Matt O'Connor

Matt O'Connor asked for a rough estimate of the fee contribution from Huntington Bancshares' recent capital market deals, given their reported 1% addition to the expense base. He also inquired about the key drivers behind the company's stronger-than-expected fee income guidance, beyond the capital market contributions.

Answer

CFO Zachary Wasserman estimated the fee contribution from the new capital market deals to be between $80 and $90 million. He explained that the strong fee income guidance reflects an expected acceleration of growth in payments, wealth management, and capital markets, building on 7% core fee growth in 2025, further boosted by contributions from new capital markets divisions and Veritex.

Matt O'Connor asked about the deposit growth assumptions, specifically why interest-earning asset growth was projected to be higher than loan growth. He also sought clarification on any other factors driving this earning asset growth, such as changes in the securities book or hedging strategies.

Answer

Bruce Van Saun, Chairman and CEO, stated that the loan-to-deposit ratio (LDR) is expected to remain relatively stable in the high 70s. Aunoy Banerjee, CFO, added that non-interest-bearing deposit growth has been steady from both the Private Bank and Consumer Bank, with expectations for modest DDA growth in the Consumer Bank and a continued healthy low-cost mix in the Private Bank. Mr. Van Saun attributed the earning asset growth exceeding loan growth to a potential build in liquidity and additions to the securities book, partly to match the deposit composition growth from the Private Bank, which has lower lendability.

Matt O'Connor asked about Regions Financial's leverage to a potential recovery in commercial real estate (CRE), specifically from a loan volume perspective. He inquired whether upcoming maturities present an upside risk for overall loan growth or a risk of CRE loans being unexpectedly refinanced away from the bank.

Answer

Former CFO David J. Turner stated that Regions Financial has been successful in refinancing maturing loans and sees improving opportunities, particularly in multifamily, as rates have come down. He noted that while CRE was de-risked over the years, it's not constraining growth when risks are appropriately compensated. CEO John M. Turner, Jr. added that strong real estate banking teams and a diverse product portfolio position the bank to grow this business, contributing to both balance sheet and income statement success as capital markets activity picks up.

Matt O'Connor inquired about Regions Financial's leverage to a recovery in commercial real estate (CRE), beyond just credit aspects. He asked if the anticipated recovery presents an upside risk for overall loan growth or if there's a risk of more CRE loans being refinanced away from the bank.

Answer

Former CFO David J. Turner stated that Regions has been successful in refinancing maturing loans and that the current rate environment is aiding growth, particularly in multifamily CRE, as the economics are improving for developers. He noted that while CRE was de-risked over the years, it does not constrain their ability to grow when risks are appropriately compensated. CEO John M. Turner, Jr. added that Regions has strong real estate banking teams and a comprehensive product portfolio, expecting continued investment and growth in the business, contributing to both balance sheet and income statement success as Capital Markets activity increases.

Matt O'Connor asked for quantification of the remaining targeted loan runoff in the commercial book and its timing, as well as any remaining runoff on the consumer side.

Answer

President, CEO, & Chairman John Turner estimated an additional $400 to $500 million in targeted commercial loan runoff for the remainder of the year. He clarified that this would complete the current targeted runoff plan, although the portfolio is always under review. He also stated there was nothing material left to run off on the consumer side, suggesting the drag from runoff should lessen going forward.

Matt O'Connor sought an update on PNC's interest rate positioning, noting that the FirstBank acquisition likely had minimal impact, and asked about strategies for protecting the bank from unusual movements in interest rates, particularly concerning the securities book.

Answer

Bill Demchak, Chairman and CEO, stated that PNC's interest rate positioning remains largely neutral, with the NII guidance not reliant on rate cuts. He explained that the bank is indifferent to the front end of the curve due to balanced gains and losses. For fixed-rate reinvestment, PNC manages exposure by locking forward maturities at opportunistic times with forward-starting swaps. Rob Reilly, EVP and CFO, added that this strategy has been in place since the beginning of the previous year.

Matt O'Connor from Deutsche Bank requested an update on PNC's interest rate positioning, particularly post-First Bank acquisition, and how the company is strategizing to protect itself from unusual movements in interest rates, including its approach to the securities book.

Answer

Bill Demchak, Chairman and CEO, stated that PNC's interest rate positioning remains largely neutral, with the First Bank acquisition not significantly altering this stance. He emphasized that the NII guidance is not reliant on rate cuts, as PNC is indifferent to the front end of the curve. He explained that PNC manages exposure to fixed-rate reinvestment by opportunistically locking forward maturities with forward-starting swaps, a program initiated at the beginning of 2025 and continued into 2026. Rob Reilly, Executive Vice President and CFO, confirmed this unchanged strategy.

Matt O'Connor inquired about PNC's organic growth strategy, specifically asking if the company plans to accelerate branch expansion or other organic initiatives, given its selective approach to M&A and desire for scale.

Answer

Bill Demchak, Chairman and CEO, reaffirmed PNC's strong commitment to organic growth, including continuing branch builds (25 new branches this year, with a target of 200+ by 2029) and adding bankers in new markets. He emphasized the need for 'real, honest retail share' which many M&A targets lack, making organic growth a more reliable path. Rob Reilly, Executive Vice President and CFO, added that organic growth contributions are substantial across all business lines, with higher growth rates observed in expansion markets.

Matt O’Connor asked for elaboration on M&T Bank's deposit environment, including net checking account growth, competitive landscape, and brand strategy for organic growth, as well as the reason for the recent step-up in trading revenues.

Answer

Daryl Bible, Senior Executive Vice President and CFO, M&T Bank Corporation, stated that the bank focuses on growing its customer deposit base and retiring non-core funding. He described the competitive landscape as stable, with varied pricing strategies, and emphasized the focus on acquiring operating and checking accounts across all segments. Regarding trading revenues, Bible clarified that the increase is primarily from the customer swap book and is a precursor to broader growth in capital markets and investment banking, which had a record year in 2025 and is expected to have another strong year in 2026. He mentioned that these segments would be broken out in reporting after a general ledger conversion.

Matt O’Connor asked for details on M&T Bank's deposit environment, including net checking account growth, the competitive landscape, and brand strategy for organic growth. He also questioned whether the recent step-up in trading revenues was due to a change in efforts or a specific deal.

Answer

Daryl Bible (VP, Senior Executive and CFO, M&T Bank Corporation) highlighted the focus on growing customer deposits and retiring non-core funding, noting consistent competition. He stressed the importance of acquiring operating and checking accounts across all business segments. Regarding trading revenues, Mr. Bible clarified that the increase was primarily from the customer swap book and is a precursor to broader growth in Capital Markets Investment Banking, which had a record year in 2025 and expects another strong year in 2026.

Matt O'Connor posed a broader question on the credit environment, seeking M&T Bank's perspective on the recent 'one-off' commercial fraud-related events despite falling rates, and hypothetically, how the bank would evaluate an external credit book given current market red flags.

Answer

Daryl Bible, SEVP and CFO, attributed recent credit stress to prolonged elevated pressures, particularly on lower-end consumers and certain business sectors impacted by tariffs or inexperienced private equity ownership. He emphasized M&T's focus on fundamental underwriting and proactive measures like tightening in small business and leasing, and establishing specialty verticals for higher-risk areas. Mr. Bible stressed that evaluating an external book requires assessing cultural alignment in underwriting and thorough due diligence.

Matt O'Connor asked about Truist's flexibility to increase share buybacks given current market conditions and capital levels, and the specific drivers behind the commercial real estate loan growth observed in the quarter.

Answer

CEO Bill Rogers stated that the planned $750 million for Q4 2025 is a floor, and Truist has the capacity and flexibility to increase buybacks while maintaining a conservative capital structure. He explained that the commercial real estate loan growth was more of an inflection point due to prior prepayments, driven by shorter-duration, long-term relationships with associated capital markets business.

Matt O'Connor (Deutsche Bank) sought clarification on the directional impact to U.S. Bancorp's net interest margin (NIM) if the forward curve's rate assumptions for 2026 (which he noted include more cuts than the bank's forecast) were to play out instead of the bank's own assumptions.

Answer

John Stern, Vice Chair and CFO, explained that if the market's forward curve (with more cuts) transpired, it would be a net benefit on the short end. However, the bank's longer-term rate assumptions are slightly higher than the forwards, which would provide more benefit on fixed asset repricing. On balance, he concluded that the overall impact on NIM would be about equal, with positive effects on the short end offset by less benefit on the long end.

Matt O'Connor of Deutsche Bank sought clarification on the impact of the forward curve's rate assumptions (which include more cuts) versus U.S. Bancorp's own rate assumptions for 2026 on the net interest margin (NIM).

Answer

John Stern, Vice Chair and CFO, explained that if the forward curve's assumption of more rate cuts transpired, it would be a net benefit on the short end. However, he noted that U.S. Bancorp's longer-term rates are slightly higher than the forwards, which would require more improvement for additional fixed asset repricing benefit. On balance, he concluded the overall impact would be about equal.

Matt O'Connor of Deutsche Bank sought clarification on the impact of the forward curve's rate assumptions (which include more cuts) versus U.S. Bancorp's own rate assumptions for 2026 on the net interest margin (NIM).

Answer

John Stern, Vice Chair and CFO, explained that if the forward curve's assumption of more rate cuts transpired, it would be a net benefit on the short end. However, he noted that U.S. Bancorp's longer-term rates are slightly higher than the forwards, which would require more improvement for additional fixed asset repricing benefit. On balance, he concluded the overall impact would be about equal.

Matt O'Connor asked about the drivers of commercial products revenue, which was slightly lower than its recent run rate. He also questioned why period-end deposits were down sequentially for a third time despite growth in average deposits.

Answer

CFO John Stern detailed that commercial products growth was strong, driven by client derivatives, loan syndication, and bond underwriting, with new products contributing about 20% of growth for the year. Regarding deposits, Stern explained that average balances are a better indicator than volatile period-end figures, noting that a particularly strong Q3 ending balance made the Q4 comparison difficult. He also mentioned that Q1 typically sees seasonal deposit declines.

Matt O'Connor asked about the company's sensitivity to lower medium and long-term interest rates, and any updates on the medium-term net interest margin (NIM) outlook.

Answer

CFO Alastair Borthwick explained that an instantaneous 100 basis point drop in rates (short and long end) would decrease NII by $2.2 billion over 12 months, with 80% sensitivity from the short end and 20% from the long end. He provided no update on the medium-term NIM outlook, stating the company continues its progress, having added 7 basis points this quarter and now being over 2%.

Matt O'Connor asked about Bank of America's sensitivity to lower short, medium, and long-term interest rates, and requested an update on the medium-term net interest margin (NIM) outlook.

Answer

Alastair Borthwick (CFO, Bank of America) reiterated that an instantaneous 100 basis point drop in rates would decrease NII by $2.2 billion over 12 months, with 80% sensitivity to the short end and 20% to the long end. He provided no update on the medium-term NIM outlook beyond noting the 7 basis point improvement this quarter and the ongoing 'march' towards their target.

Matt O'Connor asked how Wells Fargo plans to achieve its target of becoming a top five U.S. investment bank, considering it's a significant step up from its current position. He inquired about how much of this goal is already embedded in the franchise versus requiring further hiring or expansion.

Answer

CFO Mike Santomassimo highlighted significant talent investments over the past 3.5 years, which have led to growing wallet and market share, contributing to record investment banking fees. He anticipates continued investment in expanding sector coverage (e.g., technology) and product areas (e.g., M&A). CEO Charlie Scharf clarified that the 'top five' goal is a waypoint, not the final destination, with no fixed timeframe. He emphasized a disciplined build-out strategy leveraging existing strengths in industries, lending, cash management, and underpenetrated commercial customers to drive increased share, profitability, and returns.

Matt O'Connor asked how Wells Fargo plans to achieve its 'top five' investment banking target, considering it's a significant step up, and how much of this growth is already embedded in the franchise versus requiring further hiring or expansion.

Answer

CFO Mike Santomassimo attributed recent market share growth to significant hires over the past three and a half years and strong investment banking fee performance. He indicated continued investment in specific sectors like technology and product areas such as M&A. CEO Charlie Scharf added that the 'top five' target is a waypoint, not an endpoint, with no fixed timeframe, emphasizing a disciplined build-out leveraging franchise strengths to increase share, profitability, and returns.

Matt O'Connor of Deutsche Bank asked for details on how Wells Fargo plans to achieve its target of becoming a top five U.S. investment bank, inquiring about the extent to which this is already baked into the franchise versus requiring further hiring or expansion.

Answer

CFO Mike Santomassimo explained that significant talent has been added to the investment bank over the last three and a half years, contributing to growing wallet and market share, as evidenced by strong investment banking fees. He noted continued investment in expanding sector coverage (e.g., technology) and product areas (e.g., M&A). CEO Charlie Scharf added that the top five target is a waypoint, not an endpoint, with no fixed timeframe, and will be achieved through disciplined build-out leveraging existing strengths, lending, cash management relationships, and underpenetrated customers to drive both rankings and profitability.

Matt O'Connor of Deutsche Bank requested a breakout of Net Interest Income (NII) excluding the markets business for the quarter and for the full-year guidance. He also asked about the drivers of the lower tax rate in Q2 and the potential impact of new legislation on clean energy tax credits.

Answer

CFO Michael Santomassimo stated that the company does not break out NII ex-markets but noted that underlying trends are stable and consistent with expectations. Regarding the tax rate, he explained that the Q2 rate was unusually low due to specific items like a California tax change and that the long-term expectation remains in the high-teens. He added that any impact from new clean energy tax legislation is still several years away.

Matt O'Connor of Deutsche Bank requested clarity on the net interest income (NII) generated outside of the markets business for the quarter and the full year. He also asked about the lower tax rate in Q2 and the potential impact of new clean energy tax legislation.

Answer

CFO Michael Santomassimo explained that Wells Fargo does not break out NII by markets vs. non-markets, but noted that trends ex-markets are stable and consistent with expectations. Regarding the tax rate, he stated the Q2 rate was lower due to specific items like a California tax change, but the longer-term expectation remains in the high teens. He added that any impact from new clean energy legislation is several years away.

Matt O'Connor from Deutsche Bank asked about the progress made on the company's plan to increase its banker headcount by 10%. He also inquired about any updates to KeyCorp's consumer lending strategy.

Answer

Chairman & CEO Christopher M. Gorman indicated that the hiring initiative was somewhat front-loaded to align with the industry's recruiting season. Regarding consumer lending strategy, he stated that KeyCorp plans to lean into Home Equity Lines of Credit (HELOCs), viewing it as a multi-billion dollar opportunity given the equity held by its client base.

Asked if the bank has backed off its view of 'materially overearning' on NII and questioned the strategy and viability of expanding consumer banking globally.

Answer

While NII guidance has improved, the bank notes that spreads on consumer deposits remain historically elevated and their long-term sustainability is 'unclear'. Regarding global consumer expansion, they believe their digital-led strategy is different from past failures by others and that the initiative is going well after careful consideration of risks and opportunities.