Fifth Third Bancorp (NASDAQ:FITB) Q2 2023 Earnings Call Transcript

Greg Schroeck: Yes. I think it’s the ongoing review of the portfolio. As an example, in the second quarter, our team completed a complete review of our office portfolio, right? And so as we continue to stress that portfolio increasing rates using the forward curve to try to get out ahead of where those cash flows end up if rates continue to increase, but also looking at the softening rental rates in that portfolio in the real estate portfolio. That’s how we stay ahead of it. We’re not waiting for a covenant to forge, we’re not waiting for borrowers to come to us. We’re active, proactive in again, stressing the portfolio across the board, not just in commercial real estate. So we see what’s coming. I think it’s one of the lessons learned and a lot of us have the battles cars from the last crisis of being much more proactive state out ahead of it and then bringing forward solutions to our clients that, again, that are more proactive as opposed to, again, waiting for the covenant defaults, waiting for something to drop off the table.

So that’s what I’m really referring to in terms of the merchant risk.

James Leonard: The other one, Gerard, that we’ve talked about in the past has been some of the proprietary systems we have from an early warning perspective, keeping an eye on real-time liquidity metrics out of the book that we’ve learned, whether it’s through some of the ABL monitoring that was doing that we’ve adapted as the best practice inside Fifth Third as well as then what other banks do always with regard to covenant monitoring and other vulnerability assessment.

Greg Schroeck: Real-time liquidity metrics was kind of what Jamie is referring to.

Gerard Cassidy: Very good. And then just as a follow-up, Greg, you mentioned one to two loans, the little pop that you’ll likely see in the third quarter. were those shared national credits? And second, how big were the individual loans? And are you still making shared national credit loans today? .

Greg Schroeck: So second question, yes, on a select basis, we are still making shared national credit decisions. One of the credits that I was referring to that could impact is a shared national credit. The second one is not.

Operator: And we have reached the end of our question-and-answer session. I will now turn the call back over to Chris Doll for some closing remarks.

Chris Doll: Thank you, Rob, and thanks, everyone, for your interest in Fifth Third. Please contact the IR department if you have any follow-up questions. Rob, you may now disconnect the call.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.