Goldman Sachs at Barclays Conference Notes

Harvey Schwartz – President and Co-Chief Operating Officer

The environment could get better

“We also know that the environment could get better. For example, both interest rate and volatility could increase from near record levels. The yield curve could steepen. Our investing clients could post better performance and have more conviction. There could be more clarity on economic policy and the global economy could grow at a higher rate. Any or all of these factors could drive greater client activity and a better opportunity set for the firm. That would provide even more potential revenue upside to both our initiatives and the firm more broadly.”

JP Morgan at Barclays Conference Notes

Jamie Dimon – Chairman and Chief Executive Officer

US economy doing fine

“The U.S. economy is doing fine, it’s been chugging along at 2%, less than 2% on average probably for the last seven or eight years. It’s the longest – one of the longest recoveries we’ve ever had, 10 years is the longest, I don’t think that has end to not end. I would say a very important factor is it’s been half of a normal recovery.”

Synchronized recovery

“I think the question that then comes to me is, why is it half of a normal recovery and if you do a quick turnaround the world by the way, Europe is doing better than 2%, Japan is doing 1.5% to 2%, China is going to make is 6%, Brazil has gone from negative 4% to 0%. So you kind of have for the first time called synchronized, the first time like 12 years, just about everything is starting to grow a little bit, which I think is a plus for everybody.”

Regulatory environment not changed a lot because don’t have people in their jobs

“I think the regulatory environment has not changed a lot because we don’t have the people in their job, so you now have the OCC head which was passed by the Senate, Randy Quarles, Fed Chair, Vice Chair just passed by the senate. You don’t have an FDIC person yet, so you are not going to have these huge changes in regulations. We don’t expect to have any regulatory legislative changes so that’s not our hope or belief. We do think the treasury laid out a very good math of issues that that should be looked at all calibration.”

Hoping that QE reversal is seamless but who really knows

“The QE is still going on, so like even in the last couple months something like several $100 billion of purchased securities, all you hear now is talk about reversing that….QE, I’m hoping, I think the circumstance which they reverse it are important, so if you have a healthy economy and they are kind of raising rates and reversing QE that is very, very different than if something else is going wrong. I think it’s a little bit of wishful thinking, so I’m not predicting bad things, but you don’t really know, it is going to be a multi-year plan. We hope it’s seamless, we hope it’s painful, the hope the economies are good, what is the chance if not? We never had QE therefore we never had the reversal of QE and it will have some consequences when people reverse it.”

My view is hold onto your hats

“So my view is, hold onto to you hats, it’s not clear and we are going to be sitting here from a year some might get hurt, things might be more volatile of the economy…So, I think that we can’t expect serendipity forever, so as a company while I’m not predicting bad things, we’re always prepared for it.”

One day people will panic

“It’s definitely cyclical folks, I mean you have a volatile market one day again, markets and markets people panic, people panicked in 2008 and 2009, they panicked in the 1989, they panicked in 1994, they panicked in Asia in 1997, they panicked in the Internet thing in 2000, the people will panic, you will panic. You will all be running through the door like everybody else and regulators will panic and – come on, and I just said, the government support $12 trillion securities that has to have some effect on depressing volatility, particularly around all the benchmark, all the benchmarks. Remember the benchmarks do affect the non-benchmarks and stuff like that. So market will become more normal again one day and again I think the most important thing to keep in mind is the why”

Credit is almost the best it’s ever been

“Well, it’s not credit. You know if you look at credit, it’s almost the best it’s ever been ever, so also my credit card, middle market, large corporate, there are tools, there is exception of subprime, I do think somebody get hurt leasing in subprime, but it’s not systemic, there is problems to lending, but it’s owned by the government which means you’ll never know about it, though you will pay for.”

Bitcoin is a fraud

“The currency isn’t going to work okay you can have a business where people can invent a currency and that’s in air. And think the people who are buying it are really smart. It’s worse than two of the balls okay it won’t end well. And it won’t end well for two reasons. One is someone’s going to get killed and then the government is going to come down. The second is you just saw in China governments like to control their money supply. The first thing a nation does when it forms itself literally the first is form a currency they have a bank and it has some kind of support legal support legal tender sometimes support like gold or silver that is a currency. So whatever and where think that bad that is this one is worse. So it will blow up China just kicked them out it’s selling through its money somewhere else it will be but I don’t ask me if it is short I’m not going to it could be 20,000 for this happens, but it will eventually blow up it’s a fraud okay. And honestly I’m just shocked anyone can see it what it is.”

Wells Fargo 2Q17 Earnings Call Notes

Timothy Sloan – President and Chief Executive Officer

Don’t really know what’s going to happen

“I mean the Fed has never had a balance sheet of this size. We’ve never been through a situation where they’re talking about reducing a balance sheet. We can talk about history all day long, but since we’ve never been through that, nobody knows exactly what’s going to happen. ”

A lot more transactions in CRE where we think the risk return isn’t there

“Having said that from time-to-time and again, this can be quarter-to-quarter or year-to-year there’s a fair amount of competition in stabilized commercial real estate projects, I mean there’s lots of liquidity out there. And so this quarter there just happen to be more transactions that we’ve looked at where we said, gosh, another risk return it just isn’t there, but I wouldn’t describe it, and that’s more based on underlying risk return in an individual transaction as opposed to stepping away from any region or any product type within CRE.”

John Shrewsberry

We became concerned about the underlying values of auto loan collateral

“I think a year-ago, we look at the market and what we saw in the market was the following. And that was that – remember that majority of our originations are for our used car loans. And so we saw – we would became concerned about underlying values of the collateral because of production levels by the industry. The number of cars that were coming off leases, we got concerned by the risk return in terms of pricing as well as term and we took that all into consideration in terms of ramping down our originations in improving the underlying quality. And on the short-term we gave up loan growth and so the metrics are not as good. We gave maybe some short-term revenue. But over the long-term, this is how we think about credit.”

Wells Fargo 1Q17 Earnings Call Notes

Tim Sloan

Became concerned about used car values starting last year

“We saw and became concerned about where used car values and where competitive pressures were going back to the middle of last year. We have been very transparent about that. And we think that we have gotten ahead of any significant issues. And that’s why you are seeing originations be down in the double-digits year-over-year. And that’s not just something that happened this quarter. It’s been the last few quarters. I don’t know exactly where auto losses are going to go. They certainly could go a bit higher. But I think that the changes and the decision that we made over last 6 months has reinforced kind of the long-term view of how we manage credit at this company.”

John Shrewsberry

Tax reform and stimulus are inflationary in an economy with full employment

“I think the market was discounting for a while what the possibility was of meaningful tax reform, some form of infrastructure stimulus. And if both of those things get dropped on an economy with relatively full employment, that’s inflationary. And if that happens, there is a very reasonably expectation of higher long-term rates. ”

Stimulus still hasn’t occured so long term rates have fallen

“So, because that stimulus hasn’t occurred, it still may, but certainly is lower probability today than it was in November and December. They were back down in lower 10-year rates, lower mortgage rates than we were there for a while. And now we have to ask ourselves again, are we going to be lower for a while, lower for longer or are we still awaiting for a shoe to drop in for there to be a big backup in rates? “

Citigroup at RBC Conference Notes

John Gerspach

1Q business performing in line with expectations

“Sure, sure, sure. So first thing I’d say is that the businesses are largely performing in line with our expectations.”

Largest driver of FICC is the macro environment

“when you talk about what is the single largest driver on FICC, it’s the macro environment. And last year there was a lot of things going on in the macro environment that caused corporations and investors to look back and say, well, gee, I need to position my balance sheet this way, I think this is going to happen. And that gave us a good opportunity. I think the other thing that still holds true with FICC is that it’s a scale game.”

Make our equities business appropriate in size for our client base

“Equities, for us what we’re trying to do is we want to size our equities business appropriate with our client base. And, again, it means that you need to be able to put balance sheet to work. You need to be able to make the technology investments that you need to make. But we’re not looking in equities to be number one, two or three. That’s just not going to fit, because we don’t want to go for the same broad market that you need to have in order to get into that one, two or three level.”

Now running budgeting process from CCAR process

“I mean, I think the biggest change that we made would have been two years ago, when we really decided that rather than trying to have a separate CCAR process completely divorced from the way we would operate on a business as usual point of view. And we just decided that what we really needed to address was the fact that we needed to have a continuous capital planning cycle. And I think that that served as well, because it means that as we get into those discussions in the fall and we give the businesses, here the assumptions that we see in the environment for the next three years, let’s go out and build the budgets. Businesses used that information, those assumptions in the models that they used every day. ”

Asia is ahead of the US in digital banking

“I would say that we’re most advanced in digital right now in Asia as you might suspect. And Asia kind of leads the U.S. and the U.S. certainly leads Mexico. So we’ve got a lot of investments going on right now in enhancing our digital capabilities, both through our abilities to acquire customers digitally, but also our ability to service those customers digitally. And that serves a couple of purposes. One is it’s the way most of our clients want to do business right now. In Asia, if you didn’t have a great digital offering you would be dead. And clearly, the way the U.S. is going that’s the same way it is.”

People in Mexico like to bank at branches

“Certainly, the smartphone penetration is making – it’s growing, it’s definitely growing. But in Mexico it’s more of a cultural thing, people still like to do business in the branches. And we think though that if we offer them attractive easy-to-use digital channels, there is no reason to think that they won’t move onto those channels.”

SVB Financial 4Q16 Earnings Call Notes

SVB Financial’s (SIVB) CEO Greg Becker on Q4 2016 Results

2017 will be a year of liquidity for VC investments

“As we look into 2017, we believe there are a lot of reasons to be positive. We are optimistic that 2017 will be a stronger year for VC investment and exits in 2016. If 2015 was the year of funding and 2016 was the year of recalibration, we believe 2017 has the potential to be the year of liquidity. ”

VCs have a lot of capital to deploy

“Fundraising remained extremely strong in 2016 despite the investment pull back as VCs raised $41.6 billion, the highest amount in a decade. Clearly, VCs will have a lot of capital to deploy in 2017, although later stage startups may continue to attract the lion’s share of investment at the expense of early-stage companies.”

Exit markets looking promising

“As we enter into 2017, the exit markets are looking promising. In addition to the 20 or so venture-backed companies that are formally registered for IPOs, we are aware of a growing pipeline of other companies that have file confidentially or are planning to file for an IPO. While the exit markets could remain somewhat challenging, especially for companies with high valuations, the mood has markedly improved over last year, helped by solid performance of companies that went public in the second half of 2016 and greater confidence since the US election.”

Repatriation could mean more M&A

“Yeah. So, two points, Ebrahim. One is, I can’t recall that far back when we actually got the change in the repatriation. So, I actually can’t off the top of my head remember exactly what the impact was. Do I believe it’s a big impact? The only place where it has a potential for an impact is from an M&A perspective. If a lot more cash comes back in, could you see more M&A from larger corporations as they now are flush with a lot of liquidity and now they’re going to be willing to put that for growth, that’s clearly a possibility.”

Michael Descheneaux

Lower tax rate will benefit shareholders

“Yeah, I think that’s a fair way to look. At this point – again, there’s been talk about what’s deductible, what’s not deductible. Again, we can’t go into that because it’s just – who knows right now. But just, all things being equal, if you drop the federal tax rate, you’re right, for the most part, at this point, we would see most of it drop into the bottom line and benefiting shareholders.”

Likely to continue to see stress in early stage

“So, it’s Marc Cadieux. Early stage was interesting in the fourth quarter, in that we saw charge-off levels in the early-stage segment that were reminiscent of 2015 best of times, but then we also saw an increase in new early-stage non-performers, indicative of that continued stress in that segment, going on from the recalibration that started last year. And given the diminished rate of investment in early-stage companies throughout 2016, it’s our conclusion that we’ll continue to see some stress in that segment.”

Cullen Frost 4Q16 Earnings Call Notes

Phillip Green

Customers are moving forward with plans they had delayed

“As I have gone around the state, visiting all our locations during the month of December, one thing it was a consistent message was how many customers particular I would say mid and small customers are moving forward with plans that they had, had delayed, right? Somebody had a piece of equipment they want to put in and they can wait for six months, after they got the clarity from the political situation, the word was let’s move forward, let’s move forward now. So I think you are definitely seeing just general optimism in the market moving forward. I think our people are doing a great job being responsive to those opportunities. We’re trying to do a better job of getting decision-making authority closer to the customer and working closely with our concurrence and credit people and in doing that in a faster way I think we’re giving a better customer experience.”

I would expect loan growth to be better than 2016 for sure

“I don’t think we are projecting a number. I think we are seeing momentum increase. I would expect loan growth to be better than 2016 for sure.”

Feel good about Houston

“Yeah, I think we feel pretty good about Houston. Houston grew jobs, as Jerry mentioned, in 2016 which I think a lot of people were surprised that. Their parts of the market that our soft, construction soft. You need to be careful of multifamily there. We’re not really doing any multifamily in Houston. We’re doing in some other markets. And I think the attitude is pretty good. We talk to our people there, we ask him what beatitude is, what people are feeling, I think it’s been very consistent. I think we will still see some more employment shake out from the integrated firms and energy firms, but the rate on that has slowed. ”

Jerry Salinas

The Texas economy grew faster than the national average despite low oil prices

“The diverse and resilient Texas economy expanded 1.6% in 2016 and the Dallas Fed expects even stronger growth in 2017. Despite lingering low oil prices in the first half of 2016, the Texas economy grew faster than the national average and all other energy states. The service sector and the I-35 corridor remain strong throughout the downturn. According to the Texas Workforce Commission, Texas added 210,000 jobs last year. The unemployment rate in December was 4.6%.”

We’re only projecting one rate increase in November

“Sure. I guess I would say a couple of things as we look at the NIM for 2017, first of all, let me just say that we are projecting just one rate increase and we are projecting that in November of this year. In addition, we are projecting that we’re going to have increases in deposit rates during the year. Now we didn’t see any in all of 2016, but we are projecting deposit increases in 2017 related with the Fed increase that we just saw in December.”

Bank of America 4Q16 Earnings Call Notes

Bank of America’s (BAC) CEO Brian Moynihan on Q4 2016 Results

Optimism is palpable

“This quarter, investors have a lot – asked a lot of questions that they usually asked, but importantly, questions about the incoming new Presidential administration. Their questions have ranged from corporate tax reform and what do we think about that, regulatory changes, economic growth and the impacts of these things and interest rate changes. The optimism for positive change here at Bank of America and among our customers is palpable and has driven bank stock prices higher. We will have to see how these topics play out, but that we are optimistic and we will continue – but in the interim, we will continue to operate the company by controlling and driving what we can. We are going to drive responsible growth.”

Got approval to return $4b in the first half

“Yes. John, so this morning and as part of our release, we announced that we got approval for de minimis of $1.8 billion, that’s the $2.5 billion we have for the first half of this year to bring the repurchased volume for – to $4.3 billion for the first half year. So we applied to that obviously in December and got the approval and our Board has approved it.”

Deposit growth strong driven by consumer

“Well, Marty, we – so let’s start. We saw a $50-odd billion of deposit growth year-over-year. Consumer business was the lion’s share of that. To give you a sense, fourth quarter ‘15 to fourth quarter ‘16, checking balance in the consumer business grew 12%, so the growth is strong. And as you said, we expect to maintain pricing discipline in the company, not – obviously, those are non-interest bearing, but on the interest bearing side. So – and you have seen that so far as the first couple of – the first rate happened last year. In terms of deployment economy, we made $20 billion more loans, And we will continue to drive the economy and we can will invest in mortgage backed securities and things like that, so we are able to fund easily all the loan demand that we think is responsible to take on. ”

Did see some acceleration in consumer spending coming into the fall

“What I’d reflect on is that as you came from – through the summer into the fall through the election, you saw both on the consumer side and commercial side, you saw increasing optimism. On the consumer side, you saw a bit of an acceleration in spending coming into the fall. And so just if you think about the middle-market business, as I said earlier, the revolver utilization is on the high end of where it’s been the past several years at 40% plus in a – that group, which is our middle-market business, a commercial real estate business, etcetera, at about $4 billion with loans in quarter four, so all that really relates to greater business confidence. And so I think we feel very good where businesses stand and if you get the same reports in the small business side, so they are very – as I go out and visit these clients, they are very optimistic.”

Paul Donofrio

Mobile banking now represents 19% of all deposit transactions

“I won’t go through all the details on this slide, but mobile devices now represent 19% of all deposit transactions and represent the volume of more than 880 financial centers. Sales on digital devices continued to grow and now represent 20% of total sales. ”

We need to return capital to shareholders in order to push our ROE higher

“We need to get our capital down. We are returning more capital to shareholders. That’s going to help. We need to continue to grow. So we feel really good about the progress that we have made. Our return on assets metric is tracking in the right direction. Our return on tangible common equity metrics is tracking in the right direction. So we will just have to wait and see. I think we would get there even without a rate rise eventually, but certainly rate rise is going to help.”

Citigroup (C) Presents at Goldman Sachs Conference

John Gerspach – Chief Financial Officer

Few answers on what the Trump administration will do

“I have very few answers… Almost none”


Which is why the plan is to assume a similar environment to 2016 and be poised to react to changes

“we can’t build a plan on hope. So, our base plan going into next year is really looking very similar to an environment that looks like ‘16. We don’t know what the new administration is going to do. I think during the campaign trail, both candidates said a lot of things. And now exactly what gets rolled into policy and new laws and what gets repealed, we don’t know. We don’t know the timeframe in which they are going to handle things. We don’t know the priority in which they are going to handle things. So for us, it’s you build the plan based upon what you see and then you make sure that you are poised to take advantage of the opportunities…”


The reason behind interest rate increases is important  

“100% certain, 95% certain that we are going to get a rate increase next week. Fine, we had already assumed that. The key then becomes what happens after that and I think, even more importantly, why. If you are just getting rate increases for the sake of getting rate increases, that’s kind of nice. If those rate increases are because the economy really is growing at a faster rate, you do get stimulus as far as whether it’s tax reform or its infrastructure spending that would all be a big positive for us.”


No particular emerging market is an area of special concern

“we are no longer overly concerned about what’s going on with Brazil and Russia. When I look at the world, there really isn’t a spot in the emerging markets that really stands out as something that says, well, watch here. You watch everything, but there is no special area of concern right now.”


Europe deserves extra attention though

“I was going to say the one area that we actually are spending more time looking at right now is Europe… we are just not sure as to how that Brexit is going to be negotiated. So a lot of that is going to be determined over the course of the next several months and perhaps even years and therefore, it’s a little uncertain as to what the impact will be on the UK and uncertain as to what the impact is going to be on the remaining countries in the EU.”


1 million new accounts in the Costco portfolio

“Little bit of a rough patch in the beginning, but the Costco portfolio is performing extraordinarily well. Just this past weekend, we got to our 1 millionth new account since we have taken on the portfolio. So, we have added 1 million accounts in less than 6 months. Don’t take that as a run-rate, but it’s a great way to start. That’s pretty good. You take a look at how we are growing revolving balances with Costco. All of that is good. We have secured extensions on most of our key co-brand partnerships now.”


Yet, reserve build required for Costco rewards and rebates was high

“When you bring on a portfolio like that, it’s going to take you a good year before it really becomes accretive and there is probably 6 months after that before it normalizes… We had $150 million reserve build on Costco in the third quarter. That should be the highest reserve build that we ever have on Costco, so it should decline from here, but it’s still going to take until the second half of ‘17 before it’s really accretive to earnings.”


70% of Costco card spending is outside of Costco

“On the reward component for Costco is baked in there. There is nothing – there is no front end on that. So everything with the Costco portfolio as far as that value proposition that we put out in partnership with Costco is operating at or better than what we expected. We mentioned in the third quarter earnings that 70% of the spend on the Costco card is occurring outside of the Costco stores and that’s better than what we had planned.”


Compliance with the Volcker rule and regulations in general requires 29,000 workers

“When you take a look at our entire workforce of 220,000 people and you think about 29,000 people being involved in risk, compliance, audit, yes.”

Toronto Dominion 4Q16 Earnings Call Notes

Toronto-Dominion Bank (TD) CEO Bharat Masrani on Q4 2016 Results

The economic picture is brighter in the US

” the economic picture is brighter in the U.S. The Fed appears likely to raise rates in the coming months and the market has responded with bond yields rising and the U.S. dollar on the upswing. While there are global risks, these conditions in the U.S. if sustained, will enable us to deliver total bank adjusted EPS growth for 2017 inside our 7% to 10% medium term target range.”

Even though our effective tax rate is lower, we would expect it to go even lower if the statutory rate goes down

“I think Sumit the way you should think about that is the tax rate is established by reference to statutory rates that are in place at the time and then there is deducts from that. So for example as an example we participate in various community reinvestment activities that are subject to tax credits etcetera and so those tend to be deductions that get you to your effective tax rate. So if the overall tax rate would reduce, then yes we would have benefits come up.”

Mike Pedersen

Good growth in the US. It’s possible we could see moderation in auto lending

“Yes, so it’s Mike. So we’ve obviously seen very good revenue growth in the U.S. this year and based on what I see right now, I expect that to continue, but I expect our volumes to continue to be strong. I also expect our margins to increase based on what we’re seeing. It’s possible we’ll see a bit of moderation in categories like commercial and auto finance lending, but not seeing that yet. There are some signs that there’s a bit of pricing pressure in some of those sectors. So that may adjust our flows a bit but broadly speaking, I expect good growth across the categories that have produced good growth this year with improving margins.”