Financial Data and Key Metrics Changes - The company reported a strong quarter with revenues increasing by 11% year over year to a record $18.4 billion and earnings per share (EPS) rising by 19% to $4.14 [4][12] - Card member spending accelerated to 9% or 8% on an FX-adjusted basis, with notable growth in retail spending and a rebound in travel [4][12] - Full-year revenue growth guidance has been raised to 9% to 10%, with EPS expected between $15.20 and $15.50 [4][21] Business Line Data and Key Metrics Changes - Annual card fees are approaching $10 billion, growing at double digits for 29 consecutive quarters [12] - Total spend was up 8.5% FX-adjusted, driven by strong retail spending up 12% and a rebound in travel and entertainment (T&E) [12][13] - Premium T&E bookings showed good momentum, with spending on front-of-cabin airline tickets up 14% [13] Market Data and Key Metrics Changes - International spend increased by 13% FX-adjusted, with three of the top five countries growing by 18% or more [14] - Millennials and Gen Z now account for 36% of total spend, matching the share of Gen X [14] - The company acquired 3.2 million new cards in the quarter, with over 70% of new accounts being fee-paying products [15] Company Strategy and Development Direction - The company continues to invest in refreshing its product offerings, with over 200 refreshes across its portfolio since 2019 [5][6] - The recent launch of the refreshed U.S. Consumer Platinum Card and Business Platinum Card aims to enhance customer engagement and drive growth [4][10] - The strategy focuses on understanding customer needs and enhancing value propositions with compelling benefits and services [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth through the powerful membership platform and expanding digital capabilities [11][21] - The company noted a stable macroeconomic environment and a positive outlook for the holiday season based on strong retail spending [26][27] - Delinquency rates remain low, and credit performance is stable, indicating a healthy consumer base [57][59] Other Important Information - The company returned $2.9 billion of capital to shareholders, including $0.6 billion in dividends and $2.3 billion in share repurchases [21] - The company expects a step-up in costs related to the Platinum Card refresh, but remains committed to achieving mid-teens EPS growth [32][34] Q&A Session Summary Question: Insights on the path forward and potential improvements in customer spending - Management noted a recent acceleration in billings and expressed optimism about maintaining this momentum, particularly in retail and travel spending [25][26] Question: Financial impact of the Platinum Card refresh - The refresh is expected to have a delayed impact on card fees, with costs rising in the short term but aiming for mid-teens EPS growth in the long term [31][34] Question: Strength of demand for consumer versus business products - The company reported strong demand for both consumer and business products, with notable growth in premium offerings [36] Question: Insights on small and medium enterprises (SME) growth - Management indicated good acquisition trends in the SME segment and expressed confidence in stabilizing growth moving forward [38][40] Question: Performance of the Platinum Card refresh and competitive takeaways - It is too early to determine the competitive impact of the refresh, but initial results show strong upgrades and new card acquisitions [42][43] Question: Marketing spend strategy - The company plans to continue investing in marketing while ensuring efficiency and effectiveness in spending [61][63] Question: Consumer health and impact of government shutdown - Management reported stable consumer health metrics and no significant impact from the government shutdown at this time [57][58]

Financial Data and Key Metrics Changes - FMB's third quarter earnings per share increased by 14% linked quarter to a record $0.41, with net income available to common shareholders rising to $150 million [4] - Operating pre-provision net revenue grew 18% year-over-year, contributing to a peer-leading efficiency ratio of 52% [4][15] - Total revenue reached a record $457 million, with non-interest income hitting a record $98.2 million [4][15] - Return on average tangible common equity was 15%, and tangible book value per share grew 11% to $11.48 [5][21] Business Line Data and Key Metrics Changes - Period-end loans increased by 3% on an annualized linked quarter basis, driven by equipment finance, consumer lending, and seasonal residential mortgage production [5] - Commercial and industrial loans grew by 2% annualized linked quarter, affected by lower line utilization and higher attrition due to customer M&A activity [5] - Equipment finance saw a strong annualized loan growth of 21%, reflecting activity across the company's footprint [5] Market Data and Key Metrics Changes - Annualized linked quarter deposit growth was 7%, outpacing the industry, with non-interest bearing deposits comprising 26% of total deposits [6][7] - The loan-to-deposit ratio ended the quarter at 90.9%, with the company's CRE concentration improving to 214% [6] - FNB ranked in the top five in nearly 50% of its MSAs and in the top three in nearly 30% [7] Company Strategy and Development Direction - The company is focused on growing low-cost deposits and reducing CRE concentration, with a strategy to price deposits competitively while protecting net interest margins [6][9] - FNB plans to expand its branch network by adding 30 new branches, primarily in high-growth markets [25] - The company is leveraging AI and data analytics to enhance customer engagement and operational efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth driven by fiscal policies and a potentially more robust business environment [14] - The company remains committed to strong risk management frameworks while exploring AI's transformative potential [10] - Management noted that they have not seen material impacts on the loan portfolio from tariffs or the government shutdown, maintaining a stable credit quality [12][80] Other Important Information - The CET1 ratio reached a record 11%, and tangible common equity ratio was at 8.7% [21] - The company is actively managing its capital position to support balance sheet growth and optimize shareholder returns [21] - The efficiency ratio improved to 52.4%, with expectations for continued strength in operating leverage performance [20] Q&A Session Summary Question: Concerns about loan growth and refinancing risks - Management indicated that they have strategically shifted pricing in the mortgage book and are not overly concerned about prepayment speeds impacting margins, as they can redeploy capital effectively [30][34] Question: Insights on deposit growth and market share - Management highlighted strong deposit growth across various markets, particularly in the Carolinas, driven by technology and competitive pricing strategies [40][42] Question: Capital management strategy with a strong CET1 ratio - Management confirmed a focus on internal execution and opportunistic buybacks, while maintaining a flexible dividend strategy [56][58] Question: Expectations for Investor Day - Management emphasized showcasing technological advancements and team depth at the upcoming Investor Day, aiming to energize investors [60][62] Question: Efficiency ratio and expense management - Management confirmed ongoing efforts to optimize expenses and improve the efficiency ratio, with a focus on leveraging technology and operational improvements [70][74]

Financial Data and Key Metrics Changes - The company reported a September net interest margin of 3.76% and expects it to be at or above 3.65% in the fourth quarter, indicating a positive outlook for net interest income growth [18][22][28] - Cumulative deposit beta was reported at 65% through the rate cycle, but is expected to moderate due to the reduction of brokered deposits [36][38] Business Line Data and Key Metrics Changes - The company has focused on improving organic growth capabilities, including talent acquisition and operational excellence, to drive efficiency and growth [11][19] - The restructuring of the balance sheet has led to an increase in net interest margin, with core balance sheet NIM growing seven basis points [26][28] Market Data and Key Metrics Changes - The competitive environment remains intense, with the company maintaining discipline in pricing despite pressures from larger banks offering lower rates [62][63] - The company has seen growth in consumer accounts but faces challenges with average balances per account declining [39] Company Strategy and Development Direction - The company aims to grow core deposits while reducing reliance on brokered deposits, with a long-term goal of eliminating brokered deposits entirely [58] - The focus is on generating consistent, strong, risk-adjusted returns without sacrificing soundness and profitability [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, citing strong pipeline activity and production volumes [15][63] - The company is proactive in managing credit quality and expects to resolve existing loan issues while maintaining a sound balance sheet [46][50] Other Important Information - The company has implemented a hedging program to manage interest rate risk effectively, aiming to maintain net interest margin within a range of 3.50% to 3.75% [28][72] - The CEO announced his retirement, marking a significant transition for the company [79] Q&A Session Summary Question: What are the key strategic initiatives moving forward? - Management highlighted a focus on addressing structural challenges and enhancing organic growth capabilities, including talent acquisition and operational excellence [10][11] Question: How is the company approaching loan growth in a competitive environment? - Management emphasized the importance of soundness and profitability in growth strategies, with expectations for low single-digit loan growth rates [14][15] Question: What is the outlook for net interest margin? - Management provided guidance for a net interest margin of 3.65% or higher for the fourth quarter, supported by loan repricing dynamics [22][25] Question: How have deposit betas trended with recent rate cuts? - The cumulative deposit beta was reported at 65%, but management expects it to moderate due to the reduction of brokered deposits [36][38] Question: What is the company's credit outlook? - Management reported a benign quarter for credit metrics and expressed confidence in maintaining strong reserve levels [46][50]

Financial Data and Key Metrics Changes - The company reported a net interest margin (NIM) of 3.76% for September, with expectations for the fourth quarter to be at or above 3.65% [13][15][19] - Cumulative beta for deposits was reported at 65% through the rate cycle, with expectations for moderation due to the reduction of brokered deposits [21][22] Business Line Data and Key Metrics Changes - The company has focused on improving organic growth capabilities, including talent acquisition and operational efficiency [9][10] - The restructuring actions taken are expected to support loan growth, with a focus on maintaining soundness and profitability [10][11] Market Data and Key Metrics Changes - The company has seen a competitive environment with intense pricing pressures, but remains disciplined in its approach to growth [10][41] - The deposit base has been leaner, with a significant reduction in brokered deposits, which are now targeted to be reduced to zero over the long term [21][38] Company Strategy and Development Direction - The company is prioritizing operational excellence and efficiency while also investing in talent acquisition to drive organic growth [9][28] - The strategic plan includes growing core deposits to reduce reliance on brokered deposits, with a focus on enhancing customer relationships [38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, citing strong pipeline activity and production volumes [11][41] - The company is committed to maintaining discipline in its growth strategy, focusing on risk-adjusted returns rather than volume alone [10][41] Other Important Information - The company underwent significant restructuring in the third quarter, which management described as a bold and exceptional move [55][56] - The CEO announced his retirement, marking the end of his tenure and expressing confidence in the company's future [56][57] Q&A Session Summary Question: What are the key strategic initiatives moving forward? - Management highlighted a focus on addressing structural challenges and enhancing organic growth capabilities [8] Question: How is the company approaching loan growth in a competitive environment? - Management emphasized the importance of soundness and profitability over volume, with expectations for low single-digit growth rates [10][11] Question: What is the outlook for deposit betas with upcoming rate cuts? - Management expects the beta to moderate due to the reduction of brokered deposits, which had a 100% beta [21][22] Question: How does the company view its credit outlook? - Management reported a benign quarter for credit metrics and expressed optimism about resolving specific loans [30][32] Question: What is the company's strategy regarding brokered deposits? - The goal is to reduce brokered deposits to zero over time by growing core deposits [38] Question: What are the expectations for loan pricing and competitive dynamics? - Management noted that competitive pricing pressures are significant but remains committed to generating strong risk-adjusted returns [41]

Financial Data and Key Metrics Changes - Revenues increased by 11% year over year to a record $18.4 billion, with earnings per share (EPS) rising by 19% to $4.14 [7][19] - Full year revenue growth guidance has been raised to 9% to 10%, with EPS expected between $15.2 and $15.5 [7][34] Business Line Data and Key Metrics Changes - Annual card fees are approaching $10 billion, growing at double digits for 29 consecutive quarters [19] - Total spend was up 8.5% FX adjusted, driven by strong retail spending up 12% and a rebound in travel and entertainment (T&E) [21][22] - Premium T&E bookings saw spending on front-of-cabin airline tickets increase by 14% [21] Market Data and Key Metrics Changes - International spend was up 13% FX adjusted, with three of the top five countries growing by 18% or more [22][23] - Millennials and Gen Z now account for 36% of total spend, matching the share of Gen X [21] Company Strategy and Development Direction - The company is focused on enhancing its premium product offerings, exemplified by the recent refresh of the U.S. Consumer and Business Platinum Cards [8][9] - The strategy includes continuous product refreshes to drive customer engagement and growth, with over 200 refreshes since 2019 [10][12] - The company aims to expand its digital capabilities and merchant coverage outside the U.S. [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth, citing strong initial demand and engagement following the Platinum refresh [17][34] - The operating environment is viewed as stable, with expectations for continued spending growth into the holiday season [42][43] - Management noted that the consumer base remains resilient, with low delinquency rates and strong credit performance [86][90] Other Important Information - The company returned $2.9 billion to shareholders, including $600 million in dividends and $2.3 billion in share repurchases [33] - The company has seen a significant increase in new Platinum account acquisitions, running at twice the level before the refresh [16] Q&A Session Summary Question: Thoughts on the path forward and potential improvements - Management noted a recent acceleration in billings but remains cautious about predicting future trends, emphasizing a stable environment [38][39] Question: Financial impact of the Platinum refresh - Management indicated that while there is a delay in card fee increases, they expect to maintain mid-teens EPS growth despite the refresh costs [50][54] Question: Contribution of the Platinum refresh to billed business growth - Management acknowledged that while the refresh has had a positive impact, macroeconomic factors also play a significant role in spending trends [56] Question: Insights on small and medium enterprises (SME) - Management reported good acquisition trends and organic growth in the SME segment, with expectations for stabilization moving forward [60][62] Question: International strength and coverage - Management highlighted strong performance in international markets, particularly in the top five markets, and ongoing efforts to improve coverage [66] Question: Marketing spend strategy - Management emphasized a disciplined approach to marketing spend, focusing on efficiency while supporting product launches like the Platinum refresh [94] Question: Retention offers and customer engagement - Management indicated that retention offers play a minimal role, as the product's value drives customer loyalty and engagement [80][82]

Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $1,300,000,000 or $1.04 per share, which included $0.02 per share of restructuring charges primarily related to severance [5][15] - Average loan balances increased by 2.5% linked quarter, with broad-based growth across wholesale and consumer segments [6][17] - Average deposit balances decreased by $3,900,000,000 or 1% linked quarter due to the withdrawal of large M&A related client deposits [18] - Adjusted non-interest income increased by 9.9% linked quarter to over $1,500,000,000, driven by strong investment banking and trading income [7][21] - The company maintained a strong capital position, returning $1,200,000,000 to shareholders through dividends and stock repurchases [9][26] Business Line Data and Key Metrics Changes - Consumer and small business banking saw net new checking account growth with over 20,000 new accounts added in the third quarter [10] - Average consumer and small business deposit balances increased modestly by 1.9% year over year, while average loan balances increased by 7% year over year [11] - In wholesale banking, average wholesale loans increased by 2.8% linked quarter and 4.8% year over year, driven by new client acquisition [13] - Wealth management reported a 27% year-to-date increase in assets under management from wholesale and premier clients [14] Market Data and Key Metrics Changes - Digital transactions rose by 7% year over year, with digital channels accounting for 40% of new clients, particularly among Gen Z and millennials [12] - The company experienced strong growth in treasury management revenue, which increased by 11% year over year [14] Company Strategy and Development Direction - The company announced a strategic investment to build 100 new insight-driven branches in high-growth markets and enhance digital capabilities [5] - The focus remains on deepening relationships with existing clients and attracting new clients through personalized, technology-enabled experiences [5][10] - The company aims to achieve a 15% return on tangible common equity (ROTCE) by 2027, with plans to increase share repurchases significantly in 2026 [9][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to accelerate growth and profitability, expecting revenue growth in 2026 to more than double compared to 2025 [29] - The outlook for net interest income is positive, with expectations for growth driven by loan growth and lower deposit costs [19][26] - Management emphasized a strong credit risk culture and proactive approach to managing asset quality, maintaining strong credit metrics [24][96] Other Important Information - The company plans to target approximately $750,000,000 in share repurchases during the fourth quarter [9][26] - The CET1 capital ratio remained stable at 11%, with an improvement in the CET1 ratio including AOCI by 10 basis points to 9.4% [16] Q&A Session Summary Question: Revenue growth expectations for 2026 - Management indicated that revenue growth in 2026 is expected to more than double compared to 2025, with both net interest income and fee income contributing positively [37][42] Question: Deposit pricing and growth momentum - Management expressed confidence in deposit pricing and growth momentum, anticipating improvements due to recent Fed rate cuts and strong client acquisition [50][55] Question: Credit quality perspective - Management stated that overall credit quality remains strong, with a focus on high-quality assets in both wholesale and consumer spaces [96][100] Question: Capital levels and buyback flexibility - Management confirmed flexibility in buybacks, indicating that the $750,000,000 target is a floor, with potential for increases based on market conditions [104][106] Question: Nonaccrual loans in C&I - Management addressed concerns regarding nonaccrual loans, clarifying that the increase is related to specific exposures but overall credit quality remains robust [114][96]

Financial Data and Key Metrics Changes - The company reported record-breaking third-quarter sales of over $2.7 billion, a 6% increase year-over-year, driven by strong performance in Asia and South America [9][12] - Adjusted operating income increased by 14% to $271 million, with an adjusted operating margin of 10%, up 70 basis points from the previous year [9][16] - Earnings per share increased by 26% to $2.31, marking the ninth consecutive quarter of growth in adjusted earnings per share [17] - Operating cash flow was robust at $258 million, an increase of 46% compared to the previous year [19] Business Line Data and Key Metrics Changes - Sales growth was particularly strong in China, with a return to outperformance with Chinese OEMs, driven by recent product launches [4][12] - The company achieved a gross margin of 19.3%, an increase of 130 basis points year-over-year, primarily due to direct labor efficiency and headcount reductions [10][16] Market Data and Key Metrics Changes - Global light vehicle production increased by 4.6% in the third quarter, exceeding expectations, with strong growth for domestic OEMs in China [11][23] - Light vehicle production in North America showed resilience, while production in Western Europe and Japan declined by approximately 2% to 3% [11][23] - The company underperformed light vehicle production by 0.7% globally, attributed to a negative regional mix [12][13] Company Strategy and Development Direction - The company is focused on expanding its presence in China, investing in a second R&D center to strengthen partnerships with Chinese OEMs [6][7] - A strategic agreement with CATARC aims to define the next generation of safety standards in the automotive sector [7][8] - The company plans to form a joint venture with HSAE to develop advanced safety electronics, targeting high-growth areas [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial targets despite anticipated challenges in the fourth quarter, including lower light vehicle production and geopolitical issues [25][26] - The outlook for the global auto industry has improved, particularly for North America and China, with expectations of sustained growth in Chinese light vehicle production over the medium term [23][24] Other Important Information - The company has committed to stock repurchases of $300 to $500 million annually and increased its quarterly dividend to $0.85 per share [6][17] - The leverage ratio remains low at 1.3 times, below the target limit of 1.5 times, reflecting prudent financial management [22] Q&A Session Summary Question: Why isn't organic sales benefiting from the stronger production environment? - Management explained that adjustments for past quarters and a larger negative market mix impacted organic sales guidance [30][31] Question: Was there anything unusual in the strong margin for Q3? - Management confirmed that a $50 million supplier compensation was one-time and highlighted the importance of internal improvement efforts [32][33] Question: Should Q4 trends be extrapolated into 2026? - Management expressed confidence in reaching midterm targets and noted that Q4 is typically the strongest quarter of the year [36][39] Question: Can you dimensionalize the headwinds for Q4? - Management indicated that engineering income would be the largest headwind, followed by the absence of out-of-period inflation compensation and increased depreciation [44][45] Question: How is the company positioned in the Chinese market? - Management noted strong growth with Chinese OEMs and ongoing investments, including a new R&D center [52][53] Question: What is the outlook for the European market? - Management remains cautious about the European market, primarily due to demand uncertainties [54] Question: How does the company view supplier contract trends? - Management stated that they do not foresee major concerns regarding contract negotiations with OEMs [76][77] Question: What is the impact of the recent supply issues on European production? - Management indicated it is too early to comment on potential impacts but emphasized their preparedness to manage supply chain constraints [80]

Financial Data and Key Metrics Changes - The company reported record-breaking third-quarter sales of approximately $2.7 billion, representing a 6% year-over-year increase, driven by strong performance in Asia and South America, along with favorable currency effects and tariff-related compensation [11][22][12] - Adjusted operating income increased by 14% to $271 million from $237 million last year, with an adjusted operating margin of 10%, which is 70 basis points better than the same quarter last year [12][23] - Earnings per share for the third quarter reached a record high, with a 26% increase year-over-year, primarily driven by higher operating income and a reduced share count [8][24] - Operating cash flow totaled $258 million, an increase of $81 million or 46% compared to the previous year [12][26] Business Line Data and Key Metrics Changes - Sales growth in China has returned to outperformance, driven by recent product launches, with sales to domestic OEMs growing by almost 23%, significantly outpacing light vehicle production growth [7][19] - The company achieved a gross margin of 19.3%, an increase of 130 basis points year-over-year, primarily due to direct labor efficiency and headcount reductions [13][23] Market Data and Key Metrics Changes - Global light vehicle production increased by 4.6% in the third quarter, exceeding expectations, with strong growth for domestic OEMs in China supported by government policies [14][15] - Light vehicle production in North America showed resilience, while production in Western Europe and Japan declined by approximately 2% to 3% [15][31] Company Strategy and Development Direction - The company is focusing on expanding its presence in China, investing in a second R&D center to strengthen partnerships with Chinese OEMs [9][10] - A joint venture with HSAE, a leading Chinese automotive electronics developer, aims to develop advanced safety electronics, enhancing the company's competitive position in high-growth areas [11][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate trade volatility and regional dynamics, with an improved outlook for global light vehicle production, particularly in North America and China [31][32] - Despite expected challenges in 2025, the company anticipates higher sales and continued outperformance, especially in China, while acknowledging potential headwinds from inflation compensation and increased depreciation costs [35][36] Other Important Information - The company plans to repurchase shares worth $300 million to $500 million annually and has increased its quarterly dividend to $0.85 per share, reflecting confidence in financial strength [9][24] - The leverage ratio remains low at 1.3 times, below the target limit of 1.5 times, indicating prudent financial management [30] Q&A Session Summary Question: Why isn't organic sales benefiting from the stronger production environment? - Management explained that adjustments for past quarters and a larger negative market mix impacted organic sales guidance, along with delays in new launches in China [42][44] Question: Was there anything unusual in the strong margin for Q3? - Management confirmed that a $50 million supplier compensation was a one-time benefit, contributing to the strong margin alongside higher-than-expected sales [45][46] Question: How should Q4 trends be viewed for 2026? - Management expressed confidence in reaching midterm targets, noting that Q4 is typically the strongest quarter, but current trends should not be extrapolated directly into 2026 [50][52] Question: What are the expected headwinds for Q4? - Management identified lower engineering income, reduced inflation compensation, and increased depreciation as the main headwinds for Q4 [61][63] Question: How is the company positioned in the Chinese market? - Management highlighted strong growth with domestic OEMs, despite some negative impacts from global customers, and expressed optimism about future performance in China [116][117]

Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $1.3 billion, or $1.04 per share, which included $0.02 per share of restructuring charges primarily related to severance [4][12] - Adjusted revenue increased by 3.7% late in the quarter, driven by a 9.9% growth in non-interest income and a 1.2% growth in net interest income [12][22] - Average loan balances increased by 2.5%, while average deposit balances decreased by $3.9 billion sequentially, or 1% [5][14] - The company returned $1.2 billion of capital to shareholders through dividends and stock repurchases, with plans to target approximately $750 million in share repurchases during the fourth quarter [7][22] Business Line Data and Key Metrics Changes - Consumer and small business banking saw net new checking account growth with over 20,000 new accounts added, and average loan balances increased by 2% late in the quarter [9][10] - Wholesale loans increased by 2.8% late in the quarter, driven by growth from new and existing clients [10][11] - Wealth management income increased by 7.5% late in the quarter due to higher market values and positive net asset flows [18] Market Data and Key Metrics Changes - Digital transactions rose by 7% year over year, with digital channels accounting for 40% of new clients, particularly among Gen Z and Millennials [10] - The company experienced broad-based growth across industry banking verticals, with significant increases in loan and deposit production per banker [11] Company Strategy and Development Direction - The company announced a strategic investment to build 100 new branches in high-growth markets and enhance digital capabilities [3][4] - The focus remains on deepening relationships with existing clients and attracting new clients through technology-enabled experiences [4][26] - The company aims to achieve a 15% ROTCE by 2027, reflecting confidence in long-term earnings power and strategic direction [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to reach a 15% ROTCE by 2027, with expectations for revenue growth in 2026 to more than double compared to 2025 [24][26] - The company anticipates continued loan growth and improved client deposit growth in the fourth quarter and into 2026 [14][22] Other Important Information - The company maintained strong asset quality metrics, with net charge-offs declining both on a late quarter and year-over-year basis [7][19] - The CET1 capital ratio remained stable at 11%, with an improved CET1 ratio including AOCI at 9.4% [12] Q&A Session Summary Question: Revenue growth expectations for 2026 - Management indicated that revenue growth is expected to more than double in 2026 compared to 2025, with both net interest income and fee income contributing to this growth [32][34] Question: Deposit pricing outlook with Fed rate cuts - Management expressed optimism about deposit pricing and growth momentum, anticipating improvements in interest-bearing deposit beta due to recent Fed rate cuts [38][40] Question: Credit quality perspective - Management stated that overall credit quality remains strong, with a focus on high-quality assets in both wholesale and consumer spaces [70][73] Question: Capital levels and buyback flexibility - Management confirmed flexibility in buybacks, with a target of $750 million for the fourth quarter, while maintaining a conservative capital structure [78] Question: Non-accrual loans and First Brands exposure - Management acknowledged that the increase in non-accrual loans includes exposure to First Brands, which has been accounted for in the forward guidance [87][90]

Financial Performance - Sales growth accelerated to 4% in Q3, with broad-based execution across teams despite market headwinds [3][4] - Higher Education delivered 2% growth in the nine-month period, with solid performance in core U.S. Higher Ed [4][30] - Q3 performance is in line with expectations, with confidence in a stronger Q4 due to known business unit dynamics [5][6] Business Unit Performance - Virtual Learning achieved 17% sales growth in Q3, driven by excellent enrollment performance [3][4] - Assessment and Qualifications growth accelerated to 4% in Q3, with Pearson VUE returning to growth [3][4] - English Language Learning returned to growth in Q3, despite difficult migration conditions in larger markets [5][6] Market Dynamics - International Higher Ed faced challenges, particularly in mature markets like Canada and the UK, leading to a decline [28][30] - The company is shifting strategy towards emerging markets and digital products to address challenges in mature markets [28][29] - Visibility into Q4 performance is decent across business units, with strong expectations for virtual learning and assessments [5][6] Company Strategy and Industry Competition - The company aims to lead in the application of innovative technologies, particularly AI, across products and services [6][7] - Investments are being made to maintain core strengths, including brand and distribution networks, while evolving products to leverage AI [7][11] - Strategic partnerships with companies like Salesforce and Cognizant are being pursued to enhance enterprise learning solutions [12][13] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about Q4 performance and annual results aligning with market expectations [6][30] - The company acknowledges ongoing headwinds in certain segments but is confident in the long-term growth potential driven by digital strategies [28][30] - Future growth is expected to be mid-single digits, with a focus on leveraging new contract wins and improving performance in enterprise learning [25][48] Other Important Information - The Test Prep business is currently small but is being integrated into a broader Pearson Skilling Suite [56][57] - The company is actively monitoring the impact of AI on the education sector and exploring partnerships to enhance learning outcomes [41][42] Q&A Session Summary Question: Clarification on revenue model for new contract wins in Pearson VUE - The revenue model is primarily on a per-candidate basis, with no significant upfront implementation fees [16][20] Question: Expectations for growth from new contract wins in 2026 - Management is not providing guidance for 2026 at this time but expects mid-single digits growth in the medium term [25][26] Question: Challenges in International Higher Ed - The decline in International Higher Ed is attributed to challenges in mature markets, with a strategic shift towards emerging markets and digital products [28][30] Question: Performance expectations for virtual learning and ELL in Q4 - Strong visibility for virtual learning is expected to continue, while ELL is anticipated to have a good Q4, particularly in Latin America [39][40] Question: Clarification on PDRI and PTE performance - PDRI is facing challenges this year, with a slow recovery expected, while PTE has shown stronger performance than initially anticipated [48][50]