollars even after we reprice those balances down.

Got it. Okay.

Thanks, Bryan. Then lastly, on the on the credit side, I know you cited certain areas that you are watching more closely, consumer discretionary, leveraged lending, Are there any areas that you are seeing stress start to evolve?

We got a couple of the banks this quarter. I am gonna have a couple of lumps.

And so are you seeing anything on that front of them, the ACL ratio declined a bit this quarter, a couple of bps. How should we think about the reserve level?

Thanks.

Yeah. Not really in terms of any areas You know, as you mentioned the areas of the economy where there have been transition consumer discretionary is 1, and you just.

you see the value position brands and the luxury brands doing better than the sort of, you know, middle-of-the-market brands in discretionary at the moment. In terms of what is going on.

We were watching commodity pricing exposed categories really closely. But the margin compression this last quarter was like 1.4% in terms of their operating margins.

In our portfolios as we got new financials in. So they have done a very nice job of positioning themselves either to be less sensitive to the movement in commodities prices or be able to push price along.

To their own customers. Rate sensitive borrowers, in particular, the ones that are, you know, reaching a refinance.

Wall are always places that we look. That tends to be real estate and leverage lending.

there is just not a lot in our leverage loan book, so there is not a lot to watch in that particular case, although we always watch it. Closely.

And then on the real estate front, I mean, you can see it in our performance this quarter and you get the stratifications there. Think that we feel pretty good about what is going on that front.

But those are gonna continue to be the areas that we watch. Is there a factor that can drive a shift in demand Is there volatility in input costs?

Or do you have a scenario where that service costs become challenging for clients. Those are the things that would anticipate credit stress in the portfolio.

there is just not a lot of that going on really anywhere in the industry as you as you referenced.

Greg. Thanks, Timothy.

Yep.

Thank you, Alexandra, and thanks, everyone, for your interest in Fifth Third. Please contact the Investor Relations department if you have any follow-up questions.