U.S. Bancorp (USB) Earnings Call Transcript & Summary

Welcome to the U.S. Bancorp Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call will be recorded and available for replay beginning today at approximately 10 a.m. Central Time. I will now turn the conference over to Brian Mauney, Director of Investor Relations for U.S. Bancorp.

Thank you, Krista, and good morning, everyone. Today, I'm joined by our Chairman and Chief Executive Officer, Gunjan Kedia, and Vice Chair; and Chief Financial Officer, John Stern. In a moment, Gunjan and John will be referencing a slide presentation together with their prepared remarks. A copy of the presentation, our press release and supplemental analyst schedules can be found on our website at ir.usbank.com. Please note that any forward-looking statements made during today's call are subject to risk and uncertainty. Factors that could materially change our current forward-looking assumptions are described on Page 2 of today's earnings presentation, our press release and reports on file with the SEC. Following our prepared remarks, Gunjan and John will be happy to take questions that you have. I will now turn the call over to Gunjan.

Thank you, Brian, and welcome to our team. Good morning, everyone. Beginning on Slide 3. This quarter, we delivered earnings per share of $1.35, an increase of approximately 22% year-over-year. Record net revenue of $7.7 billion highlights the strength of our diversified business mix and improved execution. Results in the quarter reflect strong progress against our 3 strategic priorities. Revenue growth accelerated to 10.1% year-over-year. Expense discipline remains a hallmark for us with 400 basis points of positive operating leverage this quarter. Our payments transformation is differentiating us and driving innovative client value propositions, especially for the Gen Z and younger generations. Importantly, we delivered these results while maintaining strong returns, credit performance and capital levels. John will provide more details on our financial performance in his opening remarks. Turning to Slide 4. Fees rose to 44% of total revenue this quarter with both scale and quality of our fee mix, driving high returns, stable earnings and enduring relationships. Fee growth has steadily accelerated, and this is an important priority for us. While fee growth drives higher expenses, productivity initiatives helped improve our efficiency ratio and increase return on average assets. Moving to Slide 5. The successful completion of the BTIG acquisition marks a significant milestone in our strategic build-out of capital markets. In its first month as part of U.S. Bancorp, BTIG generated approximately $98 million of revenue, marking the strongest monthly revenue performance in BTIG's history and outpacing our earlier expectations from the deal. As integration progresses, we expect to capture more long-term strategic benefits of the combination. Our aim is to grow capital markets to more than 10% of total company revenue over time. On Slide 6, our payments franchise remains an important source of diversification and client engagement across the company. Total Payment Services revenue increased 5.7% year-over-year compared with 4.7% growth in the prior year quarter. While merchant processing growth slowed during the quarter, card issuing continued to perform well and corporate payments saw a strong rebound driven by core demand and new business installations. We are increasingly managing these products holistically at the client segment level and investing to be competitive as this space evolves. Turning to Slide 7. Our consumer franchise is a source of strength for the company and an important driver of long-term relationships and lower cost deposits. Given the increased interest we have seen in this space recently, we are spotlighting the strategy for the consumer franchise. We serve nearly 13 million consumers through a combination of digital and physical distribution with approximately 18% residing outside of our traditional branch footprint today. In addition, we serve approximately 7 million customers through our card, co-brand, Elan and partner platforms. Our core products benefit greatly from this expanded scale. 42% of our consumer clients are now multiservice, up approximately 2 percentage points over the past 2 years. These relationships are more durable, generate higher return and strengthen engagement over our franchise. Slide 8 highlights the core strategies of our consumer franchise. We are seeing strong momentum from differentiated offerings like Banks Smartly, which we introduced in 2024. The balances across smartly checking and savings now exceeding $84 billion. We have more recently introduced a similar interconnected product suite for small business called Business Essentials. Our branch expansion is focused on densifying our presence in approximately 10 markets within our footprint that have high rates of household formation. We expect our annual investment in branches to increase from approximately $200 million historically to $300 million annually. Importantly, these strategies are delivering strong results and have now driven a third consecutive quarter of record consumer deposits. Let me now turn the call over to John.

Thanks, Gunjan, and good morning, everyone. This was another strong quarter for us as we continue to execute against our strategic priorities. We delivered meaningful revenue and fee growth, significant positive operating leverage and improved profitability metrics that are well within our medium-term target ranges. If you turn to Slide 9, I'll start with some highlights, followed by a discussion of trends for the second quarter. We reported earnings per common share of $1.35 and generated record net revenue of $7.7 billion, representing 10.1% growth year-over-year. This quarter, we continue to see strong loan growth in areas like C&I, commercial real estate and card, reflecting steady client activity across the franchise. Meanwhile, fee income growth accelerated across most line items. Notably, this includes 1 month of BTIG. Our fee growth was still approximately 10% excluding BTIG. Average total assets increased 0.9% linked quarter to $695 billion. Key credit quality metrics improved both sequentially and year-over-year, reflecting a stable economic backdrop and the continued fortitude of our clients. As of June 30, our tangible book value per common share eclipsed $30 and increased more than 13% on a year-over-year basis. Slide 10 provides our key performance metrics. ROA, ROTCE, efficiency ratio and NIM all improved both sequentially and year-over-year as a result of a disciplined execution. We delivered strong returns, which includes a return on tangible common equity of 18.7% and a return on average assets of 1.26%. The efficiency ratio improved to 57.1%. Slide 11 provides a balance sheet summary. Total average deposits grew 2.4% year-over-year and were flat linked quarter. Consumer deposits reached another record this quarter driven by our Smart lead flagship product. The offset was typical seasonality in our wholesale and investment services businesses. Average loans totaled $405 billion up 7.1% from the prior year quarter and 3.0% from the prior quarter. Growth was broad-based in strategic categories, such as C&I, credit card and commercial real estate which brings ancillary fees with them. Turning to Slide 12. Net interest income on a fully taxable equivalent basis totaled $4.4 billion, an increase of 7.5% on a year-over-year basis, above the range we had previously guided to, driven by stronger loan dynamics during the quarter. On a sequential basis, net interest income increased by $96 million or 2.2%, driven by loan growth recent investment portfolio repositioning and ongoing benefits from fixed asset repricing. Net interest margin improved 2 basis points sequentially to 2.79%. Slide 13 highlights fee revenue trends within noninterest income. Total fee revenue accelerated during the quarter, reflecting broad-based strength across our businesses. Total fee income increased 13.2% year-over-year driven by strong performance in capital markets, trust and investment management, payments and other institutional fee businesses. In June, BTIG contributed approximately $98 million of capital markets fee revenue. Excluding BTIG, fee revenue grew 9.9% year-over-year. Capital Markets revenue, excluding BTIG, increased approximately 31% year-over-year, reflecting strong client activity across foreign exchange, syndications and corporate bond underwriting. Moving to Slide 14. Noninterest expense totaled approximately $4.4 billion and included approximately $84 million related to BTIG. Excluding BTIG, expenses grew roughly 1.9% sequentially and 3.9% versus the prior year. The increase in core expense primarily reflected continued investments in technology and marketing, as well as higher incentive compensations associated with this quarter's strong revenue performance. These increases were partially offset by ongoing expense discipline across the franchise. Turning to Slide 15. This quarter highlights our ability to improve profitability while continuing to grow the franchise. Over the past several quarters, we have meaningfully improved profitability, significantly reducing our efficiency ratio from its recent peak. We remain committed to meaningful positive operating leverage as we fully integrate and normalize BTIG. While disciplined expense management remains an important contributor, we are increasingly seeing revenue growth become a larger driver of earnings growth. That combination of improving top line momentum and ongoing expense discipline resulted in a year-over-year EPS growth of more than 20% this quarter. We remain confident in our ability to sustain strong profitability while continuing to invest for future growth. Slide 16 highlights our credit quality performance, which continues to improve. Our ratio of nonperforming assets to loans and other real estate of 0.33% improved 5 basis points from the previous quarter and 11 basis points from a year ago. The second quarter net charge-off ratio was 0.53%, decreasing 3 basis points sequentially. Meanwhile, our allowance for credit losses remained steady at $8 billion or 1.94% of period-end loans. Turning to Slide 17. As of June 30, our common equity Tier 1 capital ratio was 10.8% or 9.4%, including AOCI. Strong earnings generation this quarter supported capital distributions, strong loan growth and 12 basis points of impact from the BTIG acquisition this quarter. On Slide 18, we provide a comparison of our second quarter results to our previous guidance, provide third quarter guidance and update our full year 2026 outlook. Excluding BTIG, second quarter net interest income and fee revenue exceeded previous guidance while noninterest expense came in as expected. Turning to forward-looking guidance for the third quarter and full year 2026, both of which are inclusive of BTIG and recently announced partnerships. For the third quarter, we expect net interest income growth of 4% to 6% on a fully taxable equivalent basis compared to the third quarter of 2025. Total fee revenue growth in the range of 12% to 14% compared to the third quarter of 2025 with contribution from BTIG of roughly $200 million per quarter in the back half of the year, noninterest expense growth of approximately 8% compared to the third quarter of 2025. Excluding BTIG, we would expect our core expense growth to be approximately 3.5%. Additionally, we expect to recognize approximately $160 million of reserve build related to the Amazon Small Business portfolio purchase, which we anticipate will close in mid-August. For the full year 2026, we now expect total net revenue growth of 7% to 9% compared to the prior year or in the range of 5% to 7%, excluding BTIG, up from our prior range of 4% to 6%. We expect to deliver approximately 200 basis points of positive operating leverage this year and more than 300 basis points, excluding the impact from BTIG. Moving to Slide 19. Second quarter results represented another consecutive quarter operating within all of our medium-term target ranges. We are encouraged by the momentum across the franchise and remain confident in our ability to continue to build on these results to deliver consistent, sustainable returns over time. Let me now hand it back to Gunjan for closing remarks.

Thank you, John. As we look ahead, our focus remains on sustaining the strong return profile of the company while accelerating growth with resilient fundamentals strong execution momentum and an increasingly interconnected franchise, we believe we are well positioned for the next phase of profitable growth and long-term value creation. With that, we will now open the call for your questions.

[Operator Instructions] Your first question comes from Erika Najarian with UBS Financial.

Gunjan and John, fully appreciate the revenue upgrade. I'm wondering if you could unpack maybe the path from 4% to 6% to 5% to 7% and perhaps separate the discussion with regards to the net interest income trajectory, particularly how you're viewing net interest margin from here with deposit costs coming up a little bit in the quarter. So I'm going to pause there because that's already a lot.

Sure. Erika, thanks for the question. Let me just start, we do expect, as I mentioned, the full year revenue guide to go up to 7% to 9% or 5% to 7% excluding BTIG, which is better than where we started the year when we mentioned 4% to 6%. And that just reflects a lot of broad-based growth that we just commented on in our opening comments there. You mentioned net interest income. And maybe just to talk through that a bit. We've started the year expecting mid-single digits I would continue to expect mid-single digits on net interest income. Just given the momentum that we've had in the first half of the year, I would just say that we expect to be north of 5% for the full year. But obviously, a lot can happen. I think in terms of net interest income and net interest margin, in particular, we do expect that to grow over the course of the year, and that's reflected in the guide. And the deposits, we think that, that's -- that nothing's really changed on that front from a competitive nature standpoint. So we still feel really good about where we're moving here.

And just as a follow-up, I've already fielded investor questions on positive operating leverage. It feel socially to even ask this, but I've been guiding asked about this quickly 200 versus the 200 plus. And -- but anyway, I guess, like just to frame it for us, from your prepared remarks, it sounds like the fee generation ex BTIG is better, right? And clearly, that comes with it higher expenses. And also, it seems like consensus has to frame BTIG with that higher efficiency ratio. So I guess like is that a fair read of how positive operating leverage is tracking because fees are driving the upside and thereby, that comes with it with expenses. And further, just sorry to sort of slip another one in, the $98 million in a month is clearly better than the $200 million, given the ECM sort of large assets happening in the industry, do you expect the pacing of BTIG contribution to be closer to $300 million this year.

Sure. Sure, a lot to unpack there, but I think maybe I'll start on the you talked about positive operating leverage just to start. And I would say that we're firmly committed to positive operating leverage. That is something we have been said repeatedly since the Investor Day back in 2024. We've obviously have been focusing more and more on fees, and you see that in the guide. We do expect our fees overall to be low teens from a full year perspective. and just likely over 4 points of that is going to be on the BTIG side of the equation. I think in terms of this quickly line, as you call it, versus the 300 basis points or more signal. With BTG, within that $200 million that we anticipate per quarter, we assume a 15% contribution margin. There's also about $60 million of integration costs that will likely come in that's embedded in that we'll call out, obviously, as we move forward. But we're firmly positioned for positive operating leverage. And I think from a BTIG perspective, we're really excited about that acquisition and the new team that we have there. And -- but we do expect the contribution margin to improve over time.

I'd just add, Erika, that we are very comfortable with our expense and productivity runway on our programs. And like John said, very committed to a healthy positive operating leverage on the core. Just a reminder here that between BTIG and the Amazon deal, we're installing more than $1 billion of run rate revenue over a very short period of time, and there's a fair amount of onetime cost that we are absorbing within the 300-plus DOL as well. So just a reassurance that we are both committed to it and very confident in our plans there.

Your next question comes from the line of John Pancari with Evercore ISI.

You've put up some good numbers on the fee side, and you've acknowledged that the growth has steadily accelerated and we certainly saw upside this quarter in card and corporate payments. And I know in Corporate Payments, you acknowledged the rebound that you're seeing. Can you maybe just give us a little bit more color, given this, what is that growth rate that you believe is likely for the overall fee component, but for the year, but also maybe can you talk through what are you seeing as the greatest drivers of this accelerating growth in the fee trend that has materialized and that you expect to continue to play out? What are the biggest contributors?

Yes, sure. So I think, John, thanks. The biggest drivers, and we've seen a nice turn on the corporate payment side, you called that out. I think we've alluded to this at the beginning of the year, we mentioned that there has -- we see a lot of one but not yet installed business, and that is certainly the case here. We're experiencing that. And so we have a lot of what used to be headwinds in this business last -- this year at this time are now tailwinds. And so I think that along with the new business is helping. And I would say then on the card side, we're also saying the same thing. We've been seeing a lot of great account growth. The fee revenue has been steadily increasing. We're going to get the Amazon book loaded here in mid-August, we anticipate. And so we think there's just a lot of momentum on the fee side of the equation there.

John, I'll add. This is a very important part of our strategy. It's a defining feature of our banking franchise. We closed -- this quarter, we were at 44% fee revenue. That gives us enormous stability, both of earnings and depth in our relationship. And we are building this 4-legged stool of fees, which are very well diversified. So it's the capital markets that's become very significant now. The payments franchise, which was always great trust and investment franchise has grown very nicely for us and has lots of tailwinds right now with the capital markets and then the traditional consumer fees. So we expect that the fee complex overall will outpace our NII, at least in the long-term, very, very healthy growth across the board on all 3 categories. And by design and strategy, we're very focused on that part of the business.

So based on that, Gunjan, how would you characterize the year-over-year growth expectation on the fee side? Yes, I know you said it should outpace but any way you can help us with that.

Sure. Yes. I mean we expect full year low teens on the fee side of the equation. And that's going to include about 4 points -- a little over 4 points will be BTIG driven. And again, that's we assume $200 million per quarter in the back half of the year. and then inclusive, obviously, of the $100 million that they did in June. So that's going to be -- that's kind of how we think about it. And as Gunjan said, it's strengthened the capital markets, investment services and payments that are really going to drive it.

Yes. I know you gave that line detail before, but -- and then lastly, just around loan to be in, I wanted to see if you can give us a bit more detail on what you're seeing there as trends came in pretty sold for the quarter.

On loans, Sure. Yes. So on loan growth, a very strong quarter for us. The pipelines continue to look very good, particularly on the commercial and commercial real estate side. Commercial real estate saw some nice uptick. This quarter, we continue to see that improve. And it's in virtually all the categories that we talked about last quarter. It's -- there's a -- pretty much every category in the commercial side is green from a growth standpoint. Everything from large corporates down to small business and SBA loans and things of that variety. So I know we talked about mid-single-digit growth last time at this time, but we anticipate to be through that. And then, of course, we have the Amazon the $1.6 billion that we -- as I mentioned, that will come online in the April time frame -- August time frame, excuse me.

Your next question comes from the line of John McDonald with Truist Securities.

Could you give us some color, John, on what you saw in terms of deposit trends this quarter and how you're thinking about the back half of the year in terms of deposit growth, costs and mix?

Sure. So maybe just to start with the quarter. This is a pretty typical second quarter for us, I would say, over long periods of time. On the commercial side, we always see seasonal outflow, and that's a reflection of just the tax seasonality. And so we anticipated that we would be have lower balances on the commercial side. We did see nice growth on the consumer side, and that's by design. We've been very much focused on growing our consumer deposits. As I look ahead, clearly, we've already -- as we look at the trends here, starting in the third quarter, we've already made good progress on deposit growth. A lot of that just comes back over the course of late second quarter and into third for us. So I would expect, as loan growth continues to go, deposit growth will grow with some sort of parity there. And so -- and then I think from a deposit rate standpoint, I think you mentioned that as well, were up a couple of basis points this quarter. In terms of how we're looking at it going forward, that rate is going to be dependent on just how strong loan growth is. I think the stronger the loan growth is potential rates might go up on that deposit side, we just anticipate some of that in our guidance as well. So those are kind of the puts and takes right now as I think about deposits.

Okay. And then just following up on that, could you remind us of the broader drivers of the NIM expansion story and your thoughts on getting into that 3% range next year that you've talked about on the NIM?

Yes. Sure, absolutely. We continue to see a path on the 3% journey here at some point in 2027. Not much has changed really since I think the last time we talked here some time ago, it was good to see the NIM go up this quarter. We expect that to continue to progress. the positives, of course, are going to be on the asset mix side as well as just the continual fixed repricing. I think, John, what it's going to come down to in terms of the speed in which we go that way is going to be on the deposit side of the equation, as I just mentioned, some points there. but also the slope of the curve. Obviously, there's some talk of rate hikes and things like that. And the hikes in of themselves are not consequential. It's more what's the shape of the curve after that, and that's what we're going to be focused on as we move forward.

Your next question comes from the line of Ebrahim Poonawala with Bank of America.

I guess maybe one just big picture question on Slide 19. When you look at your returns for the second quarter and for the first half, like ROE, ROTCE, or in the midpoint of the guidance. Maybe just talk to us, I mean, obviously, all banks want to use a strong revenue backdrop to invest in the business. When you think about just -- we can pick on the return on assets at 1.26, in the higher end of the guidance, 1.35. Like how do you think about it? Do you think this should move towards that 1.35? Or are you happy operating at this midpoint?

Ebrahim, thank you. We're -- first of all, we're pleased with where we're at this part of the journey. It's good to see that we're well established in our medium-term targets that we had talked to you about back in 2024. Yes, of course, our hope and expectation is to continue to improve. I mean that's where we want to go as to the -- we started at the beginning of the year or late last year, actually at the lower end of the range, not just ROA, but some of these other metrics as well. And we want to -- our continual push is to continue to improve these metrics as we progress.

Ebrahim, we think about it in waves. We published these medium-term targets at Investor Day in 2024. So the first goal was to get into the ranges across the board. The metrics have been very thoughtfully selected to balance growth, productivity and returns, which is how we think about the metrics. The first think we made progress on this capital. You'll remember, we were very low on capital coming out of the Union Bank acquisition. We are feeling very good about that, very ready for a Category 2 transition that's upcoming. Expenses is the next thing that we were able to very quickly make a difference on the fee revenue growth. And right now, we are very focused on NII expansion which will help the ROA. So broadly speaking, move towards the right on the ranges is the way we are managing the bank.

Got it. And maybe just on the capital front. Maybe if we can revisit in terms of timing. I mean, you've talked about wanting to get to a 10% adjusted CET1 before we see a ramp-up in buybacks. Is that still the case? And beyond that, are there additional BTIG out there in terms of small tuck-in deals that would make sense?

I'll start with the capital question. I mean, yes, we've made tremendous progress over the last couple of years. We've grown capital over 30% just in those last 2 years, and we think we're on the last lap, certainly of capital build right now. Our first priority is going to be supporting loan growth. That's something that we clearly did this time along with BTIG, and so we're pleased to see our capital levels actually flat NIM making -- at the same time, making progress in our category, too. And Ebrahim, I would say that we would anticipate to increase the buybacks and glide into that 70% to 75% range, which we're very committed to as we approach that 10% -- approximately that 10% level. So this quarter, we had $200 million of repurchases that was flat versus the prior quarter, but we had a lot of loan growth in the BTIG acquisition. So if we continue to see those sorts of opportunities, we'll pause for share repurchase or keep it at these particular levels, but we intend to glide up into that level.

And Ebrahim, on your second question, are there other BTIG. We do [indiscernible] look at a lot of smaller bolt-on deals, it would not be our expectation that we would need to do a bolt-on capital markets. BTIG brought equity trading and advisory businesses to complement our [ FIC ] business so we have a complete offering now. It's about 7% of our total revenue. That puts us roughly in line with our regional peers but there's a lot of headroom relative to GCIB. So we think we have a nice platform to grow organically and get to the 10% revenue, which would really give us sort of the right portfolio mix. But the broader question on the bolt-on, our thought process always is to create a very accretive, financially attractive way of creating localized scale in 1 or 2 of our products. And we do look at those. And again, I think of them very much as organic growth because these are sort of tuck-in deals. I hope that answers your question.

Your next question comes from the line of Mike Mayo with Wells Fargo.

I think you -- I think the key phrase here is fee complex. You keep mentioning fees in many different ways. And what's the output of all your plans here? Like fees over 50% or up to 50%. And then as a component of that, how do you plan to get that capital markets number higher investing in legacy U.S. Bancorp or BTIG relates to cards, in terms of -- by the way, is Amazon in the guide for the year and then corporate payments. So what's really the plan for fee, the complex as a whole? And how does that overlay with your existing business relationships?

Thank you, Mike. I do call it the fee complex don't tie because the quality and the mix is an important part of our. We don't want to be a single business name. And the 4 categories are very diversified with each other, and they are underpinned by some faster-growing markets. We would aspire to be in the higher 40s as a total percentage. We were at 45% at one point. And if we can keep our efficiency ratio to the mid. So the 55%, 57% range and growth fees at that level, I think it makes for a very enduring franchise. And that's not just financially. We think about fees as the hooks that create enduring relationships that also bring high-quality deposits, both on the consumer side and the corporate side. So the intent here is not just the business portfolio, but the consumer relationship being very deep and multiproduct. So the strategies are all anchored around each of those 4 big pillars, having enough nourishment and enough investments to grow alongside the bank. And I'll let John answer the questions on the outlook for CPS.

Yes. I would just maybe add to that, Gunjan, we talk a lot about here, leveraging the balance sheet, the growth that we have either in the loan book, et cetera, to help with the fee categories, whether that is capital markets or investment services, that's why the fee complex is so important. We have a lot of different products that we can apply to clients that have balance sheet usage for us. And so we're really leveraging that component. And yes, the Amazon component is in the guide. We talked about $75 million to $85 million of revenue that is -- a majority of that is in net interest income. So there will be some split between NII and fees on that. And then, of course, just as a reminder, we anticipate a $160 million reserve build that will occur with the closing that we anticipate to be mid-August.

And then as far as how you intend to go through 7% to 10% capital markets as a percentage of revenues. Is that -- would you be hiring more people through DTI? Or is it through legacy U.S. Bancorp or other means? Or do you have to back your mind, maybe we'll find a small bolt-on?

Well, thank you for that. Yes, you did ask that. We don't -- we are not anticipating small bolt-on needed to get to the 10-ish percent. This is organic growth from just leveraging the relationship and the product capabilities on both sides. What we are seeing, Mike, even in the first month, and we're just getting started here is balance sheet that is already being deployed has room to earn some fee revenue just from the relationships we have. BTIG is being invited in to the relationships we already have. So the organic growth does not really anticipate a massive expansion of head count or a massive it is cross-selling and getting a fair share of the fee revenue from the book from a balance sheet that has been deployed against the commercial side. So that's the plan. And we have some confidence that gets us to about 10% of the total revenue.

Your next question comes from the line of Ken Usdin with Autonomous Research.

I was just wondering if I could just clean up a couple of the -- like these acquisition-related math thing. So first of all, I guess, on BTIG, you mentioned you've got the $60 million of restructuring, that's all in the second half. And will that be the end of it? So you see kind of like an improvement in the incremental margin post the end of the year as we go forward?

Yes, Ken, that's right. So $60 million is -- would be the -- just the merger-related items that we would anticipate this year. There will be a tail or so probably early '27. We'll update you as we progress. But yes, the contribution margin, we anticipate being the remainder of this year kind of 50% for this business, but we anticipate that to build out. I have 20% in my head or how we're thinking about it right now and with hopeful room for improvement, but that's how we're progressing.

And on BTIG, so they just did a 300 run rate in June, as you mentioned, almost 100, but you're only building in 200 into the forward guide from here? Is there some -- was there something extraordinary? Obviously, second quarter wasn't ordinary for capital markets. I was just wondering, maybe you can just help us understand like what's the right run rate for that capital markets line once we kind of get to the right place and fully run rate type of thing?

Yes. Well, a couple of things yet. Just to be clear, 200 per quarter is what we anticipate. I think there's some seasonality in the third and fourth -- they had a record month in June, a lot of transactions. Could it go higher than 200, it could. But capital markets fees can swing and things of that nature. So we'll see how that goes. Going back, I would just point back to Gunjan's comments you just made on -- or 7% of revenue right now anticipating to get to 10%. I think that's the right trajectory. We expect strong growth. I mean this -- organically, the capital markets grew 30%, both first and second quarter. I don't know -- I don't anticipate being that strong in the back half of the year, but it's still going to be strong. And based on everything we see and based on the new business and all the different pieces that we've been building on our legacy products, not to mention the BTIG synergies that we anticipate. So that's what gives us all that positivity and momentum that we think for this business.

Okay. And then the third one, thanks for mentioning the 75, 85 on Amazon. Just want to make clear again, that's an annualized number? And would you expect that to be fully run rated in the fourth quarter?

Yes, that's a per quarter number, and that would be then -- so we would anticipate getting approximately half of that for the third quarter, and then that would be fully in for the fourth quarter.

Okay. So that's a quarterly enough. So more like 300-ish on an annual perspective.