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CEO Jon Winick SNL: Q1 Big Banks in Holding Pattern

Lending by the largest U.S. banks was flat in the first quarter, held in check by a seasonal pullback in demand and uncertainty in the nation’s capital.

Total first-quarter loans and leases among the 10 biggest commercial banks by assets inched down 0.1% from the previous quarter on an aggregate basis,
according to an S&P Global Market Intelligence analysis of regulatory filings.

Commercial-and-industrial lending rose 2.2% during the quarter among the big banks, a decent advance but mild relative to expectations heading into the
quarter. Commercial real estate and multifamily lending advanced more modestly, by less than 1% in both categories.

Lending in other key categories fell notably during the first three months of the year, including a 3% dip in consumer lending, offsetting moderate gains
elsewhere.

Analysts say that loan demand among consumers often slows during the first quarter, as Americans ease up on borrowing after holiday spending sprees
and shop less amid winter weather. Demand for credit also often stagnates some among commercial clients, who tend to tap credit lines late in a given year
in order to shore up business plans for the following year, leaving them with fewer borrowing needs early in a new year.

But analysts noted throughout first-quarter earnings season that investors had expected more for the start of this year, largely because of lofty optimism fueled by promises in Washington for healthcare reform, deregulation and, perhaps most significantly, corporate tax cuts.

Republican President Donald Trump, who took control of the White House in January, has vowed to work with a GOP-controlled Congress to get legislative
wins on each of those fronts — wins that would lower costs for many businesses and provide them more resources for expansion, the thinking goes.
Banks could finance such expansion, lenders say.

Trump also has touted plans for new international trade policies and domestic infrastructure spending that could benefit American businesses.

But Trump and allies in Congress have made little progress to date on the legislative front, and the likelihood and timing of major reforms remain uncertain,
analysts say. “There is a lot of waiting to see what happens,” among business owners, “a lot of questions and not a lot of answers yet,” FIG Partners bank
analyst Christopher Marinac said in a post-earnings interview.

“So with the slow first quarter loan growth, right now, it’s hard to tell how much of what we saw is seasonal and how much of it has to do with people
waiting to see what Trump can accomplish,” Jon Winick, president of bank adviser Clark Street Capital, said in an interview.

Minneapolis-based U.S. Bancorp, whose first-quarter commercial lending was essentially flat from the previous quarter, attests to the uncertainty.
“Our large corporate customers tell us that they are optimistic about the future but are awaiting more clarity regarding potential changes in tax and regulatory
reform, infrastructure spend and trade policies,” U.S. Bancorp President and CEO Andrew Cecere said during the company’s first-quarter earnings call.

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