00:00What does success look like in the early days of this tie up? Yeah. Good morning, Danny and Matt. I do have to say, by the way, it may be a bleak morning for precious metals around the world, but it's a very bright morning in the Midwest and across the sunbelt in the U.S. as a result of this.
00:16The milestone number one was just getting to legal day one, you know, as we did this morning, as you mentioned. I was thrilled with the responsiveness of the regulators.
00:28The fact we got OCC approval in 45 days and Federal Reserve approval in 65 days set us up to get open.
00:35And we actually converted Comerica's capital markets platform last night. So Comerica is trading on Fifth Third's platform as of this morning.
00:45And Comerica's all got a one notch upgrade in terms of their debt rating, which will be very valuable in letters of credit.
00:51And as it relates to our ability to gather corporate deposits and otherwise.
00:56Next big milestone for us is getting the groups from both companies together to operate as one team and then out into the market on offense.
01:05So I'm very, very excited to be here this morning and for both of our companies to have the bright future that we do.
01:13I love your focus on, you know, the physical branch is not dead at Fifth Third.
01:19And indeed, you're going to, I think, open at like 150 in Texas.
01:22You've got a ton in Michigan. And I wonder how you avoid overlap there, because you clearly don't want to alienate customers by closing the branch that they bank in.
01:35But you can't have two on the same block. Right. So what do you do?
01:39Yeah, we ironically, several of the branches that we will close in Michigan actually share the same parking lot.
01:46So they're in the same strip center with shared parking.
01:49We have just over 70 branches that are slated for closure in Michigan.
01:55They all are essentially within a sight line of one another.
02:01So customers will not have to worry about being inconvenienced.
02:04But all that will happen after we do the systems conversion this fall.
02:09So the expectation for customers this morning should be that they get up.
02:14And if they need support, they go to the same place that they would have gone to previously.
02:18They talk to the same person.
02:21And then there will be, you know, high quality products and services for Comerica customers, a big step up in terms of the customer facing technology.
02:30And then for Comerica customers, 60 percent more branches in Michigan.
02:35And for fifth or third customers, 40 percent more branches after we get through the conversion on Labor Day.
02:41Tim, I guess, you know, as a customer, it wouldn't matter if I'm going to the branch on Broad and Main or the branch on Main and Broad.
02:47But what does matter is that I keep my banker.
02:51How do you ensure that your most important employees stay on?
02:56Yeah, I think job number one is to make sure that they are confident that they can serve their clients better today than they would have been previously.
03:06And that, frankly, is probably the part of the merger here that has been least understood.
03:13We talked last fall at one of the investor conferences about the fact that we think there are $500 million in revenue synergies.
03:21Those are not coming from pricing.
03:23They're coming from broader products and services.
03:27So Comerica, the colleagues have been accustomed to working within the limitations of an $80 billion balance sheet.
03:35They have a significantly larger balance sheet to draw from today.
03:38They will have access to the J.D. Power award-winning mobile application.
03:43That Fifth Third offers its customers a broad range of services across equipment leasing, asset-based lending, and commercial payments in particular,
03:54along with the bigger capital markets platform.
03:56And then Fifth Third customers will have the ability to draw on a lot of the specialty verticals that Comerica operated in the middle market,
04:03like environmental services, dealer services, tech and life sciences.
04:07So that's it.
04:08They have to believe that they can serve their clients well and that, in fact, they have the ability to be more productive.
04:13On our platform, which I am absolutely certain they will be.
04:16Hey, Tim, more broadly, there's a lot of really good stuff happening in the banking sector right now.
04:20Easing regulation, as you talked about, the more adept speed and ease of doing mergers, which is great for regional banks.
04:26There are all these pockets, though, that people tend to worry about.
04:29And we got a big one last year in the way of Tricolor.
04:31I know Fifth Third did have a small exposure, writing off about some $170 million in bad loans.
04:37But that experience, more generally, has it changed your approach to markets at all?
04:42Has it changed some due diligence?
04:44Are you rethinking auto lending or warehousing going forward?
04:48Yeah.
04:49I mean, that's a great question.
04:51I think I look forward to January every year because, in addition to the earnings script and the performance reviews, I have to write our annual letter.
04:59And it's an opportunity to step back and not just think about what you learned in a given year, but to think about the progress you are or aren't making across a broader sweep.
05:09So, you know, one of the things that has been fun for me to reflect on as we bring Fifth Third and Comerica together is if you look at the bank in 2016, it was like $142 billion in assets.
05:21It had about a 10.5% return on tangible common equity.
05:25And by the end of 2026, we're going to have roughly doubled both those things.
05:29So really strong growth in terms of top-line revenue and the size of the balance sheet and a near doubling in profitability.
05:36The other thing that you step back and look at is, say, as a larger company, you know, that is dealing with either more sophisticated credits or a broader range of markets,
05:48have we thought the right way about concentration limits, about the decisions that we make in terms of lending?
05:55Fifth Third has been in the asset-based finance business for a lot of years, has had really wonderful experience.
06:00And banks, you know, what I think of as being the who's who of clients across the categories there.
06:08Tricolore obviously did not perform that way.
06:11And whenever you experience a fraud of that magnitude, you always step back and try to figure out what you could have done differently.
06:18Was it client selection?
06:20Were there things that we could do in terms of monitoring to get a better sense for early warning?
06:24And I did talk a little bit about this in the aftermath last fall.
06:29But again, the big focus for us is just in making sure that we do the things we need to do to monitor collateral,
06:34because you can't have a secured loan deliver an unsecured loss without it being painful, which, of course, it was.
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