John Pancari • Evercore ISI

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CFO Andrew Young delineated three separate financial items: 1) One-time integration costs (deal costs, tech migration), which are trending higher. 2) Cost synergies from combining the organizations, which remain fully intact. 3) Additional, ongoing investments to power future growth, which are evaluated separately and are distinct from achieving the cost synergies.

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CFO Andrew Young stated that the strategic and financial benefits of the deal remain intact, but declined to re-affirm specific accretion metrics due to changed variables like stock prices. Chairman and CEO Richard Fairbank added that they still expect to achieve the announced synergies and highlighted significant long-term opportunities not included in the original deal model, such as expanding the network's use.

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CEO Richard Fairbank highlighted the company's long-term, technology-driven efficiency improvements but cautioned against short-term extrapolation and did not provide 2025 guidance. CFO Andrew Young addressed the deal metrics, stating that while variables have moved, the company remains comfortable with the estimates provided at the deal announcement and feels very good about the transaction both strategically and financially.

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CFO Andrew Young explained that the company is maintaining high capital levels due to uncertainties around final bank capital rules, the macroeconomy, and, most importantly, the pending Discover acquisition. He confirmed the current $150 million quarterly buyback pace is prudent for now. Regarding loan yield, Mr. Young clarified that the year-over-year card yield is flat when excluding the Walmart partnership's impact, and the quarter-over-quarter increase was primarily due to the full-quarter effect of the Walmart termination and normal seasonality.

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Chairman & CEO Christopher M. Gorman identified renewables, affordable housing, and healthcare as key C&I growth areas, clarifying that guidance assumes a continuation of the current market environment. On M&A, he stated that whole-bank M&A is not a high priority, but the company consistently evaluates non-bank, tuck-in acquisitions that fit its strategic verticals. Chief Risk Officer Mo Ramani added that growth was achieved without expanding risk appetite.

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CFO Clark Khayat explained the guidance includes a ~$3 billion consumer loan runoff offset by 2-4% growth in commercial loans. CEO Christopher Gorman added that while client confidence is high, significant business investment is pending policy clarity. He noted that historically low line utilization and record M&A backlogs are expected to drive future loan growth.

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CFO Clark H. I. Khayat explained that while some factors were positive, lower starting loan balances for the year acted as a headwind, keeping the guidance at 20%. CEO Christopher M. Gorman added that while client optimism is high and M&A pipelines are strong, a significant pickup in business investment and line utilization has not yet materialized, but he remains confident in Key's ability to capture growth when it occurs.

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CFO Ryan Richards reaffirmed a target of 100-200 bps of positive operating leverage, driven by revenue growth and investments in producers. President & COO Scott McLean added that the new, single integrated core system significantly simplifies M&A by creating a modern, clean environment for merging acquired entities. CEO Harris Simmons also noted the new platform's real-time settlement capabilities position Zions well for future innovations like tokenized deposits.

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Chief Credit Officer Derek Steward noted that while C&I loan demand has slowed, CRE is seeing increased activity. Regarding credit, Steward expressed comfort with the reserve levels. Chairman and CEO Harris Simmons added that the past-due metric can be volatile and emphasized focusing on the low nonaccrual numbers for CRE as a better indicator of underlying strength.

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Chief Credit Officer Derek Steward explained it's hard to quantify the exact impact of the grading change, which is now more conservative and places less emphasis on guarantor support. He noted that under CECL, risk rating changes have less immediate impact on the allowance, which was already built up based on economic forecasts. Steward also provided reserve allocations: 2.4% for multifamily and 2.2% for the overall CRE portfolio. Chairman and CEO Harris Simmons added that post-crisis underwriting requires more borrower equity, creating a disconnect between classifying a loan and reserving for it, as the borrower's equity acts as a reserve.

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CFO Michael Santomassimo attributed the flat loan yields to intense and consistent competition, which is keeping loan spreads tight. He specified that the pressure is most pronounced in the middle-market commercial banking segment and that the primary competitors are other banks.

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CFO Michael Santomassimo explained that loan spreads, particularly on the commercial side, remain very tight due to intense competition. He noted that this competitive pressure has been consistent for a number of quarters and is primarily coming from other banks, especially in the middle-market commercial banking space, rather than non-bank lenders.

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CFO Mike Santomassimo stated that the approach to buybacks remains consistent: supporting clients first, assessing risks, and then considering repurchases, noting the company has capacity. CEO Charlie Scharf added that the company is monitoring line drawdowns very closely but has not seen any significant activity related to economic fears. He also mentioned that while Wells Fargo entered this period with already conservative underwriting, they will be slower to reverse any previous tightening actions.

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CFO Mike Santomassimo projected low to mid-single-digit loan growth for 2025, weighted towards the second half of the year, driven by card, auto, and new commercial clients. On capital, he reiterated that organic growth is the first priority, but given the asset cap, he expects Wells Fargo will continue to return excess capital to shareholders via buybacks, as the current CET1 ratio of 11.1% is considered sufficient.

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CFO Michael Santomassimo clarified the repositioning had minimal Q3 impact but is fully in the Q4 run rate, noting the $16 billion of securities sold were reinvested at a 130 basis point higher yield. For fee income, he highlighted that wealth management is driven by market levels, card fees by economic activity, and investment banking by market conditions and the bank's ongoing investments to gain share.

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President, CEO, & Chairman John Turner reported that loan pipelines are up 17% year-over-year, with growth in energy, asset-based lending, and manufacturing. This growth is partly offset by a disciplined runoff of nearly $1 billion in leveraged lending. He acknowledged intense competition in their markets but emphasized that Regions competes through strong execution, brand reputation, and building broad customer relationships, which has resulted in 5% annualized growth in new commercial relationships year-to-date.

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Executive John Turner explained that loan pipelines are mixed, with softness in the upper-middle market as clients access bond markets, while middle-market and real estate pipelines are expanding. He noted that line utilization remains flat as customers hold significant liquidity. Executive David Turner stated that with strong capital generation and low loan demand, the company expects to "lean into" share buybacks.

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Executive John Turner explained that the focus on risk-adjusted returns leads to exiting relationships that fail to generate expected ancillary business. Executive David Turner added that the net 1% growth reflects robust C&I growth offset by softness in commercial real estate. Turner confirmed the expense guide includes higher IT spending for new systems, which is funded by efficiencies in other areas, a point John Turner reiterated.

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CEO John Turner noted that while loan demand is currently soft, he expects modest growth in 2025 as economic and political uncertainty subsides. CFO David Turner added that he is highly confident in the updated expense guidance for 2024 and affirmed that the company is set up to achieve positive operating leverage in 2025.

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CFO Mike Maguire affirmed confidence in delivering positive operating leverage, citing levers like performance-sensitive incentives. CEO William Rogers attributed the loan growth outlook to strong production momentum with new clients, which is offsetting flat line utilization. He expressed confidence in this trend continuing in both the consumer and commercial segments, driven by strategic initiatives and expansion efforts.

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CEO William Rogers described strong loan production momentum from new and existing clients, with healthy pipelines, particularly in consumer. He clarified the investment banking pipeline is deferred, not lost, due to client caution. He explained the trading business is client-focused with a low VAR, not a proprietary trading desk, so it has less beta to market volatility.

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CEO Bill Rogers and CFO Mike Maguire identified key investment areas as talent, product enhancements, and risk and cybersecurity infrastructure. Rogers affirmed a commitment to positive operating leverage, indicating spending could be adjusted. Regarding buybacks, Rogers stated the company has ample capital to maintain the current pace while also funding loan growth, viewing it as sustainable for the short to medium term.

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Head of Commercial Banking Don McCree acknowledged the competitive environment but emphasized that CFG's focus on multi-product relationships is a key differentiator. President Brendan Coughlin added that competition is intense but stable, and the bank will remain return-focused rather than chasing price. On M&A, Chairman & CEO Bruce Van Saun stated that the bank's primary focus remains on executing its organic growth strategy, particularly in the private bank and NYC Metro market. He described the bar for any potential deal as "pretty high" and viewed M&A as a "down the road" possibility rather than an imminent one.

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CFO John Woods noted increased commercial line utilization driven by M&A and working capital, with some tariff impact. Head of Commercial Banking Don McCree added that a reversal of bond market disintermediation could be a tailwind. Head of Consumer Banking Brendan Coughlin highlighted strong growth in secured consumer loans. Regarding capital, both Woods and CEO Bruce Van Saun affirmed their commitment to the CET1 target range and stated they would opportunistically increase share repurchases if loan growth slows, citing the stock's attractive valuation and the bank's strong capital and reserve position.

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CEO Bruce Van Saun clarified the Q4 loan growth outlook is modest but reflects building momentum in the Private Bank and commercial sponsor finance as rates decline. Head of Commercial Banking Don McCree cited strong subscription line growth, while Head of Consumer Banking Brendan Coughlin pointed to slowing non-core runoff and HELOC growth. On credit, Van Saun's confidence in peaking NPAs stems from four quarters of stable criticized and classified loans. McCree added the credit book is performing as expected. Coughlin explained the auto delinquency figures reflect a reversion to the mean and a denominator effect from halting originations, not underlying portfolio stress.

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Vice Chair & CFO John Stern indicated that loan growth opportunities, particularly in C&I and card, look better now than at the start of the year. He confirmed the revenue guidance adjustment was due to a slower-than-expected start for Net Interest Income, but expressed strong confidence in the fee outlook. He stated the bank is comfortable with achieving mid-single-digit fee growth, citing momentum in payments, trust, and other fee-based businesses.

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CFO John Stern clarified the mid-single-digit growth target is for total fees, noting that credit card revenue grew 4% ex-items in Q1. He and CEO Gunjan Kedia explained that expense levers include adjusting the pace of savings from programs in real estate and automation, with the main 'flex' being the amount of savings reinvested into the business.

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CFO John Stern projected that NIM would directionally follow NII higher, with potential to move toward the 3% level over time, influenced by loan growth, deposit management, and the yield curve. CEO Andy Cecere stated that the bank's view on M&A is unchanged; it is not a current priority due to factors like purchase accounting, regulatory hurdles, and valuations. President Gunjan Kedia added that the focus is on driving strong organic growth in areas like trust and capital markets.

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CFO John Stern detailed a $10 billion notional securities transaction resulting in a $119 million loss, with a roughly two-year payback, and stated no further repositioning is in the guidance. Chairman and CEO Andy Cecere added that after ~30 bps of operating leverage in Q3, he expects it to be "north of 1%" in Q4 and to expand further into 2025.

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CFO Jenny Osterhout clarified that the 15-17% card loss target is a longer-term goal for the mature portfolio, not a 2025 guide, and noted that current delinquency trends are positive. CEO Douglas Shulman stated that while they are comfortable with their organic plan, they are always 'opportunistically looking' at M&A but will remain 'discerning buyers,' only pursuing deals that are a strong strategic, cultural, and financial fit.

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EVP and CFO Perry Beberman stated that capital priorities are unchanged, focusing on responsible growth, technology investment, and maintaining strong capital ratios before returning capital to shareholders. He noted that future buybacks will be discussed with the board, balancing all priorities. Regarding NIM, he reaffirmed the outlook for slight full-year expansion, citing tailwinds from pricing changes that are expected to offset headwinds from anticipated prime rate cuts and lower late fees.

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EVP & CFO Perry Beberman attributed the yield decline to a 'double whammy' effect: rapid repricing of variable-rate loans due to prime rate cuts, and lower billed late fees from improved delinquency, while high gross losses still caused reversals of interest. He confirmed the loan growth outlook is conservative due to economic uncertainty and that the co-brand shift is a deliberate diversification strategy, partly driven by charge-offs of higher-risk private label accounts.

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EVP and CFO Perry Beberman clarified he was not providing specific guidance but reminding analysts that a seasonal loss rate increase from Q4 to Q1 is normal. He estimated 4-5% of customers were in the impacted FEMA zones. He confirmed the mitigation impact was not material to full-year 2024 results but will begin to build and have a slightly positive effect in Q4, helping to offset some seasonal NIM pressure.

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CFO Brian Wenzel declined to provide a hypothetical stressed charge-off number for a future recession but noted that due to lags, a recession starting now would likely have a more significant charge-off impact in 2026 than 2025. CEO Brian Doubles confirmed they are evaluating methodically widening the credit box, likely starting with existing customers, but any action would be managed to stay within their long-term 5.5%-6% net charge-off target range.

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EVP and CFO Brian Wenzel explained that maintaining higher liquidity is a positive EPS trade and a strategic move to attract deposit customers now rather than re-accelerating acquisition efforts later. He sees the long-term liquidity level around 15-17%. Regarding the late fee rule, Wenzel stated it is hard to speculate on political outcomes, noting the legal process has many uncertainties and the appeal window remains open, so the company is monitoring it closely without making predictions.

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CEO Tim Spence stated that while industry consolidation is likely, Fifth Third will not pursue scale at any cost, given its strong organic growth capabilities, but remains interested in nonbank deals in commercial payments. Regarding returns, he said the focus is on sustaining current strong levels (mid-to-high teens ROTCE, mid-50s efficiency) and growing tangible book value per share.

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