Bankers Differ On Prospects For Fed Tightening In FY15

Four bankers from mid-and large cap institutions differed on whether the Federal Reserve will move in 2015 to tighten interest rates.U.S. Bancorp's (NYSE: USB) Chief Financial Officer Kathleen A. Rogers told listeners at the Credit Suisse Financial Services Forum Thursday that she expects a tightening cycle in the second half of the current year.But Rogers, named CFO of the $402.5 billion Minneapolis bank last month, expects the company to increase revenue "with or without" higher rates.U.S. Bancorp's first quarter is shaping up in line with the bank's recent guidance, and its energy exposure equals a "minimal" 1.5 percent of loans, Rogers said.SunTrust Banks, Inc. (NYSE: STI), on the other hand, "would be surprised if we saw any Fed tightening this year" according to Chief Financial Officer Aleem Gillani.Atlanta-based SunTrust, with assets of about $190 billion, is managing its business "with a view that tightening is a 2016 event," Gillani said.Low rates, fewer commercial loan swaps and higher regulatory costs will make 2015 "a harder year, in terms of earnings growth" according to Gillani, who expects SunTrust's capital payout to shareholders will improve, but remain below average.Cleveland-based KeyCorp (NYSE: KEY) expects higher rates in the second half of 2015 will boost its net interest income growth to the low-to-mid single digits.Donald R. Kimble Jr., CFO of the $93.8 billion KeyCorp, expects 2015 loan growth to be led by commercial clients.KeyCorp is smaller in mortgages relative to peers, but the sector is "being looked at" with an eye to both partnerships and "organic investment," Kimble said.Salt Lake City-based Zions Bancorporation's (NASDAQ: ZION) CFO Doyle L. Arnold reiterated the company's recent financial outlook and said its energy reserve-based loan portfolio is divided equally between oil and gas producers.Recent analysis has "led to a few downgrades of problematic borrowers," Arnold said, adding that the $57 billion bank is "not expecting a sharp change in growth" among non-energy related markets.