Fifth Third Bancorp (FITB) Earnings Call Transcript & Summary

Hello. This is Jason Goldberg, and I cover the U.S. large-cap bank stocks here at Barclays. Welcome to the third and final day of our 19th Annual Global Financial Services Conference. We got a very strong lineup today. This morning, we have 3 high-performing super regional banks in Fifth Third, Truist and M&T. We also have several topical panels throughout the morning on a lot of topics that are of interest to investors at the moment. We also have a full day fintech track looking at some private companies that could impact the financial services landscape going forward. We're very pleased to kick off the day with Fifth Third Financial. From the company, we have Tim Spence, its President; and Jamie Leonard, its Chief Financial Officer. Tim, take it away.

Thanks, Jason. It's good to see you again. It feels like a lifetime ago that we were sitting around the table at the Barclays Payments Conference in New York several years back. And good morning, everyone. I hope you're doing well. As Jason mentioned, this morning I am joined by our CFO, Jamie Leonard, and we're looking forward to discussing Fifth Third's strategic priorities. I will start on Page 3 of our presentation. At Fifth Third, it all starts with purpose. Our purpose is to improve the lives of our customers and the well-being of our communities because a bank can only be successful over the long term if our customers and our communities thrive. Slide 4 illustrates how we live our purpose through our actions and our choices. The left side of the page highlights some of our achievements. And the right side provides third-party validation of the impact that we are having. For example, earlier this year, we were once again named one of the world's most ethical companies by Ethisphere, reflecting our strong corporate culture, compliance program and ESG actions. We were one of only 5 banks among the 25,000 in the world to receive this accolade. We were also honored to be recognized as the #1 bank in the country for our response to COVID-19 by a leading third-party customer research study. This reflects several actions we took during the pandemic. We made more than 3 million welfare calls in the first weeks following the lockdown and successfully kept over 99% of our branches open throughout the last 18 months. This is critical because the individuals and small businesses most impacted by the pandemic are also the most likely to need support from a branch. We also worked closely with our customers to support them during these challenging times through the PPP program, hardship relief programs and other outreach efforts. Lastly, we were also recently recognized by Forbes as one of America's Best Employers for both diversity and new graduates entering the labor force. As a leader in environmental sustainability, we understand that our impact is not just limited to our own operations, but also risks and opportunities for our customers. We recently appointed a head of climate risk, who will focus on identifying, measuring and managing the physical and transition risks our clients face. We are also well ahead of schedule with respect to our $8 billion sustainable financing goal and continue to focus on additional opportunities to help our clients transition to a low-carbon economy. On Slide 5, let's turn to our financial performance. 5 years ago, we articulated 4 strategic priorities aimed at delivering strong and consistent financial results through the cycle. These priorities, supported by specific actions and a long-standing culture of accountability, have resulted in Fifth Third, moving from the bottom third to the top 1/3 in our peer group in both client growth and profitability while maintaining credit quality metrics that are at or better than pure median. We expect consistency and sustained performance in how we execute against these priorities. One example of this is household growth, where we have generated strong and peer-leading performance for several years now. We have outpaced the U.S. average by over 5x organically during the period of time that saw the emergence of the fintech Neobanks and while many peers have been flat or down on the same measure according to syndicated industry research. One critical ingredient of our success has been sustained improvement in customer satisfaction scores, where we now consistently rank in the top quartile in both retail and commercial business lines. Additionally, our continuous discipline around reengineering our expense base has enabled us to drive down our efficiency ratio while also creating capacity to invest in our digital transformation. I'm also pleased with our fee income performance where we have produced sustained growth despite a multiyear effort to reduce our reliance on consumer deposit fees. We now have the lowest concentration of overdrafts as a percentage of total fees among peers who have significant consumer banking operations. Our 4 priorities remain especially relevant in the current environment as we build upon our foundation and continue to drive the company forward. Personally, I couldn't be more excited about the opportunities in front of us. Turning to Slide 6. We continue to leverage technology to improve our resiliency and better serve our customers. We've heavily invested to modernize our data infrastructure and platforms including the recent announcement that we are expanding our partnership with FIS to migrate our core deposit and wealth systems to the cloud. Combining this agreement with the renegotiation of our existing payment processing relationship allows us to modernize our platforms while maintaining an efficient overall cost structure. FIS is one of several technology partners that we have partnered with to accelerate our transformation. Our current initiatives are squarely focused in areas that improve the customer experience, accelerate development speed and further drive operational efficiencies. Now turning to Slide 7. We recently launched Fifth Third Momentum Banking, which is our flagship mass market everyday banking offering. Momentum is unparalleled in the industry, combining the best of innovative fintech product functionality with the strength, access and human touch of a traditional bank. There are no monthly service fees and no minimum balance requirements associated with momentum, and we offer our customers the broadest array of solutions to get access to their money quickly. These include free access to their paycheck and other recurring ACH payments such as Social Security income up to 2 days early through Early Pay, just like Chime. Algorithmic smart savings to build up a Nasdaq just like Acorns and Digit. Immediate access to funds from digital check deposits like PayPal and Venmo. On-demand short-term advances through MyAdvance to help out in a pinch, just like Dave and the Extra Time to cure an overdraft until midnight the following business day. These are all designed to help customers live better every day and avoid unnecessary fees. Although it has only been 3 months since we fully launched Momentum, we are seeing positive early trends emerge. In addition to strong household growth, we are seeing lower attrition, better engagement and higher digital adoption. As Jamie mentioned in our July earnings call, we are expanding our marketing efforts to further accelerate growth given the opportunities we see ahead. Turning to Slide 8. In addition to expanding our digital products, we continue to invest differentially in our key Southeast markets. We are the sixth largest bank in the Southeast metro markets where we compete today as measured by location share. These are not new markets for us. We have had a strong and growing presence for over a decade with strong leadership in place. We continue to prioritize growing our branch footprint, brand awareness and our talent base across key business lines in these MSAs, which have expected population growth rates double the U.S. average. One example of this is the Raleigh-Durham-Chapel Hill Triangle, one of the fastest-growing areas in the country. We currently have 11 branches in the Triangle, up from just 5 a few years ago. We expect to open an additional 8 locations before the end of the year on our path to 30 or more by 2025. In total, we plan to add 125 de novo branches in existing Fifth Third Southeast markets from 2021 through 2025. Additionally, we will continue to focus a significant portion of our company-wide hiring in wealth management and commercial banking in the southeast and are on track to hire approximately 25 experienced middle market bankers by year-end. We remain focused on allocating capital to organic growth opportunities, such as our Southeast franchise. Bank acquisitions remain a lower priority. We have a long track record of optimizing our branch network based on evolving customer expectations. We currently expect to consolidate approximately 42 branches next January in addition to the 43 branches we have already consolidated this year. We have experienced very limited household attrition from recent consolidations which are primarily in our Midwest markets. While our momentum in Southeast branch strategies are primarily focused on acquiring new relationships, we are also focused on driving improved revenue per household retention and the customer experience. As shown on Slide 9, we are leveraging advanced analytic techniques similar to Netflix recommendations to personalize the roughly 1 billion interactions we have with our customers on an annual basis. Our proprietary patent-pending approach combines over 200 machine learning algorithms and was developed in-house by a team of over 50 data scientists. It has been in place throughout our retail footprint since the end of last year to help our retail bankers prioritize their efforts to onboard, follow-up and source new opportunities through a portal we call MyDay. We are very excited about the positive feedback that we have received from both our customers and our bankers so far. Total retail appointments are up 15% and the outbound calls are up nearly 40% against prepandemic levels, and customer response rates are 2x higher relative to the control group. We expect overall customer relationship strength to continue to improve as we roll out this capability to all our channels and to our new digital assistant, Genie, in the coming year. Our commitment to value-added solutions applies to our commercial business as well. As shown on Slide 10, Fifth Third's Capital Markets revenue has increased at a 12% compound annual growth rate since 2015. We have invested in people, technology to complement our key industry verticals. This includes our recent acquisitions of Coker Capital and H2C to build out our health care M&A advisory services and the build-out of our digital trading platform in addition to expanding debt capital markets and fixed-income trading. Slide 11 shows a snapshot of our commercial payments business, where we have been investing for several years to provide differentiated and digitally-enabled treasury management solutions, particularly through payments process automation services such as Expert AR and Expert AP. Managed services ecosystem revenue is expected to exceed $150 million in fees this year and has been growing at a compound annual growth rate of 12% since 2016. Demand accelerated during the pandemic as CFOs at our clients firms faced the increasing need to move money more quickly and to automate back office functions. These are tip of the spear offerings for us. Approximately 1/3 of our new core middle-market relationships added over the past year have started with the TM relationship. Slide 12 provides more detail on our commercial middle market strategy. We are showing strong production across our footprint, including in our Southeast markets and our middle market expansion into California and Texas. We expect our middle-market franchise to generate loan growth of 7% or more next year compared to 2021 without the benefit of any normalization and line utilization. Slide 13 highlights our recent acquisition of Provide, a medical practice finance fintech. Provide focuses on the dental, veterinary and vision segments and delivers digital capabilities, which support a best-in-class customer experience and speed to close. We know the Provide team well dating back to 2018 when we invested in their Series A financing. In the 45 days or so since closing, we couldn't be more excited about the opportunities for growth in front of us. We expect stronger origination volumes in 2022 relative to our original expectations, reflecting a strong pipeline, added product capabilities and key talent hires. This will be a relationship business for us as well as a source of high-quality loan growth. The Provide team has been able to continue their best-in-class customer experience and strong deposit and TM penetration. And over time, we expect our offerings through them will include more lending as well as consumer and wealth services. Slide 14 provides an update on our third quarter expectations. We continue to expect total average loan growth of around 1% sequentially, excluding the impact of PPP, which also continues to track closely to our July expectations. We expect third quarter PPNR to be slightly favorable relative to our previous expectations, reflecting stronger fee revenue, partially offset by expenses associated with stronger business performance. We also expect credit quality to improve with net charge-offs below 15 basis points for the third quarter. In summary, Fifth Third is a different bank today than the Fifth Third of a decade ago. With a focus on long-term through-the-cycle outperformance, we have significantly improved our franchise and our financial performance, and will sustain the management discipline and commitment to customer-focused innovation in the future. We are committed to generating sustainable value for our stakeholders, investing in our future and deploying capital to maximize long-term profitability. With that, Jamie and I are happy to take your questions. Thank you.

Tim, appreciate that. [Operator Instructions] Tim, I enjoyed that presentation. I just have to maybe spend a little bit more time on Slide 14 with the third quarter number.

We had to make you work for it a little bit.

No, but I appreciate you teaming up. And maybe we could just run down it and just get more texture. Loans down 1% with PPP, up 1% ex PPP. I think that's kind of the range you've been talking about for a while now, but still subdued. Just maybe talk about your expectations looking out on the commercial side, when do you expect utilization rates to begin to improve and just some of the trends you're seeing underlying those figures in the outlook?

Yes, Jason, thanks for the question. And as Tim and I like to joke, our guidance really hasn't changed since the January earnings call all the way through today in terms of loan growth and how we expected the year to play out from a loan perspective. I think the one update for today would be that things are actually starting to improve from a momentum and actual loan balance growth perspective. So in terms of the total loan growth, we are seeing strong production in the third quarter. We expect third quarter to be consistent with second quarter levels, which is actually up above the pre-pandemic levels, especially in commercial. So what that's translating to if we just talk about HFI and we exclude PPP, we expect the quarterly loan balances to be up 1%, and then PPP is the headwind that results in this down 1% in total. But on an end-of-period perspective, for the quarter, we expect to be up 2% sequentially, and that's driven by auto and C&I. So if we dive a little deeper into the C&I outcomes, what we're seeing actually from June 30 through the end of last week as C&I balances on a point-to-point basis are actually up 3%. So we're seeing that strong momentum, customer acquisition. And as Greg described on the July earnings call about second quarter results, we're actually seeing the same trend through the third quarter where that growth is being led by middle market broad-based corporate banking and then a couple of our verticals in the technology, media, telecom space as well as in retail. We continue to have softness in a couple of our segments, obviously, entertainment, lodging and leisure, leasing. And then we have a small dealer floor plan, but that obviously is a headwind at this point in time. So we also get the benefit in August of Provide, and so their monthly volumes in August were actually ahead of expectations. They originated about $75 million in loans. So that's all additive to the total. So they're well ahead of the annual pace of $700 million for this year. And so I think the undercurrent to all of this, and we've discussed it a lot internally, if you go back and look at our RWA growth in the second quarter, it was really driven by continued growth in total commitments. And so while line utilization has not changed. We were at 31.3% at the end of June, and we're at 31.4% as of last night. It's been very stubborn. But what is changing is the total commitments are growing. And so we grew $1.7 billion in the second quarter. We've grown total commitments $1.9 billion. And so that customer acquisition and supporting existing clients, is really showing up now in those loan growth numbers, albeit small, at least it has pivoted from a loan net runoff situation. So now we are seeing as the third quarter continues, but for PPP, we are seeing loan growth. And so we're opportunistic about what the back half of the year could hold.

That's right. Operationally, what I think we try to do on a day in day out basis is focus on what we can control. And what we can control is the production levels and client retention, right? So I fully expect that this year, we may end at a record level of overall annual production in the commercial business. I think we've done a nice job in several of the consumer asset classes, as Jamie mentioned. And every month, Jason, we go through name by name in any payoff or paydown and we evaluate, did we keep the client and did the client just take us out because they went to the capital markets or they retired a facility because there's no longer a need for it, or did we lose the client? And the positive signal for us is that we are adding way more clients than we're losing. And more often than not, when the client goes to the bond markets, we have an opportunity to participate, which is reflected in the strong performance we've had in both DCM and bond fees this year.

No, it makes sense. And I guess just moving down that slide, originally talking about net interest income down 2%, now down a little bit now a little bit better down 1% to 2%. Loan growth guidance unchanged, I guess what's driving the modest improvement in the NII outlook?

That one is actually fairly straightforward. The core NII is exactly as we thought it would be. PPP forgiveness has gone a little bit smoother than we expected. On the July call, we guided to about $40 million of PPP NII, we expect that to be in the upper 40s, and that's really the only change to the NII guidance. It's a little bit better PPP performance for the third quarter.

Got it. And you still have this kind of elevated liquidity position on the balance sheet. I know rates really haven't moved I think much since the last time we talked. But I guess just any updated thoughts on how you're positioned with that?

So we continue to be patient with our excess cash. We have not deployed the excess cash into growing the investment portfolio. We joke around a lot about theme songs and walk-up songs and other things. And if we were to pick a theme song for our investment strategy, it's either Tom Petty, The Waiting or Guns N' Roses' Patience. But either way, our conviction remains that by waiting we will get better entry points post the Fed tapering, and therefore, we will continue to be patient to focus on delivering the best outcome for the shareholders in the long term as opposed to the current quarter.

Got it. No, that makes sense. And on the fee income front, a bit better. I know you've gone along in corporate banking, investment advisory, just maybe some texture in terms of what's driving the improvement there?

Yes. The fees are playing out across the board very well. And as we expected, the one improvement over our July outlook is actually mortgage, where production will be up low-single digits for the quarter and margins are relatively stable to the June levels. And so perhaps we were a little pessimistic in the third quarter outlook, but it actually has held up well. And then the other factor is that a portion of the expense growth and the guide on the expense change from down 1% to flat is driven by the mark-to-market on the nonqualified deferred comp plan, but that carries an offset in fees. So that's a little bit of the factor, both in the fees and then that's about half of the change in noninterest expense, and then the other half of the noninterest expense growth is in comp and benefits, given some of the other improvements on the page.

I think I would emphasize on the fee income side. The thing I'm most pleased about strategically is that we're getting the growth from value-added services. I made reference to it earlier, but over a period of about the last 5 years, we have been pretty deliberate in running down or weaning ourselves off of consumer deposit fees because we did not believe they were sustainable competitively nor did we believe that they offered the best value for the consumer. And the byproduct of that is we are just substantially less reliant on that fee line item than virtually any of our investor peers and certainly, all of our investor peers who have big consumer operations. So we think the growth outlook for the fee business is long term is really rosy because we have taken -- we've bitten the bullet there. We have a product in market that's driving the right sort of growth. On the consumer deposit side and have been investing really heavily whether it's been through the acquisitions we've made in M&A advisory or the new leadership we have in the mortgage business or otherwise in areas where we can add a lot of value.

And then in terms of the rest of the page, obviously, credit in this environment has performed well for everybody. We're exceptionally pleased with how well it's performed for Fifth Third. We expect commercial charge-offs to be sub 10 basis points, consumer to be sub 20 basis points. And then the other category, not reflected on the page would just be noncore items. So we continue to expect to close the sale of our HSA business at the end of the month, and that's about a $60 million gain. We're currently promoting and sponsoring the Momentum products and marketing expense will be higher in the quarter. And then we have a donation to the Fifth Third Foundation in support of racial equality and inclusion that will also occur at the end of the quarter. And then obviously, whatever the Visa total return swap ends up being for the quarter. So those will be the noncore items not reflected on the page.

Right. So to be clear, that $60 million gain is not in the fee income outlook?

Correct.

And then I guess with that gain, you mentioned the $15 million additional marketing for Momentum investing -- Momentum Banking. Just -- I mean, how do we think about that? Is that a onetime event? Or are we going to kind of have to see continued marketing for that product in future quarters?

Yes, we definitely expect to run it through the end of the year. So at that point in time, we'll evaluate the success of the programs and whether we continue it into 2022. Obviously, the product is going to continue. It's a question of, does it get -- does it need the elevated marketing support post launch and following 5 or 6 months of marketing? So we'll evaluate that in January, but we're definitely going to run the program, the marketing spend a little bit higher through the end of the year. But with that said, as Tim mentioned, from a fee perspective, we expect fees on a year-over-year basis to be up 9% to 10%. In July, we were discussing an 8% to 9% level. That's how confident we are and what we're seeing from a momentum and results perspective. And we continue to expect expenses to be up 3%. So I think that's a nice leverage there where we'll have -- we had positive operating leverage in the second quarter. We expect positive operating leverage in the third and the fourth quarter, and it's certainly our goal for 2022.

No, good to hear. I guess not on the page is capital. I know you were kind of active buying back stock earlier in the quarter. Maybe just talk to just kind of capital deployment strategies. I think the CET1 ratio was 10.4% in the second quarter, you've talked about getting to 9.5% next year. Just how you think about future buyback, dividend and the like?

Yes. So earlier this week, we announced an 11% increase in our common dividend. So it was nice to be able to get that accomplished. It was certainly a goal of ours to increase the dividend. We've completed $550 million of buybacks this quarter. We have flexibility over the fourth quarter and then the first half of next year to continue to conduct the buybacks. And our target is to get to a 9.5% CET1 -- continues to be the target to be at 9.5% CET1 June of 2022. We think it's prudent to hold some amount of excess capital through this next flu season and given the uncertainty in the environment. We certainly believe we can run the company at a 9% CET1, but we want to get a little bit more of the uncertainty removed from the environment before we take that next step.

As Jamie always reminds me, you have to get to 9.5% before you can consider getting past it, right? So we still have work in front of us just to get to 9.5%.

Got you. And then I think you talked about opening 25 branches a year or so for the next 3 years in the Southeast markets. I mean, acquisition seems like a quicker way to get there in terms of expanding your footprint. It's been a bit since you've done a deal. The Chicago deal, certainly seems to have worked. I guess, thoughts around just bank M&A in general.

If you look at the capital priorities for us, it's always -- it has been and continues to be organic growth, raising the dividend now that we're able to do that, continue the buybacks and then evaluate nonbank acquisitions. We've done a lot of that with Provide and some of the M&A advisory businesses. So it just -- bank M&A continues to be the lowest priority within the group.

I also just think practically, Jason, we've been pretty clear that we have a metro market strategy in the Southeast, and that we have an in-footprint strategy. The focus for us has not been adding new markets down there so much as it has been enhancing existing markets. And it's very difficult to find any acquisition that allows you to be as precise in terms of where you choose to invest your dollars as you can when you build organically. And the performance of the de novos has been outstanding. I mean I think they are running well north of 100% of their plan and in some cases, as much as 300% ahead of expectations in terms of their ability to generate new households and the quality of the relationship is excellent. I think we've shared some of the statistics on the rate of growth in the Southeast markets. But in markets like Tennessee and North Carolina, where we're really not in all of Tennessee or all of North Carolina, but rather Nashville, Charlotte, the Raleigh-Durham-Chapel Hill Triangle, Greenville, South Carolina, we're growing at 7% or 8% right now in terms of household growth rates. And we're doing it in a fashion that's efficient and that allows us to be precise. So we have a good strategy running down there right now to be able to build out our presence.

No, makes sense. [Operator Instructions] We do have one coming in. Did you mention 7% middle market loan growth in your California, Texas markets? What are your thoughts of having loan growth targets in new markets? And how do you balance kind of the risk reward of that?

Yes. No, I appreciate the opportunity to correct that. I mentioned 7% total middle market loan growth next year across the entire franchise, not just California and Texas. And I think our point of view on -- our own point of view on the new markets has been it's a talent business. We are not believers in flying in talent. We're believers in hiring people who are career bankers in their individual markets. And the byproduct of that, I think, probably to the question askers point is you have to be a little bit circumspect because you add the talent as the talent is available as opposed to setting a top-down target and trying to grow to it. So we feel really good about the momentum we have in middle market overall. As I think I showed in the prior page, we're seeing production growth in every segment of our footprint, Chicago, the Midwest minus Chicago, Southeast and the expansion markets. And the expectation is that next year, we'll be able to get 7% loan growth across that entire franchise, not just California and Texas.

Makes sense. And then I think you're the first bank at this conference so far to commit to positive operating leverage in 2022.

I believe I said it's our goal, Jason. We're going through our planning process, but it's always a goal for Fifth Third to deliver positive operating leverage, and we're pleased to be able to do that in 2021, and it is our goal for 2022. But we'll obviously provide further guidance on the January earnings call.

Okay. We'll wait till then not to press you further. I guess that kind of incorporates revenues and expenses. So maybe we could just delve a bit more into credit. I guess your outlook for charge-offs near term is obviously really, really, really benign. I think your ACL ratio is still over 2%. So there seems to be some disconnect there. I guess, one, how are you thinking about kind of the reserve levels and against this construct, do you expect the reserve to kind of fall below CECL day 1 levels? And then secondly, clearly, credit is going to get worse at some point, I guess, which particular portfolio you're keeping a closer eye on?

So couple of embedded questions there. In terms of the CECL reserve, we were at 206 at the end of June. That is based on the life of loan, expected losses, given the economic environment we're assuming at the time. I think, it may look like a disconnect in terms of a current quarter forecast versus a life-of-loan concept, but they are tied together and part of what is in the CECL reserve is the fact that there are different scenarios at play, and we have an overweight to the downside scenario, the S3 scenario. And so this forecast is based off more of a base scenario and for a limited period of time. So when you look at the mid-cycle stress test results, we just finished and actually walked through with our Board this week. When you look out 2022, 2023, the charge-off range increases 20 to 30 basis points, 25 to 35. It's in that ballpark. So we certainly expect losses to increase from the 15 to 20 basis points we're expecting on a full year basis for 2021, but it's not a normalized level. Certainly, the government stimulus continues to help with these credit outcomes. But I also think all of the work we've done at Fifth Third over the past several years to improve the credit discipline and make some tough decisions, is paying off in this environment. And it's really nice to see that we are performing well through the cycle and perhaps even top quartile credit results as a result of that. So in terms of the areas we continue to be concerned, those industries most impacted by the pandemic, while leisure has come back, certainly Central Business District hotels as well as certain CRE classes continue to be concerning. And then we'll keep an eye on as all the unemployment benefit and enhanced unemployment benefits roll off to see how the consumer portfolio performs. But thus far, our forbearance levels and mortgage continue to be well below the industry average. And so we think we should definitely show well in terms of credit over the next couple of years.

Got you. And then earlier, you kind of gave us your perspective on bank acquisitions. Maybe kind of shift gears and talk about just nonbank acquisitions and particularly interested in the fintech space, you talked about the Provide acquisition that kind of helps you in the health care space. Just kind of -- and you've done other kind of stuff in the fintech area previously, whether it's partnerships or acquisitions. I guess kind of what else are you looking at, kind of what are some of the needs you see for your customer base that you potentially don't offer today that you'd like to in the future?

Yes, absolutely happy to do that. I think as you said, this isn't a new idea for us. I think we have been doing it for the past several years now. And essentially, what we have -- the philosophy we've always subscribed to has been a by-partner build strategy. So when it comes to building out new capabilities, if there's something that's on the shelf and we can go out and buy it, we buy it. If we cannot acquire capabilities that way, we partner. And if there is no alternative that fits our needs, then at that point, we arrive at build. So the areas of focus for us are still pretty consistent on the commercial side of the business, Jason. We are interested in continuing to build the M&A advisory capabilities that we offer our clients and in particular, specific industry expertise, we have a good growth rate there. I think our M&A advisory fees continue as we showed on the slide to exhibit that strong momentum. A good bit of that is organic, but we've also been additive there. We acquired Coker Capital a handful of years ago that brought us a health care M&A advisory capability. We acquired H2C this past. I think we announced it in December and then closed in January, which was a preeminent not-for-profit health care M&A advisory shop. So we continue to look in that portion of the market. And then commercial payments is the other area where I think we've been pretty clear that we wanted to move that business from being purely transaction processing-centric to more value-added services. So we continue to evaluate opportunities in that space. On the consumer side of the equation and in terms of small business, very clearly, there are some interesting niche platforms that have sprung up that cater to very specific industry sectors. That's how we got interested in Provide, that allowed us to build the business banking version of the health care strategy we've been running in middle market corporate banking. I mean we continue to look there for products in particular that leverage digital to really change the customer experience as partnership opportunities.

Right. We have a couple of minutes remaining. It sounds like you have a lot of underlying momentum. I guess maybe looking out over the next couple of years, I guess what are your kind of biggest concerns?

I'm going to take it. I mean, -- we are -- have been deliberate about the way that we have deployed excess liquidity, right? Jamie talked about that. I think I feel very proud of the way that our treasury team positioned this bank to perform well in a down rate environment. We are now being very disciplined about not buying securities that we think offer a negative real yield. And you feel the pain of that in the immediate moment because it puts pressure on NII. The other side of the equation is, we're well positioned in an environment where, whether it's a Fed action or other action in the market changes the shape of the curve and in particular, the level of intermediate and long-term rates. But if rates don't move, then the question for us always -- it just becomes how long do you hold your breath. So that's one thing. I think I worry about tactically. Strategically, we are operating in an environment right now where we're not competing on a level playing field with some of these technology firms, and the regulatory arbitrage, whether it is around debit interchange or the permissiveness of certain activities or otherwise is a headwind for us because we have to compete for new customer relationships, and we expect to be able to make a profit when we book incremental customers. We don't like negative unit economics. And it is more challenging to compete in an environment where you face folks who are either willing to operate at very large and sustained losses, or who have the ability to do things that are not prudent for a regulated financial institution to do. So we're hoping for some normalization of the playing field. But that, I think, becomes a big concern. And lastly, operationally, cyber risk is probably the area that we spend the most time thinking about these days. In particular, as we invest in modernizing our core platforms, we want to make sure that we're creating an environment where our perimeter is as secure as possible.

Great. Tim, Jamie, thank you so much for your participation again this year and looking forward to speaking with you again soon.

Thanks, Jason.