Manan Gosalia

Zach named deposit costs and the shift in the rate outlook (from cuts toward potential hikes) as the biggest NIM changes.

Zach laid out revenue growth, 400-500bps of operating leverage, stable credit, and lower share count as the bridge components.

Zach broke down: 5bps from higher Fed cash (revenue neutral), 2-3bps from slightly higher deposit costs and lower asset yields. Modest commercial spread compression of 5-15bps in competitive markets.

Zach outlined 3-tier contingency: accelerate efficiency programs, hunt for savings across all areas, and dial back investment pace. Steve noted they have a recession readiness playbook.

Zach confirmed 2026 is not peak investment. Revenue growth CAGR 10%, investment CAGR 20%, earnings growth in teens, sustainable long-term model. AI investment significant and growing with exponentially increasing use cases across the organization. Steve confirmed AI included in digital and technology category.

Brendan sized NDFI exposure at approximately 2% of total loans excluding REITs, subscription lines, and higher-rated insurance companies. Characterized by relationship approach with diversity and active portfolio management.

Brendan described disciplined client selection, active collateral monitoring, and relationship-first approach. Steve confirmed they passed on recently reported problem credits. Relationship orientation helps avoid one-off transactional lending risks.

Zach attributed sequential variation to seasonality, noting approximately $1 billion of growth is a terrific level. Back half expected to match or beat. Steve added strong July start.

Zach explained higher expense guide driven by revenue-driven compensation and volumes. Positive operating leverage 0.5-1pp above original budget.

Steve highlighted nuanced client impact: non-importers feel more bullish, USMCA trade exempt, auto dealers thrived in prior disruption. Distribution finance and equipment finance seeing some deferrals.

Steve acknowledged deliberate conservatism in second-half guide given tariff uncertainty. If trade negotiations resolve, opportunity to beat guidance.

Zach confirmed 60/40 core vs new initiatives growth mix, with intentional deposit prefunding strategy now enabling loan growth to outpace deposits.

Zach expressed high confidence, noting ability to manage NIM approximately flat across zero to three rate cuts, with loan growth driving revenue performance.

Clark tied tighter-spread growth to Key's investment-grade, capital-markets-oriented book; Gorman cited electrical-infrastructure buildout and largely investment-grade REIT growth as targeted-scale opportunities.

Clark emphasized name-by-name, month-by-month decisions on excess commercial deposits. Let some go in Q1, may bring back in H2 (same pattern as 2025). Commercial mortgage servicing clients now paying with deposits instead of fees, took deposits on and off balance sheet strategically. Multiple funding levers available. Chris stressed no relationship risk from letting excess deposits leave.

Chris confirmed 100 bps benefit under standardized approach would provide greater flexibility. Will have more to say after final rules, evaluating standardized approach vs ERBA.

Chris noted tech/ops spending at $1B (up from $800M to $900M to $1B). Finding ~$100M/year in continuous improvement savings. Too early to claim large AI efficiencies but focused on transformational opportunities like loan underwriting and processing horizontals.

Chris confirmed commercial 5% guide (C&I ~7%, CRE contributing) has upside potential. Clark noted risk appetite unchanged, growth achievable with prudent underwriting.

Clark explained 3.25%+ NIM achievable on forward curve with ~50s beta. Steepening would provide additional benefit but not required. Forward curve already incorporates some steepening.

Clark walked through building blocks: 50 bps NIM improvement (half mechanical from fixed asset repricing/swaps including $34B swaps at 3.8-3.9%, half from organic C&I growth and deposit management at ~50s beta), fee compounding, expense discipline, buybacks to maintain current capital levels. If marked CET1 taken from 10.3 to peer 9.1, adds 2% ROTCE. Chris noted long-term ROTCE goal remains 16-19%.

Chris noted additional competition manifesting in larger hold levels and structure stretching by competitors. Key not stretching. Over 95% of commercial borrowers have broader relationships. Clark noted mixed deposit pricing dynamics, very local market-to-market.

Clark explained half of Q1 qualitative reserve retained given remaining uncertainty. If economy strengthens and credit continues improving, room to reduce reserves. Half of Q2 build was loan growth.

Chris noted utilization up 92 bps, new teams in Chicago and SoCal gaining traction, and balance sheet retention rising from 15-16% to 17% as markets get choppier.

Clark explained tail scenarios required to miss 20%: big C&I pullback, much lower/flatter curve moving rapidly. Consumer-to-C&I remix doesn't require incremental funding.

Chris acknowledged strong capital position at 12% CET1 but deferred specific targets until capital rules are finalized.

Chris stated no more large-scale repositionings but will continue to look at smaller opportunities around the edges.

Bible explained SSFA treatment limits downside capital risk and new CRE products will build capital-efficient growth slowly over the next couple of years.

Bible detailed robust, broad-based loan momentum across middle market and specialty businesses and reaffirmed mid-50s deposit betas.

Bible said ERBA opt-in likely if advantage persists, would get processes in place to cover costs. ~90bps CET1 benefit from standardized approach, additional 10-20bps from ERBA. Driven by conservative LTVs.

Bible said ~100bps capital release would need to be assessed against rating agency views since capital comes out of the system. Would probably trend lower on CET1, visible in tangible equity ratio. Needs more measurement.

Bible said ROTCE approaching 16% in 2025, targeting continuation at 16% in 2026 and 17% by 2027.

Bible said MSR fair value election moves $75M from expense to net against revenue. Core fee growth about 4% driven by treasury management (double-digit YoY), trust, mortgage, capital markets. Positive operating leverage of ~150bps in 2026.

Bible said GL going live next quarter with run-rate cost drop. Other investments: new debit platform, commercial/consumer servicing upgrades, data center migration, cloud migration. Revenue will grow faster than expenses.

Bible explained two contractor credits drove $49M of $146M NCOs. Could have another lumpy item in Q4 but full-year still under 40bps. Declined to give 2026 guidance but noted economy still in good shape.

Bible signaled imminent dividend increase, 'you will see some action out of our board this quarter.' Capital allocation priority: organic growth first, then dividends, then M&A, then buybacks.

Bible explained new deposits came at $3.90-4.40 cost, below marginal funding curve. Higher than average IB cost but allows payoff of non-core funding. Characterized as timing difference, not sticky pressure.

Bible attributed C&I criticized increase to single idiosyncratic credit. CRE continues performing well. Expects continued criticized decline at measured pace.

Bible attributed improvement to payoffs (driven by yield curve drop), upgrades from improving cash flows, and partial paydowns. Cautioned pace may slow in 2025 with steeper curve.

Bible directly addressed capital return flexibility, noting ~$2B+ buybacks likely with expected loan growth, more if growth is slower.

Preston gave the multi-year balance trajectory and framed retiree demographics as a structural tailwind.

Spence pointed to beating the 19% ROTCE and 53% efficiency 2027 targets but declined to give a new medium-term efficiency number.

Bryan highlighted two priorities: credit for secured borrowing capacity (FHLB, discount window, repo) in liquidity rules, and more rational deposit outflow assumptions, current stress test assumptions are absurdly high relative to core operational deposits attached to treasury management services.

Bryan said ERB would provide incremental ~10bps capital benefit but involves data/model/systems complexities. Doesn't think opt-in vs not will have a big competitive impact. Tim added that FITB already underwrites using economic capital at individual credit level with PD and LGD, so the macro-level opt-in decision is separate from credit-level return calculations.

Bryan confirmed full run rate in guide except January (pre-close month). Continues at $3.6-3.7B deposit range and ~$100M/year in expenses/fees. Tim added upside from executive order directing agencies to eliminate paper checks, will work agency by agency with Bureau of Fiscal Services after conversion and feature builds are complete.

Bryan cited two offsets: Q1 seasonal compensation pressure (Q4 is seasonally strong), and this quarter included a small ACL release where normal growth would require a build. So Q4 2025 profitability is a seasonal high point, not the new baseline.

Bryan detailed ~$3.5B average DDA balances, 15-20% fee margin on ~$100-110M expense load primarily from processing costs. Growth from transaction activity increases and program expansion via executive order mandating electronic federal disbursements.

Greg cited leading indicators: criticized assets down 4%, NPAs down 30% over two quarters tracking to 40% year-end target, no NPA surprises, losses are reserved. Consumer delinquencies 6bps below pre-COVID levels. No exposure to Cantor or First Brands, residual First Brands exposure is $51,000 of operating leases secured by a forklift and a printer.

Bryan confirmed year-end CET1 including AOCI target of around 9%, with AFS portfolio duration at 3.8 years providing predictable AOCI accretion.

Tim segmented consumer health: lower-income stretched, upper-end lifestyle spending down ~30%, middle-income homeowners stable with fixed housing costs.

Tim clearly stated no near-term constraint on loan growth from AOCI levels.

Tim confirmed 8% CET1 inclusive of AOCI floor with expected accretion from AFS portfolio pull-to-par. Buybacks tied to maintaining 10.5% CET1 target.

Van Saun quantified the deposit ambition and Coughlin explained the self-funding branch mix shift with revenue-to-expense benchmarks.

Van Saun laid out rating agency, RWA adjustment and AOCI phase-in considerations, quantifying 50 to 60 basis points of potential net CET1.

First probed NII/NIM trajectory in a higher-for-longer rate scenario with no cuts. Follow-up on magnitude of RWA benefit from new capital proposals and ERBA adoption considerations. Technically detailed regulatory and balance sheet questions.

First questioned whether 6-8% fee guide is conservative given strong pipelines and M&A push-outs. Follow-up on front-loaded buyback guide and SCB importance for CET1 migration. Testing both revenue and capital return assumptions.

First question on capital markets pipeline into Q4 and 2026 given record Q3. Follow-up explored private credit exposure risks and structural degradation concerns. Balanced between growth and risk assessment.

First question noted the decline in office reserve coverage and asked about managing ECL trajectory. Follow-up asked about stablecoin strategy under the reimagining initiative. Mix of credit fundamentals and forward-looking technology questions.

First question explored NBFI loan growth and credit risk, a topical industry concern. Follow-up asked how non-core student loan sale benefits NIM and whether it raises probability of hitting upper end of guide. Technically well-informed questions.

Asked about belly-of-curve impact on both asset repricing and liability costs, probing whether higher mid-curve rates could weigh on deposit betas. Follow-up explored catalysts for mid-single-digit ex-non-core loan growth. Technically detailed questions.

Confirmed the adjusted base and named NII drop-through, fee growth and headcount discipline as the levers.

Moynihan cited strong card credit, growing direct deposits across income tiers and spending up 5%, with gas crowding out some purchases.

Alastair said a September hike is a net positive already embedded in the top-of-range NII guide; directly answered.

Alastair confirmed no one-timers in Q1, the 16% ROTCE is clean. Framed as a medium-term target with quarter-to-quarter variability; management focus is continued progression (13% → 14% → 16% over recent years).

Brian confirmed incremental NII flows through to the bottom line. If NII outperforms, expect the operating leverage range to trend toward the high end (290bps delivered this quarter vs >200bps guide).