Model Indicator changes post 2Q results for 6 issuers Friday
18 July 2025 - Not recommendations
G – 255 Issuers reporting results Friday
Danske Bank (DANBNK, A-/BBB+ attractive long) Reported
Charles Schwab (SCHW, A2/A- attractive long) Reported
Truist Financial (TFC Baa1/A- attractive long to attractive short ) Reported
Huntington Bancshares (HBAN Baa1/BBB attractive short) Reported
American Express (AXP A2/A- attractive long to attractive short) Reported
Ally Financial (ALLY Baa3/BBB- attractive short to attractive long) Reported
Earnings Summaries with Credit Trading Model Indicators
Truist Financial (TFC, Baa1/A-, Attractive short) Earnings Summary:
Truist reported 2Q earnings that rose 1% YoY and “adjusted operating income” that fell by -1% YoY. Net interest income fell -1% YoY. Non-interest income was flat QoQ and slightly lower YoY. Loans grew 2.0% YoY. Credit quality improved QoQ and YoY. Company guidance is for 1.5% – 2.5% revenue growth for the remainder of 2025.
Financial Position:
• Tier 1 capital at 11.0%, slightly down from 11.3% at March 31, 2025, but up from 11.6% in 2Q 2024.
• Company used balance sheet to repurchase equity and pay dividends in 2Q 2025.
• Deposits increased by $2.5 billion QoQ, and $20.7 billion YoY to $406 billion. • Balance sheet liquidity was flat YoY and QoQ.
• Net debt rose by 20% QoQ to $23 billion.
Trading Model Indicator: The credit trading model creates trading indicators for TFC’s secondary trading curve, comprising 36 liquid bonds (fixed and floating rate bank notes, senior holdco, subordinated bonds, and perpetuals) totaling $42.3 billion. 20 bond indicators are overvalued with 12 identified as attractive short recommendations. The most attractive short according to the trading model is the TFC 2 1/4 03/11/30 subordinated bank note.
Equity Indicator: The model views TFC equity as an attractive long trade at $40.75 per share.
American Express (AXP, A2/A-, Avoid Long) Earnings Summary:
AXP reported 2Q revenue growth of 9% and reported earnings decline of -4% YoY. “Foreign currency adjusted earnings” rose 9% YoY. Loans and card member receivables rose 6% YoY. Credit quality was slightly improved QoQ and declined slightly YoY. AXP reaffirmed full-year guidance of 8-10% revenue growth as well as introduction of crypto product by the end of 2025.
Financial Position:
• Equity Tier 1 capital was 11.3% at June 30 vs. 11.4% at the end of 1Q and 11.5% YoY.
• Total debt rose $7 billion QoQ and $6.5 billion YoY while net debt rose by $1.5 billion QoQ
• Deposits grew by $3 billion QoQ and $15.5 billion YoY to $149 billion.
• Loans and receivables were essentially flat QoQ.
We will see shareholder cash returns when the company files its 10-Q in the next couple of days.
Trading Model Indicator: The credit trading model creates trading indicators for 34 AXP liquid bonds totaling $37.5 billion in market cap. The trading model now sees AXP secondary bonds as overvalued, but not yet an attractive short. The model would participate in American Express new supply.
Equity Indicator: The model views AXP equity as an attractive long trade at $285 per share.
Charles Schwab (SCHW, A2/A-, Attractive long) Earnings Summary:
Schwab reported 2Q revenue growth of 25% and earnings growth of 50% YoY. Client transaction balance grew by 1% to $413 billion in the quarter and trading revenue rose 23% YoY.
Financial Position:
• Schwab reduced its FHLB borrowing by $2.5 billion to $9 billion as of June 30.
• Schwab redeemed its $2.5 billion Series G preferred stock in the quarter.
• Deposits fell by $13 billion QoQ and $19 billion YoY to $233 billion.
• CET 1 capital was 9.8% in 2Q vs. 9.9% in 1Q 2025 and 9.4% at June 30, 2024.
• Net debt declined by $3 billion in the quarter and $18 billion YoY.
Trading Model Indicator: SCHW hasn’t issued debt in almost 2 years. The credit trading model output indicators show just 16 SCHW bonds as undervalued.
Equity Indicator: The model views Schwab (SCHW) equity as an attractive long trade at $82.25 per share.
Ally Financial (ALLY, A3/BBB-, Attractive long) Earnings Summary: Ally Financial reported 2Q revenue that fell -2% YoY, while pre-charge earnings rose 29%. Net financing revenue was flat YoY and rose by 2% QoQ. Credit quality improved both QoQ and YoY.
Financial Position:
• Deposits fell by $3.6 billion QoQ and $4.5 billion YoY to $148 billion.
• CET1 capital was 9.9% as of June 30, 2025, compared to 9.52% in 1Q 2025 and 10.62% in 2Q 2024.
• Overall liquidity rose and net debt fell as the company sold its credit card business during the quarter.
• Ally continues to pay $90 million per quarter in common dividends.
Trading Model Indicator: The credit trading model indicators now switch to trading ALLY secondary bonds from a long perspective. However, just 3 of the 13 outstanding USD secondary bonds have a market capitalization above $750 million. The trading model would participate in any new ALLY supply.
Equity Indicator: The trading model sees ALLY equity as an attractive long trade at $35.65 per share.
Huntington Bancshares (HBAN, Baa1/BBB, Attractive Short) Earnings Summary:
Huntington reported 2Q revenue that grew 4% and flat operating earnings YoY. Net interest income grew 3% QoQ and 12% YoY to $509 million for the quarter. A drop in non-interest income led to flat earnings in the quarter. Average total loans and leases increased $2.3 billion, or 2%, from the prior quarter to $133.2 billion, and increased $9.8 billion, or 8%, from the year-ago quarter. Credit quality was flat QoQ and YoY. Much of the conference call and presentation related to HBAN’s Veritex acquisition.
Financial Position:
• Deposits rose by 2% in the quarter and 7% YoY to $163 billion.
• 2Q CET1 capital was 10.4% compared to 10.6% as of Q1 2025 and 10.5% at the end of 2Q 2024.
• Total debt continues to grow modestly YoY. HBAN net debt is 50% higher YoY now at $9 billion.
Trading Model Indicator: The credit trading model indicator for HBAN secondary bonds remains to trade from the short side. At present, 3 of the 8 liquid Huntington Bank USD bonds in circulation have attractive short trade identifiers. The HBAN 5.272 01/15/31 is considered the most attractive short trading recommendation by our credit trading model.
Equity Indicator: The model views HBAN equity as an attractive long trade at $15.50 per share.
Danske Bank (DANBNK, Baa1/A-, attractive long) Earnings summary:
reported flat 2Q operating earnings on revenue that grew less than 1% YoY. Core loans grew 5% YoY and 1% QoQ. Similar to other Nordic banks, 2Q net interest income fell -3% YoY owing to lower Danish interest rates. Loan quality improved QoQ and YoY. Company affirmed 2025 guidance of slightly lower 2025 results when compared to 2024.
Financial Position:
Danske Bank Tier 1 capital at 6/30/25 was 18.7% vs. 18.4% at the end of Q1 and 18.5% a year ago.
Deposits are roughly 4% lower QoQ and YoY.
Total debt on the DANBNK balance has been reduced by 10% (DKK 255 billion) YoY.
Trading Model Indicator: Danske Bank (DANBNK) has just 12 liquid USD secondary bonds in circulation. Our systematic credit trading model indicators show 4 as undervalued and the DANBNK 4 3/8 PERP as an attractive long indication.
Equity Indicator: The model views DANSKE DC equity as an attractive long trade at DKK 242 per share.
Disclaimer - This report is not intended as, and does not constitute an offer, or a solicitation to buy or sell any securities or financial instruments. All data, levels, opinions, and representations herein are provided for informational purposes only and should not be relied upon for making investment decisions. Past performance is not indicative of future results. The authors of this report assume no liability for losses or damages arising from the use of this information. Investors should consult with a qualified financial advisor before making any investment decisions. The information in this report is based on sources believed to be reliable, but no guarantee is made as to its accuracy, completeness, or timeliness.