Hello and welcome to the Q4 2023 Fifth Third Bancorp Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I'll now turn the conference over to Matt Curoe, Director of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to the Fifth Third's Fourth Quarter 2023 Earnings Call. This morning our Chairman, President, and CEO, Tim Spence; and CFO, Bryan Preston will provide an overview of our fourth quarter results and outlook; our Chief Operating Officer, Jamie Leonard and Chief Credit Officer, Greg Schroeck have also joined for the Q&A portion of the call. Please review the cautionary statements in our materials, which can be found in our earnings release and presentation. These materials contain information regarding the use of non-GAAP measures and reconciliations to the GAAP results, as well as forward-looking statements about Fifth Third's performance. These statements speak only as of January 19, 2024, and Fifth Third undertakes no obligation to update them. Following prepared remarks by Tim and Bryan, we will open up the call for questions. With that, let me turn it over to Tim.

Thanks, Matt, and good morning everyone. At Fifth Third, we believe that great banks distinguish themselves based on how they navigate challenging and uncertain operating environment. 2023 was certainly a challenging year for the industry, but I am very pleased with how we measured up. A defensive balance sheet positioning, strong execution, and multiyear strategic investments produce top-quartile profitability, the best core deposit growth, and the best total shareholder return among all regional peers who did not participate in an FDIC-assisted transaction. We generated an all-time record full-year revenue of $8.7 billion. Deposits grew 5% compared to an industry-wide decline of 3%. Credit performance was strong with net charge-offs remaining below historical averages. And although it would be foolish to expect it to repeat forever, in commercial real estate we experienced zero net charge-offs in 2023 and only two basis points in delinquent loans as of early January. These strong outcomes combined with our multi-year expense discipline produced a full-year adjusted return on assets of 1.25% and adjusted return on tangible common equity ex-AOCI of 15.9% and an adjusted efficiency ratio of 55.9%. All among the best of our peers. We also continue to take market share organically by growing our customer base and deepening relationships. We grew consumer households by 3% overall punctuated by 6% growth in the Southeast. In commercial, we added a record number of new quality middle market relationships up 11% over the prior year. As a result, we grew or maintained our deposit market share position in all 40 of our largest MSAs. As we turn the page to 2024, we remain focused on differentiating Fifth Third based on the strength and consistency of our financial performance by prioritizing stability, profitability, and growth in that order. Bryan will take you through the detail on the…

Thanks, Tim, and thank you to everyone joining us today. 2023 was a very different year than what we were expecting 12 months ago. For Fifth Third, our success in outperforming this year was driven by our intentional actions to create and maintain flexibility for navigating uncertainty. As we enter 2024, we are very pleased with the results from 2023 and how we continue to be well-positioned for a wide range of economic outcomes. We have optionality in our balance sheet and diversification on our business mix that will allow us to adapt to changing environments. As Tim mentioned, achieving this positioning requires discipline and years of deliberate investments. Our full-year financial performance in 2023 benefited from this long-term investment. Fifth Third delivered industry-leading deposit growth of 5%, record revenue of $8.7 billion, and 100 basis points of capital accretion during the year, all while maintaining expense and credit discipline. We delivered another solid quarter to end the year. Adjusting for the FDIC special assessment and the other discrete items listed on page two of our release, return on assets was 1.3%, RoTCE was 17%, and our efficiency ratio was 55%. Additionally, we completed our risk-weighted asset diet in the fourth quarter, which reduced RWA by 3%, which was a little more than we previously estimated. The diet combined with our strong earnings led to a nearly 50 basis point increase in CET1 during the quarter, which ended at 10.3%. This capital accretion combined with the rally in market rates during the fourth quarter resulted in our pro forma CET1 ratio including the AOCI impact from unrealized losses on AFS securities, increasing to 7.7% at year-end, well above the 7% minimum. Net interest income for the quarter was $1.4 billion, which was consistent with our expectations. While NII continues to…

Thanks, Bryan. Before we start Q&A, given the time we have this morning, we ask that you limit yourself to one question and a follow-up and then return to the queue if you have additional questions. Operator, please open the call for Q&A.

Thank you. [Operator Instructions] Your first question comes from the line of Scott Siefers of Piper Sandler. Your line is open.

Good morning, everybody. Thank you for taking the question. A lot of good color on the NII expectations, so I appreciate that. I guess just within there, I think, Bryan, you noted your comment about deposit costs decreasing through the course of this year. Maybe a thought or two on how those trajectories will differ in your view between the commercial and the consumer portfolios.

Thanks, Scott. Great question. We tell you that obviously similar to what we've seen from a rising rate perspective. The commercial and the wealth betas in particular, were -- have come through recently at a much higher level. We're in the range of probably low to high 80s from a beta perspective in both of those businesses. Cumulative betas have started to reach that point. So we're going to get a lot of repricing out of those portfolios as rates move lower. To give you a little bit of perspective, our indexed commercial deposits right now are up around $30 billion. So that gives us a lot of confidence in our ability to get some price out of that book. The consumer book is one that the betas -- the cumulative betas in that book is kind of in the mid-30s right now. It certainly moved up from a marginal perspective and we continue to have a lot of optionality between our promos and exceptions as well as what we've done from a CD perspective. We're going to be able to get rate cuts out of those portfolios as well. Our CD book, which is $10 billion now is fairly evenly laddered across the year with about 25% maturities across each quarter. We've been very careful as part of our pricing strategy to make sure that we could be able to reprice those down quickly as the rate environment were to change.

Perfect. Thank you. And then separately, so given that you're done with the RWA mitigation efforts, it sounds like you've got the option to be on your front foot to the extent that you choose to be going into the year. Just sort of curious what your expectation is in terms of loan demand as the year plays out.

Yes. Scott, it's Tim. I'll take that one. I mean, look, when we talk to customers today, I think in general, they're cautious but not pessimistic. So rates in the election uncertainty are definitely weighing on the appetite for new investments in the near term. I don't know of anybody who stopped an existing program or an existing investment, but they are being very careful about new expansion. So I don't expect that we're going to see a big pickup in loan demand. And I'm sure we'll get a question later on the economy. We're not expecting robust growth to drive the top line there. It's going to have to come from market share gains. So -- in our world, the key areas of investment there are very clearly in the middle market, where we have been very focused in driving more granularity into the C&I portfolio. Our middle market loan production this past year was nearly 50-50 split between the Midwest markets, including Chicago and then the Southeast markets and our expansion markets in California and Texas. And our sales force in those locations across the entire footprint is going to be up about 20% over a three-year period here for 2024. So we've got a good pent-up sales capacity there and high activity levels that will drive the outcome. And then I think the other area of strength has been in the health care and telecom, media and technology verticals. And then in the fintech platforms, right, the continued seasoning in of both provide and dividend portfolios. The last thing is the absence of a negative here, which is the auto business, our deliberate rundown of the outstandings in the auto business have created a little bit of a drag on loan growth. And the combination of credit unions being a little bit more funding constrained than all the banks who exited have created a much more favorable environment for auto originations. So we expect volumes there to come up. We're generating volume today with a weighted average FICO north of 780 and very attractive risk-adjusted spreads and that should stop the headwind and give us a more stable platform from which we'll get growth through the rest of the year.

Perfect. Okay, great color. Thank you very much.

Absolutely.

Your next question comes from the line of Gerard Cassidy of RBC. Your line is open.

Hi, Tim. Hi, Bryan.

Good morning.

Congratulations, Bryan, on a new role. And if Jamie is listening, congratulations to him as well.

Worse than that, Gerard, Jamie is here.

I hear that laugh. That's great. Here's like and you touched on it Tim about the economy -- many of the banks, you as well, are following the forward curve for rates, which is understandable. And there continuing to be signs that the US economy is proving more resilient than we all expected. And so the question is this for the upcoming year, what if we're all wrong -- and all of a sudden, we see 2% plus real GDP growth, the Fed doesn't move on rates, maybe one or two cuts like what we saw in '95. And credit remains even better. How does that affect the way you approach what you've set up for '24? I know Bryan gave us some color on the different interest rate scenarios. But wants just come into this year, at the end of this year, it proves to be much stronger than any of us are expecting and inflation stays around 3%.

Yes. I'll leave it to Bryan to provide more detail, drag. But I'm glad you asked that question because if there is one frustration, I have, in particular, on the way that the media is reporting on economic activity is the treating the world like it's deterministic and it's not, right? It's stochastic in terms of the outcomes here and while you can see the slowdown in inflation, you can see some slowdown in the economy, in particular, in specific sectors. It's just hard to be certain, given the impact of deficit spending and the way that has continued to provide a buffer against any consumer slowdown. And I think the possibility that maybe we return to a world where recessions in the US are regional as opposed to being national phenomenon, which I think people have forgotten about because of the last two were driven by global health pandemic and a global financial crisis. So we're trying to run the company in a way that provides an outlook on the expected outcomes in the middle of the distribution, but that manages to a much more stable return profile in the event we get into either of the tails, right, more robust economic growth, stickier inflation on one side of the equation and therefore, the Fed not being able to come off of its restrictive policies and stuff. And the other alternative, where I think you have to say you have some sort of a geopolitical event that creates a price shock and energy or another supply chain issue or otherwise, which could trigger an unexpected slowdown. So Bryan, maybe a little color on the upside.

Yes, absolutely. I think the scenario that you're laying out there with fewer Fed cuts, continued strength from an economic perspective, that's not a remote scenario in our view. We feel like that is something that could very easily happen, especially in the first half of the year as we continue to see potentially some strong resiliency from the consumers. What that means for us, and it's a big part of the actions that we've taken thus far is that we think that could cause the long end of the curve to move up a little bit, that would actually be beneficial for us as we get an even greater benefit from the fixed rate asset repricing. We've talked previously that full year impact of fixed rate asset repricing should generate about $300 million of annualized run rate NII improvement. And that number would look even better if we saw that long and move up. It also is part of the rationale associated with shifting some of our securities into HTM. So a stronger economy is one that we're actually would obviously always hope for because we're very well positioned for that. To quote Jamie, you can't spell flexibility without FITB. That's something that we have been very focused on and recognizing that we can be wrong on both sides, the economy weaker or stronger, and we're well positioned for that.

Very good. Thank you. And then another bigger picture question, Tim. I think you touched on your middle market business, customers grew 11% year-over-year. And then later in the comments, I think you said that you got to take these customers or clients from maybe other banks. How are you guys doing that? And then if you could tie it into that loan-to-deposit ratio, I think you guys said you're at 72%. What's the ideal level that you eventually like to get to? Thank you.

Yes. I mean I think it's a combination of things, Gerard. The first one is we've been very deliberate to select a few places and invest multiyear when we think about how we invest strategically, right? So the Southeast is obviously a key point of focus there. And I know a lot of people are investing in the Southeast, but it bears reminding that we've been in nearly every one of the markets down there for more than 15 years. And we're not running small LPOs. We have more than 200 client-facing people in those markets across commercial banking and wealth management alone. And then like another 1,700 that said in more than 300 branches. And the brand is seeded in those markets. So those investments when you make them, you make the investment in year one, but they don't actually hit the sort of peak benefit until year five or six. So you have this accumulation I guess a coiled spring for lack of a better term that supports then more sustained growth. We have the same benefit in the Midwest in Chicago, in particular. I mean, we added nearly 100 new quality relationships in Chicago in the middle market alone last year and have been gaining share pretty steadily at least if you use the FDIC deposit share measures as the guide. In Chicago because we're still seeing the benefits that we got out of the combination between Fifth Third and MB in those markets. The other area that we are winning, where we win is through the strength of the treasury management and the capital markets platform, which really is a middle market-focused offering for Fifth Third. About 1/3 of the new quality relationships we added in treasury management last year were treasury management only. So as opposed to being a follow-on product that you deliver into a customer that you lend money to, they're actually contributing to the relationship acquisition. And that's an engine that just wouldn't have existed here in the past, and I think still doesn't exist inside most of our peers.

Thank you.

Your next question comes from the line of Mike Mayo of Wells Fargo Securities. Your line is open.

Hey, Mike.

Hey, I'll ask a question about the quarter, then requeue for bigger picture question. But what you don't hear too many regionals talking about buybacks like you are right now. So -- but you have a lot of numbers you're tossing out there. You have a 7% CET1 minimum, 7.7%, 10.5% by mid-year. It might be better on the buyback of $300 million to $400 million depending on the rules. So I guess, I just want to be a little more concrete. So -- are you sure that you want to be talking about buybacks as much as you are now? And what gives you confidence in doing so? And then the other side of that is you say if the rules get eased, then you might be able to buy back more than the $300 million to $400 million. So just give us the kind of the whole range of options, if you could.

Yes, Mike. And what we would tell you on the buybacks and in particular, on the rule, the -- there's a lot -- there appears to be momentum associated with some relief on both the ops risk side and the credit risk RWA. As we've continued to refine our estimate from an RWA perspective, the rule as proposed is a low single-digit impact from an RWA perspective. And almost seven points of RWA is created by the ops risk rule. So if that is pared back, we could actually see our RWA go down under the new rule, which obviously creates a lot of incremental capacity for us as we think about how much capital we need to help run the company from a long-term perspective. Additionally, we have a lot of confidence in the stability of the capital ratios going forward and the pace at which we're accreting capital, that in combined with the actions that we've taken from a security portfolio perspective to de-risk the portfolio with the HCM election as well as just the continued benefit that we're going to get from roll-in on the remaining AFS portfolio. It just puts us in a position where we are going to have a lot of capital generation and a lot of ability to have flexibility to return capital if the organic growth opportunities aren't there.

Yes. And Mike, I think the one thing I would add to what Bryan said we've tried to be very clear and transparent that our belief is it's always better if you have to make a change to adapt to new regulation, it's better to get there first. We did that as it related to consumer deposit fees, right, and very deliberate about being early there because we just viewed those profit pools as being unsustainable. I think we were clear this past summer and through the fall and winter that our intention on putting ourselves on the RWA diet and focusing as much as we did on building liquidity was that we wanted to get to the rules there first because of the flexibility that it provided. So we ended the year at roughly 10.3 in terms of the CET1. We said we wanted to get to 10.5. We'll get there just based on the current run rate in the middle of the second quarter, you had to pick a particular spot. And that gives us then the ability to return to share repurchases subject to the environment not changing, maybe a little bit earlier than others.

And a short follow-up. So Basel III gets gutted, I guess, not a high probability, but some have mentioned that recently, then your RWAs, obviously, would be flat. So you might be better off if they change the ops rule -- and it passes. Did I get that right?

Yes.

Other than if it truly gets gutted and the AOCI impact, that would be a better option than even if ops risk rule got gutted, so.

Okay. Thank you.

Your next question comes from the line of Ebrahim Poonawala of Bank of America.

Good morning.

Good morning.

I guess two questions. One, first on trying to make sense of the loan-to-deposit ratio at 70% relative to Fifth-Third's history prior to the pandemic. And even relative to some of your peers -- is a 70% loan-to-deposit ratio, the new normal for the bank or trying to understand if there's anything idiosyncratic about the deposit base that requires you to hold and operate with a lower loan-to-deposit ratio.

Great question. I would tell you that 72% is not our long-term target, but I would say that our loan-to-deposit ratio has come down relative to pre-pandemic levels. And a big portion of that is just heightened expectations regarding liquidity. So I would expect us to operate in the mid-70s more than likely from a long-term perspective with loan-to-deposit. We were probably mid-80s pre-pandemic. So that is something that we would expect to continue. But we do think that we can move up from the current levels.

Got it. And I guess a separate question maybe for Tim. I think you tried to sort of draw some distance between you and some of your peers around the Southeast technology investments. If we take those statements and account for how do you think this should reflect into should fiscal become a higher growth bank relative to these banks, a more efficient bank? Like what should we be measuring you against and do we start seeing that this year and next year? Or is this more of a longer-term process?

Yes, great question Ebrahim. And I think maybe a nuance, I'm less trying to draw a distinction between us and others than I am to say that you can't get what we think we have in terms of the advantages overnight, right? They're not advantages that can be built in one to two years. They require a steady and consistent investment, which, of course, has been the philosophy here, along with the belief that you have to find ways to self-fund it through efficiency and better productivity along the way. And I'm hesitant to say Fifth Third is going to be a growth bank because I think four or five of the people who are described as growth banks failed this past year. Our belief, though, is that great companies should be able to take market share on an organic basis. So if you assume that the base market growth is somewhere around 2% or at least the financial services sector should be able to track GDP. There's a headwind with the emergence of all of these nonbank competitors. Therefore, the more realistic goal from my perspective is to try to beat GDP by a couple of percentage points on an annualized basis, which probably means you need to have 3% to 4% outsized growth relative to your market. These granular investments we're making across the Southeast are definitely part of the way that matriculates in the performance. I think the other place then you should expect to see it, given where we're investing is continued support for a better fees to total revenue mix, which is going to be really critically important in the event that the rules as they are proposed do pass because of the impact that higher capital and liquidity requirements are going to have. And you're seeing that today. The core Fifth Third consumer franchise, if you just look at household acquisition as a measure is outgrowing Midwest population growth by about 1.5% per year. It's outgrowing the Southeast markets by about four percentage points per year. So you can see the impact of the incremental investment, if you just disaggregate our business and look at it on a market-by-market basis. Jamie, maybe you want to add something here?

Yes, Ebrahim, on maybe to tie your two questions together, on the loan-to-deposit ratio, part of the improvement has been the strong deposit growth we've been able to get both from the RWA diet, which I talked about a couple of quarters ago, just how customer reaction resulted in more deposits and a better share of wallet. And that continued in the fourth quarter and commercial deposits, you see in the numbers are up nicely. And then on the Southeast, we actually grew deposits in the Southeast, 5% just in the fourth quarter. And so you do get that growth in the numbers, but the Midwest still grew in total about 1%. So we've got a very nice balance here of Midwest and Southeast. And I was down in South Carolina on Wednesday, we opened our 10th branch in South Carolina this week and have plans to do 25 more over the next five years. So I think you'll continue to see the benefits of the investments over the last three years as we continue to really expand that Southeast presence.

Thank you.

Your next question comes from the line of Erika Najarian of UBS. Your line is open.

Good morning. This is Nick Holowko on for Erika. I think in the past, you've talked about a curve where the front end is in the low 3% range as an ideal rate environment for the bank. Is that still the right way to think about it? And if we get to that range, do you think we could see NIM migrate back to the 3.20% to 3.30% range that you're producing back in the 2018, 2019 period. Thank you.

Yes, absolutely. We're turning to a normal curve where we would have, I'd say, a 3% front end and maybe 100 to 200 basis points of spread between the front end and the 10-year rate is a very ideal environment for us because, one, we are going to get the benefit of deposit repricing lower, and at the same time, still being able to pick up a lot of benefit associated with that fixed rate asset repricing. So being able to achieve a 3.20% plus NIM in that kind of scenario, a year or two forward would be something that would be easily -- that should be very easily achievable, and we feel good about that environment.

Your next question comes from the line of Vivek Juneja of JPMorgan. Your line is open.

Hi. Congrats, Bryan and Jamie. A couple of quick questions for you guys. One is in your NII outlook that you've given for the year, what are you assuming for deposit betas on the way down. Sorry if I missed that, trying to keep an eye on bunch of different releases this morning.

Glad you asked the question. It's the first time it's come off, actually, and it wasn't in our scripted remarks. We are expecting betas on the way down to look very similar to what we saw in the last couple of hikes which is in a 60% to 70% range. We don't expect a significant difference in betas between like the first cut and the third cut. You're still at such a high level that, that beta should be relatively high from a marginal perspective. Our rate risk disclosures, we talk about, say, 60% to 65% beta on the way down. We tend to be a little bit conservative on those disclosures. So we think we're going to be able to deliver that, if not a little bit better.

Great. Another little one. Other consumer loans, the NPLs moved up quite a bit linked quarter to a little over 1%. Any color is that coming from dividend finance? Or is that something else?

Yes. It's Jamie, Vivek. Yes, it is actually from dividend finance. And the driver of that -- there's some element that's just normalization as you go through growing a new company, but that's a smaller part of it. The larger part of it of the increase is actually from our decision to deliver a good customer experience for the borrowers that have had instances where there are delays in getting the solar panel installations to receive permission to operate from the utilities that could also be delayed due to installer performance issues or supply chain shortages. So what we've elected to do is different forms of deferment or modification in order to assist the borrowers. And then I would expect this to improve over time as we continue to improve the installer network as well.

So not much loss content you'd expect from that, Jamie then, since it seems like you're deferring rather than that.

There will be lost content in there. It is appropriately reserved, so not an income impact. But from a solar perspective, we continue to run solar losses around 1% or so. And as we talked about, our deal model was 130 basis points on solar. The challenge we've had from a loss content perspective has been on the home improvement side, where dividend had a subprime component to their portfolio that has higher losses. And we stopped originating that product back over a year ago. So there will be some loss content, but I don't think you would see it impacting income.

Okay. Thank you.

Your next question comes from the line of Matt O'Connor of Deutsche Bank. Your line is open.

Good morning. I was wondering if you guys can elaborate a bit on the commercial real estate exposure. Obviously, it's a bit less than peers. And as you noted, no charge-offs last year, but your nonperformers are also into this event and even the office criticized is a relatively low 6% compared to others. So how is it so good? And I guess, are you confident that the marks and estimates are up to date. Thank you.

Yes, it's Greg. Great question. So yes, very confident in our marks and where we currently are. Also very, very comfortable with the overall asset quality. We've been, for the last several years, very disciplined in terms of our client selection. We're underwriting commercial real estate, specifically office at something below 60% loan to value. We've got 90% recourse on that portfolio. And so our borrowers are continuing to exhibit the right behaviors. They're supporting their projects. They're writing checks to reduce the debt as necessary. We're out ahead of that portfolio. The maturities are evenly split over the next four to five years. We don't have that so-called wall of maturities that we've heard from some other banks and you've heard in the marketplace. So I do feel very good about the overall portfolio, our office included.

And then just more broadly speaking, obviously, the overall charge-off outlook for this year is fairly benign 35 to 45 basis points. Any more color in terms of drivers of call it, the midpoint of that range versus 2023 levels?

I think we're going to continue to see a lot of what we saw in 2024 with what we saw in 2023, right? We don't have any significant trends geographically or by product. And so what we saw in 2023 was a little bit more episodic. And based on what we're seeing on the C&I side right now, I mean, our borrowers have done a nice job both on the executing on the revenue expense management side, there's obviously margin compression. But overall, as Tim said earlier, they're looking for the same things we're looking for, which is what is the Fed going to do and when. We hear a lot about labor costs, so they're keeping their eye on that. So I think we're going to have a lot of the same old same old, certainly as we get into the first and second quarters in terms of what we're seeing both from a loss content and commercial real estate minimal and C&I, right? We will have a name pop up every once in a while we'll deal with it. But again, we're not seeing trends that would lead me to believe that our criticized assets -- our overall asset quality is going to move much from where it is right now. Again, as we sit here today heading into the first quarter.

Okay. That's helpful. Thank you.

Your next question comes from the line of Christopher Marinac of Janney Montgomery Scott. Your line is open.

Hey, thanks. Good morning. Can you remind us how the commercial C&I DDAs behave on a down rate environment? And is there any reason to believe that they wouldn't kind of behave positively in your favor this time?

Yes, absolutely. We would expect DDAs to especially the migration to stop migrating into interest-bearing and begin growing as rates cuts begin to occur. We talked about that a little bit in the scripted remarks that if we were to see more aggressive cuts, we'd see some opportunity there. We've typically modeled somewhere between $500 million and $1 billion of DDA migration per 100 basis points of rate hikes or rate cuts. We'd expect that to be a fairly similar migration level on up or down, just positive or negative. We would tell you that probably the beginning cut or two, maybe it's a little bit slower, but if you were to see a much more aggressive path, and if the Fed funds rate got down into the 3s, we would expect a decent reversal.

Got it. That makes sense. Thank you, Bryan, and then just a quick follow-up on reserve build -- would you still build reserves kind of within the current level we have today? I'm just trying to compare the guide of 35 to 40 basis points in the average life of the portfolio is less than four. There's really strong coverage. So just curious if you would build that same level.

Yes. As long as the economic scenario is similar and the mix of the portfolio, obviously, is very important in terms of what drives a build. Certainly, dividend, some of the things that we're talking about from an auto perspective, where can carry a little bit more reserve that has an impact from a build perspective that drives more of the dollar built than anything else at this point.

Great. Thank you for taking my questions.

Thank you.

There are no further questions at this time. I will now turn the call back to Matt Curoe for some closing remarks.

Thank you, JL and thanks, everyone, for your interest in Fifth Third. Please contact the Investor Relations department if you have any follow-up questions. JL, you can now disconnect the call.

This concludes today's conference call. You may now disconnect.