What's on the minds of big-bank CEOs

By Allissa Kline, Jim Dobbs, Polo Rocha, Jon Prior

October 25, 2021 4:27 PM

Twelve days after the start of earnings season, many of the nation’s large and midsize banks have reported their third-quarter results.

During earnings calls, chief executive officers have opined on a variety of topics — some of them specific to their own banks, and others that have broader applicability across the industry.

JPMorgan Chase CEO Jamie Dimon spoke about the regulation of fintechs, while Bill Demchak of PNC Financial Services Group issued a warning about the risks associated with stablecoins. Meanwhile, Charlie Scharf of Wells Fargo and Citigroup CEO Jane Fraser updated investors about their companies’ regulatory troubles.

Here’s a look at some of the most noteworthy CEO comments this quarter.

Citigroup CEO Jane Fraser, shown here during an interview in Sao Paulo, Brazil, on Dec. 3, 2018, when she was CEO of the company's Latin American operations.

Rodrigo Capote/Bloomberg

Jane Fraser, Citigroup

“The main message here is there will be consequences if we fall short of what is expected. ... I’m accountable. My team is accountable. And very simply we must and we will deliver."
”

Fraser was

on the defensive

about Citi’s efforts to fix its risk management and control problems, which led to a $400 million regulatory penalty last fall. She faced questions about the company’s plan to pay bonuses to some of the top managers charged with fixing the shortcomings.

Bill Demchak, PNC Financial Services Group

“There is also the risk through time that a substantial portion of savings, either domestic savings or even emerging market savings, get absorbed into a stablecoin. ... And that would affect the economy and the ability to control the money supply long term.”

Demchak’s

warning about threats associated with stablecoins

came as PNC prepares to enable the trading of cryptocurrencies through its mobile app. He said that he believes regulators are looking at the issues he flagged.

Charlie Scharf, Wells Fargo

“I believe we're making meaningful progress, and I remain confident in our ability to close the remaining gaps over the next several years. Having said that, it continues to be the case that we are likely to have setbacks along the way.”

In September, the Office of the Comptroller of the Currency hit Wells Fargo with a new $250 million penalty, citing continued problems in its home lending unit and violations of a 2018 consent order. In light of that fine, Scharf

faced questions

about the bank's ongoing regulatory troubles. His comment about “several years” did not seem to assuage analysts’ concerns.

Jamie Dimon, JPMorgan Chase

“I don't expect that there will be beneficial changes that help banks. But I think that we just have to compete with the hand we're dealt.”

Dimon was responding to a question about new Biden-era leadership at regulatory agencies, and whether there are likely to be efforts to clamp down on fintechs that engage in regulatory arbitrage.

Brian Moynihan, Bank of America

“The pre-pandemic organic growth machine has kicked back in. You see that this quarter, and it is evident across all our lines of business.”

Moynihan was

referring

to loan growth and an expansion of the net interest income at BofA during the third quarter. The metrics were indications that demand for credit has been rebounding as the economy has strengthened and pandemic worries have eased.

Greg Carmichael, Fifth Third Bancorp

“We're starting to see, once again, some good momentum out there."

Carmichael

delivered an upbeat message about business lending

after Fifth Third reported a sequential 5% increase in commercial loan production during the third quarter. Executives at the Cincinnati bank expect a slight uptick during the last three months of 2021 — and further improvement if supply chain shortages abate.

Bryan Jordan, First Horizon

"We want to protect the integrity of the balance sheet and want to protect credit quality. So we're being very thoughtful about price structure and term with an eye towards long-term credit quality.”

Jordan was questioned about two competing banks that have reported higher recent loan growth, and he indicated that First Horizon is not going to lower its standards to win business. But Jordan also

said

that First Horizon sees strong momentum across its franchise. Loans at the Memphis, Tennessee, company grew by 1% in the third quarter compared with the prior quarter, excluding Paycheck Protection Program loans.

Bill Rogers, Truist Financial

“We’re committed to having a business that has positive operating leverage and has industry-leading efficiency. I mean, I feel more comfortable about that today than I did the day we announced the merger.”

Part of the rationale for the combination of BB&T and SunTrust Banks — renamed Truist — was substantial cost savings. Truist’s adjusted efficiency ratio, which measures expenses as a percentage of revenue, rose during the third quarter. Still, executives

sounded confident

that the company will meet its $1.6 billion cost-cutting goal on schedule.