U.S. Bancorp (USB)

“Additionally, we expect to recognize approximately $160 million of reserve build related to the Amazon Small Business Portfolio purchase, which we anticipate will close in mid-August.”

“Excluding BTIG, we would expect our core expense growth to be approximately 3.5%.”

“Non-interest expense growth of approximately 8% compared to the third quarter of 2025.”

“Total fee revenue growth in the range of 12%-14% compared to the third quarter of 2025, with contribution from BTIG of roughly $200 million per quarter in the back half of the year.”

“For the third quarter, we expect net interest income growth of 4%-6% on a fully taxable equivalent basis compared to the third quarter of 2025.”

“We absolutely feel confident in the mid-single digit number for the overall payments complex, on the better side of that range as we go forward.”

“That's the plan, and we have some confidence that gets us to about 10% of the total revenue.”

“We think we have a nice platform to grow organically and get to the 10% revenue, which would really give us sort of the right portfolio mix.”

“Ebrahim, I would say that we would anticipate to increase the buybacks and glide into that 70%-75% range, which we're very committed to as we approach approximately that 10% level.”

“We're firmly positioned for positive operating leverage.”

“I do anticipate that the investment portfolio will kind of keep at this level or so as we kind of have been trading the securities book balances for more loan balances, which we think is a healthy thing to do from a balance sheet perspective.”

“That's why we anticipate, as I mentioned earlier, our trajectory of NIM and net interest income kind of growing throughout the course of the year, in part due to the Amazon.”

“I would just point back to Gunjan's comments she just made on, we're 7% of revenue right now, anticipating to get to 10. I think that's the right trajectory. We expect strong growth.”

“Ken, that's right. $60 million would be just the merger-related items that we would anticipate this year.”

“I don't anticipate being that strong in the back half of the year, but it's still going to be strong.”

“Yeah. Well, a couple things. Yeah, just to be clear, $200 per quarter. is what we anticipate.”

“Yes, the contribution margin we anticipate being the remainder of this year, kind of that 15%- for this business, we anticipate that to build out. I have 20% in my head, or how we're thinking about it right now, with hopeful room for improvement, that's how we're progressing.”

“$60 million would be just the merger-related items that we would anticipate this year. There'll be a tail or so, probably early 2027.”

“It would not be our expectation that we would need to do a bolt-on on capital markets.”

“If we continue to see those sorts of opportunities, we'll pause for share repurchase or keep it at these particular levels. We intend to glide up into that level.”

“We expect that to continue to progress.”

“We continue to see a path on the 3% journey here at some point in 2027.”

“I would expect as loan growth continues to go, deposit growth will grow with some sort of parity there.”

“I know we talked about mid-single digit growth last time at this time. We anticipate to be through that.”

“Sure. Yeah, we expect full year low teens on the fee side of the equation.”

“We expect that the fee complex overall will outpace NII, at least in the near term, very healthy growth across the board on all fee categories.”

“We do expect the contribution margin to improve over time.”

“Just likely over four points of that is going to be on the BTIG side of the equation.”

“We do expect our fees overall to be low teens from a full year perspective.”

“I think in terms of net interest income and net interest margin in particular, we do expect that to grow over the course of the year, and that's reflected in the guide.”

“Just given the momentum that we've had in the first half of the year, I would just say that we expect to be north of 5% for the full year.”

“We started the year expecting mid-single digits. I would continue to expect mid-single digits on net interest income.”

“We do expect, as I mentioned, the full year revenue guide to go up to 7% to 9%, or 5% to 7% excluding BTIG, which is better than where we started the year when we mentioned 4% to 6%.”

“We expect to deliver approximately 200 basis points of positive operating leverage this year and more than 300 basis points excluding the impact from BTIG.”

“For the full year 2026, we now expect total net revenue growth of 7%-9% compared to the prior year, or in the range of 5%-7% excluding BTIG, up from our prior range of 4%-6%.”

“We expect our annual investment in branches to increase from approximately $200 million historically to $300 million annually.”

“Our aim is to grow capital markets to more than 10% of total company revenue over time.”

“To the extent that it stays around here, we feel really good that hopefully we can keep at that level or expand as we move forward.”

“If we can keep our efficiency ratio to the mid to the 55-57 range and grow fees at that level, I think it makes for a very enduring franchise.”

“So we see the pipelines being really strong there. And so by the time we get to the third quarter, that will be more representative of what we believe that will be the true growth rate in that business.”

“So on the Amazon side of the equation, we expect that to be coming online in the third quarter. The loan amount is going to be about $1.6 billion area, is likely in that area, and it's going to be about 70,000 co-brand clients. It's probably going to add in the neighborhood of $75 million to $85 million per quarter.”

“I would anticipate we're going to continue to glide up. I think we're going to start at $200 million would be my base case, but -- because we see such strength in the pipelines. But it could increase from there or that would be our intention.”

“What we see with loan pipelines going forward, which are quite robust, is people beginning to invest in kind of core middle market expansion and CapEx.”

“We are very much committed to positive operating leverage and having it more driven by revenue growth here as we look into 2026.”

“Yes, we certainly feel there's a path in 2027 to get to that level.”

“Yes, John. Yes, we certainly still see a path to that 3%.”

“I do want to just reiterate that we are very committed to long-term capital distribution targets of 70% to 75%, and we are keen to get back to those levels with share repurchases.”

“In payments, the Amazon partnership will meaningfully accelerate credit card revenue growth by the end of the year and expand our banking opportunity with the small business segments in the future.”

“Yes, that's our expectation, John, is slightly accretive to inclusive of those charges.”

“Maybe just to link a couple of comments we made here, I think deposits will generally grow in line with loans, although it may not be one for one. It will probably be a little bit less.”

“We expect that would to be under current rules sometime in 2027, the effective date of ERBA”

“And so you see the acquisition numbers be much stronger, and they will lead to stronger strengthening revenue growth about 4 to 6 quarters out.”

“The Amazon deal will bring 700,000 new small businesses to the co-brand side, with the opportunity to attract them to the business side.”

“Going forward, I expect that the mortgage stuff will abate and the other things to stick, meaning the good core loan growth, the deposit pricing stability, our earning asset mix all improving as we think about the future. So we see -- we continue to see progression in our net interest margin going forward.”

“We've talked about loan growth to being in the kind of that 3% to 4%, but I certainly think it's going to be higher than that. It's probably more in the mid-single-digit range from a broader loan growth perspective for the full year.”

“As we think about 2026, we're really thinking about our revenues growing faster and that being the driver of positive operating leverage.”

“We expect to deliver positive operating leverage of 200 basis points or more for the full year.”

“We expect total net revenue growth to be in the range of 4% to 6% compared to the prior year.”

“We're encouraged by the initial proposals and expect to see meaningful RWA relief under both methodologies, particularly in areas like mortgage and investment-grade corporate lending, providing additional flexibility to support clients through disciplined balance sheet usage.”

“Looking ahead, we see opportunities to build on our strong operating leverage story, supported in part by the ongoing deployment of AI and other automation tools to improve efficiency.”

“In capital markets, our organic product expansion as well as our pending BTIG acquisition are expected to drive sustained revenue growth.”

“Certainly, if the revenues don't materialize, we have levers to move that down.”

“We are thinking here 1 or 2-quarter changes. So that's why I say it's not that material to our strategy or our timing. But it can move by 1 or 2 quarters in terms of how quickly we step up.”

“And we expect total noninterest expense growth of approximately 1% compared to 2025.”

“We still feel there's definitely a path to 3% in 2027.”

“All this is to say that the mix is improving in the balance sheet, and that's going to continue throughout 2026, and that's what gives us confidence in the NIM expansion as well.”

“But we have a lot of ability to flex that. Those are not long-term investments... So we are very committed to our meaningful positive operating leverage, and we expect it to come from revenue. But something happens in the macroeconomic environment, we have levers on expenses.”

“So we are very confident about expense management. We have aggressive plans to invest back in the business, just to drive the revenue growth, especially fee revenue growth in businesses like capital markets and payments that attract more expenses.”

“On the loan side, we will drive commercial and credit card loans to deepen client relationships.”

“Today, our balance sheet is poised for continued NII growth.”

“We've had several hundred branches remodeled this year. We expect to have that occur next year as well, and that'll be just a continuation of our strategy that Gunjan just laid out.”

“So in our call here for growth, on both loan and deposit, I would anticipate it's both a mix of interest-bearing and noninterest-bearing deposits with roughly the mix probably being in the same area that it is today is kinda how we think about it.”

“In terms of noninterest-bearing, and yes, we have grown both sequentially and on a year-over-year basis. That year-over-year basis has not been achieved in quite some time. So it was very nice to see that. And we do expect that to continue into 2026.”

“The answer is yes. We expect merger-related costs to happen in the next quarter or two. And so as that occurs, that will keep the EPS neutral. And so, after that, then we expect to have some, obviously, we'll see margin expansion in this business once we get through those costs.”

“Short answer is yes. On the continuation on the commercial side of the equation... So a combination of all these things, we think, persists into 2026, and so we're looking forward to that growth.”

“So, you know, card, if I think about there's seasonality, so you should expect a little bit higher charge-off rate on card in the first half of the year just given that seasonality. But overall, if I just kind of look big picture on card 25 versus 26, we expect stability in that charge-off rate based on what we know today.”

“That will likely continue into the first half of the year, but should overall strengthen as we get through that. And that will, by the time we exit that, that will be more in the mid-single-digit range.”

“And so, again, here, we think that mid-single-digit growth for the year is appropriate for this business as well.”

“You know, absolutely, payments has a role in our mid-single-digit call for fees overall... We do expect mid-single-digit growth in this business for the year of 2026.”

“So that's all, again, a big focus for us as we look into 2026 and continued NIM expansion.”

“What I would say there on the fixed asset repricing is that we'll have slightly or we'll have more balances that should reprice this year than last year. But it'll be likely at a lower spread just because the nature of long-term rates have come down over the course of the year, and based on our forecast.”

“We also see that commercial real estate is starting to grow, and we expect that to be a help in terms of growth there.”

“But with the increase in loan pipelines that we see as well as NIM expansion as that continues, we do expect that to grow.”

“We expect to deliver positive operating leverage of 200 basis points or more for the full year.”

“Net interest margin increased two basis points sequentially to 2.77% as we look to achieve greater margin expansion in the medium term.”

“As such, we expect revenue growth to be a stronger driver of continued positive operating leverage for the year.”

“In 2026, we will make strategic investments necessary to drive our growth, particularly in technology, sales, and marketing.”

“There's some seasonality there, but for certain, our 2025 loss rate on card will be less than our loss rate in 2024.”

“So all of that leads us to have confidence in our mid-single-digit fee guidance across the whole portfolio and payments overall. With upside over time as we gain momentum.”

“And of course, CPS is a very attractive business, and we are expecting those trends to reverse in due course here.”

“And so we do expect improving trends in our year-on-year outlook on corporate payments.”

“I would say that we're biased to the upside both in terms of net interest income and net margin from versus our flat guidance because I just see more opportunity than I do risk.”

“We expect to deliver positive operating leverage of 200 basis points or more on an adjusted basis.”

“So that's the range. But the business model lends itself to meaningful positive operating leverage for next year. Just a matter of level.”

“We are very confident in our expense management disciplines because our four signature programs have runway still to go.”

“We definitely see a path of net interest margin expansion getting to that 3% level in 2027.”

“I think as I mentioned, we have four cuts in our forecast think the market's a little bit wider than that.”

“As we look into 2026, we certainly have a feel that the glide path will be there to increase our pace and get to that 75% area that we that had mentioned on the slide that you'll see there.”

“Our view is that the impact this impact finance impact finance line item will and increase. We've had, as we saw on the slide, a 17% increase. We expect this to be a high single-digit type of business over the medium term.”

“Well, we've talked about mid-single-digit in the payment complex, and that's what our objective is with upside. So I think that's where our starting point is.”

“We've been able to manage quite prudently, so we expect to shave meaningful positive operating leverage next year.”

“The fees, we continue to expect that mid-single-digit type of growth in our expenses.”

“Over the next several years, we anticipate additional growth from a pull-forward of activity tied to some recent executive orders and expect revenue trends across our environmental finance, affordable housing, and community finance solutions to remain robust.”

“We continue to expect net interest margin expansion in the medium term.”

“The speed in which we gain to that 3% margin is going to depend on the curve.”

“I don't know, if I acknowledged the flat for several quarters, it was double-digit growth last year... I view that as temporary. We still have all of the conversations we've had on our capital market side is still very much in play, and we feel very confident about that going forward.”

“Still comfortable with the mid-single-digit range?" ... "Yes. Yes, absolutely.”

“We feel the pipelines are strong on C&I and card.”

“But just overall, when you look at 2025 net charge-off, that's going to be lower than 2024 for card.”

“We expect on the card side of things to be this year in 2025, a better charge-off rate than 2024.”

“So what I would just say is that in the second half, we'll have more volume... We anticipate to be in the mid- to-high end of that range in the second half of the year.”

“The question we have is for this particular third quarter as we are more upbeat about loan growth and things of that riding. So we'd rather deploy it there than $50 million or $100 million on the share buyback.”

“On the issuing side of the equation, it's going to be a continual -- continuation of kind of what you saw this quarter.”

“But then after that, I think that abates and we have -- what we'll take over is our initiatives that we have.”

“I don't see us growing that from here on out from this particular level, any issuance we do will just be here to replace other maturities and things like that.”

“The short-term borrowing cost goes away next quarter.”

“So we do not expect it to be sort of material to our payments business anytime soon.”

“But we got a little less than half the quarter of the benefit this quarter and we'll pick up the rest full quarter, obviously, in the third quarter.”

“So we expect productivity to be a meaningful contributor to bottom line growth.”

“The card growth. We continue to expect to see that as well. So -- so we're -- as I sit here today, we're better positioned on the loan growth side or we see better growth opportunities than we did at the beginning of the year.”

“On the net interest income side, I think, sure, it's been a little slower than at the beginning of the year, but we think that there is acceleration that can grow because of the things that we talked about.”

“We continue to -- or we expect to see that to continue to improve given the strategies that we're putting in place there.”

“I would expect our other revenue to be north of $150 million for the remainder of the year.”

“We continue to expect to see that as well.”

“Even on deposit mix, even on the institutional side, you will observe very healthy growth in treasury management fees and our corporate trust fees... that focus will also help our NIM trajectory.”

“We do the strategic actions we took in terms of the loan sales as well as the investment portfolio repositioning is going to help net interest income trajectory for the next several quarters.”

“We do have fixed asset repricing that will accelerate and be better than the first half of the year.”

“I also expect sequential net interest income growth here in the third and fourth quarter as we move forward.”

“We had 3 basis points of the 6 basis points was really attributed to transitory things related to the sale that I mentioned kind of a grossing up balance sheet. So we expect that to reverse.”

“For the full year, we expect to deliver positive operating leverage of 200 basis points or more on an adjusted basis.”

“But over time, we are very much committed to getting back to that approximately 75% payout, and that's really what we are focused on is achieving that goal.”

“And I would just say, in terms of our 3%, there's no change... we just -- we have those drivers that I just mentioned that are going to help us see through that. That 3% over the medium term.”

“No. No changes there. We've talked about no earlier than 2027.”

“Our focus very much is on organic growth and are planning for the Cat 2 transition and the capital build is based on organic growth profiles.”

“But we assume that if the rate cut cycle persists and continues moving forward, we get back to that level, and it's the same drivers as we've talked about in terms of our mix of institutional versus retail.”

“Well, for all the drivers that we talked about, we continue to expect that to be in the medium term. I would say that we have about 4 cuts over the cycle remaining within that assumption, more cuts are more helpful. Fewer cuts make it a little bit more of a slower pace.”

“The capital markets business continues to show a lot of growth opportunities. We've been growing our client base. Both in terms of high grade as well as or investment grade as well as high yield. The foreign exchange and derivative or client interest rate derivative businesses have very strong pipelines.”

“We do expect net interest income to grow. Obviously, there is one more day, so it's about $20 million or so. For the second quarter. Ex that, we do expect growth, but we you know, it's a volatile market, and we want to had some uncertainties and we don't or there is uncertainty, I should say, in the marketplace and we want to reflect that.”

“Card was impacted, as I mentioned, with the prepaid item for the first quarter. But as we get beyond that, then we expect to grow.”

“I mentioned before, we have five to seven billion on average per quarter that roll off on loans. Fixed-rate loans that will reprice 150 to 200 basis points better and then an investment portfolio of three billion on average for the quarter.”

“So our expectation would be that we would be in line with the market on volumes, and we'll maintain our margin, and it'll be a very healthy accretive sort of trajectory for the overall payments business for us.”

“On the fee side of things, we still believe the mid-single digit is an appropriate way to think about fee growth for the year.”

“You know, first of all, you're right. No change to our guidance 3% to 5% is our expectation.”

“We expect to achieve positive operating leverage of greater than 200 basis points for the full year.”

“Total net revenue growth on an adjusted basis is estimated to be in the range of 3% to 5% compared to the full year 2024.”

“During the quarter, we completed $100 million in share repurchases and moving forward, we expect the level and pace of buybacks to remain modest as we balance continued capital accretion with distributions and further evaluate broader macroeconomic conditions.”

“The growth here could be stronger, and our target is to be more in line with the market.”

“Headwinds around consumer fees and the sale of our ATM cash provisioning business are also dissipating and support stronger fee growth going forward.”

“So we didn't this expectation expectations that we will achieve three percent managed margin over the medium term. 2026 or 2027.”

“But we are as we get closer, we would anticipate, you know, that we would increase our share repurchases as we approach and achieve that approximately that 10% capital level.”

“Further, we expect that our trajectory will benefit from an improved asset mix, fixed asset repricing, and continued optimization of our funding mix.”

“As the slide shows, we do not expect to become a category two bank before 2027.”

“Our medium-term fee growth targets for the overall bank expect a mid-single-digit growth rate for payments with more upside beyond that time frame.”

“However, a wide range of plausible forward-looking macroeconomic scenarios still support our targets.”

“and fully expect that momentum to continue into 2025.”

“And assuming there's additional cuts, we would migrate kind of through the cycle to that 50%, north of that level is kind of where our expectations are.”

“It may not show up immediately this quarter, but over time we would expect the retail competitiveness to moderate.”

“But overall, you should think about deposits being a modest growth, consistent with the industry, those sorts of things is kind of how I would -- how I characterize it.”

“And we anticipate, given the drivers, we do anticipate net interest margin to follow net interest income and increase.”

“And so, we see high single-digits there as well.”

“We expect travel to improve, same store sales to improve.”

“So we continue to expect that mid-single-digit growth in terms of, on a retail card side of things.”

“So, in terms of our curve, we do have two rate cut assumptions embedded. I think one's in May and one's in September.”

“Just as an example, we have about $3 billion of investment portfolio that reprices per quarter $3 billion that runs off that can get replaced at 150 basis points to 200 basis points of spread.”

“But directionally, it should follow, we talked about it at Investor Day about how, not that there's anything magical about 3%, but I mean, there's certainly a lot of momentum in all those categories and drivers that I just mentioned really to kind of get us into that level over time.”

“We talked about 10% being an approximate level of where we want to be on a Cat II basis. And obviously we don't expect to be a Cat II bank until 2027 or there about.”

“But perhaps the changes we're thinking, hopefully is in the back half of the year, we can see that pick up in loan growth.”

“So a steeper curve, the better off we are. If it's more inverted, then that would put a little bit more pressure on the net interest income.”

“It's hard to see volumes really persist or be a lot stronger than it was in the prior year and gain on sales pretty stable as well.”

“And then we do see corporate spend being stronger. We saw some nice momentum at the end of the third quarter and into the fourth quarter, and that's what's really giving us the confidence that, that will grow from the level that you saw in this quarter's results from a corporate payments perspective.”

“But by -- all in all, that's what gets us and gives us confidence in our mid-single-digit growth on the fee side of things.”

“And we would expect that our growth will be in line with the industry.”

“So maybe just to go off of a couple of those points. From a net interest income standpoint, in the fourth quarter, we expect to have relative stability and that's just thinking about our earning assets are going to be relatively flat, we expect, and our asset repricing and liability pre-pricing are going to be largely offsetting.”

“The service charges you know has -- will start to lap the ATM exiting business as we think about that starting in 2025.”

“So, Vivek, I would start by saying that I think there were still a little aftermath here on the freight side in the third quarter, but we expect that to completely lap here in the fourth quarter.”

“And I think the other thing is, over time, as the cuts happen, then that implies a more upward sloping curve, which should help us in our trajectory going forward as well.”

“The beta for this particular juncture was around that, I'll call it, 30% area for this particular cut, and we expect that to continue to migrate closer to or up to -- just north of 50% as we kind of get through the cycle and that sort of thing.”

“The guidance that John provided would indicate that our expectation for positive operating leverage in the fourth quarter of '24 will be north of 1%, and we would expect it to continue to expand from there into 2025.”

“we do have expectations of growth in those particular businesses in the fourth quarter”

“We expect full-year non-interest expense as adjusted to be $16.8 billion.”

“For the full-year, we still expect mid-single-digit growth in total non-interest income as adjusted, but likely at the lower end of the range.”

“Full-year 2024 net interest income on an FTE basis is expected to come in at the higher-end of our $16.1 billion to $16.4 billion range.”

“We expect net interest income for the fourth quarter on an FTE basis to be relatively stable to this quarter's $4.17 billion.”

“Looking ahead, we intend to balance our continued capital accretion of 20 basis points to 25 basis points per quarter with capital distributions, starting with a modest share repurchase in the near-term.”

“In the near-term, we expect changes to the loan loss reserve to be driven primarily by loan balance growth and mix.”

“We expect our fourth quarter net charge-off ratio to remain relatively stable compared with the third quarter level.”

“But given all that, we would still expect to be up at our capital targets even under the CAT II when we cross that threshold, which again as a reminder, we talked about is not expected till 2027.”

“I can't put a timeframe on when exactly the 3% occurs, but that's a good level to think about, and it's -- obviously it's embedded within our medium-term guidance that we provided to you during Investor Day.”

“We talked about the momentum in fee growth, and I would expect that to continue given the unique businesses we have.”

“I think the lumpiness will come out of CRE office and that's the one that's going to go up and down a little bit.”

“We would expect our charge-offs in the first or the third and fourth quarter to look more like the first quarter.”

“We don't anticipate anything really in the C&I book outside of that. So that is something that -- is something that we're not concerned about.”

“I think if you think about as we start to lap some of that sort of thing and same store sales come in and that sort of thing, that's where we expect the momentum in the second half of the year.”

“Well, I think it's -- you saw the card growth rate was about 1% or so versus our sales area of about 4% -- 3% to 4%. So, I think there's going to be some of that pressure in the third quarter or so.”

“We would expect momentum as we move forward and getting and approaching those sort of medium-term levels.”

“We think of high single-digit growth in terms of the merchant and corporate payments system categories. And we think of mid-single-digit growth as we get into the credit card, debit card kind of area.”

“And I would expect that to continue as we go forward. So, nothing significantly different from what we saw in prior quarters.”

“Mortgage book is kind of that 6 basis point to 8 basis point range.”

“And John, in our projections, we've assumed two more rate cuts in September and December.”

“And quite frankly, we don't expect a lot of deposit growth in the next quarter just simply because QT is still around and is still putting pressure on industry liquidity for us and for the market.”

“So, I think those are really some of the things, I think especially on corporate, we -- payments we -- by lapping that fleet kind of in the third quarter or so is going to allow for very strong rates as we think about the fourth quarter.”

“But still, we think that the strong growth on the retail side of things is going to -- continue to be very helpful.”

“So, I think if I kind of think about the different businesses here... we think that there's momentum on this side of things that will allow us to grow and grow nicely.”

“So, as we've talked about, I think most of the capital accretion going forward, Erika, will be through normal earnings accretion. And as we talked about, we expect that to be 20 basis points to 25 basis points.”

“We expect to be well above our fully-loaded Cat II capital targets well before the cross -- we will cross that threshold.”

“We would anticipate approaching 60 basis points here in the back half of the year is kind of how we're thinking about the charge-off.”

“Well, I don't think -- well, first of all, our guidance really hasn't changed from a credit standpoint. It continues to be -- it's stabilizing.”

“I think on the fee side of things, we had a solid quarter, but we continue to expect momentum in the various categories.”

“Our earning assets, we know are going to be formulaic and continue to reprice, whether that's the investment portfolio or the mortgage book. We expect kind of in that 6 basis point to 8 basis point range on average, given current levels.”

“We do expect some level of rotation out of deposits going forward, but it's going to be relatively modest.”

“We remain focused on our target of positive operating leverage in the second half of this year and beyond.”

“We continue to expect full year noninterest expense as adjusted of $16.8 billion or lower.”

“For the full year, we expect to achieve mid-single-digit growth in noninterest income as adjusted.”

“Full year 2024 net interest income on an FTE basis is expected to be in the range of $16.1 billion to $16.4 billion.”

“Our second quarter net charge-off ratio of 58 basis points increased 5 basis points from the first quarter, in line with our expectations and we continue to expect our net charge-off ratio to approach 60 basis points in the second half of this year.”

“Going forward, we would expect the balance on the investment portfolio to remain relatively flat to the current level and for the reinvestment benefit from quarterly securities runoff to be approximately 6 basis points to 8 basis points on average based on current rates.”

“I would expect, as we said, the rotation is continuing. So I wouldn't expect growth necessarily in DDA, but deposits overall, we do expect it to basically be stable.”

“Going forward, again, the driver here in investment portfolio is the $3 billion or so that's rolling off at lower yields and will be replaced at now current higher interest rates.”

“So as John said, it's the repricing of loans, the expectation of stabilization of the flow of deposits and the securities portfolio churn that we talked about.”

“So I would expect that '25 would continue the momentum that we see in the second half of '24.”

“So what we're saying, Mike, is that this pressure that, as John described, we believe, is going to dissipate and has dissipated. It's just dissipating slower than we thought. And we expect a relatively stable into the second quarter and then growth in the back half of '24.”

“The offset to that is we're going to have asset churn on the loan side as well as the investment portfolio side. And over time, those things will offset and turn ultimately in our favor.”

“Yes. I would say mid-50s, maybe closer to the 60 basis points.”

“So even though NPAs are likely to tick up, we don't see that as a real impact from a P&L standpoint.”

“And I think when we think about kind of the rest of the year, probably in the second quarter, it's going to tick up a bit more. But then, that growth rate is going to really moderate quite a bit.”

“I think that we're continuing to see in nonperforming assets that, that will continue to tick up and did tick up in the first quarter.”

“There might be a little bit more than that in the second quarter. But we see strong momentum as we look -- again, the fundamentals of business spend and things like that are continuing to be in case. So we feel good about high single digits.”

“We saw high single digit for virtually other -- all the other categories in that space. So we think that travel is just kind of a short-term nature thing here, and we're well positioned and continue to feel good about high single digits there.”

“I would look -- as I look forward, the typical churn that you see in asset repricing of that book. As a reminder, it's about $3 million per quarter that is rolling off at the lower level and will replace.”

“So to boil that all together, what we do see now with our guidance is that we have the second quarter net interest income will be relatively stable and we should see growth in the second half of the year.”

“For the full year, we continue to expect mid-single-digit growth in noninterest income.”

“John will go on to more details on these topics, but importantly, we believe this is a near-term phenomenon.”

“However, we are taking a closer look at our expense base given these near-term NII headwinds and plan to take actions to mitigate the impact of lower-than-expected NII to our overall profitability.”

“As a result, we now expect our NII for the full year to be lower than anticipated.”

“I think that -- I think -- yes, as I mentioned a little bit on the noninterest-bearing side, we're at about 17%. It's -- customers are being more efficient and things like that. It could go down a couple of points as we stay a little bit lower -- at this higher-for-longer type period.”

“As we're in a higher for longer, it's possible that, that continues to drift lower just based on the dynamics that we're seeing in the marketplace.”

“But when you end up kind of thinking about the overall credit performance of credit card business, we still think it's a very nice business... And even through this cycle, I think it's going to perform very well.”

“Now, whether or not that's two cuts or six cuts, it's not going to be a material driver to our outlook.”

“We continue to expect core deposit growth in the consumer side, and that has been something we've been -- the team has been very focused on, and we feel we've had great success there.”

“And again, once we get clarity on the rules, as I mentioned earlier, in both the Basel III endgame as well as the CCAR process, and determine our target capital levels, we will return the difference either through dividends or buybacks has been in our history.”

“As we think about going forward, I would expect us to continue to lead the pack in terms of that return, which is key to generating capital, key to returning capital.”

“And we will continue to drive that efficiency ratio down certainly into the 50% -- high 50%s at the beginning and continue to deliver positive operating leverage to get it even lower. That's our objective.”

“My expectation is, once we get more to our normalized revenue level, that we will continue to manage expenses below revenue growth and continue to take down that efficiency ratios into the 50%s.”

“Yeah, Mike, it's probably more likely a positive operating leverage in the second half of '24 versus the first half given some of the margin pressures that we talked about.”

“In terms of deposits performance on the way down, I anticipate commercial and wholesale type balances will go down just as fast as they would come up.”

“And so, we don't expect a lot of growth overall in deposits, but we'll -- we have ways to manage through that.”

“In terms of -- the first part of your question in terms of QT, we do anticipate QT to be throughout the year. And so that's going to, on whole, put pressure on deposits throughout the year in terms of balances.”

“My expectation is we'll be above the 9% that we were a few years ago.”

“We will continue to accrete the 20 to 25. We'll continue to burn down the AOCI.”

“We expect utilization to pick up and things of that variety.”

“I do believe our expectation is that we will see growth in the commercial side.”

“And so, that will impact us by about $30 million to $35 million per quarter, starting in the first quarter.”

“Our trust investment management fee also should experience growth led by our institutional service businesses and Corporate Trust and Fund Services, and certainly in wealth management, some of the fees associated with that.”

“We would expect high-single digits there, given strength we've had in foreign exchange, derivatives, the fixed income, capital markets, loan syndication has all been performing very well for us.”

“But we see that extending, and so we think mid-single digits from that standpoint.”

“The same would be said for corporate payments, we think high-single digits, given the amount of T&E growth and client growth and all that sort of thing that we see.”

“And so, we continue to expect high-single digits in terms of revenue growth there.”

“We will have burned down on the securities book of about 30% or so relative to where it is by the end of 2025, just to give you some context.”

“So, while I'll say that first quarter NII projection is going to be slightly lower than the fourth quarter, these broad factors are really going to be supportive of NII growth as we -- especially as we think about the second half of the year.”

“We continue to see loan spreads improve in various categories, led on the commercial side of things.”

“As we move into 2024, we expect earnings to be the primary driver of capital accretion with limited reliance on balance sheet capital-related actions.”

“This quarter, we opportunistically restructured a portion of our investment securities portfolio, which we expect will enhance our net interest income trajectory, while also strengthening our capital and liquidity positioning.”

“On the retail side, it's going to be more of an arc. It'll take some time for that to turn.”

“So, we're bound, Ken, by the current rule set, which is after four quarters of an average of $700 billion then you would go to Category II, or the new Basel III rule set, which is yet to be finalized, as you said. But the current rule set is what we're bound on. So $700 million still is important, but what we're seeing is given where we think asset growth will be, given our continued optimization in certain categories, given our focus on high-return businesses, we do not see that as a hurdle to growth.”

“And then you add in what we're getting from Union Bank, I think that's why we're confident in that higher single-digit increase.”

“So Mike, the way I think about it, this is Andy, by the end of the fourth quarter, we will be on a run rate recognizing $900 million of savings, which will be fully reflected in 2024 in our expense base.”

“That's what gives us the confidence really that we will bottom out here in the fourth quarter from a NIM and net interest income perspective.”

“we continue to be on track to realize approximately $900 million in cost synergies, which we expect to be fully reflected in our run rate as we head into the year 2024.”

“So in terms of merchant processing, we have been making a number of investments over the years and continue to expect that high single digit in terms of that sort of thing.”

“We have a reserve that's about 10% of the overall balance there. We have been increasing that, and we're likely to continue to increase that because that's going to be a pressure point.”

“And our expectation as we go into 2024 is that that normalization will continue. Delinquencies will continue to kind of move up and nonperforming assets will continue to move up.”

“In terms of -- you talked about the net interest income. We feel like it's -- again, just to kind of reiterate, we are looking for that to bottom at this particular point in time in the fourth quarter. And where it kind of goes from there post -- will depend in part of interest rates.”

“What I would say, though, is that we're going to be emphasizing higher return loans and deemphasizing lower return type of assets.”

“So, we're going to be in a mode to continue to accrete that capital and 20 to 25 basis points is our earnings stream that we will accrete. And like this quarter, for example, it was 20 basis points, but we anticipate going to 25 on the higher end of that range as we get through the merger-related costs and we have the Union synergies.”

“And that is consistent with how we think about a relatively flat 23% to 24% expense base, including those savings plus investments we'll continue to make in the business.”

“When we have the savings, we'll have approximately $400-or-so million that has gone through this full year, and then we'll expect to see that in the next coming year.”

“We will get to a full run rate of $900 million, it's probably $100 million or so is kind of the -- in that range is probably what we were seeing. But it's been growing in terms of the amount, and we'll see that full benefit fall through in the fourth quarter.”

“And then in terms of the net interest margin and things like that, we do anticipate a little bit more pressure here in the fourth quarter, but then that really is the point where we feel that it'll bottom out based on my comments I just made a previous question?”

“So from a noninterest bearing, yes, we do expect that mix, we're at about 19%. That's about where we will be -- we expect that to be in that range.”

“I guess what I would say is as the Fed is -- whether they're done or not in terms of the rate hiking, we start to see a lot of things on the deposit side slowdown, so our noninterest-bearing balances will be relatively stable here at this level.”

“And we're still going to be executing risk-weighted asset optimization transactions. But now we have the time and flexibility to do that over in a way that is low to neutral in terms of our earnings impact.”

“And our expectation is to accelerate that as we get through the merger-related costs or be in the high end of that range, I should say, as we get through the merger-related costs and start to realize the full Union Bank synergies.”

“As expected, we will continue to carefully balance the need to accrete capital with any potential impact to earnings from further balance sheet optimization activities.”

“We expect merger and integration charges of between $250 million to $300 million in the fourth quarter.”

“Our income tax rate is expected to be approximately 23% on a taxable equivalent basis.”

“Total noninterest expense, as adjusted, is expected to be approximately $4.2 billion, inclusive of approximately $115 million of core deposit intangible amortization related to Union Bank acquisition.”

“Total revenue, as adjusted, is estimated to be in the range of $6.8 billion to $6.9 billion, including approximately $65 million of purchase accounting accretion.”

“In the fourth quarter, we expect net interest income of between $4.1 billion and $4.2 billion.”

“Our mix of noninterest-bearing to interest-bearing deposits was approximately 19%, consistent with where we expect the mix shift to stabilize based on historical performance and the operational nature of our core deposit base.”

“Emphasis on expanded partners and integrated capabilities will continue to support tech-led growth across merchant processing and increased opportunities across other areas of payment services businesses.”

“While net interest margin declined 9 basis points to 2.81% this quarter, in line with our expectations, we continue to expect the NIM to bottom in the fourth quarter as we reach the end of the current rate hiking cycle.”

“And from a beta perspective, we are in the mid-40s right now. It's possible it could creep up higher depending on where the Fed goes from here, but we feel good about that.”

“We expect to be at least 9.5 by the end of the year, if not better.”

“Gets us to the run rate, John of the full 900 by the end of the quarter. So, when we get into 2024, we will have achieved a full run rate of $900 million of cost synergies”

“Based on your outlook and under a reasonable range of scenario for the economy, do you think you could get to 8.5% to 9% fully loaded CET1 by 4Q ‘24? Yes, absolutely.”

“Yes. Well, it'll be - fully adopted, it'd be roughly 8.5%, 9%.”

“So, while there may continue to be a little bit of downward pressure, we don't see it as being significant from here.”

“Our game plan, I guess, is that we're going to continue to work on shortening the duration of the AFS portfolio.”

“the things that will start to come into the equation is a lot lower merger and integration charges next year. We’ll be substantially done with that, as well as the fact that by the end of the year, we will really be at kind of full run rate from a cost synergy standpoint.”

“We still expect Erika, that the benefit from capital accretion or earnings accretion is going to be somewhere in that 20 to 25 basis points on average.”

“we continue to kind of look out the rest of the year on the merchant acquiring side of the equation of revenue kind of in that high single digits sort of range, on the credit card fee revenue still in that mid-single digits, and on the corporate payment side equation. It'll normalize, but it'll kind of normalize in that high single digits range.”

“We'll continue to be focused on reducing our MSR, our mortgage servicing right portfolio over the course of the next several quarters.”

“as that begins to normalize, we think we're probably in line with the industry, which we anticipate being more of a decline given the quantitative tightening and all the other sorts of things that are headwinds for deposits in the industry.”

“Our expectation now through the rest of this year is that we'll be at least at 9.5% by the end of the year, and that's going to be a function of earnings accretion net of distributions, as well as some continued actions from a risk-weighted asset perspective.”

“We continue to expect to have $900 million to $1 billion of merger and integration charges in 2023, and total merger and integration cost of approximately $1.4 billion, consistent with earlier guidance.”

“Our estimated full year income tax rate on a taxable equivalent basis, as adjusted, is expected to be approximately 23% to 24%.”

“For 2023, net interest income is expected to be in the range of $17.5 billion to $18.0 billion.”

“Our income tax rate as adjusted is expected to be approximately 23% to 24% on a taxable equivalent basis.”

“Total non-interest expense as adjusted is expected to be approximately $4.3 billion, inclusive of approximately $120 million of core deposit intangible amortization related to the Union Bank acquisition.”

“Total revenue as adjusted is estimated to be in the range of $6.9 billion to $7.1 billion, including approximately $75 million of purchase accounting accretion.”

“During the quarter, we received the results of the Federal Reserve’s 2023 stress test, and we expect to be subject to the minimum stress capital buffer requirement of 2.5%, which is unchanged from last year.”

“Given current interest rate volatility and the significant competition for deposits across the industry, we now expect our cumulative deposit beta to be in the mid 40% range by the end of this rate cycle, slightly higher than our previous expectation, but consistent with the deposit pricing dynamics in the industry.”

“We continue to expect meaningful revenue opportunities, and our cost synergy targets remain intact.”

“We definitely believe that as we get into 2024, the standing up, which obviously takes a little longer, standing up of securitization programs and many of the actions that I talked about earlier, gets us to where we need to be from a capital perspective when you take into consideration the burndown, et cetera. So, that opportunity I think is certainly - probably in line with another 50 basis points, would be my guess.”

“Our expectation right now, Gerard, is that it's probably going to be fairly neutral to maybe just a little bit of a benefit it based upon everything that we're seeing in terms of the end game, but we really have to wait and see what the final rules say and then apply it to our specific portfolio.”

“We think that that's about where we land here. It'll be plus or minus of course, as we kind of go through the quarters, but we think that we're at a low point here.”

“Yes, it will help us both this year as well as into next year. Absolutely.”

“We feel pretty confident that we don't have to go through a capital raise.”

“I'm confident that our earnings accretion, our RWA optimization, our AOC burn down will all get us to a point that we will be at the appropriate capital levels.”

“Integration efforts have been progressing well and we remain on track for our successful main systems conversion over the upcoming Memorial Day weekend.”

“Yes, I mean our expectation is that 30 basis will continue to normalize throughout the year and into 2024, probably on a similar sort of pace.”

“Yes, we think that the capital generation, the accretion that we'll see the is core earnings capability. So it does not rely on those RWAs.”

“We're going to continue to shorten the duration and that's going to help us with respect to managing AOCI.”

“We think it's kind of hitting that kind of stable level, keeping in mind that we have a lot of operational deposits tied to our -- both our Corporate and our Corporate Trust businesses, and that kind of helps to sustain it.”

“Yes. Our expectation is that if you end up just looking at the industry, there's going to be pressure on deposits and high competition. We think will fare quite well with respect to that.”

“We continue to expect to have $900 million to $1 billion of merger and integration charges in 2023.”

“Our estimated full year income tax rate on a taxable equivalent basis is now expected to be approximately 23.0%.”

“Total non-interest expense as adjusted for the year is expected to be in the range of $17.0 billion to $17.5 billion, inclusive of approximately $500 million of core deposit intangible amortization related to Union Bank.”

“We expect the net interest margin to be between 3.0% to 3.05% for the full year.”

“For 2023, average earning assets are now expected to be in the range of $600 billion to $610 billion.”

“We continue to estimate total merger and integration costs of approximately $1.4 billion, consistent with earlier guidance.”

“Our tax rate is expected to be approximately 23% on a taxable equivalent basis.”

“Total non-interest expense as adjusted is expected to be in the range of $4.3 billion to $4.4 billion, inclusive of approximately $120 million of core deposit intangible amortization related to Union Bank.”

“Total revenue, as adjusted, is estimated to be in the range of $7.1 billion to $7.3 billion, including approximately $85 million of purchase accounting accretion.”

“We expect to exceed 9.0% later this year as we accrete capital back quickly over the next few quarters and continue to focus on risk-weighted asset optimization initiatives.”

“In the fourth quarter, we actually started see that inflection point with linked-quarter revenue starting to come up, and we would expect that to be a little bit stronger as we go into 2023.”

“You would not expect to see additional continued expense increase related to CapEx.”

“The pace of growth from 8.4% to a little above 9% by the end of 2023, it's fairly ratable across the four quarters.”

“We could see unemployment move up to around 6%, 6.5%, and we still feel like we would be in a pretty good spot from a reserving point of view.”