John McDonald

John McDonald asked about Ameris Bancorp's deposit trends, specifically the decline in non-interest bearing (NIB) deposits, seasonality, and the planned mix evolution for future growth. He also questioned the relationship between deposit growth and loan growth forecasts and the nature of the provision for unfunded commitments.

Answer

CFO Nicole Stokes explained the Q4 NIB decline was due to seasonal public funds inflows offset by mortgage escrow outflows and some customer tax/balance sheet management, with much of it already returning. She emphasized focus on core deposit growth and relationship banking, aiming for mid-single-digit growth, clarifying that while core loan growth is tied to core deposits, other loan segments might be funded by brokered/wholesale. The provision for unfunded commitments reflects rebuilding a bucket that had hit a wall, signaling future loan growth.

John McDonald from Truist Securities asked about Ameris Bancorp's Q4 deposit trends, specifically the decline in non-interest bearing (NIB) deposits and whether any of it has returned, along with the planned mix evolution for deposits in the mid-single-digit growth outlook. He also questioned if the mid-single-digit loan and deposit growth forecasts are linked, given potential for higher loan growth if payoffs normalize. Lastly, he inquired about the unique aspects of the Q4 provision build, particularly the portion related to unfunded commitments.

Answer

CFO Nicole Stokes explained that Q4 NIB deposits are seasonally lowest due to public funds inflows and mortgage escrow outflows, noting some customer outflows for tax planning have already returned. She emphasized focus on growing core operating and money market accounts, backfilling with brokered deposits to maintain 5% of total. Stokes clarified that while core bank loan growth is tied to core deposits, other loan portfolio components may be funded by brokered/wholesale deposits. She added that the provision for unfunded commitments, seen for two consecutive quarters, reflects rebuilding a previously constrained bucket, signaling future loan growth.

John McDonald asked about SouthState Bank's net interest margin (NIM) outlook for 2026, including deposit costs and strategies for funding expected loan growth. He also inquired about loan growth expectations for the year, particularly what factors could drive growth to the upper end of the guidance.

Answer

COO Stephen Young reiterated NIM guidance of 3.80-3.90% for 2026, citing stable interest-earning assets, three anticipated rate cuts, $125 million in loan accretion, and a deposit beta of 27%. CEO John Corbett discussed the growing loan pipeline, record production in Q4 2025, and reaffirmed mid to upper single-digit loan growth guidance for 2026, noting growth in investor commercial real estate and strong momentum in Texas and Colorado as potential drivers for higher growth.

John McDonald asked about SouthState Bank's net interest margin (NIM) outlook for the year, including expectations for deposit costs and strategies for funding anticipated loan growth. He also inquired about the company's loan growth expectations for the current year, specifically what factors could drive growth to the upper end of their guidance.

Answer

Stephen Young, COO, reiterated NIM guidance of 3.80%-3.90% for 2026, with deposit costs averaging around 1.75% in Q1, based on assumptions of $61-$62 billion in interest-earning assets, three rate cuts, and $125 million in loan accretion. John Corbett, CEO, confirmed mid to upper single-digit loan growth guidance for 2026, noting a pipeline increase from $3.4 billion to $5 billion. He added that continued momentum in investor commercial real estate and strong pipeline builds in Texas and Colorado, particularly reaching $1 billion, would contribute to the upper end of loan growth.

John McDonald from Truist Securities followed up on the NIM discussion, asking for details on the drivers of the strong deposit cost performance and the outlook for those costs. He also questioned if there were any changes in loan paydown activity affecting net growth.

Answer

Chief Strategy Officer Stephen Young stated that while the deposit base has been optimized, costs are forecasted to rise slightly to fund anticipated loan growth. CEO John Corbett clarified that loan paydowns, which were unusually low in Q1, returned to more normal, slightly elevated levels in Q2, and this pace is expected to continue.

John McDonald from Truist Securities asked about the long-term earnings power of the combined company, seeking updated thoughts on the illustrative EPS of $11.63 from the merger announcement and the expected run rate EPS exiting 2027. He also inquired about how the purchase accounting mark impacts future provisioning, specifically if it pre-funds losses, and the outlook for provision relative to charge-offs in 2026, including any remaining Q1 cleanups.

Answer

Kevin Blair, President and CEO, Synovus Financial, highlighted strong 2025 performance and confident 2026 guidance, noting that lower rates are a headwind to merger math (lower PAA, lower Synovus book mark) but offset by better-than-expected loan growth. He emphasized the sustainability of growth through distinctive service, talent acquisition, and market share opportunities. Terry Turner, Chairman, Synovus Financial, reinforced the long-term sustainability of growth due to existing hires and continued talent acquisition in an advantaged footprint. Kevin Blair clarified that the allowance is expected to remain stable, and the mark primarily pre-funds specific reserves, not general losses. He expects charge-off levels to remain stable in Q1 2026, consistent with the 20-25 basis points full-year guidance, with no systemic changes observed.

John McDonald from Truist Securities asked for insights into the long-term earnings power of the combined company, seeking updated thoughts on the illustrative EPS of $11.63 (based on 2027 consensus) or the run-rate EPS exiting 2027. He also inquired about how the loan mark impacts future provisioning and the starting loan loss ratio, as well as expectations for Q1 charge-offs, including any potential cleanups.

Answer

Kevin Blair (President and CEO, Synovus Financial) expressed confidence in the strong 2026 guidance, noting that while lower rates are a headwind to merger math (lower PAA/marks), better-than-expected growth offsets this. He emphasized the sustainability of growth through distinctive service, talent hiring, and market share opportunities. Terry Turner (Chairman, Synovus Financial) reiterated confidence in the long-term earnings opportunity due to already hired talent driving immediate growth, sustained hiring, and the advantageous footprint. Kevin Blair (President and CEO, Synovus Financial) clarified that the allowance is expected to remain stable, and the loan mark doesn't prefund charge-offs unless for specific reserves. He expects Q1 charge-offs to be stable with Q4 2025 levels, with some credits already reserved for.

John McDonald (Truist Securities) inquired about U.S. Bancorp's net interest margin (NIM) trend for the fourth quarter, seeking details on the puts and takes influencing the relatively flat net interest income (NII) outlook. He also asked about the drivers for NIM expansion in the coming year and the bank's confidence in reaching a 3% NIM by 2027.

Answer

John Stern, Vice Chair and CFO, explained that Q3 saw sustainable favorable items like fixed asset repricing and a healthy mix on both loan and liability sides. For Q4, while repricing and mix remain tailwinds, seasonal credit card favorability will reverse. He noted a bias to the upside for NII and NIM. Stern confirmed a path to 3% NIM by 2027, driven by mechanical fixed asset repricing, strategic loan mix towards card and commercial, and deposit mix/pricing, though macro factors like the yield curve and deposit competition could affect the speed.

John McDonald of Truist Securities asked about U.S. Bancorp's net interest margin (NIM) trend for the fourth quarter and the outlook for net interest income (NII) stability, as well as the drivers for NIM expansion towards 3% by 2027.

Answer

John Stern, Vice Chair and CFO, explained that Q4 NII is expected to be relatively stable, with favorable fixed asset repricing and mix offsetting seasonal credit card favorability, noting a bias to the upside. For 2027, he reiterated the path to 3% NIM driven by mechanical fixed asset repricing, strategic loan mix towards card and commercial, and deposit mix/pricing, acknowledging macro factors could influence the speed.

John McDonald of Truist Securities asked about U.S. Bancorp's net interest margin (NIM) trend for the fourth quarter and the outlook for net interest income (NII) stability, as well as the drivers for NIM expansion towards 3% by 2027.

Answer

John Stern, Vice Chair and CFO, explained that Q4 NII is expected to be relatively stable, with favorable fixed asset repricing and mix offsetting seasonal credit card favorability, noting a bias to the upside. For 2027, he reiterated the path to 3% NIM driven by mechanical fixed asset repricing, strategic loan mix towards card and commercial, and deposit mix/pricing, acknowledging macro factors could influence the speed.

John McDonald from Truist Securities questioned the historical underperformance of the payments business and how the bank can maintain investment levels while keeping expenses flat.

Answer

CEO Gunjan Kedia stated that the payments strategy is to balance margin and growth, with a new focus on the affluent transactor segment to boost fees. CFO John Stern added that disciplined expense programs generate savings that are being redeployed into growth initiatives and technology, shifting investment from 'defense' to 'offense'.

John McDonald asked two strategic questions: one for Gunjan Kedia about the plan for the reorganized payments business, and another for Andy Cecere about where the company has invested for offensive growth across the franchise.

Answer

President Gunjan Kedia explained that the payments reorganization aims to accelerate execution on the bank's 'interconnectedness' strategy by better aligning the business with consumer and institutional franchises. CEO Andy Cecere added that growth initiatives are underway across all business lines, highlighting momentum in payments, trust, commercial products, and retail. He emphasized that this broad-based revenue growth, coupled with disciplined expense management, is the key driver of the company's positive operating leverage.

John McDonald inquired about the outlook for capital markets businesses (sales & trading, investment banking, wealth), pipeline strength, and expectations for deposit betas with anticipated Fed rate cuts.

Answer

CFO Alastair Borthwick stated that investment banking activity picked up due to increased certainty, with pipelines up double digits, and a constructive M&A environment. For sales and trading, he noted normal Q4 seasonality but a continued constructive environment. Regarding deposit betas, he expects full pass-through of rate cuts in wealth management and a client-by-client pass-through in global banking, with Q4 reflecting the late September rate cut.

John McDonald asked for an outlook on Bank of America's capital markets businesses, including pipelines and investments, especially given the seasonally slower fourth quarter, and inquired about deposit beta expectations for various businesses in a declining rate environment.

Answer

Alastair Borthwick (CFO, Bank of America) noted a pickup in investment banking activity due to increased certainty, with pipelines up double digits, and a constructive environment for sales and trading despite normal Q4 seasonality. Regarding deposit betas, he expects full pass-through of rate cuts in wealth management and similar disciplined pricing in global banking, noting the Q3 numbers didn't reflect the late September rate cut.

John McDonald of Truist Securities inquired about Bank of America's methods for measuring retail deposit share and sought clarity on the expense outlook for the second half of 2025.

Answer

CEO Brian Moynihan highlighted that the company's deposit growth has outpaced the industry since the pre-pandemic period and emphasized the strength of its consumer franchise, with average checking balances at $9,200. CFO Alastair Borthwick added that second-half expenses are expected to be flattish, with any potential increase being tied to revenue-related costs from strong performance in sales and trading or wealth management.

John McDonald inquired about the dynamics of the loan loss reserve this quarter, specifically asking about any changes in scenario weighting due to potential tariffs. He also sought confirmation on the full-year expense growth outlook.

Answer

CFO Alastair Borthwick explained that the reserve was set using the blue-chip consensus, which already reflected lower GDP growth, and that weightings were unchanged, resulting in a reserve positioned for a ~6% unemployment rate. He also confirmed the full-year expense growth outlook remains 2% to 3%, possibly at the higher end.

John McDonald inquired if deposit growth is being used to pay down more expensive funding and asked about the bank's capital management strategy, including its CET1 target and buyback plans.

Answer

CFO Alastair Borthwick confirmed that strong deposit growth allows the bank to reduce higher-cost liabilities like institutional CDs, which benefits the net interest yield. CEO Brian Moynihan stated that buybacks would likely continue at the current pace of ~$3.5 billion per quarter and that the bank is comfortable with its CET1 ratio of 11.9%, maintaining a buffer over its 10.7% requirement while awaiting final capital rule changes.

John McDonald inquired about Citi's efficiency path for next year, including potential for lower expenses, and the target of achieving an efficiency ratio below 60% by 2026, as well as the long-term evolution of transformation spend.

Answer

CFO Mark Mason stated that Citi is targeting a 10-11% ROTC for 2026, driven by continued top-line momentum and expense discipline, including lower transformation expenses, reduced stranded costs, and productivity gains. He confirmed the target of an efficiency ratio below 60% by 2026. He added that transformation spend will decrease in 2026, with more details on its long-term evolution to be shared at Investor Day.

John McDonald asked about Citi's efficiency path for 2026, specifically if expenses could directionally decrease due to lower severance, transformation spend, and stranded costs, aiming for an efficiency ratio below 60%. He also questioned the ultimate end state of the $3.5 billion transformation spend.

Answer

CFO Mark Mason affirmed the target of 10-11% ROTCE for 2026, driven by continued top-line momentum and expense discipline, including greater efficiencies and lower severance. He confirmed targeting an efficiency ratio below 60% in 2026. The transformation expense will decrease in 2026, with more details to be provided at Investor Day. CEO Jane Fraser emphasized consistent revenue growth with disciplined expense management.

John McDonald of Truist Securities asked for details on the improving credit card quality trends, including delinquencies and roll rates, and whether the improvement was macro or portfolio-driven. He also sought to reconfirm the sub-$52.6 billion expense target for 2026 and if it should be considered a 'waypoint.'

Answer

CFO Mark Mason confirmed that the improvement in card credit trends, including lower NCL and delinquency rates, is largely consistent with pre-COVID seasonality, giving confidence in the outlook. Regarding expenses, Mason affirmed the 2026 target but emphasized the primary focus is on achieving the 10-11% ROTCE and improving returns beyond that, which may require continued investment to capture sustainable revenue growth.

John McDonald from Truist Securities inquired about the drivers behind the improving credit card quality trends and whether the sub-$52.6 billion expense target for the next year remains in place.

Answer

CFO Mark Mason explained that the improvement in card credit, particularly delinquency behavior, is consistent with pre-COVID seasonality, which supports the current NCL guidance. He confirmed the sub-$52.6 billion expense target for 2026 is still the goal, but stressed that the firm will continue to invest to capture sustainable top-line growth, balancing expense discipline with strategic investment.

John McDonald asked about capital optimization levers, such as RWA mitigation and DTA utilization, and requested an update from Jane Fraser on the planning and timing for the Banamex IPO.

Answer

CFO Mark Mason confirmed the firm is constantly working on capital optimization, citing improved revenue-to-RWA metrics in Markets and a focus on generating more U.S. income to reduce the DTA. CEO Jane Fraser stated that preparations for the Banamex IPO are on track for year-end, but the final timing could shift from 2025 to 2026 depending on market conditions and regulatory approvals, with the ultimate goal of maximizing shareholder value.

John McDonald sought clarification on the capital assumptions underlying the 10-11% RoTCE target for 2026. He also asked for the outlook on card net charge-offs for the full year and whether the pace of provision builds seen in 2024 might slow down.

Answer

CFO Mark Mason confirmed the 10-11% RoTCE target for 2026 assumes operating at their 13.1% CET1 ratio target. For credit, he expects branded card net credit losses to approach the 4% level over the year, with retail services remaining at the high end of its range. He noted that future provision builds would be driven by expected volume growth in USPB and macroeconomic model inputs.

John McDonald asked for more color on Wells Fargo's loan growth momentum, specifically the reduced drag from commercial real estate and auto, front book momentum, and the impact of the investment bank build-out. He also sought details on whether credit card growth is driven by new-to-bank or existing customers.

Answer

CFO Mike Santomassimo highlighted less drag from residential mortgage, strong growth in card and auto, and overall consumer loan growth linked quarter. On the commercial side, the CRE office portfolio is declining, while CIB shows good demand. He noted that credit card growth is a mix of new and existing customers, with strong originations from branches and digital channels. CEO Charlie Scharf emphasized the focus on strong credit performance, not just growth.

John McDonald sought more color on Wells Fargo's loan growth momentum, specifically how reduced drag from commercial real estate (CRE) and auto, front book momentum, and the investment bank build-out are contributing. He also asked whether credit card growth is primarily driven by new-to-bank customers or existing Wells Fargo clients.

Answer

CFO Mike Santomassimo highlighted reduced drag from residential mortgage, strong growth in credit card and auto loans (leading to linked-quarter consumer loan growth). In commercial, CRE declines continue, particularly in office, but Commercial & Industrial (C&I) loans are growing across Corporate & Investment Banking (CIB) and other sectors. He noted stable commercial bank utilization rates but expects future pickup. Regarding credit cards, Mike Santomassimo confirmed growth from both existing and new-to-bank customers, with the majority being existing. He emphasized strong originations from branches and digital channels, indicating low-cost acquisition and good credit quality. CEO Charlie Scharf reiterated the focus on strong credit performance, not growth at the expense of credit standards.

John McDonald of Truist Securities asked for more details on Wells Fargo's loan growth momentum, specifically regarding reduced drag from commercial real estate and auto, front-book momentum, and the impact of the investment bank build-out on balance sheet opportunities. He also inquired if credit card growth was primarily from new or existing customers.

Answer

CFO Mike Santomassimo explained that consumer loan growth is benefiting from less drag from residential mortgages and strong growth in card and auto. Commercial loan growth is driven by CIB, particularly non-bank financial loan categories, despite stable utilization rates in the commercial bank. He noted that credit card growth is a mix of existing and new-to-bank customers, with a majority from existing, and strong originations from branches and digital channels. CEO Charlie Scharf reiterated that credit card growth is driven by strong execution and disciplined credit performance.

John McDonald of Truist Securities inquired about the loan growth assumptions underpinning the Net Interest Income (NII) outlook and the overall revenue forecast for the second half of the year. He also sought clarification on how the lifting of the asset cap impacts the NII guide, particularly regarding the mix shift toward the markets business.

Answer

CFO Michael Santomassimo outlined expectations for modest loan growth, with slight declines in mortgage offset by some growth in card and auto, and modest commercial growth primarily from the Corporate & Investment Bank. For total revenue, he noted supportive market trends for advisory fees. CEO Charles Scharf added that the NII outlook assumes only a small increase in the total balance sheet, with a focus on allocating capital to the markets business to maximize total returns, not just NII.

John McDonald of Truist Securities asked for details on the net interest income (NII) outlook, specifically the loan growth assumptions for the second half of the year and the drivers behind the updated guidance after the asset cap removal.

Answer

CFO Michael Santomassimo explained that modest loan growth is expected, with some growth in card and auto, and modest commercial growth primarily from the Corporate and Investment Bank. CEO Charles Scharf added that the updated NII outlook reflects a strategic allocation of more balance sheet to the markets business, which generates fee income rather than NII, and that the company is focused on maximizing overall returns, not just NII.

John McDonald requested more color on the drivers of commercial loan growth and asked about the performance and outlook for market-sensitive fee businesses like trading, investment banking (IB), and venture capital.

Answer

CFO Mike Santomassimo attributed the modest commercial loan growth primarily to increased utilization by larger clients in the commercial bank and some new client activity, noting it was mostly business-as-usual borrowing. He stated that venture capital results were impacted by mark-to-market losses and impairments due to market volatility, while trading had a decent quarter. He added that IB activity was led by debt capital markets, with M&A conversations remaining positive but dependent on policy certainty.

John McDonald asked for details on the drivers behind strong organic growth and inquired about the current M&A pipeline and any internal constraints on the pace of expansion.

Answer

CEO Fred Burke attributed stronger organic revenue growth to higher patient acuity and success with their plan optimization program, in addition to resident growth. CFO David Morris described the M&A pipeline as the strongest in five years but noted that 'human capital' is the primary governor on the pace of new acquisitions and greenfield startups.

John McDonald of Truist Securities asked for color on what drove better-than-expected credit quality and inquired about the potential impact of a more favorable regulatory environment, including on M&A.

Answer

EVP & Chief Credit Officer Anne Fortner attributed strong credit performance to the resolution of larger office relationships and a three-year low in NPL inflows. CEO Kevin Blair stated that while a favorable regulatory environment could increase M&A activity, Synovus's primary focus remains on organic growth to improve its valuation.

John McDonald from Truist Securities asked about the momentum and potential for loan growth in specialty verticals like ABL and equipment finance. He also inquired about the dynamics in the CRE portfolio, specifically the balance between new business pipelines and ongoing paydowns.

Answer

Head of IR Tyler Kraft responded that there is good growth and momentum in both the ABL and equipment finance lines. Regarding CRE, he explained that the balance decrease in Q2 was a positive story, driven by significant upgrades and payoffs of classified assets. He noted the new business pipeline in CRE is slightly down, which is expected given the current market inventory.

John McDonald from Truist Securities asked about loan growth momentum in specialty verticals and the current dynamics within the Commercial Real Estate (CRE) portfolio, specifically regarding new business versus paydowns.

Answer

Head of IR Tyler Craft highlighted strong momentum in the Asset-Based Lending (ABL) and equipment finance verticals. On CRE, Craft explained that the recent balance decrease was a positive sign, driven by significant upgrades and payoffs of classified assets. He noted that the new business pipeline for CRE is slightly down, which is expected given the current market dynamics.

John McDonald sought clarification on whether share buybacks would accelerate while still allowing for capital ratio growth. He also asked for an update on strategic initiatives like the national expansion and new consumer card product.

Answer

CFO Rob Reilly confirmed that buybacks would increase in Q2 but not at a pace that would 'break the current path' of building capital. CEO Bill Demchak highlighted that growth in customers and net inflows is being driven by the new expansion markets. Reilly added that the new credit card product is 'going great' with continued growth in customer count.

John McDonald of Autonomous Research inquired about PNC's 2025 outlook for industry-wide deposit growth and the bank's strategy for gaining market share in retail deposits, particularly in its expansion markets. He also asked for details on the drivers and quarterly cadence of the net interest income (NII) growth guidance.

Answer

CFO Rob Reilly projected modest 1-2% deposit growth for 2025, citing strong organic efforts in expansion markets and recent DDA growth. For NII, Reilly explained the 6-7% annual growth is driven by fixed-rate asset repricing, with the Q1 dip primarily due to fewer days and seasonal factors, not a change in the underlying positive trend.

John McDonald questioned how to reconcile the unchanged full-year card net charge-off forecast with rising recession risk. He also asked how macroeconomic uncertainty affects the firm's capital deployment strategy, particularly the balance between investments and share buybacks.

Answer

CEO James Dimon stated that given the wide range of potential outcomes, they probably should not have provided the charge-off forecast. Executive Jeremy Barnum added that card charge-offs have a mechanical lag. On capital, Dimon affirmed that strategic investments will continue regardless of the environment and that he prefers holding excess capital during turbulent times to ensure the bank can serve clients.

Asked about the framework for managing the growing capital base and the nature of the current year's investment spending agenda compared to previous years.

Answer

The bank feels comfortable holding excess capital for future opportunities but plans to stop the excess from growing further, implying more buybacks. The investment spending agenda remains consistent with prior years, focusing on hiring, technology, and marketing, with new efficiency efforts focused on developer productivity, hardware utilization, and maintaining a roughly flat headcount.