Fifth Third Bancorp (NASDAQ:FITB) Q4 2022 Earnings Call Transcript

Operator: Your next question comes from the line of Ken Usdin from Jefferies. Your line is open.

Unidentified Analyst: Hey, guys. This is Ben Reseck on for Ken. Just a quick follow-up on the Dividend Finance. As those originations continue to ramp up and mortgage loans go on balance sheet, when do you ultimately see that NII benefit overcoming the reserve builds and becoming accretive to earnings? And then, can you just remind us of what type of loss rates you’re assuming on those dividend loans? Thanks.

James Leonard: Yes. Great question. The PPNR levels for Dividend will be positive in the back half of — or in 2023. The net income of Dividend post ACL will be positive or accretive in 2024. Certainly, if prepayments accelerate faster than what we have modeled, then that large amount of unamortized platform fees will come through the P&L, would it improve or accelerate the return profile. But for now, that’s how we have it playing out. And we model roughly an eight-year life on the dividend asset and that we would expect to have loss rates in the 125 basis point area on a blended basis for the portfolio per year over those eight years.

Unidentified Analyst: Great. Thanks for taking the question.

Operator: And there are no further questions at this time. Mr. Chris Doll, I turn the call back over to you for some closing remarks.

End of Q&A:

Chris Doll: Thank you operator, and thanks everyone for your interest in Fifth Third. Please contact the investor relations department if you have any follow-up questions. Operator, you can now disconnect the call.

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