The dialogue introduces a conference call discussing US Bancorp's third-quarter 2025 earnings, featuring a slide presentation and a Q&A session with the CEO and CFO, highlighting forward-looking statements and risks.

The company reported robust Q3 earnings, highlighting 18.4% year-over-year EPS growth, record net revenue of $7.3 billion, and a 530 basis point positive operating leverage. Key achievements include diversified fee income, successful expense management, and advancements in payments transformation. The firm also noted improved credit quality, strong capital and liquidity levels, and strategic growth in environmental and affordable housing finance, supported by the Union Bank acquisition. Deposit base diversification and interconnected consumer products bolstered deposit share, while strategic balance sheet actions and loan remixing enhanced profitability and net interest margins.

Discussed Q3 financial results, including increased net interest income, non-interest income growth, and improved credit quality. Outlined Q4 guidance with stable net interest income, higher fee revenue, and controlled expenses. Emphasized strategic focus on growth, productivity, and risk management.

The dialogue discusses the current net interest margin trends, factors influencing stability and growth, and future strategies for margin expansion, including asset repricing, mix adjustments, and deposit management, aiming for a 3% margin by 2027.

Discussed strong positive operating leverage, expecting continued growth into 2026, driven by prudent expense management and robust revenue momentum. Highlighted confidence in mid-single-digit fee growth, particularly in payments, attributing success to enhanced product interconnectivity and effective marketing strategies. Anticipates further upside in payments, planning a detailed merchant and card issue business update in the fall.

The dialogue explores the factors influencing corporate payment trends, noting headwinds from government and corporate Tei spending. Despite these challenges, there is anticipation for a turnaround in Q4, driven by robust pipelines and strong performance in key merchant verticals, embedded finance, and tech-led strategies.

Discussion on consumer bank deposit trends, debit card revenue, and card loss rate maturation, with positive outlook on credit and payment strategies.

The dialogue explores strategies for enhancing deposit growth, emphasizing the importance of sticky, lower-cost deposits through various channels. It discusses the integration of consumer, wholesale, and trust deposits, focusing on creating stickiness and improving funding costs. The conversation also highlights the impact of digital acquisitions, marketing investments, and multi-product relationships on deposit growth. Additionally, it addresses the potential for margin expansion, considering macroeconomic factors and the speed of achieving financial targets.

The dialogue explores the Non-Deliverable Forwards (NDF) portfolio's significance, highlighting its higher credit quality compared to core investments. It discusses the growth of NDF, which now constitutes 12% of the loan book, emphasizing the importance of client selection and risk management. The conversation also touches on the diverse nature of NDF businesses and the firm's disciplined approach to maintaining credit standards.

Discussion centered on credit risk management, emphasizing careful attention to areas with higher leverage, client selection, and maintaining a stable net interest income outlook.

The dialogue covers assumptions about rate cuts, credit card favorability, and the impact on fourth-quarter guidance. It highlights seasonal credit dynamics, expectations for sustainable finance growth, and its influence on other income lines. Forward curve assumptions and potential risks are also discussed.

A significant business has experienced growth due to renewable energy tax credits and low-income housing, achieving market leadership in new market tax credits. The acquisition of Union Bank has bolstered California operations, contributing to revenue benefits and expanding client base, showcasing the impact of strategic administrative and legislative support on business expansion.

The dialogue outlines a proactive approach towards stablecoins, focusing on two key areas: capital markets and payments. On the custody and investment side, there's a clear business model emphasizing the safekeeping of collateral and cryptocurrency assets, with plans to pilot stablecoin transactions this year. For payments, efforts are being made to integrate stablecoins into banking systems and provide payment services, with special attention to the unique credit card payment franchise serving smaller banks. Organizational changes are also being implemented to keep pace with the rapidly evolving industry.

Discusses US Bancorp's strategy to increase CET1 ratio, aiming for 75% returns to shareholders, balancing loan growth, and detailing asset repricing impacts on net interest margin.

The dialogue discusses the company's strategy of balancing organic growth momentum, highlighted by positive operating leverage and revenue beats, with the pressures of inorganic growth opportunities within a limited timeframe under the current administration. The focus is on maintaining an inward approach towards capital rebuilding and organic expansion, emphasizing fee businesses, credit loans, and consumer deposits to drive NII and fee growth, while signaling a cautious stance on bank acquisitions. The company aims for EPS growth alongside high returns, showcasing confidence in organic growth potential and strategic alignment with market conditions.

Discussion revolves around the impact of tax benefits and fee revenues growth in impact finance, with emphasis on maintaining a 3% tax rate benefit while expanding fee-based services.

The dialogue revolves around the current status of medium-term targets, emphasizing the company's satisfaction with its performance. It explores the conditions necessary for revisiting these targets, including improved operating environments and exceeding expectations, with a focus on consistent performance at the upper end of the target range.

The dialogue highlights an investor relations scenario where a representative addresses an open line inquiry, emphasizing the importance of clear communication with financial analysts.

Discussion revolves around the effect of forward rates on net interest margin, with insights on repo activities boosting earning assets' yield. Repo capacity expansion and volume increase are highlighted as key factors driving a 300 basis point yield rise, alongside short-term liability adjustments. The conversation clarifies the sustainability and balance sheet implications of these activities, emphasizing the need to consider both earning assets and liabilities for a comprehensive view.

Discusses factors contributing to a 30% quarter-over-quarter increase in CNI NPLs, highlighting exposure to first brands and their impact on commercial MPAs, with reassurance that this exposure is accounted for in reserves.

Exploration of financial provisions taken for First Plant, focusing on secured borrowings and whether potential losses are already accounted for in existing reserves.

The dialogue reassures concerns about structural weaknesses, highlighting strength in both commercial and retail banking sectors, with no immediate threats from NDFs, while continuing to monitor potential issues.

Discusses confidence in robust underwriting processes despite market surprises, emphasizing vigilance and learning from issues to maintain book quality.

The dialogue revolves around loan growth momentum, with an emphasis on past actions that led to current benefits and future focus on organic growth. The speakers discuss the attractive opportunities acted upon in the second quarter, benefiting the third quarter, and express a commitment to growing accounts and client relationships.

A conference call was updated regarding a technical issue with a participant's line, which was resolved, and the call was returned to the host without further questions.

The call concludes with an invitation to contact Investor Relations for further questions and an instruction to disconnect, marking the end of the session.