Gerard Cassidy • RBC Capital Markets

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President and CEO Javier Ferrer stated that following the approval of the Genius Act, the company has assembled a team to conduct deeper analysis and explore potential use cases for stablecoins. He acknowledged that it is still "early innings" but confirmed that Popular has begun to address the opportunity, recognizing its future impact on the industry.

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President and COO Javier Ferrer-Fernández outlined his vision to build on the current strategy, focusing on execution and strengthening areas like payments to achieve a 12% ROTCE by year-end and a sustainable 14% long-term. CFO Jorge Garcia acknowledged the bank's robust capital but stressed a measured, long-term approach to capital reduction. He confirmed the current buyback authorization is open-ended and that new authorizations follow a rigorous internal process involving stress tests and regulatory communication.

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CEO Ignacio Alvarez confirmed that the Census Bureau reported positive net in-migration for the first time in years. He detailed that $45B-$47B in federal funds remain, primarily for the electric grid, water systems, and housing, with the grid being an 8-10 year project. CRO Lidio Soriano clarified his earlier comment was about the timing of the credit cycle, not underwriting, but confirmed they have tightened standards and are lending to higher FICO scores.

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CFO Jorge Garcia described the bank's rate position as 'fairly neutral' and noted they are hedging against falling rates by buying 2-3 year treasuries. CRO Lidio Soriano explained the credit card disconnect by stating that new, high-FICO originations are still a small part of the total outstanding balance, so their positive impact is not yet fully reflected in portfolio metrics.

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President, CEO, & Chairman John Turner attributed strong credit quality to healthier customer balance sheets and improved industry-wide risk management. He noted they are working through a few large office credits and that the transportation sector remains stressed but manageable. Senior EVP & CFO David Turner added that consumer credit is strong. Regarding stablecoins, John Turner stated that Regions would likely participate in a bank consortium, similar to its approach with Zelle and other payment initiatives.

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Executive John Turner confirmed the economic data is for their footprint. Executive David Turner acknowledged the pace of reserve decline is uncertain but stated the accounting math dictates the ratio must come down as fully-reserved charge-offs are realized. John Turner identified retail trade, manufacturing (consumer durables), and construction as new areas receiving extra attention.

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Executive John Turner cited high customer liquidity and real estate headwinds as constraints on loan growth. Regarding acquisitions, he noted Ascentium is performing well despite some small business pressure, while EnerBank's growth is muted due to a runoff portfolio. Executive David Turner stated the interim target for the HTM portfolio is to increase it from 14% to around 25% to reduce AOCI volatility, adding that large-scale repositioning is unlikely in 2025.

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CFO Michael Santomassimo explained that the C&I loan growth was broad-based, with contributions from fund finance, TMT, industrials, healthcare, asset-backed lending, and prime brokerage. He confirmed that the rail portfolio was the last significant business divestiture planned as part of the company's multi-year strategic simplification.

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CFO Michael Santomassimo detailed that the C&I growth was broad-based across the Corporate and Investment Bank, including areas like fund finance, TMT, industrials, healthcare, asset-backed lending, and prime brokerage. He also confirmed that the rail portfolio was the last major business identified for divestiture as part of the company's strategic simplification.

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CEO Charlie Scharf stated that the company has not defined a specific optimal revenue mix post-asset cap, but emphasized that building fee businesses in card, wealth, and payments is strategically sound regardless. CFO Mike Santomassimo responded that the entire C&I portfolio is under continuous review, highlighting the company's long-standing and robust credit discipline rather than focusing on specific categories.

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CEO Charlie Scharf identified cybersecurity as the biggest non-economic risk they focus on, with the overall strength of the U.S. economy being the most critical factor for business performance. CFO Mike Santomassimo addressed M&A by stating the company is 100% focused on its significant organic growth opportunities and that this focus will not change even after the asset cap is lifted.

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CEO Charlie Scharf stated that while CRE office performance is within expectations, conditions are not improving but rather worsening as more properties are impacted by revaluations. CFO Michael Santomassimo added that the bank's allowance is appropriate for a workout that will take a long time. On deposits, he noted that customer behavior has not changed significantly, with the year-long trend of slowing migration to higher-yielding products continuing.

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Vice Chair & CFO John Stern explained the mortgage sale was a strategic move to divest single-service loans and reinvest the proceeds at a higher spread, better supporting multi-service clients. President & CEO Gunjan Kedia stated that while the bank is prepared for stablecoins, she does not anticipate a material near-term impact on its primarily domestic payments businesses, as current stablecoin use cases are concentrated in cross-border and institutional payments.

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CFO John Stern explained that while the bank maintains a neutral interest rate risk position, an upward-sloping yield curve is ideal for profitability. He also stated that share repurchases would increase as the bank approaches its target CET1 ratio of approximately 10% under Category II rules, aligning with the long-term goal of a 70-80% total payout ratio.

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CFO John Stern responded that the bank doesn't target a specific loan-to-deposit ratio but holistically manages its balance sheet, noting they shed higher-cost deposits amid muted loan demand. President Gunjan Kedia explained the branch strategy is to increase density within their existing footprint while using digital capabilities and partnerships for capital-light expansion into new markets.

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Chairman & CEO David Solomon explained that the 'high bar' for M&A is primarily strategic and cultural fit, particularly in advancing the Asset & Wealth Management franchise, with financial analysis being a subsequent consideration. Regarding risks, he emphasized the firm's constant focus on risk management for low-probability events and the need to remain vigilant amid geopolitical and policy uncertainty, noting the path forward is 'never a straight line.'

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Executive Denis Coleman clarified that capital from the HPI portfolio is freed up progressively as it's sold down, not at the end. CEO David Solomon stated that uncertainty is up significantly everywhere, but he hears a 'greater sense of short-term concern' from CEOs outside the U.S.

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CEO David Solomon identified potential risks including market sentiment shifts and uncertainty around new administration policies on trade, tax, and energy, as well as cyber risk. Regarding AI, he explained that while the firm is having early success and is focused on efficiency, investors should not expect a specific line-item impact. Instead, AI and technology create capacity to reinvest in and scale the client franchise, making the firm more productive overall.

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CEO David Solomon explained that clients seek the best capital structure for their needs, and Goldman is uniquely positioned to offer a range of solutions from syndicated loans to direct lending. He noted competitors vary by activity: JPMorgan Chase & Co. in syndicated finance, firms like HPS or Ares in direct lending, and Apollo in investment-grade. CFO Denis Coleman added that few competitors match Goldman's breadth across the ecosystem.

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CEO Brian Moynihan stated that the efficiency ratio can move back toward pre-pandemic levels, noting that 200 basis points of the current ratio is due to the accounting for tax credit deals that will run off, and that accelerating NII growth will also drive improvement. Regarding stablecoins, he views them as a potential new payment rail the bank will be prepared to support for clients, similar to how the industry developed Zelle.

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CFO Alastair Borthwick described the commercial loan book as highly diversified, secured, and investment-grade, with growth supporting multinational clients. CEO Brian Moynihan explained that the current credit card charge-off rate represents a normalization from unsustainably low, stimulus-fueled levels and is in line with the pre-pandemic 2019 period.

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CFO Alastair Borthwick credited the strong credit performance to a more resilient consumer with stronger balance sheets and income levels, rather than any change in the bank's consistent underwriting standards. CEO Brian Moynihan identified geopolitical events and the buildup of excess leverage in the non-bank financial system as key risks, emphasizing that the company is managed to withstand such events.

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CEO Brian Moynihan stated that while details are pending, the latest Basel proposal appears more favorable than the original, which would benefit the bank and support returning more capital to shareholders. He also explained the branch expansion is a disciplined strategy to achieve full market coverage in key cities, providing a 'high touch, high tech' experience, as many customers still prefer opening accounts in person.

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Interim CFO Mark Keating confirmed that higher market levels were a positive contributor to fee growth, consistent with their disclosed sensitivities. CEO Ronald O'Hanley explained that 'One State Street' is about delivering the entire firm's capabilities through integrated relationship management. He acknowledged the measurement question was valid and said the company would consider how to provide disclosures to demonstrate its success.

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CEO Ron O'Hanley explained that while machine learning is already deeply embedded in operations like NAV calculation, generative AI is in early testing. He anticipates its first applications will be in client service chatbots and internal HR inquiries. CFO Eric Aboaf added that there are no immediate limits on loan growth, as it is a core part of their relationship-based model and State Street remains a capital-light business compared to peers. He also expressed openness to providing more detailed disclosure on the portfolio.

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CEO Jane Fraser confirmed that Wealth Management saw positive momentum in May and June as clients became more proactive, though they remain cautious. CFO Mark Mason explained the reduction in allocated TCE to Markets was due to the business's excellent work in optimizing RWA and generating higher, more stable returns, which reduced its contribution to stress losses and thus its capital requirement in the firm's annual allocation.

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CEO Jane Fraser confirmed that positive momentum in wealth flows returned in May and June as markets recovered, although clients remain cautious. CFO Mark Mason explained that the lower capital allocation to the Markets business reflects its strong performance in optimizing RWA and generating higher, more stable returns, which reduced its contribution to the firm's modeled stress losses.

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CFO Mark Mason attributed the growth in trading assets to strong performance and client demand across the entire platform. Regarding equity allocation, he explained it's an annual process and the reduction reflects the improved PPNR, profitability, and resiliency of the businesses in internal stress scenarios. This allows them to get the benefit of improved performance even before it might show up in the regulatory stress capital buffer.

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CFO Mark Mason explained that the Banamex IPO process involves multiple steps and regulatory approvals, and he did not provide a precise timeline or ownership structure, noting the P&L impact occurs at deconsolidation. CEO Jane Fraser expressed confidence in the path to mid-to-high teen returns for U.S. Personal Banking, driven by top-line growth from co-brand partnerships like American Airlines, innovation in proprietary cards, and feeding the Wealth business.

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CFO Mark Mason cited product innovation, like the STRATA card refresh, and the normalization of credit costs as key drivers for U.S. Personal Banking returns. He clarified the Banking ACL build was due to portfolio mix changes but was not material, pointing to a low corporate non-accrual loan ratio of 31 basis points.

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CFO David Fox noted that while AUC is about 50% equities, the company is increasingly moving toward solution-based, custody-agnostic revenues. CEO Mike O'Grady commented that potential Basel III changes to operational risk models could be favorable and that SLR changes would add capacity but are not currently needed. He also stated the remaining Visa stake is carried at zero, has a pre-tax unrealized gain of about $1.1 billion, and is considered restricted.

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CEO Mike O'Grady stated that the primary external metric for the 'One Northern Trust' strategy's success will be a higher organic growth rate. Then-CFO Jason Tyler explained that despite a steepening curve, the current short duration of the balance sheet means falling short-term rates would be a headwind for NII, though partially offset by deposit stability and reinvestment benefits.

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CEO William Rogers described the Southeast as 'always competitive' but stated Truist is well-positioned and not seeing unusual aggression in pricing or structure. Chief Risk Officer Brad Bender detailed that NDFI exposure is well-governed, with the largest concentration in REITs, and is considered regular business with long-time clients. Rogers also acknowledged private credit as a known competitor.

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CEO Bill Rogers expressed confidence in maintaining a low double-digit growth CAGR for the investment banking business, highlighting its efficiency and middle-market focus. However, he also stressed the importance of growing other fee income streams like payments and wealth to maintain a diverse revenue mix, suggesting a 'steady as she goes' approach rather than allowing one area to become disproportionately large.

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CEO Bill Rogers stated that the ultimate measure of wallet share gain is improved business returns, specifically ROTCE and ROA, and pointed to metrics like increased checking primacy as evidence. He described the "T3" (Touch + Technology = Trust) strategy, which emphasizes an integrated approach where digital tools and human interaction are complementary, highlighting the critical role of physical branches during recent hurricanes as proof of the model's effectiveness.

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CEO Bruce Van Saun and CFO John Woods stated they prefer to let the remaining short-duration auto portfolio run off naturally to avoid incurring an unnecessary liquidity cost on a sale, noting the balance will be minimal by year-end. Regarding C&I credit, Head of Commercial Banking Don McCree asserted there is no broad deterioration, attributing the small nonaccrual increase to isolated instances rather than a macro trend. He emphasized that clients remain resilient.

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Executive Bruce Van Saun expressed hope for finalized Basel III rules, refreshed supervision, a more insightful CFPB approach to fees, and less friction for M&A. On CRE, Van Saun assessed they are in the 'middle innings' of the workout. Executive Donald McCree added that deterioration has nearly stopped and inflows to workout have slowed to a trickle, with liquidity returning to the broader CRE market. Executive John Woods confirmed criticized assets declined significantly, led by CRE.

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CFO Clark Khayat stated that while he doesn't expect 'massive reserve releases,' the credit book is viewed as stable to improving. Regarding C&I loans, he acknowledged the slight pickup and strong pipelines but noted they are waiting for borrowing activity to materialize more consistently, citing continued low line utilization rates.

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CFO Bryan Preston described a steeper yield curve as 'very powerful' for NII, as it would provide relief on liability costs and improve spreads on fixed-rate assets. CEO Tim Spence added that this outlook is realistic, citing macroeconomic factors that could support a stickier long end of the curve. Regarding capital, Preston reiterated a target dividend payout ratio of 35-45% in normal environments, with buybacks determined by capital capacity after funding organic growth.

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Chief Credit Officer Greg Schroeck explained the commercial charge-offs were driven by two idiosyncratic, previously reserved loans and not a systemic trend. He noted overall credit metrics, including NPAs, improved. Regarding SNCs, he stated exposure to private credit is minimal, with the main exposure to financial sponsors being through well-collateralized subscription lines.

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