Brian Foran

Brian Foran asked whether Old National Bancorp expects consolidated loan growth in 2026 to be similar to its legacy Old National growth, specifically regarding the integration of Bremer Bank. He also inquired about the deposit side, asking if Bremer is already contributing to deposit growth and if its trajectory will align with Old National's legacy deposit growth going forward.

Answer

CEO Jim Ryan affirmed that consolidated loan growth in 2026 should absolutely be similar to the total average loan growth of the organization, expecting the Bremer Bank footprint in Minnesota to actually generate more on average. He clarified that any quarterly changes are due to the newness of portfolios and ongoing reviews of national businesses they don't pursue. Jim Ryan also stated that the total balance sheet, including fee income, should have a similar mix, and the Bremer market is expected to lead the organization in growth, with no outlying differences anticipated in 2026.

Brian Foran asked if consolidated loan growth in 2026 should be expected to be similar to Old National's legacy loan growth, despite the initial trimming of Bremer loans. He also inquired if Bremer is already contributing to deposit growth and if its deposit trajectory will be similar to Old National's legacy going forward.

Answer

CEO Jim Ryan affirmed that consolidated loan growth in 2026 should absolutely be similar to the total company's average, expecting the Bremer footprint to generate more on average than the total company. He also stated that the total balance sheet and fee income lines, including Bremer, should have a similar mix and, on average, lead the organization in growth, with no outlying differences expected in 2026.

Brian Foran asked for clarification on the earnings per share impact from the Bremer partnership, specifically whether the decision to retain $2.4 billion in CRE loans was the primary change to the accretion model.

Answer

CFO John Moran confirmed that the improved EPS outlook compared to the original model is driven by the earnings from the retained $2.4 billion in CRE loans offsetting the lower-than-expected purchase accounting rate marks. He affirmed that using the original $2.60 EPS estimate for 2026 plus a modest benefit is a fair assessment.

Brian Foran asked about the interactions between the Gold and Platinum cards, particularly with the increased dining benefits on Platinum, and whether there was white space for a new card product between Platinum and Centurion (Black Card) given consumer willingness to pay high annual fees.

Answer

Chairman and CEO Stephen Squeri stated that Gold remains a very strong product with continued new cardholder acquisition, and while upgrades are occurring, it's still early to assess the full interaction. He acknowledged that a product between Platinum and Centurion is something discussed internally but did not commit to any specific plans, emphasizing satisfaction with the current positioning of Centurion and Platinum.

Brian Foran of Truist Securities highlighted an investor concern about the disconnect between spend volume growth (+7%) and slower growth in discount revenue net of rewards (+1-2%), asking for management's perspective on this dynamic.

Answer

CFO Christophe Le Caillec explained that the key metric is the Variable Customer Engagement (VCE) ratio to revenue, which they manage holistically. He noted that a higher VCE ratio is not inherently negative, as it is often tied to the most premium and value-accretive products that deliver benefits in other areas, such as marketing efficiency and superior credit outcomes. Chairman and CEO Stephen Squeri added that they evaluate the overall revenue associated with a product, not just one component.

Brian Foran sought clarification on whether the 8-10% revenue guidance is FX-adjusted or GAAP and asked about the embedded EPS impact from foreign exchange rates.

Answer

CFO Christophe Le Caillec (identified as Unknown Executive) explained that guidance is provided on an FX-adjusted basis to reflect true business momentum, as predicting year-end FX rates is impossible. He used Q4 as an example, where FX created a 1-point difference between adjusted and GAAP revenue growth. For EPS impact, he referred to company filings, which state a 10% increase in the dollar negatively impacts pre-tax income by approximately $136 million.

Brian Foran from Truist Securities asked if Capital One is considering providing more specific financial guidance or targets to help investors navigate the complex post-acquisition transition period.

Answer

Richard Fairbank, Founder, Chairman & CEO, reiterated the company's long-held philosophy of not running the business to meet specific guidance. He explained that guidance is given situationally and that his comments on the consistency of the deal's expected earnings power were intended to provide a 'bounding' for investors. He indicated that investors should not expect a detailed layout of specific numerical guidance in the near term.

Brian Foran asked for an update on spending trends between high-end and low-end consumers, particularly in reaction to tariffs. He also sought to clarify if the network strategy is an incremental investment or a major reset to compete directly with Visa and Mastercard.

Answer

Richard Fairbank, Chairman and CEO, noted no significant difference in recent spending patterns between high-end and low-end consumers. On the network strategy, he clarified they are not trying to replicate the Visa/Mastercard model. The primary goal is to move more of Capital One's own volume onto the network, which requires a long-term journey of building international acceptance, rather than a 'full stop' competitive reset.

Brian Foran asked for management's view on the bank's normalized return potential, given the stock's valuation relative to its current ROTCE. He also inquired about the expected trajectory of Net Interest Income (NII) for the remainder of the year under a four rate-cut scenario.

Answer

CFO Craig Nix emphasized a focus on ROE and tangible book value growth over ROTCE, stating a long-term goal of double-digit ROE. He provided detailed NII guidance, projecting that with 3-4 rate cuts, headline NII would be up low-single-digits by Q4 2025, with a likely trough for key metrics in Q1 2026.

Brian Foran followed up on M&A, asking for the specific factors driving the view of a slow deal environment. He also asked for the key leading indicators that will signal whether the current loan demand slowdown is a temporary pause or a longer-term trend.

Answer

CEO Curtis Farmer attributed the M&A slowdown to 'all of the above,' including regulatory rules, the economy, interest rates, and valuation marks. Chief Banking Officer Peter Sefzik identified the interest rate outlook, the broader macro economy, and performance in key sectors like Michigan Middle Market as the primary indicators for future loan demand.

Brian Foran asked for context on the commercial payments business, including how its scale compares to peers and what metrics best demonstrate its strength, and also inquired about the primary upside and downside risks to the full-year guidance.

Answer

CEO Tim Spence highlighted that Fifth Third is overweight in commercial payments, evidenced by high volume-to-deposit ratios and strong client penetration, partly driven by fintech partnerships. For guidance risks, CFO Bryan Preston identified loan growth and deposit costs as key variables for NII, with market activity being a potential source of volatility for fee income.

Brian Foran from Truist Securities asked for a detailed breakdown of the 20% NII growth forecast and questioned why it wasn't higher given several positive factors. He also inquired about the long-term normalized Net Interest Margin (NIM) range for 2026 and beyond, and whether the consumer loan runoff would conclude in 2025.

Answer

CFO Clark Khayat detailed the drivers for the 20% NII growth, noting that lower starting loan balances offset some positive developments. He stated that for 2026 and beyond, the NIM could reach '3% or maybe even better.' He also clarified that the consumer loan runoff would likely continue past 2025 due to its rate-sensitive nature, but consumer lending remains a long-term strategic focus.

Brian Foran of Truist Securities inquired about KeyCorp's view on a longer-term, normalized Net Interest Margin (NIM) range beyond 2025 and asked if the runoff of the consumer loan portfolio would be completed during the year.

Answer

CFO Clark H. I. Khayat projected that there is 'no reason why' the NIM wouldn't reach 3% or better sometime in 2026. He also explained that the consumer loan runoff is structural and will likely continue in the near term, though consumer lending remains an important long-term part of the balance sheet strategy.

Brian Foran asked about the drivers behind the potential deceleration in loan growth rates for 2025 and sought details on the performance of new geographic and vertical investments.

Answer

CFO Zachary Wasserman clarified the guidance represents sustaining the current strong run-rate, not a significant deceleration. CEO Stephen Steinour added that seasonality impacts quarterly comparisons and that business pipelines are 50% higher year-over-year. Steinour highlighted that new markets in the Carolinas and Texas are already profitable on a direct expense basis and that the fund finance vertical has ramped up exceptionally fast, with investments continuing.

Brian Foran asked about the key economic assumptions, such as home price declines, embedded in the bank's allowance for credit losses. He also sought clarification on the role of real estate brokers in business referrals and the associated client cross-sell timeline.

Answer

Acting CFO Olga Tsokova and CEO Mike Roffler explained the allowance is appropriate given the bank's pristine long-term credit history (9 bps of cumulative losses) and conservative underwriting with low LTVs. Founder and Executive Chairman James Herbert clarified that they do not use brokered loans; rather, real estate brokers refer clients directly due to the bank's reliability. Chief Banking Officer Mike Selfridge added that there is a lag in cross-selling as the bank focuses on earning the full relationship over time after an initial trial.