Fifth Third Bancorp (FITB) Earnings Call Transcript & Summary

[Audio Gap] the management team of Fifth Third. As many of you know, Fifth Third is the 13th largest bank in the United States with assets just over $200 billion in revenues this year or possibly just over $8.4 billion. The company is a well-diversified regional bank with about 69% of its revenues from net interest income and the remaining from fees. We're very pleased today to have Tim Spence, who's the CEO. As you may recall, Tim was appointed to this role in July or assumed this role in July of 2022, and he's been with the bank since 2015, and prior to that, was in the consulting industry and joined the bank, as I mentioned, heading up their North Star strategy at that time. And to his left, of course, is Jamie Leonard, who is Executive Vice President and Chief Financial Officer; Jamie has been with the bank, I think, since 1999 and has held a number of senior roles in the finance area of the bank. And with that, maybe we can kick it off with you, Tim.

When you look at the outlook for the economy and what's going on, what's your guys' current outlook, how are you managing the bank for a possible recession next year? And what are the some of the ins and outs of doing that?

Sure. So first of all, hello to everybody. I'm going to take it as a compliment that we're in the last slot. And that means nobody wanted to have to follow Fifth Third.

There you go. You're betting clean up.

Listen, I think from our point of view, we're obviously in a pretty uncertain time here. I think we try to think about this in 3 ways. One, at the highest level, it's a general rule of thumb, it's good not to fight the Fed. So Powell has been pretty clear about what he believes he has to get done in order to get inflation back to a more manageable level, which if you take them and his word means we're going to have a rockier outlook than maybe everybody expected at the beginning of the year. With that said, -- we're also living in a period of time now where more than half of every asset class in the U.S. has agglomerated outside the banking system, right? And the nonbanks didn't scrape the top 50% of credits in every category. I think by and large, a lot of the risk is actually migrated outside the banking system. So even in a scenario where we do end up in a world where the Fed has to go higher than people expected, holds for longer, and that has a negative impact on the economy overall. We think banks as a group are going to do really well in the Fifth Third in particular, because of both the improved discipline since the financial crisis that has gone into the way that we manage our credit exposures and in particular, the portfolio allocations we have, which are light on commercial real estate, not at all in subprime heavy on homeowners and people who have been able to inoculate themselves and heavier on middle market and large corporate businesses and less so in small businesses. that we're going to be well positioned to perform quite well.

Speaking of the homeowners, maybe we could talk a little bit about dividend and finance. And Jamie, I don't recall exactly what the growth expectations are for that. But maybe give us some thoughts about that. And also from a reserving perspective because it is a different business than some of your other businesses.

Sure. Thanks for the question. In keeping with the fab theme this year, the dividend is the perfect example of balancing growth and credit and in this case, the cost of CECL. So if you go back to May, when we closed on the dividend finance transaction, at that point in time, we felt very good about the business, about the management team and most importantly, about the technology that we were buying. From that point in time to our earnings call and as we look ahead into 2023, what has happened has really been the stars are aligning to where the return profile and the volume profile of the dividend finance loan originations are improving significantly. And so what you have is when we bought the company, we assume the tax credits would expire, but we still like the product. But now the tax credit rate is higher and extended beyond 2030. It's a highly productive asset for us with an ROA north of 2 could be as high as 3%. There's a little bit of variability in the yields and the return profile because of the platform fees and what the repayments will ultimately look like. But our actual volume now is running 2x what we originally had assigned in the deal model, and it could run even more if we wanted it to. And so what we're doing is throttling back the volume to be cautious as we go into it, but we really like the asset class, and we're going to originate about $1 billion a quarter for the foreseeable future. And as a result of weakened competition, higher energy costs, longer and higher tax credits and the strength of Fifth Third behind a fintech company, you really are getting what could be a very nice return profile with very nice growth. The challenge is it's a 20-plus year contractual maturity, should behave in the 7-year type of duration. But we'll see as the product unfolds and with that comes a higher CECL reserve. And if there were -- if you go back and look at what we said when we closed on the deal and now the higher CECL reserving, it's solely driven by the fact that the volume has doubled what we originally were expecting.

Have you guys been able to identify the factors that have led to this better-than-expected volume growth?

It really is the inflation reduction at tax credit extension and the addressable market spend within solar has expanded significantly as energy costs and the energy crisis has occurred. So it's a more compelling trade for the homeowner to put the solar panels on their house and save on energy costs. And so it's a combination of the weakened competition and the unit economics for the homeowner that are creating this window of opportunity go...

It is -- if you think about the home improvement lending sector in general because this is an area where a lot of different regional banks are now active. The one form of lending that's getting done there where there's a direct hard economic cost offset in the form of not having to pay the utility company for your monthly power bill once you put a panel or a set of panels in a battery into the house.

Got it. Tim, when you look about the other parts of your franchise, obviously, we just talked about dividend finance. What are some of the growth dynamics you guys are seeing in other parts of the Fifth Third franchise?

So I think one of the things that we spend a lot of time thinking about, right? We try to run the company for the long term. And in a mature, highly competitive business like ours, you have to be focused if you're going to think about how you drive sustainable organic growth about how you position your franchise to benefit from some secular tailwinds, right? So the energy transition is one obvious tailwind and the investment that will go into that, whether it's through the infrastructure bill or the federal tax credits and the inflation Reduction Act or otherwise is 1 theme. Clearly, the domestic migration to the Southeast markets is another one, right? And that's been a really a solid source of growth for Fifth Third. We are, I believe, second only to JPMorgan in terms of the number of branches that we've built in the Southeast markets where we're competing over the course of the past 3 or 4 years. And we're seeing great outcomes there, right? Household growth that depending on the market that you look at is running 6 to 8 percentage points per year. And the growth is robust there in terms of population, but not that fast, like Nashville is doing 2% a year in terms of household growth as a city and Fifth Third is growing at 6% to 8% in markets like Nashville and Nashville included across the footprint, and we're also seeing really strong deposit growth on the back of that. So I think that would be pocket number 2, that we're really excited about. Pocket number 3 is going to be a really good theme for us, for several years going forward now, which is I think we -- in the markets where we operate are really well positioned to benefit from a resurgence in U.S. manufacturing, right? And whether it is geopolitical dynamics that cause people to want to move production back onshore or just concerns about delivery and quality because a lot of the folks who have moved to a contract manufacturing model, now worry about sitting behind folks who are placing larger orders, and therefore, they need a little bit more supply chain control over their supply chains or otherwise. There's just going to be a lot of investment and not just on the scale of the electric vehicles and the batteries and the semiconductors and otherwise that occurs across the Midwest and the Southeast. And we were one of the banks along with bank one at that time that played a really principal role in helping the Japanese conglomerate set up shop in Indiana, Kentucky and Ohio 30 years ago. And I think we have the capability to continue to really benefit from that trend thematically as those sorts of large capital investments are made in our markets. And that is manifesting itself. When you look at the net, it's one of the catalysts for what will be the second year in a row where we have record new commercial quality relationship growth, some new commercial relationships.

And I think that's the other one we really like. Good.

Coming back to the economy in your opening comments about, we all know potentially slowing down next year. And maybe, Jamie, when you look at the portfolios, -- which ones are you monitoring maybe more closely today for kind of an economic slowdown? And are there anything -- any portfolio specific to you folks that we should know about in that kind of environment?

Well, as Tim mentioned, from a Fifth Third idiosyncratic perspective, we feel very good about the de-risking we've done as part of Greg's legacy and what Tim has continued is we're being very defensive in our positioning. We're foregoing growth in certain asset classes, either from a returns perspective or from a credit discipline perspective. As Tim mentioned, we only feel good about how the industry has pushed a lot of the risk outside of the banking sector, but we still all have exposures that we're monitoring, whether it's the leverage lending, the CRE, central business hotels, office space, I would say the usual when it comes to portfolio types, what we're spending probably more time on would be the customers that have the scale in order to push through the price increases and the inflationary impacts through to customers versus smaller customers that may not have that capacity. And so that's how we think the economy may evolve is that those with scale ought to do a little better than those without scale and making sure you're monitoring the smaller end of the portfolio.

Got it. And just sticking on the subject of credit. Obviously, the banks are using CECL accounting now to build the reserves. What kind of unemployment rate are you currently using in your CECL modeling? And then second, if unemployment was to go up by 100 or 200 basis points, what would that do to the reserve levels?

So we use Moody's scenarios. We use an upside scenario that has a 10% probability. We have the -- we use the Moody's baseline scenario, not the consensus, but rather the baseline, which is a little more conservative than the Moody's consensus scenario. The baseline scenario has in a maximum unemployment of 4% during the time horizon. We use a 3-year reasonable supportable time horizon. And then we use the Moody's S3 downside scenario that also has a 10% probability. So you end up with a 10/80/10 -- and that downside scenario has a maximum unemployment approaching 8% in that scenario. And as we model different sensitivities in the ACL, a 1% change in unemployment, all other things being equal, which is probably not possible to happen, but well, from a modeling perspective, it's about $0.25 billion for us. Every 1% would be additive to the ACL of unemployment ticks higher.

Got it. And would that $0.25 billion be from present levels of the reserve?

Yes. So call it an incremental 10% to the ACL because we're at about $2.5 billion per 1% of unemployment growth.

Got it. Got it. When we look about the QT and what's going on with deposits, you guys have certainly indicated and shown that you're obviously going to see some deposit outflows as well. Can you give us some flavor on how are you managing the deposit side of the balance sheet, the relationships you've built up the new products you introduced?

Yes. No. It's actually sort of nice to be in an environment where stable funding matters again. Funding efficiency is as relevant as other things in terms of the way that you drive growth in the business. I think we're in an environment where people who have really strong primary banking relationships, whether it's operational deposits and the accounts that people use to manage cash flow on the commercial side of the business or the accounts to the deposits you use for living as opposed to the cash that's there as an asset on the consumer side of the equation are the real drivers of how you're performing. So if you think about our business, you have the Midwest where we're the #2 bank by market share in the Southeast, whereby locations share we're #6 and growing above the market in terms of deposit growth. I think in the Midwest markets, the shift we made a couple of years ago to the Momentum banking platform and the focus on migrating our checking business away from one that was characterized by fee waivers and interest rates and on to one that was really focused on the ways in which the technology fit there provided could help you with better, better manage our short-term liquidity and otherwise, has been very powerful, right? And the byproduct of that is the deposit betas on the consumer side have stayed in the single digits, cumulatively since the Fed began hiking. We also, though, have the unique asset of all of these branches we're building in the Southeast, where because they are new branches, they're starting out with a much lower share of their trade area than ultimately, they gather. And they give us the ability to be a little bit more disruptive and to go on offense. So we have been able to use rates, right, and to really deploy the beta that we had allocated to the consumer business to attract new customers to the bank and deposit balances that we didn't have previously, whether they were RMM promos or now CDs and otherwise, I think that new branch footprint is a really useful way for us to grow deposits outside of our existing customer franchise. The third point of focus then has been the managed service business and treasury management, right? I know this is the thing we have talked about in several different places. But we're very proud of there, again, the focus that the bank put on building automation solutions that are primarily software enabled around the major receivables and payables processes for the big client segments that we serve. And about 1/3 of the treasury management fee equivalent that we generate on an annual basis is now coming from clients that have one of those managed services. And that's been the catalyst for top line TM equivalent growth in the mid- to high single digits now. And that TM growth is directly derivative of having the operating accounts, and it's given us then the ability to be more circumspect about chasing balances that we knew were 100 beta balances. And that is part of the reason why we were trying to be very clear as we got into this year that when the Fed started hiking there were balances inside the bank that we were going to roll out and run off and that played out in the second quarter at the beginning.

And speaking of just deposits and branches, and you touched on the Southeast strategy. How is that meeting your expectations? And if we were to go into a longer prolonged recession, would that change that strategy much? And then as a final part of the branch question, how is the closures going in existing legacy markets...

Sure. I'll take whatever you don't. In terms of the branch builds, our focus has been getting to that top 5 share in the Southeast. We think we've got about 3 more years of building 30 to 35 branches. And as you had asked on the earnings call, that about $3 million a branch to build, maybe $0.5 million to $1 million for the land, if you're buying the land versus setting up a lease. So you're looking at about $4 million of investment, so call it, $120 million or so a year to build out this network per year. Whether it's a recession or not, I'm still committed to building those locations. It's the right long-term answer for the company. And if folks have learned anything about how Tim and I approach different decisions, it's on the long term. And so we think that build-out of the Southeast, the demographics are compelling. And in the long run, we're currently a top 6 in the Southeast bank and we'd like to get into that top 5 spot and that could be a long-term driver of both deposit growth as well as new customer acquisition fee opportunities and obviously lending. So we're committed to the strategy. In terms of the branch closures, every year, we go through a process of pruning, but for us, we like the 1,100 branches we have, and that's our intent as we head forward.

And as a portfolio, the 70-ish branches that we built since we started this effort are running ahead of expectations in terms of their ability to drive household growth. They're going to do meaningfully better in terms of the original economic model, but the Fed has a lot to do with that, right, in terms of the way that those perform. So I don't want to take all the credit. We've gotten good enough at the way that we open these things that they're generating cash generally by year 2. And then it takes up until year 4 to 5, call it, before you're hitting your hurdle rate of return and then everything after year 5 is just enhancing...

Yes. Jamie, I know you have a great interest in passion and music. And on the third quarter earnings call, you showed another passion, which is AOCI and tangible common equity ratio.

So you had to go there today, didn't you?

And so just we're all trying to get our arms and heads around whether the TCE ratio matters and what the implications are if rates continue to -- excuse me, go higher. Can you share with us -- and you did a very good job on the call talking about it, and it's good to talk -- you hear it again in my opinion.

They're sort of a 867 AOCI can offer them musically.

My wife, Jenny, appreciates that song. Yes, I feel like this is a game of stump the chump. So I was hoping you weren't going to ask, but since you did, I was thinking about how I view this. And it's a little bit like Sisyphus pushing the rock up the hill in Tartarus because I've tried like 4 times now, which then makes me pause and say, what am I missing when we continue to get that question and making sure that we are managing our balance sheet the right way because it's obviously a concern for people because the question keeps coming up. And so what an outsider to the banking industry perhaps does not realize that the bank management teams all realize because I think the bank management teams are all saying the same thing, which is you have accounting and then you have regulation and then you have your desire to manage your balance sheet. And so the accounting rules are what they are and you got to pick a category and you got to put it in the bucket and it's done. I believe the investors are concerned that regulators care about the AOCI or the TCE. But what an outsider may not realize is whether it's the LCR or your liquid securities buffer under Reg YY, it is already mark-to-markets regardless of which portfolio you put it in. And so I don't know that the bank management teams have explained -- we just like to just give a nice short answer, which is, listen, it doesn't matter, trust us, we're fine -- that's the short answer. But the long answer is in terms of why is it fine? I think it's where we've not gotten to a common understanding. And so our view as we run the balance sheet is the regulators already hold us to a mark-to-market on AFS and HTM from a liquidity management perspective. And we have a capital framework with CET1 post the OA crisis that is the regulatory framework, and that's not going to be changing. And therefore, TCE, while useful leading up to the great financial crisis is more of an antiquated item now that the regulators have the liquid securities buffer, they have LCR. They have a CET1 regime. And therefore, bank management teams will always prefer the flexibility of moving a security, selling, repositioning, that has value, that option has value. And so given my choice of locking it up in HTM and never getting a question about AOCI and TCE, while certainly in the past 30 days is actually not the best answer for us in terms of running our balance sheet. And as we talk at our ALCO Committee, we're also focused on what is the environment that is the hardest to protect either your NII, your liquidity or your capital. And that environment is always going to be a falling rate environment, a recessionary environment. And in that environment, we will have the opposite AOCI impact and therefore, have a lot of dry powder or options when it comes to either triggering capital deployment opportunities with triggering a gain and bolstering capital or just having a higher NII run rate going forward. So it's just a -- it's a value to the management teams to have that flexibility and the regulators already have their regime, and therefore, it's just not something that bank management teams are going to focus on.

Great. And we'll go to questions in the audience next. But Tim, coming back to you for a moment. You guys have stated that M&A is not a top prior traditional bank depository M&A. You have done, obviously, some smaller deals, dividend finance that we talked about. Can you share with us or just update us on your thinking there and what you're seeing? And maybe opportunities that might arise next year if we get into a more distressed environment.

Yes. Yes. No. Look, I think our capital priorities are the same as they were the last time that we communicated them, which is funding organic growth, paying a strong dividend and then provided that the environment does change, we any share repurchases after we hit the $925 level that we laid out that we'd like to be able to run the bank at -- from an M&A perspective, I think we got the 2 things that we wanted. Like we have been very deliberate about where we thought there were opportunities to take advantage of technology and changing the business model. And most of those things have been consistent since 2015, 2016, when we started down this path. Like we had a thesis on lending for home improvement projects. That thesis was initially expressed in late '15, early '16 and an equity investment in the partnership we put in place with GreenSky, right? We had a belief that there were some interesting niche opportunities that -- where we could grow a relationship business on a national scale in the small business, business banking space. In 2018, we made an equity investment in a company called Lendeavor, which 2 years later rebranded itself provide and ultimately manifested itself. -- and provide -- and I think lastly, we had this thesis I talked about as it related to payments businesses moving from just pure commodity payment processing businesses to value-added business process automation businesses. And we did those things through co-development relationships with some software providers, one of whom was sold and is privately owned and the other one have in the case of Avid Exchange as a public company. So we kind of have what we want in terms of technology. We always evaluate when it comes time to build something. Is it cheaper to build this ourselves or to buy it internally, but you should not expect us to buy anything that is material. And that, frankly, from my point of view, includes some of the bolt-on businesses that a lot of other banks and Fifth Third of the past have been active on. It's just not -- we don't need it right now to achieve the goals that we have for the company over the course of the next 18 to 24 months.

Great. Any quick -- Yes, Mike.

Well, thanks for joining us here. And Gerard for the conference, of course. You mentioned a lot of the risk has been pushed outside of the U.S. banks. And I just have to imagine 1 year from now, it's going to be a hedge fund -- it's going to be a fintech. It's going to be some other bank outside the U.S., some nonbank players, some private equity firm, you name it, the boogie man is out there somewhere, right? And we haven't seen it yet. So first, as you mentioned that -- and Jamie mentioned that, where do you think the boogie man is? And more importantly, to Fifth Third, how are you going to protect yourself? Like what is your lending to the whole nonbank space and getting the Ricochet effect? How do you avoid that?

Yes. No, that's the right question. I think that's one of the things that we talk about a lot internally is where does the second order risk materialize from a lot of these companies, whether they're the BDCs that exist outside the banking sector, the fintech companies. So we're not currently funding any loans through fintech partners, right? All of the loan production that's going on inside Fifth Third is going on through Fifth Third owned platforms at this point. So I don't view us as having any exposure in the fintech space. But I think the area where you will see losses start to materialize or in places where people trained underwriting models over essentially historically out of sample period in the last 15 years and who missed a lot of the FICO warping that got introduced into the system as all of us as banks for more loans during the pandemic or the government pushed out student loan payments and otherwise. And we're starting to see that. When you look at the tapes for folks that were playing in the near-prime space and purportedly we're able to split risk there in a way that traditional underwriting tools didn't allow them to, I think as it relates to the debt funds, we have been laser-focused on trying to get our heads around who's providing the leverage that's embedded inside a lot of those structures. And that has just not been a business for us. We don't have the bulge bracket capital markets capabilities that are required to maintain relationships with those folks to begin with. So I don't know where that risk will materialize, but it's not going to materialize besides the third one.

Up here, please. Betsy.

Deposit betas.

Well, maybe a little bit more broadly, can you give us a sense as to how you feel your position for the rate environment right now and what you're doing to either hedge protect or let run the sensitivity that you've got today?

So we're very happy with what we've done with managing the balance sheet. And with all the questions coming out of earnings season, there's perhaps one item that we didn't highlight that we should have, which is our positioning to be good through the cycle is one that our peak will never be as high as the highest peak in the industry and our valleys will certainly not be nearly as low. And so what we've done is really put a band on the NIM through the structure in the investment portfolio as well as with our hedging program. And we've taken our hedges out. We've done $15 billion of hedges going out into 2031. And as a result of that, at the time at an earnings call, we were using a 450 terminal Fed funds rate, and we said at that level, you could expect from us a NIM in the mid-340 range. But in a down 200, we would have a floor in that 330 range. So now as the -- looks like as of today, following the jobs report, we're at a 525 terminal Fed funds rate. Those items can certainly go higher. For us, the neutrality point on a deposit beta is in the low to mid-60 range. So if you get over 65, you're going to -- we would be liability sensitive, but we think we can continue to manage the betas even as the Fed gets to 450, 475 in the 50s range. And therefore, we still have a little bit of asset sensitivity left. But for the most part, we've monetized that in order to have what Tim will like to call the collared NIM. And so we're tightly banded on the NIM, and that should just be a nice good through-the-cycle performance for the company. And then from there, the growth in NII and NIM is just more driven by core business activity.

Terry?

Yes. Momentum Banking has been a success at Fifth Third. Could you just talk about the profile of that customer expectations going forward. And Tim, your comment about the deposit betas in the Midwest of the high single digits -- was that all the consumer customers or just those that are using momentum...

That was our consumer deposit beta in total. So in Midwest and Southeast and momentum and non-momentum. But the single largest share of Fifth Third, the single largest product portfolio inside our consumer tracking business is now the momentum banking. I think we've shared this some -- at some prior conferences. So forgive me if I get if I'm wrong, by half a year here, otherwise. But the median age Fifth Third momentum customer is about 37%. The median income is just north of $75,000 memory serves. Chris is nodding, close enough, okay, $100,000. And the average deposit balance was 90 days is about $10,000. So it's a very attractive customer base. It's younger on balance than the population in our footprint. It's still very much in asset accumulation and growth phase, right? So it's people who are not yet, but soon to enter their peak earning years. And it's a customer base that because they're getting the value out of having their direct deposit with the bank and using the AI-driven savings tools to manage liquidity and to handle deferred purchases and then have the short-term liquidity tools in the event that they need them. It's a customer base that's really sticky and on balance, more satisfied than where our customers are in totality, which was already a pretty good starting point, right? We're routinely sort of third or fourth of the 25 largest banks in terms of customer satisfaction.

Any other questions from the audience? Just following up on that. One more, right here.

A question on the dividend finance portfolio. You mentioned that there is strong demand in that portfolio, and you're actually holding back a little bit to be a little bit cautious. I guess the question is how large are you willing to let that portfolio grow? And why not lean in? Is it the CECL impact? Is the competitive factors? Is it maybe the CCAR impact given you don't have the history in that portfolio? I guess what are the things we should be thinking through for that portfolio?

That is an outstanding question, and we actually had our outcome meeting 2 days ago -- or actually yesterday morning and discussed at that very question, which is how -- how high are we willing to let that portfolio go and the ultimate answer comes down to what is the environment you're operating in? Because in a productive, healthy environment, there are whole loan sale opportunities, their asset securitization opportunities. But given the uncertainty in what we believe is uncertainty in the environment, how '23 and '24 play out. We are certainly mindful of managing liquidity, combined with the fact that it is a newer product for us, and we want to make sure from a credit perspective, it does behave how we think it should behave. And thus far, all signs are proving that out. But it's not something that we think it would be prudent to originate $10 billion. The opportunity is there in a year to originate $10 billion, but we don't think that's the prudent path. And so we're going to be a little bit cautious. And it is -- again, it's a great returning asset. We -- it's a good problem to have, but at the same time, it is truly a balance of growth and potential credit as the environment unfolds. So great question. And we don't know, environment dependent.

Yes. Just at the core, right, the tension that you always have to manage in a business like ours is growth, profitability and stability. Those are the 3 things that you can manage and you have to have an order of priority. So we've tried to be really clear that what you should expect from Fifth Third is stability, profitability and growth, in those orders and that we are going to make decisions at the margins to trade off growth in environments where we think it favors stability and profitability. So dividend is clearly the most visible area where we have the ability to run faster than we are electing to run right now, but it's not the only one, right? There are several banks larger than us that have been very clear publicly that they're going to manage RWA, which means there are opportunities if you wanted to, to step up in large syndicated transactions. Jamie talked about the auto business, that volume is still there. We're just not taking it at the moment. We have been, I think, very public about the fact for a while that we didn't like mortgages as a portfolio asset, right, that we wanted that to be a business that was successful because we were great on an originate-to-sell basis and then a really great low-cost servicer. But the reason we're doing it is because in an environment like this one, it feels right to prioritize flexibility and to run the risk that we miss out on a few points of loan growth at the margin to ensure that we're going to deliver the profitability commitment that we want because if we draw a different conclusion about what the forward environment looks like, it turns out that the plane lands, there's not an ounce of turbulence and all 3 wheels hit the ground exactly at the same time. We can go get the point or 2 of growth.

Yes, Vivek.

Tim, you mentioned about the same business, sorry, going on dividend finance that you're benefiting from weakened competition. What's -- can you explain a little bit what's driving that phenomenon in the industry that the competition is weaker?

They're relying on the sale funding. So it's the instability. It's just you look at the securitization markets and the market for whole loan purchases, if this is one of those moments in time, which used to occur every 7 years, and it looks like we could wait 15 for them where it turns out that, as I said at the beginning, right, the funding efficiency matters. So you have platforms that are well-built platforms with nice technology and good contractor relationships who don't have the ability to predict what funding capacity they have at a given point in time or what the rate at which they need to fund that is. And in an environment where you have a stable funding profile, that's a huge comparative advantage.

Maybe we've kind of run out of time here, and I know the lots of rolls are waiting for us. But before we get there, just one last question, Jamie, almost halfway through the quarter. Maybe can you give us an update on how the quarter is shaping up relative to your most recent guidance?

Yes. It's actually shaping up nicely. We're one lap around the track with 2 laps to go. October is under our belt, and everything is playing out as advertised. So feel good about heading and wrapping up what is going to be a record year for Fifth Third.

No desire to update the guidance you provided a week ago on our earnings...

We reaffirm our guidance.

There you go. And with that, please join me in a round of applause thanking both.