Ken Usdin

Woods expects continued organic growth in servicing and management fees, with FX moderating from the record and NII flattening.

John said fee guide of 7-9% assumes FX conditions moderate. For NII, NIM expected at 110-115bps (slightly off Q1's 116). Deposits expected $250-260B. Funding mix optimization continues. Both are incorporated into updated guides, not Q1 run-rated.

John broke down Q1 expenses: 9% growth = 2% FX + 5% revenue-related + 2% net (run-the-bank + strategic investments minus 4% productivity savings). Same storyline holds for full-year 5-6% guide. Productivity savings continue to fund strategic investments.

John cited seasonally higher non-interest-bearing deposits in Q4 that will come off in early 2026 as the primary reason Q4 can't be run-rated. NIM of 110bps in Q4 vs 100bps for the year; 2026 NIM expected somewhere between full-year average and Q4 peak, still growing year-over-year.

John said terminated hedges contributed about 2bps in Q4 and will continue as a positive tailwind into 2026 with some quarter-to-quarter lumpiness.

John said as much as half of the $400M backlog installing by year-end with significant portion of remainder in 2026. Ron confirmed largely on track with beginning-of-year targets. Later mandates implementing faster than earlier ones as process becomes more repeatable. John added backlog mix increasingly back-office and private markets, both attractive for profitability.

John noted year-over-year expenses up 5% but 1% is FX, of remaining 4% about half is revenue-related, rest is net investment. Even stripping out markets/FX tailwinds from 12% fee growth, still significant operating leverage. Ron added AI-driven productivity opportunities beyond the $500M 2025 target, with more detail coming next year.

Ron cited accelerated sales pace on track for $350-400M, record $440M to-be-installed backlog with about half installing this year, double-digit asset management fee growth, and deepened markets client relationships. Organic elements are the primary driver, assisted by constructive markets.

Ron explained the client shifted to multiplatform front office but Alpha is interoperable. All other services continue. Development IP remains with STT. Mark added it was contained to a software contract rescoping with no impact on servicing fee revenue or AUC/A to be installed.

Mark confirmed on track with progressive capital return, anticipating step-up in Q2. Ron added they developed range of scenarios but still feel confident in capital return plan.

Ron stated no meaningful change in client behavior on timing or onboarding pace, supporting reaffirmation of $350-400M new business target.

Stern held $200M/quarter for BTIG citing seasonality but flagged strong organic capital markets growth continuing at a slower pace.

John said expense growth is a function of revenue opportunity; if revenues don't materialize, levers exist to reduce; Gunjan emphasized productivity is real and sustainable, not just squeezing expenses.

Gunjan said branch and technology builds are less flexible but marketing/card acquisition spend is short-term flex; acknowledged investor preference for more than 200bp; leaning into growth opportunities this year; efficiency ratio reduced 400bp+ over two years.

John guided mid-single-digit for both card and merchant in 2026; card momentum from SmartLeap and small business focus; corporate payments still negative but improving, expected mid-single-digit by year-end.

John expects stable card charge-off rate YoY; some seasonal uptick in H1 2026; overall stability in credit quality.

Card credit quality favorable; 720+ FICO vast majority of book; 2025 card loss rate will be lower than 2024.

Government (~15%) and corporate T&E headwinds; strong uninstalled pipeline converting in Q4. Debit growth tied to consumer franchise expansion via interconnected products.

Beta target unchanged at 50%+ through cycle; institutional high-beta deposits will reprice quickly when Fed cuts; deposit competition is persistent but not unusual.

Not a pull-forward; growing client base in investment grade, high yield, FX, and derivatives; market volatility supportive; strong pipelines.

Prepaid headwind worth a couple points on card line; fully lapped now. Normal seasonality expected going forward.

Two Fed cuts assumed (summer and fall); long-term rates roughly at current levels through the year.

Luchetti said NII ex-markets grew about 7% against 11% deposit growth and expects 16% Services deposit growth to normalize, without sizing the repricing room.

Fraser said investors should feel good about the exit rate, citing stranded costs at a $100 million quarterly run rate, but gave no 2027 expense figure.

Luchetti reaffirmed the 5-6% NII ex-markets guide, noting 6% Q2 growth and expected deposit normalization.

Luchetti humorously acknowledged the attempt to extract a guidance raise but firmly declined. AA Barclays portfolio fully factored in. Cautioned against extrapolating Q1.

Luchetti detailed NII growth anchored by client-driven activity: Services deposits up 16%, Wealth up 4%, loans ex Markets up 5%. Pricing discipline and stable betas support sustainability.

Mason expects continued strength driven by large multinational relationships, commercial/middle market client growth, North America emphasis. Deposits provide lower-cost funding for loan growth at good margins.

Mason identified two drivers above $53.4B full-year expense target: FX impact (~$400M) and revenue outperformance-related costs. Reaffirmed discipline on all other expense categories.

Mason noted seasonal first-half peak with 90-day delinquency buckets starting to trend down in retail services as a positive indicator.

Mason confirmed 2-3% NII ex-markets guidance unchanged despite late fee removal and fourth rate cut assumption, as back-loaded timing limits impact.

Clark guided NIB mix roughly flat in the back half as operating deposits come on as low-rate interest-bearing or hybrid; noted 3% household growth and some pickup in CD/MMDA production in select markets.

Clark noted Q1 deposits slightly better than planned despite seasonal decline and $1.6B brokered CD runoff. NIB stable at 24% adjusted for hybrids. Ending Q2 balances expected higher than Q1. Low loan-to-deposit ratio provides flexibility. Can access excess client deposits and third-party capacity if needed.

Clark expects deposit pricing to stabilize with no cuts as base case. If banks step back in from private credit retreating, could see intensification. Can hold serve in mid-50s beta. If stronger loan growth, might accept slightly lower beta as trade-off for quality relationship growth.

Chris confirmed ~$600M/quarter total consumer runoff, primarily 3.3% yielding doctor/dentist mortgages. Bottom in next couple years depending on rates. Building HELOC capabilities (50% of customers have significant home equity). Student loan refi platform available when rate cycle plays out.

Clark confirmed long-term 2-3% expense growth with meaningful continuous improvement component. Stepping down from ~4.5% in 2025 to 3-4% in 2026, then converging to long-term rate over next year or two.

Chris noted middle market M&A starting to pick up after being quiet. PE firms haven't exited much in three years, inverse relationship between return on capital and holding period is real. Goal to reach $1 billion IB revenue (2021 was ~$940M in outlier year). Strong hiring pipeline supports growth.

Clark explained commercial deposits recovered after Q2 rational competition plus new-to-Key C&I growth. Overall rates down despite growth. Consumer mixing from CDs to MMDAs at better rates. Mass affluent added $3B deposits in two years. Clark noted loan remix reduces incremental funding demand, enabling pricing selectivity.

Chris said he expected more aggressive forward buying of tariffs but hasn't seen it. Utilization ended up only 50 bps. Clark noted denominator also grew, depressing the rate.

Chris explained higher retention driven by April market dislocation creating attractive hold opportunities. Dislocation is actually good for Key's platform model.

Fox explained the incremental deposits are idiosyncratic institutional balances, including a liquidating fund, not expected to persist into Q3.

O'Grady noted surprise that deposit/MMF levels stayed high despite $2.5T Fed balance sheet reduction. Stabilization would be positive for organic deposit growth. Acknowledged some exposure if Fed shrinks further, model expands and contracts with system liquidity, but less upside risk from here.

Fox listed NII tailwinds: securities maturity repricing, deposit pricing actions from late 2025 not yet lapped, leaning into higher-yielding opportunities and FICC repo, deposit growth with businesses. US rate cuts removed from outlook, potential European rate increases. Not reaching for yield or materially changing duration, don't need to.

Fox emphasized expense curve grinding lower each quarter, without currency would be closer to 4% than 5%, and 2026 productivity gains will probably exceed 2025. Firmly committed to below 5% for Q4 and full year.

Fox explained two-thirds of degradation was one asset manager restructuring from mutual funds to CIT (kept client, lost AUC), with fee realization on lost AUC less than 10% of normal. Total dollar impact less than $3-400K/month in fees.

Fox confirmed elevated transaction volumes from April dislocation, also noted 2 large client losses from Q2/Q3 2024 (one took business in-house) still weighing on YoY comparisons by ~50bp, to be fully lapped after Q3.

O'Grady acknowledged Wealth organic growth is positive but below target, outlined segmentation strategy replicating GFO success in ultra-high net worth, adding leadership and revenue-generating hires in California, Texas, and New York.

Fox emphasized organic fee growth and organic expenses as the controllable components, acknowledging market gyrations affect the ratio beyond their control.

Fox indicated ~100% payout ratio target going forward, up from 78% last year, noting 116% payout in Q1. CET1 target range remains 11-12%.

Reilly confirmed Q2 capital markets pull-forward, guiding capital markets down about 20% in Q3, with full-year up 25-30%.

Rob confirmed mid-June conversion on track. $325M integration charges: $98M in Q1, ~$150M in Q2, remainder in H2. Cost saves will run rate by Q4, providing good starting point for 2027 planning.

Rob provided standalone fee breakdown: AM mid-single, cap markets high-single, card/TM mid-to-high single, lending and mortgage each low-single. Plus $100M FirstBank fee overlay. PNC standalone NII at 7-8% within the 14% combined guide.

Rob confirmed deposit costs already declining. C&I can approach 100% beta eventually. HNW similar. Retail beta slower since rates paid already low. Standard dynamics, nothing new.

Bill cautioned against putting duration on excess corporate cash, treated as one-day duration. Excess liquidity supports loan growth when it materializes. Meanwhile, Fed deposits are accretive and riskless.

Rob confirmed swap and securities positioning largely in place to sustain NII growth trajectory into 2026+. Not much new activity in last 90 days because heavy lifting already done.

Rob noted Harris Williams (30-40% of cap markets) tracking above last year's strong performance. FX and derivative-based business that was soft in Q1 came back in Q2 and expected to continue into Q3.

Rob gave detailed fee category outlook: AM mid-single, cap markets mid-single, card/TM mid-to-high single, lending low single, mortgage down ~10%+. Categories largely consistent with beginning-of-year expectations.

Rob noted NIB deposits stable at 22% of total. Rate paid expected to continue gradual decline over the year. No dramatic shifts anticipated in deposit mix.

Preston quantified current asset sensitivity, the $4.5 billion repositioning and $3 billion of swaps, and targeted the mid-single-digit range.

Bryan detailed ~$12M loan PAA in Q1 (2 months), rising to mid-teens for full Q2 quarter. Primarily commercial portfolio with shorter tail than residential mortgage. Securities marks reflect current market rates and will flow through based on yield outlook.

Bryan detailed standalone: mid-single-digit loan growth driven by middle market C&I, home equity, and auto. Revenue growth mid-to-upper single digits with another 100-200bps positive operating leverage taking efficiency to low 55s. Then layering on 200bps ROTCE and efficiency pickup from Comerica, all stacking up for strong 2026 and beyond.

Bryan confirmed ~$20M/month CDI in 2026, declining $20-30M in year two using sum-of-year-digits approach.

Bryan noted 2-3yr curve down ~40bps impacting auto business, but still $4-5B/quarter repricing at ~100bps pickup expected to persist through end of 2025 and mid-to-late 2026. Comerica transaction will have meaningful impact on overall NII trajectory for 2026 including diverse funding capabilities.

Bryan said betas will drop to ~30% range in Q4 and Q1 (from low-60s on first 100bps of cuts). Pre-Comerica expectation was mid-40s to low-50s beta, but now prioritizing retail deposit balance growth to position for replacing higher-cost Comerica funding post-close, a very accretive 2026 opportunity.

Tim laid out thesis: administration sees bank deregulation as key to reigniting credit formation. Loan-to-deposit ratios down 20pp over 20 years equating to ~$5T in credit not formed.

Zach avoided a precise spot deposit cost but guided NIM to the low 320s in Q3 and mid-to-high 320s in Q4.

Zach declined a tight AEA range but pointed to Q4-like cash/securities levels and 2-3% quarterly loan/deposit growth.

Zach credited organic outperformance across all fee businesses. Long-term: high single-digit fee growth, double digits in 3 power alleys. Near-term even faster due to revenue synergies. $50-75M synergies expected this year.

Zach confirmed on track for $2 pro forma EPS in 2027. Building blocks: 16% EPS growth in 2025, mid-to-high teens organic EPS growth in 2026, full run rate cost synergies worth ~10 cents, plus revenue synergies and PAA. Veritex and Cadence both performing above expectations.

Zach confirmed FY2025 core expense baseline of $4.871 billion for the 10-11% growth calculation.

Zach highlighted commercial payments, treasury management, and merchant acquiring as sustained growth drivers. Wealth management executing well with positive net flows.

Zach noted modest NIM headwind from hedge drag returning as forward-starting swaps come online, partially offset by asset repricing and cash optimization.

Van Saun benchmarked trailing 12-month capital markets revenue near $600 million against a prior high watermark and Swimmer added product build detail.

Single focused question on expense growth cadence through the year, noting Q1 and Q2 guide get to ~4.5-5% and asking how Reimagine benefits flow in H2 against ongoing investment. Testing the mechanics of the guide.

Single focused question on whether private bank expense growth (1.8% of 4.5% total) will decelerate after 2026 or continue, and how that fits with overall expense trajectory. Efficient and targeted.

First asked about capital markets pipeline diversity across advisory, equity, and debt, and outlook beyond the Q3 push-out tailwind. Follow-up on whether 'other fees' line had anything notable or what run rate to use. Efficient two-question format.

Probed confidence level in closing the record M&A pipeline and how much expense flex exists if capital markets underperforms. Testing management's ability to protect PPNR in a weak fee environment.

Anil Chadda confirmed the $900M securities repositioning was normal course extending duration on shortening securities. Not a strategic shift for higher-for-longer. Approximately 2-year payback period.

John Turner said most activity in office, multifamily, transportation, and communications portfolios has been completed but a few sizable credits remain. Timing of returning to 40-50bp charge-off range not entirely clear but credit quality improving. Anil Chadda added ACL ratio of 1.68% should approximate down to 1.62% day-one CECL assuming credit and macro resolution.

John Turner confirmed charge-offs predominantly related to office with additional Q4 resolutions expected in office and transportation. Almost $1B in classified loan reductions with more upgrades than downgrades for first time in several quarters. Telecom identified as new area of modest concern at $700M total exposure.

John Turner said $300M in remaining exit portfolio paydowns expected to complete by year-end. Pipelines up 100% YoY, production up ~20%, commitments up $2B YTD. Line utilization down 70+ basis points reflecting excess customer liquidity. David Turner confirmed $300M target for year-end to start 2026 clean.

John Turner highlighted competitive advantage from single cloud-based deposit platform. David Turner noted technology costs will increase but AI and automation will offset through natural attrition at 6-7% annually.