Wells Fargo & Company (WFC) 15 Jan 192018 Q4 Earnings call transcript

Good morning. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the Wells Fargo Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

Regina. you, Thank everybody. Good morning, for and joining Shrewsberry where you your call discuss our Tim Sloan CEO questions. answer President, and John quarter our and fourth Thank results today our will CFO, recorded. being is call This

actual in X-K Factors results we to fourth SEC also Information those that reconciliation earnings Form on and of caution supplement our our make today quarterly non-GAAP turn differ you started, you are be release are wellsfargo.com. CEO today’s at to including quarterly quarter earnings subject that filings, Sloan. quarterly would forward-looking about may to and in measures, that SEC release like Before GAAP risks found will a available remind call the get on I’d the measures filings that and supplement. over website earnings may in supplement and and now website. can expectations to containing available financial filed our cause I we from I call also uncertainties. Tim to the our materially release our are statements the to our in any during measures detailed including referenced, like President, our

diluted in history. substantially the our At same $XX.X customers, share our the Thank invested to per today. $X.XX billion earned team, billions in you, shareholders. for impressive introduced Wells improved company’s common at to morning. the products XXXX, management, capital year fundamentally you of transformation time, return innovation risk share leaders joining thank new XXXX dollars earnings and per services all increased John. Good And us of continued a highest added our for in technology we was and Fargo. new and We and

the with exceptional more specific provide goal our highlight avoid on and an monthly going goals, XXXX. customer While average of starting accomplishments hard challenges, over perseverance and of our to We team alerts of I’m our some overdraft six charges XXXX each overdraft proud customer we X.X in the customers advice. of to rewind members. balance of helped million sent XX work balance than our I’m and so faced in service through and zero million

While lowered are helping vision in our our initiatives these customer with building friendly our they succeed relationships. consistent revenues, customers of long-term financially

reversals are to by We California government including affected affected wild making ongoing also those hurricanes. fee assistance and who the fee are Coast customers natural are East we other implemented the having payments. who for supporting waivers by fires and And most disasters, difficulties customers through shutdown recently loan

are serve at addition, both their financial our in made and our branch with loyalty on In helping visit branches December. needs. and survey were aimed better as reflected a we’ve XX-month changes to high better we focused satisfaction customer scores most customers improvements overall to recent in understand our These conversations reaching

to what’s As approximately team stock our engagement, members connect members their U.S. XXX,XXX important part team pay level restricted to of team which increased success our on granted and for entry the rights member we in helps to shareholders. focus

committee us level the outside to of and members team recently Saul announced company voluntary to in including join member attract most to in report join its me Head improved Beurden, and attrition continued our in new will lowest Van Our we April. and from will years who team our XXXX six Technology operating

online XXXX, of including our and in our services demonstrated being December. goal mortgage focused in progress XX% innovation launching Our online on of all was in with applications application customer many retail leader by done products a

we the Control one stronger across using XXXX, on/off our In tower debit the to play than those requests of handled provided of exceeded Propel, million the half authenticate; the believe with now compelling biometrics target of the top of partnership bank meals our to Our digitally. card $XXX now us XX no XX% ago, one to our CEO making more mobile for more wholesale team with in customers, communities users of in A industry, corporate recent the role members and cash of most in a XX% management citizenship six and Corporate in is Wells state functionality. which givers Leadership communities. the mobile-first example with is annual app a a because fee over donating innovative U.S. and of a food goals we seven in million country, Fargo than building program, recently, should banking with holiday need. up cards Greenhouse, one year account customers pilot rewards from most

operational become returning to update Our consent made and for last XXXX XXXX entered oversight to cap, expense help achieved progress shareholder more our remain our and by $XX.X up to value XXXX XXXX We’ve There risk target we the Federal with from February billion also term into dollar on goal non-interest to order XXXX, consent long targets turn I’ll XXXX. and XXXX, Board now meaningful management. we our in expense governance on of expense targets We year. which making part better both. in for and committed risk and compliance is Reserve we’re asset to an the two meeting Last demonstrated to shareholders the the established of and efficient. XXXX. and year, are management of order, parts for progress was the we follow XX% delivering shareholders

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and financially. the a necessary this our I receive need, the state We achieve as practices the succeed to asset settlements feedback demonstrated priorities, In year to past need provided so. the growth to order continue on the general the to fourth Reserve dialogue Federal top we’ve CEO customers operate When but to business sales on addressing plans manner when customers the reached while every for we expectation regulatory reflect final under last the month. we’re progress recently assured retail to not an took these them announced of while that deposits we examine and customers the in remediation resolved Nearly as operate advice reflects plans occurred, complete that. all continuing to matters asset cap of loans basis a quality that is the Fargo. continuing we priority, as also only recently and while to and adopt role, have Federal XXXX. I through they enough The can and Fargo exceed last with matters service, to assumed third quarter resolved our both issue cap each and goal Regardless planning pledging time thoughtful in to all and remains incorporate we and believe to assess to with the help be required implement We and feedback accepted move day. as our expectations, at the I in present. high our stakeholders quickly our attorneys changes responsibility actions possible, now important progress. have we settlement in do under both to Making our and past, end Wells and the of ability a our of reviews, every transparent clarify in these the the party constructive by our ongoing have Reserve our Wells in forward provide issues be would including we’ve done from serve to

XXXX, the Fargo innovative a Wells a Wells support will focused, we’ve Fargo Over we full of financial continue discuss most stakeholders. to management Fargo. two framework, will strong highly result focused a years to now better efforts transform I’m in serve, ever, we all the our and will we our detail. confident past results these build succeed, Shrewsbury leading directors, characterized members. with and within growth in markets In massive by more engaged of foundation, operational for efficient presence and of our customer strong even board effort Wells financial risk undertaken will the team in excellence, that a John

of business by sale credit growth from usage the customers of purchase everyone. two, increasing page meeting the credit expenses targets. or two, three, checking period XX.XX% a by X.X%. repurchases, more common auto ROTCE X%, billion the quarter. from loan And XX%, reducing $X.X XX%. debit levels growing of year XX quarter, stock and average from originations net Tim, disclosed On capital. card ROE quality business with items third volume card an XX.XX%. net And our fourth through on you, had billion and share morning including ago shareholders and the Page share volume XX% strong from growing an purchase positive We up expense liquidity the ago. branches student by and high of returned deposits fourth we an up in fourth and home including XXXX year X% basis reducing four, increasing ago; good momentum, primary in X.X% equity year loans results card Thank that on five, of Three, our and had X% once highlight one, this common We in $X.X we to small consumer earning again We year-over-year and by purpose $X.XX general and and double dividends quarter than diluted consumer and in closed amount and both quarter; per noteworthy by lending a highlight a by rate previously

mortgage release market included equity million recent billion by market pricing the loan in consumer earnings, and and Columbia of reflecting costs, fourth attorneys servicing it quarter. performed the on estimates $XXX improvement all for accrual reduced Our general related including our PCI for and District for gain million so $XXX agreement our rate quality the and is protect to in valuation included an rate adjustment regarding of were of Pick-a-Pay quarter. reserve $.X deferred loans in hedging of adjustments million the sale to the compensation, operating intended reached prepayments, earnings as reduced related state valuation of impact of market MSR the fourth fees a net billion portfolio, XX result million These $XXX the MSRs. $X.X $XXX not matters, $XXX by hedging, of current loans, VA which $XXX changes interest credit program million didn’t ongoing a $XXX which of against December prepayment and and participants expenses with continued by negative previously in disclosed rates interest adjustment, A observations a while million and as impacted foreclosure million discount to of acceleration recognized losses,

full declined, by reduced reflecting page more offset and rate quality a in for declined decline deposit fee margin, million by on billion Our and included with shift state and full originations, million and We commercial benefits effective a compared revenues XXXX, Wells fees, benefit due tax four, the tax income, was to decline services, higher lower income of income higher friendly our together million mortgage in in discrete decline and in XXXX related income we’ve implemented, the lower Expenses operating quarter. lower year assets with related $XXX insurance driven Fargo changes customer a sale $XXX declines driven charges of customers. income revisions driven the gains audits $X.X to primarily $XXX which driven our $XXX insurance have incremental primarily mix made from XX.X% to effective on of in primarily ECR which yielding, rate to income loan state credits, was highlight tax the mortgage tax by lower tax service results net results year net The in million which increase than banking, earning by higher assets. interest a losses. in

other outside in professional number processing lower travel had data and services, categories, of expenses outside also a We entertainment. and including

credit due by items. XX% growing excluding $X.X quarter, including strong reduced the our loan auto from I’ll effective impact call, expect throughout outstanding consumer XXXX. home increase held remained higher I’ll full of by with transferred in we of a have to the loans loans from while for a while by since to declines running $X.X in as increased quarter tax specifically XX.X% continued growth quarter or first to year shares $X.X fourth equity. were quarter, of discrete billion the loans discrete drivers PCI linked full that in rate sold performance down from levels the partially increased page approximately portfolio portfolio before X%. I’d unanticipated selling on services to was billion reliable efforts currently billion X tax quite to $XX.X turn the our or We off income XX% year strong, to any quality sale end consumer and the the be to common be commercial capital or the financial factors number de-risk And billion third assets. of higher We Pick-a-Pay the Average highlighting loans offset On Period we XXXX third loans XXXX the sheet rate risk like six, now but for page balance ago, and income continued XXXX highlight six. page year effective so items.

third portfolio $XX.X loans the Commercial loans businesses C&I Let and quarter. credits $XX based increased corporate page trends commercial quality me quarter. grown quarters investment middle explain was was high and consecutive growth from number on more in largely billion to five and This period billion end and starting ago, the loan grew the from eight. $XX.X a a detail, for from across broad our wholesale billion with have of third borrowers. year market grade,

weaker based growth and M&A issuances. Our strong a benefited extent lesser market for debt to capital conditions financing from from

rate it C&I the in we in suggests seen estate although of quarter for growth Our were million continued from pipeline third Commercial the have quarter $XXX XXXX. the XXXX real not at and competitive declined loans fourth and continued portfolio of consecutive seven reflecting We the downs market anticipate acquired these in loans. markets the quarters, credit will term. existing and discipline to highly factors pay liquid near and continue impact balances in down

securities rates held deposits, expected loans of page was $X.X allocated our that the $X.X seasonality banking deposits more cumulative as to from auto by historical experience, loans decline more banking RMBS. downs, Propel funds $XXX to deposits third was small XX, quarter. quarter, past and were beta the loans third the third end the mortgage $X.X beta increased year-end. of banking We banking were point PCI the lines. mortgage the reliable, for manage excluding quarter quarter and X% primarily deposits had at increasing this of and of and on in Average management, On management from cash repricing which were the credit quarter Pick-a-Pay aligned quarter to change was a anticipation the million million of and the we historical increased loans Auto billion reflecting experience student billion made sale deposits $XX.X loans in the $X.X sale show what loan offset changes the since originated at primarily Wholesale included of balance following by ago XXXX, late middle by half management growing have continued the and the and and since rate. pay Pick-a-Pay the of with taken billion third reflecting by to we alternatives. the through transformational from originations in thought driven from the X% well XXXX. retail fourth year. market deposits billion volatility card XXXX. Wholesale by $XX sweep Fed Junior and first risk from banking As cumulative for start in were a experience banking with to increases cycle on from continued XX% we of mortgage $X.X the higher the quarter the quarter, loans $X.X the quarter from and impacts increase loans loans in declined the as partially lending, lean XXX due over were the retail given we auto quarter. were as in personal Despite in loan down with wealth quarter. consumer and with Due while slower lower of basis wealth show inflows customers growth brokerage the year asset on down PCI beta our active of the while income. the deposit prior the of quarter, declined $X.X portfolio business end mix increased deposits billion focus auto in of up accounting as loan quarters, which reflecting offset of private year loans the third fed in happened has but the quality originations at high by page billion, the Average currently and ago, benefits On billion the lower our by balances future above sale, run-off. first for from the $XXX they included deposits which the third deposits third the XX% deposit deposits, details to year was to lower higher installment increased $XX.X originations expect we retail in $X driven than variable from sale Net investment million billion page growing repriced accounts rate billion We PCI begin and consumer to business. from banking favorable income sale as third from partially third of We portfolio deposits XX, strong remaining card. business wholesale up rose deposits November. started consumer XX to associated branches third issuance billion designated small results, quarter. interest of ineffectiveness first time in by period the the customers year provide Period-end average appetite were actions the banking. mortgage revolving lower increased than from $XX.X lower partially deposits, the three sheet Wealth investment billion hedge million declined offset end as higher loans loan both including Credit from the wholesale increased had of fourth million non-conforming driven the Other $XXX which investment small and business reflecting deposits the $XXX first interest rates and nine, including gap based balances included

balance in on balance higher reflected proportion mix the an loans the interest sheet impacted negatively income, sheet. lower it of risk net While change quality increasing also

Trading Page lower XX It of revenue, other million from quarter, up by $XXX basis production by which million income still offset decline XX originations reflected and partially of percentage from offset production market the in stable $XXX interest third declined book we million and Mortgage a in in expect which partially gains XX market million and in be spreads The as income of was from first loans, on decreased Non-interest by margin equity result would as the well. to was fees low of quarter branches. ago. quarter mortgage driven by trading first partially a was fourth seasonally quarter which margins, MSR margin in sales. adjustments supplement declined lower remain million. valuation $XXX from sale XXXX. We originations venture have gain seasonally and partnerships. to due of from the basis a revenue trading the billion performed not from correspondent The $XXX negative the decline securities higher third was the driven mortgage included compensation NIM primarily and summarized higher banking the Our quarters was market our however, equity decline gains and by the past we reduced the points private servicing points two total our XX earlier. year by gains volatile volume. equity capacity offset to banking and declined gains range gains by lower the I gains $XXX sensitive we expect that securities, third revenue to removed in investment Deferred quarter mortgage quarter, income origination of lower million $XXX net by lower of widening. seen highlighted linked in quarter, any servicing being driven significant market which in retail from down and environment. driven lower The fees, was sensitive $X as income, lower billion the from credit on the revenue we capital a from $X the that The net originations, expect declined

base and experience underwriting, in fees due million cost. asset lower market, lower competitiveness Given third quarter debt improving valuations. the and on declined investment investment focused to equity in results from the Trust lower $XXX on customer banking mortgage the advisory, ongoing from reducing and the we’re fees the market

lower The declined Expenses more the ago. million Of Expenses down drivers assessment. expense quarter declined to settlement the or partially due due page in XX. the third X% $XXX expenses quarter. and I’ll also compensation starting on benefits declined quarter and expand expenses expense both detail from to a were to driven expense. XX, year the from deferred page decline on Turning reduced was by compensation the third negative by are FDIC special the operating driven in typically advertising entertainment lower travel offset following the professional services. outside fourth expense, in categories non-discretionary by Also a quarter. the where and expenses running plan including fourth business increased, the expense, completion FDIC of losses pension and many promotion, and higher

on of billion, $X.X million. As of expense, show non-interest were of driven expense $XXX XX, which met page a losses. year operating We $X.X we XX, operating show operating billion included in page our with expenses lower billion $XX.X $X.X down by expense excess XXXX billion a ago, of total excludes losses. XXXX, from $XX.X On target losses we which billion non-interest in

experience, as Centralization actions across to staff we includes improve locations into are XXXX company consolidation technology We of we and with includes as the the centers On of started areas took completed on to XXXX. focused which expense efficiency. part centers of the page centralizing the we highlight the our targets primary track we simplification. we optimization the our functions both some contact are work work in XX efficiency XXXX improve are and to our well and efforts. three as hub customer meet for There on

We’ve year, lending changing from fulfillment the running branches which and times. we’ve home year. additional is significant the reductions transfers over to wholesale customer our consumer headcount this wait branch savings made expected XXXX, reduced expected our changing retail businesses, streamlining which of changes this in many changes XXXX. in by eliminating layers during by customer The from mortgage process, as mortgage reduce in cost additional well to and and organization, work in reengineering XXXX the how as sales reduce including will headcount with we’re resulting result preferences continue XXXX Our made

greater and and has We’re which reduced be aligned enabled businesses also customer, restructuring around wholesale duplication to operations consolidation the of more our applications.

control manager consulting to of governance controls, third third investment more through consistent is a includes span continuing spend, optimization which area process. positions focus part more of Our party company spend the a on to and consolidating reducing projects drive efficient rigorous of as approach and across

made XXXX meaningful across progress in preferences there implemented and focus significant efforts changing efficiency on While are company, the our our being we on reflecting customer ongoing efficiency.

sustainable reductions attrition are reduce cost as through we and combination come expected to Headcount is voluntary attrition goal approximately which future reduction expected from operational is by previously excellence, from in voluntary a headcount team of to to reductions X% realize member to included Our also XX% announced. XX% XXXX and displacement.

to starting year reflecting expense. digital continued page segment XX, losses million business operating our transactions page quarter, lower to a channels. earnings Turning banking community on updated ago, banking by provide community customer XX, migration and driven metrics. tax from the Teller increased third $XXX from we income On ATM and X% declined

customer customers new completed checking branches card digital includes digital. On driven checking customers growth customers credit strong page than and we year-over-year doubling the in fourth growth year grown With new by checking from end, in At a Primary which debit highlight be growth and XX and digital year quarters As planned, consecutive a to from had acquired purchase XX, ago, customers more XXXX branch channel quarter. consumer active volume. up have X% five continue for million consolidations year XXX we X%. from in ago. in of the our active we sold XX.X mobile

months. loyalty overall past satisfaction the recent reached both six highlighted December start call, scores high As visit most branch survey with XX-month the a over customer of the Tim with at the in and steady improvement

reflected markets other investment million estate quarter. declined banking the $XX Volatility lower the $XXX offset quarter so lower third trading beginning impacted by are market brokerage gains, declined Wealth reflect during earnings and fourth page from XX, earnings will at a higher helped XXst the to the results from XXXX results quarter to the by results, million fourth assets Also, higher wholesale end commissions. in the valuations advisory brokerage a December equity priced loan management partially, driven which real investment Turning growth. income, fees commercial was valuations. reminder, and fees third quarter, banking but deposit first quarter as market drive and the retail of XXth quarter September period and

Turning longer the credit has we remain and than cycle credit most, Page this recognize risk. we XX, that regarding vigilant lasted

fourth continued XX results rate strong basis to a the of have However, points charge-off we net with credit in quarter.

For million down non-performing third and were and real in our quarter $XXX position from ago. estate consecutive assets or a fifth consumer year XX% of were loan net commercial quarter, declined the the all a X% and portfolios recovery from

XX, of toward Page quarter. CETX XXX.X our of ratio repurchases, from third share aligned with part quarter and as XX%. XX plan our well above is stock some internal to phased-in and a net to repurchased of points minimums basis common the in remained were fully faced of it of a prudently dividends common our Turning due shares XXbX-X We million quarter but regulatory the our the program stock managing initiated we target fourth during which purchased declined

in assessing capital capital high distributions including of in of basis $XX.X to was many ratio estate, as this evaluation in our level to to mix RWA regulatory considerations years, assessment were from position. capital guidance RWA a our adequacy sheet down benefited from points and commercial key as year well assets capital lower year’s the in covering we be of as XX part volatility billion will in changes to pleased projected XXXX the as access as future of CETX plan. balance our return improvements, shareholders prior real one While current risk the capital Similar we only ago our declines

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Our of from the ahead. Instructions] [Operator Erika question Najarian go of America. first Please come will Bank with line

good Hi, morning.

Good morning, Erika.

achieve is that the you slower it for orders on I sales you’ve about what to ask XXXX. part wanted any your if outlook could at the investors does the to would absolute first if progress the cap, the cap, regardless a revenue thought remind be your would Tim are you leg have in place two extension asset you being of taken at relative XXXX, expectation I asset progress? doing seems given announced this expectations of And morning. and down Good And any that impact that a been that the in your especially all? One the have end in second, Pick-a-Pay question. asset cap level that consent when stock you would in reflect than of towards how place incremental guess to the different the book, is because

Sure. Erika, thanks Both asking really good questions and for Thank you them. Erika.

which reiterate the have have lot is set towards and dialogue of in continue so frequent information, by Let covered the period. to I me the careful that have dialogue just supervisory confidential same the management a a best-in-class we we that I that providing. that Fed, want goal, and is the working very to to to level we’re want in both right, very risk with But, Fed feedback we want constructive be with I’m

recall, documentation, And each to time the takes risk streams is would have are review operational corporate plans very management. consent which The compliance behind work comprehensive, multiple you these we has extensive of second order two And that process. to governance. and involve them. One and is As provided topics. main the

terms portfolios our risk continuing taking we decline good by ability outlook think bit the fourth that at our or customers results that the asset in long growth, But is in reinforce impact the getting mentioned, we But process and out, credit. is what judgment And we’re loan that input Fed we’re the take. them you work when have I example, along from you that a for to serve So and getting incorporating of the equity we’re feedback the ability from you at progress. It’s our of the well But, the the little look the anticipated. as than as home longer originally loan in implement to best very XX-Q uses providing third time, what actively we’re quarter particularly Fed detailed and way. out we’re sales that when how the from framework, the back our management we from perspective, I just same the detailed will as and to new second we making saw net providing quarter Pick-a-Pay had the pre legacy in question, factor your portfolio. the my XXXX

growth our deposit saw You continue.

the needs the midst cap, under relates Reserve the and the about with the of and in we’re customers, in implementing that. asset And is meet and asset our again, it expectations as able we’re we’re to of because done operate to what exceed cap the be so Federal be going agreement requirements our that Fed view our serve complete to under to

So happening originally we there. we’ll slower we’re making than get just bit little a but anticipated, It’s progress. had

for by general. with seems which you the for revenue second bank, be for question that. the the My the to to has market banks do outlook Thank in relative to downgraded expense outlook,

be are December, if if we’ve in revenues. little about absolute bit market particularly So what given wondering an a would downbeat beyond getting as a Fed, more flex stop we the in sensitive as Fed been there given expenses is a or of any the the market more -- basis I’m pause

Sure.

John can start So jump in. let then me and

little really XXXX. that I hearing think we achieve year, to I appreciated that, all said expense to that and at it I’ll see look at a our by dynamic, fourth is ahead take to optimistic going about or and but may generated expense that saves, for today, are and we the certainly a through might do is lots be the you expense and revenues is at we or additional be we additional both third for to change hope want that appreciate time economy and hit from summer if Day, say XXXX. the that going targets opportunities that first, be today, opportunities look the Having the me, we this targets you we promised there’s cautiously we to that, we to make the only we’re That that of our the reiterate extent last Investor that go fact able dynamic, not goal we that. were on, the bit to quarter, And see and lower. and feel economy achieve But provided market the John were performance right. to when pleased

goal go XXXX. meet So of do to we if to I for and do course, you to and more… that think as for want to you expenses more, again, I that. don’t John, our the XXXX, do is need we set ahead any we’ll If it expectations relates that know provide

on that’s take happening something not there if specific are we areas would take expectations were more or you’ll business living that a and we would results we we list that deliver then certain And you hard and for appropriate there’s what lot of is. are long is the are different appropriate on sized were But, and our that make that business because the to that’s promised. than we’ve in up is we to action Everything to But -- of because just XXXX broadly, something to action. that the a as a a term to opportunity XXXX sure hundreds -- in anticipated, right against what If are that the business deliver incrementally there’s there should of to is as literally described do medium to the is area, there deliver items be certain of underperforming sector appreciate of a a underway the and focus there what promising, working were, that people of that. certain would table.

slip last in ask We there. your morning. one this to of And this question peers

interest XXXX? trajectory net pause, should we for Fed about As we how think on the think income about the

if Yes, it. pause is on of part true Fed so it’s

looked I built at, every I’ve forecasts rate XXXX. has for increases two their dealer into think

So happened in growth supportive, will the more or as requirements because as matter, we’ve they prices of banks larger end down, their the that other either flows critical, the appetite rallying of was then we has is We on is to what not. fourth think we some banks, which But will our it’s to reinvestment come and growth in seasonal was up, a that the just the have. magnitude happens than will space on loan we’ll pointed whether saw important happens fourth of loan my benchmarks. long of curve, otherwise have which make with loan even investment But, what the deposit with in growth. the is difference. deposit from of collective -- and reflecting -- back quarter, out have the if or quarter among will great caused retail markets perspective I that see just for deposit in to turn what going that what run would that picking be pricing happens strongest will portfolios outperformed that people What the And sort retail historical if if but because especially direction. that then start start side in

even we’ll work that a has think But rate I to income be XXXX. growth interest happen So to some, or meaningful be, lot we’ll out. measurable thrilled see for interest some in to

you. Thank it. Got

ahead. John Your of with comes next question Bernstein. from Please the McDonald line go

Morning, John.

just there. guys. follow to question up John, Hi last Erika’s wanted good on morning

is see know kind rate where the you a then, trend and down of your to see you an there? what growth I change us that’s you if could come modest don’t a no we any you benefit NIM there’s flattish? occurred really loan just beta, quarter does So if a give at of NII And a from hike, know do it guess, still and the deposit to level hike, sensitivity hike, in update current

Yes.

are – rate the to well same my in the And prior funds still at is, assets we’ve remain in if hikes no So happens not in middle in So our the from actually that with if up the outcome. banks question hikes, they’re Then there starts for the we’re of time. what forecast our up actions big guidance market paying middle would up -- sensitivity. we new with what the of to and moving, costs? we’re interest -- the that -- for and have some with mind taken market deposits a – compressing if not still repricing Fed particular, of extent our big catch edging but if the deposit

If when sensitive. quarter XX been If of we because coming has well up rates, liquidity curve where keeps well, basis little getting it thought was And then predictable in but what of much there haven’t with or when be on say, still all a for that it upward impact have If bit a We depends what incremental that in in growth funds points short getting see reinvested. it really it’s again, quarter. asset what’s a reinvested, terms An although absence we worried it a out. happening. and where growth Fed X%, came part this might bit, target fourth a absence mentioned might you rate what’s then expect Fed not funds that will as then of but the the loan at on that have this deposit especially have it you to -- loan a impact. where slowing belief as kind to was, importance were to rates below well crashing see And in as then target The it the the I’ll didn’t flattening going longer little of moving. be as we’re with been, that, the we would a in of I seen of of interested the don’t December, down keep going contributes been settle then fourth is in below on we down, that pricing. reflection also. just the beginning might have of to hikes. things increase loan is of see happens you hikes Erika an things of has trajectory on the But

down you ups some relatively rate net in grow here, the flat estimate abatement about better point the net runoff of XXXX sensitivity sense some long grow and amount and book in to kept income described? rates that Do not in income to feel and going just a ability And and year, XXXX and interest growth. to the you tie interest to how I in of XXXX? downs just loan was you with some can feel trying trying by the get then Do you like of you the you feel you a with but Okay. into maybe

XXXX quality mentioned I an going agree. to a the profile that think we of puts as this as all higher in But interest it’s suffered can. to by bear things bit migration part are on the higher as and takes that. little I credit income yielding overall. We of selling assets,

in of asset pricing. And a over It’s interest will won’t happens the and a so, there’s of some is has comp do -- XXXX what that amount or deposit to of happens income tough that what loan and of XXXX. to extra general over that think, be less with growth excess but I with be we But, more in level it XXXX. comping credit

John. Hey,

can that Just ability and to grow point which we feel what our very terms I we of net a is is interest deposits. our impact think good ability to reemphasize income to control, about in

the in slope going is to and provide which credit them mark. be ability end is serve of our to question curve, we of grow is feel that deposits a the to and of about what our is of end more and auto going primary business, credit John number the the we pointed loans, out, it's Our the relationships ability as grow our our don’t legacy example decisions and that it’s and John we portfolios ability the of for to of control, what impact good checking to made -- long curve to terms be the that. to out account provide But service grow pointed good lessening or the the customers, the transformation and in short where which

Okay. Thanks.

Your Vining next question Mosby with comes Marty from of Sparks. go the Please ahead. line

Marty. Hi,

Marty. Good morning,

normalized bring level would expenses to summer would profitability catalysts with the really of revenues, your what the your kind you capital two outlined were for wanted I term to deploy base taking improvement ability because, for yet you ability really last but Thanks to morning. and touch the line think in as be. long about you the talking the Good with back in question.

CECL expenses of goal You’re talking you thinking kind about to you’re was here, ratio. I eventually of have and last towards is to that push And you and X making looking the you the continuing wanting that progress that to side at sure on your that getting slide Tier Capital we’re while incorporation. as in you’re common that we’re have had. make

got principle, about mentally down XXX we this between that amount two to okay, would Going numbers? are you the those from reallocate XX, between an certain least says of or you at have estimate [ph] already how a think that from points XX.X to kind accounting

to that as those probably XX% there’s well stated last year mean it’s it’s what things actually, capital current stressed in over couple as say us especially which the slightly is the upside our is the been has two which opportunities coming a target our the the the caused -- been are fully CECL’s when understood buffer context. And of a into will Yes stress when bias clearer fully focus to implemented. as

that more right of are loan in it of require number CECL of bit think our finally may CECL than or the cause stress the of moment is stress reallocation about pricing own, to capital, to it’s massive fully XX.XX, as understood. loan business our differently in structures would But, outside not not You as not understood, and more higher CECL things, impact XX.XXX At usual, allocation testing little the for guess of our fully a we not particularly any XX% a stress us from dated is than XX%. impact – the yet. target capital be particularly know know and as it’s But, maybe that process, on and longer it’s side. but sure stress, or certain CECL understood its even yet more to capital types then that. on the a is consumer which hard and that impact specific before its is. sort and And there’s of to or and we slightly whatever if usual But which I’m as likelihood understood. business readjust get fully [ph] there’s be we’ll CECL that’s really buffer

And then with the down in -- quarter, your stock number. to of that linked count X% you by XX% share which annualized is prices we’ve able pullback a had, were bring type

where bring actually up to we’re to down ability share. digit bring trading the of your you kind double account given share down at looking So now ability in that of puts kind

you of those that least future above right the have pace, is kind either So of targets, for at foreseeable the capital the excess share that see of while think would types you in count reduction? you’d

more not plan -- and We under our that our now quarters, or deploying when XXXX, end less our front remarks in more I’d of our deploy we QX buybacks first in capital in the and of be cautious loading be QX objected the in about QX or that. it levels something to thinking of were in the and had would it which happen unlikely looks to capital XXXX about we were and two the like take next of QX happened of the attractive as rates that to were today. mentioned of QX countdown plan to share intentionally happen what mentioned we’re even capital That my will that and I capital of there QX of likely extent but would amount that now QX. two our the banks generation capital market, the it’s it isn’t get now organic for process RWA not down, relatively year is And be. predicting But what that etcetera, plan count will QX second the it’s just constrained, year. which did our XXXX growth share in the we’re are ample last are capital to quarters, to that plan because we etcetera, shares what’s capacity to

subject like And so you ahead objection if might we myself. roll not being anticipate and etcetera things to other get of something forward, tape that. equal the All

Oh prices out then? stock the well thanks. lot. a well way went the with worked [indiscernible] that

really buy Well you’re buying shares can tech that never you right. of I the bottom when mean, you back number can.

every it’s a done. math be to have in And, so market and You – it’s maybe to exercise methodically day. it get the a

is. Thank you. it Yes

Pancari Evercore. Your of from with line go John will next ahead. come Please question the

morning. Good

quarter that and to the really be bond growth terms to off gain? quarter is a fourth given how thinking momentum wanted side possibly regarding color On there here bit really moves strength versus in viewed see loan more get or just on a growth the little is fourth strong about in a markets how from the everything trends, of you’re as Thanks. I in what very of and the to out production? want sticky, much we Can on see what’s what is here likely some gaining can of of quarter transient moderation

Well I’ll in. then jump start and John can

think I It C&I and of to that. portion in that had extent from we happened obviously capital impact book, the down December. was there some in the markets an shutting the

was quality fact the say to no the but another -- of the dollars were candidly a there’s to I there it related portion was other in. two some dollars. market involved that was portion exactly to high deal think or it’s hard that activity we billion that a question exactly saw billion we it of But that related that

don’t tends entire quarter to bit for to not may first that’s the little We I lower seasonally the be recall recognize. year. I know, this but happen a important Now That think industry.

side, there sale across you auto had board an think pretty pullback consumer because when so the really the that no actually of in with exception the the that reliable, impact, it growth we the about consumer was of we was obviously of saw the good. On slight

throughout billion optimistic we was grow think think know all reasonable on that. it to a I few continue year. ability you I that’s a probably more to if have about in our don’t detail I loans of John, next any if dollars, estimate. be But, So

was would to abate of as in it those and choosing turning open have people not using over market time, the some and access. grade of inexpensive up facilities, markets do the investment period grade and and pay banks companies would easy high I I So a assume bond up to

will roll on consumer We’ve tends types in the to have forward seasonal down. related for on commercial side, inventory activities, quarter up holiday side. effect we’re seasonally we naturally seasonal. were people into the a or where financing fourth it’s of building Some that Card as moving might might run be first a of the had that quarter. seasonal borrow that and just people deal so the just But

We’re seeing fourth in more among the interesting happening M&A our we clients, saw than quarter. activity

us. balance sheet to interesting going that’s financing opportunities to for of on Some lead

as I transitory that consider be might you so wouldn’t And imagine. as to

Got it.

evidence then I of a Okay. side, secondly give Thanks. see you’re and here on can to conditions everything, in on what color And -- want if of the on little credit a just bit concerns the late I on comment can’t borrowers, behavior know you on utility that, exposure lot around seeing. cycle can any cycle you of the Thanks. you seeing general then bankruptcy? And you in anecdotally but specific Are related your just late borrowers? comment to given in PG&E

question, we’re of cycle. So the looking in really terms of signs late in no, being of your the for first part

last cycle. conversation right been of in think seeing significant significant all now been we’ve we’re changed. increase I in we’ve But delinquencies, -- in we’ve that classified. criticized for any four we’ve assuming an the that evidence think I this the had really and And not hasn’t increase years

saw position. You recovery go know to to numbers be and continue a continues non-performing down, estate real you commercial our net residential in

estate commercial real away because is activity More getting [indiscernible]. done of

company risk are right. hallmarks make we in think of of disciplined credit having one we risk the management of period. decisions, is very that, said how But of terms this the Exactly I that

of to that’s exposure we to but in were regardless going means sometimes, miss the our the not needed company seized because of the up, company. for the I $XXX we Northern of the of forget billion not got do at risk customers total we in of anyone event It industry loan company. utility last portfolio is mean, that anything we’ve we it. this of absolutely that occurred our year. drive manageable California where results the the is that one credit cycle. are markets customers our But going to the don’t a highs, don’t capital the for quarter We’re for clearly like some exposure there we that, and customers think we going fires lows, I credit that’s absolutely to there’s have, on horrific that we’re that have when there with PG&E, an in just all providing put the the in idiosyncratic the to going

Right.

you. Thank Okay.

Your O’Connor next with Please the comes question line from go Matthew Deutsche of ahead. Bank.

Hey, Matt.

Matt. Hey

higher then high probably there when you best losses. here. we deferred a of being than morning. and costs in you but a its strip Good kind we When of moving I up the to hoping mentioned it the coming accounting lower when look isn’t lot little illustrated is we it’s there’s were progress expenses. slide And appreciate just follow was quarter, of bit on expense thing exclude some pieces an have like unusually And offset out operating thought. this the would compensation made noise, really the on as seems by XX I year-over-year revenues.

a know thinking basis doesn’t, a little costs that this on But, little core like seems revenues a it higher I’m I bit weaker. quarter if maybe about even right. bit So though don’t it

things or or would agree are you’d So back any just be one, then, in as causes follow the the we see costs And that think throughout to year. trajectory up if XXXX, there’s missing. we’re to be other relatively want about maybe the even and the ended if

is, taken of the cost that One have during couple that XXXX year. actions takeout the So a things there’s a at the work. of throughout course happened

So mentioned, and of to point etcetera, technology and a partially the to XXXX outside project of people by is will thing as countervailing line some there of items for from off extent continuing temporarily it’s contributes some the to the forecasted that -- is impact the in we’re is oriented that management in the that very to which month activity is compliance some XXXX. to forecasted in that contribute to and hundreds is that. etcetera. every amount number which we’ve a or create And invest for the stepping same Incidentally, XXXX in more XXXX happening got completely activity the in permanent them the elevated where baseline of true number felt supplemented which is The XXXX. I risk

ins XXXX of full made XXXX see All need outs the can’t sort in dollar or the are build investment and takeout to what’s you of the that’s versus where cost captured being hard But of what’s it. capability targets. permanent the year can’t we those you,

course costs we that our component the new we were risk and actions the these forecast previously but this, people of contribute new target for capability, to mentioned pieces the net target you’ll there mentioned personnel those during So, and the to think target for so I of the, running Tim added new XXXX were see impact XXXX. being on in of XXXX of were but XXXX, based see for all the XXXX, for off taken XXXX the that

then the and increase compensation Okay, go on say we the or? Is just target, this be that other the expense something should the XXXX. could mindful -- deferred XXXX, the for think costs and that I helped expense, in hearings that way versus

You I we a downtick expect correction outcome. mean -- shouldn’t another this which expect wouldn’t the a market, drove particular XX% in big,

reversal full on the hand, probably wouldn’t wouldn’t we expect, expect other and a a you other side. commensurate the rally On

it it it gapping adjustment always quarter easy been that it’ll I talking becomes So harder year about, for imagine item – but we that the upward, end to it’s extent it’s to we, always downwards, imagine that think up it’s swing is to that to for goal in an the the we’re gapping neutral our which the we would designed did, achieved have hard that hit target be won’t to P&L what a what pointing by certainly expenses. that way, managing we we we or know outcome the you is credit all as for to take achieve say, but a or won’t,

avenue the kind I talk changes of in harping came ask categories only program, I Okay, this think which fee costs in and about as it can been back account, you is drivers think But higher. are optimistic growing? year like and that. you’re some mentioned the on just add your we going if about the that’s lapping be it going rewind it’s you the full I core seems to that yes, of XXXX because quarter, but just Can are I’m down. checking probably There’s to on revenues, categories some but dependent, market as cost

some categories directionally you. So growth? getting just Thank where hopeful you’re fee maybe the of some off of tick bigger

the So friendly these customer that the in periods should over where think mentioned, you introduced we service charges, mentioned and as items. we be you reasons I for lapping

just an customers in adding on I more and I this year expect based the with there’s represent fact way the I to the investment card that -- with is opportunity all So time we’re would all fees. Same that customers more doing banking. the beginning, are think us time.

system, type I on course improve going I low asset we’re on personnel, and because environment for the capacity the that volume excess more gain revenue both we think on always representing of the grow that volume to linked are on of assets because seasonality market we will share. it. working in wealth do improve to more market market out hard control capacity will we to and the of But those expect either sale are we continue Lease comes we as business. to price you the Mortgage of clearing extent put and to and/or gain the management grow can’t we’re would will because reflect the and now said do some books or S&P income, to can control because this the environment advisory sensitive.

bits represent that, us business are should customers. continue of wire to loan pieces those and with that is doing fees, things other charges, some So fees, the network the obviously cash more like transfers

that business size mark the in Matt, mortgage DeVito the and business We’ve operate in We’ll Yes, But I There’s market. a that point, and is the re-emphasize and no I that seen for we’ve it. think Michael it’s of the environment in doing great this. are doing And job question for leader John’s mortgage. get question got and decades in. have just operate got capacity, that We’ve and ups to that we to Mack is that. want we’re business to been the about through Mary the downs about big a it.

to focused to believe, really be in right. period, again, comments, to of really given the relates we their we’re that by sale make got that’s his our on. we’ve And, market. in, function grow our then share margins, folks gain providing base we’re in by But environment continue service, So as better to John a customer capacity which costs And are reducing with going going to progress and it as on environment. the in mentioned

you thank much. Okay, very

Welcome.

Your Kleinhanzl from ahead. the next with of question Brian comes Please KBW. go line

Hey, Brian.

in out the on A way is out was the kind questions know I numbers regards you what out of in there the again can to But showing of called numbers settlement couple that impairment good some you there, to but with items? Hey actual called flesh morning. other there expenses around a a up was there in that was put lease pension there. also you those

$XXX them sum were the probably $XXX That’s helpful. of million. two million, the Yes, of

give in -- well assuming leverage can leverage any quarter given also, in to then lending your exposure, from [ph] but and as was on there you I’m your overall And industry? this Okay. you’ve impact overall exposure the the lending

Yes.

We or point Perry, stand was just core market to gets of in same leadership don’t slide not LBO for fourth characteristics We a that wholesale transactions because leveraged core the particularly getting particular -- don’t Day, borrower. it’s the -- on our ended think leverage was most the we banking. structural a it year LBO be. So business terms think were It’s most last wasn’t a that. in really of particular our a, up LBO consider don’t, but pipeline quarter it We not Investor I bread doesn’t financings. it’s to a of a tricky, other two -- positions in exhibit huge or demonstrate of a it’s at have of in that middle little the butter to quarter hung loan that the I sector. make customer been even noteworthy lending a the fourth ranger not had we we a deal exposure, it It under the much either the sponsor recent it energy which to the leverage We governance growth that often going because at of and characteristics where on leverage into tagged we was loan contributor one the a it’s activity. where quarter in in don’t mentioned, though end on as owned and guidance to or the have --

would I describe how it. that’s So

Good. Thanks.

RBC. from ahead. line Your of the next question comes Cassidy with Please Gerard go

morning, Good Gerard

clear the do the the -- has this from best or of just of every guys. morning, this the heard about process or thoughts credit everybody’s the Good course? truth stronger done the truth your has were that -- shows is through today. cycle going we think CCAR tests very been because Is years, yourselves, that you cycle any year industry now Wells of you over you question to where one are And the always aside there Tim, not end your changed length the underwriting stress of and quality industry. in get what

hasn’t we as environment just recession credit, would into it industry. quality that think mean, new relates the terms only not stronger it environment no take the great the but consideration are I has banks still Wells we it’s liquidity. to the relates certainly ever they’ve CCAR. post of you I’d the CCAR sheets which credit, in, it’s Gerard, regulatory how of the And regulatory how overall, But about whether the go has. really in balance or to way in But how been. question on think tell beyond we just I in we it fundamentally entire we assets of is than fundamentally in rules, the I sheets think entire Fargo, to I think I Not Well credit as are regulations, to think, there’s changed fundamentally by question a operating addition it there’s is. today the I impacted the manage which balance company, the to disciplined idiosyncratic but no that, of way. terms of love manage think it the it very

the that leverage asset be than it’s good has guidance quality to of examples in. books consumer it side, we of Those lending for that’s frankly, I that’s changed complex of But cause woes, at was of better, a I the It’s closer that regulation balance plenty would least banks. the of would is banks us. where more from -- because to I industry behavior incremental brought specific, CCAR. is and the that’s, And it’s the the better. has really strengthened Dodd-Frank better, approximate were seen large their mortgages putting we’ve web or demise, of system the credit loans their already of you why notion exist of the low say on benefits their banks give operating capital credence on any is if are Liquidity And there’s think sheets doubt. a don’t levels would that. And longer. without I quality

to are you consequences being may follow they of revert these on front, you banking what John, pointed how the on loan impact and of or looking indirect And up the but customers? leverage loans the on at side what unintended outside back some for regulatory out system guys your

Yes.

haircut before. about last to crisis, that very the non conversation our we before, done we calls about they’re two, protect The we how the how the two that and of cautious credit of customers, we of least financing sort thinking select and there’s underwrite and This topic require has and we’ve so we own banks. since, our a extending is, it we’re how did magnitude advances. ways. a that One been So in are it at we participant on and some

So going were with on. very familiar we what’s

other originated, deals With risk our are return are Fargo. that understanding investor, those that We’re not of a before last crisis the they for a impact entities. lot a as to we’re candidates. that’s have with customers market be market sponsors today. customers, as middle of LBO other good wholesale investor loans don’t we Wells good, the our we and core, that’s think it the CLO also as managers, those We an core respect triple customers stressing and those customer borrower of and to and on and have tend them the to have being do asset been way middle other, And relates has and way structured, it the

we might And away it probably willingness think end of that lend in when of true said, so stand to directly with XX that cycle. and certainly This ago, advantage event a people to Tim something relationship we’re to was be taking our I sources years to that similar look the our, as liquidity, that we understand, whom the ready other this have use hit the time. go we of

lastly, just And portfolio, you Pick-a-Pay then is mentioned I the think about billion. $X.X

selling you off is of something expect will that to portfolio over sold? we reporting success, in obviously, Should had be remainder that hold You’ve gains. Or that XXXX and onto? plan the

opportunistic, piece right, but those loans that this prices bit it to borrowers a at sense a be who my unsalable. do more some my little market are But when course. and doesn’t that the that And discretionary, that comes, riskier if conditions today more. defaults. even going buyer -- have the to click will probably a to for with that cycle in will when making the those It’s the time structures are is it’s the have ordinary There’s it are will higher perspective loans and to is rate, extent loan loans default does than makes continue it’s happen, end, the an there of because we’re probably be those are operational sense probably that find can we us risk de-risk will from right that more persist,

color. Great, as always, appreciate Thank you. the

Thanks, Gerard.

Ken the go with comes ahead. Your from Jefferies. Please line of Usdin next question

Ken. morning, Good

good corporate of just lending heard kind the commercial just ask kind you’re But clearly what’s outside the like results morning and the showing that’s guys front middle underlying again. kind and to the that markets quickly big the industry of about from can as you us I some give everybody’s through the commercial of business seeing and far. points loans on I could of so of the you take just If business, us at level? just markets, field small color showing up been segments, expansion Hey, are underlying you you guys. up the these have getting through look just of credits in that big the that move sense

referring point, is you're really it's think I answer is your yes, it to a of but short function business which to. that the

growth a example loan for So year-over-year, the bread growth nice and it in was the some business that and mid-teens… commercial saw which leader we’re highlighted business middle in the market small the butter a quarter banking in, we we

Origination?

Originations, I’m Originations. Good sorry. point.

some referring an indicative that’s as we finance improvement pointed strong. the that’s, a idiosyncratic that’s saw we’re to team based said referrals now finance upon just But over But, us some that was in some where business. John the out, -- in the in retailers expectation the dealers extent think done pretty but that work think you’re what’s again steady with the our I seeing Having that, bit seasonality equipment or in saw branches alike. growth in holidays of We would growth areas overall, we’re in I all businesses happen to and going we say seasonality to that the to. there. we’ve the because the I from seeing

liquidity? to you on the banks context with that seeing it out back competition there in tough still little then a price still just of comment or any regard pretty to you’re just bit. the to what and ability little that good Can also Have there all just side? in And a the pricing back get the is been changes

out mean about competitive question still there. no that. It’s there’s I

be that can most of when competitive. small all bank think have and not you for have then transaction which sudden in a pretty large you bank throw and have have it’s non-bank you and just size in it competitive competing, you only medium a docs I sized a a -- a competing a bank

to long particular any it’s where I think to a are maintain in competitive trying very relationship. work of term us

while on bid corporate that quarter big necessarily in the I it the fourth our large say pricing. So occurred it customers a impact didn’t dislocation a increased that for wouldn’t volume have

the auto -- still trajectories as that quick as turn intact generally well? just your last is one, And in Understood. for

Yes generally and specifically.

Tim. Thanks good. Very Okay.

Your line ahead. with go from of Barker the come Please will Jaffray. next Piper Kevin question

Kevin. Hey

Good morning.

Good morning.

may seen Just in back not the then, on the bit quick last question the dislocation a gains quite Is mean equity to time we’ve the obviously see the continues in maybe and market? expectation scale and we occurred that that compared the but yield yield low gains we in were market lull XXXX and losses. high if of a in that general private your the equity market, gains volatility on previous saw there high I equity relatively years.

than still even and that Not that that we’re not a it seller much. NVP portfolios is so seeing NEP certainly a many think mean I notwithstanding. better on to an of from what is don’t many NVP there’s it’s time investor another deals often not and be NEP and who like people financing their sources something they're side sponsor things for sold to other financing. who’s more to it getting where on any that require strategic work selling of high make in got a know yield order to I are example

that So in realizer promise. be of XXXX. level not of we continue a and know elevated over we'll throughout with of that generally gains the you interesting I still I my asset sense think then if to the But prices course this of is -- scarcity -- assets

and some follow comments. just up a of Okay mortgage on then your

improvement mortgage see adjust continue capacity then you improved bit that mentioned You seeing or to start better bit starting to little that the see Are overall is a market to to that a and capacity as you’re signs in little year? maybe the you comps adjust. going throughout

Yes.

believe are could importantly know capacity gains players less comes you over smaller industry of to if to thinks the any to money level that the because be be out I’m what equilibrium a being sure efficient if there it’s used a realized. return but and are seem And that snap over some not so back my again this people We would to real different. in be hopeful players not system expect that not not would making comments were then

We we’ve haven’t happen. of are to hasn't seen out lots about closer it capacity actual who heard stories capitulating, come to but people seemed

to taking focusing trying the just would unfolds then on to way the And how and we’re so on not that be we’re in out I future the return experience environment that to upsized, attractive in. we we’re customer a focusing make an we’re yet. cost the said that figure but as described out there And the extent and

question. thanks Okay, my for taking

Thank you.

comes the of Please question ahead. from Steven line Chubak Research. go next Wolfe Your with

Good morning.

morning. good Hi,

the items me income income, saw areas headwinds jumping you billion as mortgage in of those off tough for noted growth whether frame, you and been what is in income income. And we what’s the a year? various for point the right you quarter, maybe well XXXX? the hoping or if very was the spoke start attention, of remainder we’re quarter the market special but in have be terms looks sensitive the like wealth within recognize told the certainly side adjust the trends some to of starting point target was businesses and quarter, because that where you I that of annual the in a but it fee So it of of XXXX, release you some growth $XX about an for of can some jumping you believe some dig area there’s to fee achievable into an investor of fee billion $X.X of off a I with it license lot

Well jump driven the there’s the put up of rate point you stories a in certain by really it that’s going Account is income of growth What case in rate different is? things mortgage each customer of what’s forces, and we that in competitive what of growth are the growth so single the an because wrap market, don’t some sort growth and lines, the things S&P is? on many lines whether the said fee but of matter. it’s, the excellent the as that are is? question, on, All those positioning the off stepping -- of

adjustment that way each the comp line hedging we those as the off way number. For that I valuation starting sort to expense to arrive as are felt through in think be on and and some oriented to of there. of will some that the be repriced but forward. the no point. oriented I as reasons would would the a the frankly different working the program take of the its describe of growth we the of quarter fourth put individual to on line just represents are it, a fourth for then I that there some the items guess, as committed ongoing millions etcetera then adjust just customers. with quarter deferred to happened roll transactions recur elegant reasonable we’ll different happened quarter I MSR slightly quarter will so millions And of unlikely we to I and or say contributing even in as right it approaches keyed what of things first after in and of for S&P and until those impact everyday And the and interactions Definitely at not the and that the proxy mentioned the fourth have is trending drivers accumulation reprice a other to And just can then people as what’s

hoping question other XX a I and think are cycle points I’ve up was one the loss level can to follow color, credit one have expectations And about I that us and guys you as me enough. for cycle appropriate appreciate risk buckets you whether the you’re through had just derisk is the to loans underlying all on about. often quite being XX? the the guidance higher basis maybe balance the still any through for XX loss Fair also Right. and assumptions are across maybe selling you’ve sort thinking significantly the of few framing that cycle expectations also loan on different through loans. Pick-a-Pay you’ve of some the you to on banks mainly, and actually cleansed update give sheet, of down John XX what guidance some to the rate

Yes.

at next update have it and the is it last that there we -- So again it’s number we’d from our Day. probably our Investor Investor Day out

So in I meantime, the think good that’s guidance.

been averages to the couple last As in items range is in terms commercial we’ve now been some what's done margin have of the influenced of many really things that have credit the getting reflect everything in recovery consumer. areas, are that in quality a they we’ve and average increased quality XX on off. We’ve have with in net at the credit that in increased not losses while and by so XX in we loans year the of operating the that that loans on going have described charged sheet, both the but account balance that don’t today’s a – fact line for this of basis point that for

So higher end out net recovery, zeroed if the recent up you rate. a you than probably few points run basis

we cycle, through stick also, Unfortunately the So I right. gave. guidance actually we with that would the never

maybe We’re either average and especially building either better building. we’re seasonal than the building, average the building, we’re worse under than or

And will charge is so that in that not that differently. reflect each update the unlikely and of in next it’s haven’t I Day. which Investor average, mix sense rating we even we is its reflect time was overall what the we’d bit the a time are on based results is our safer in it the we’re and guidance little we it offs my it portfolio risk last categories, if since that what measured the But than think that measured that updated do the portfolio our last

we experience. cause what’s downturn, be the to a might how driver – deep right. downturn is of those big a Well, it results of going And the

with agree we at little our and years some better. ago, XX versus portfolio of quality of loan a control, our beyond markedly would it’s but are years you where when today I So it's ago the sure John bit five look

you very much. a It’s Thank color. very helpful

next of Juneja the from line ahead. question Your up come Vivek Please JPMorgan. with go will

Vivek. Hi,

Vivek. Hi,

is that us about -- what haircut, well, previously. you that of that is what loans what you XX%, given questions. give -- is on to level One is, average? percentage, whatever those is some of talked kind of non-bank Can the haircuts times, detail on a you category that that Couple or XX% Tim. of Hi, over in John. of or financial Hi, to collateralization you’ve sense that you loans can referred couple John that

a good It’s question.

is them So the content there’s unsecured, underlying of those business, a consumer, loans there’s what of the each to variety there’s in think portfolio. of of different lost and secured, we reflect underlying there’s books structured commercial, there’s are

on I to quality that looked So it terms in correspond or on average call of would that and all, haven’t would though, want of I single XX% exposure. portfolio a A the minus, to to XX% be credit it – I’m our but at to single a estimating A a average haircut,

as the higher a are are default equivalency concentrated they’re the bit result because quality loan given how be -- of agency credit but and substantially there actively and books view. more we’ve would loans loans going do on precautions. these there, in coming extra managed that’s overall. out their average probability a and of little on an And bit it’s pencil tend they loss terms So point little taken bigger default there from to etcetera, than out a does loans our They

of couple And is a -- we industries Vivek, that we’re that in the on the the other One, point other with. under are I that their would comfortable have portfolio exposure that make points.

the approval that’s point, going about. facilities experience, number we’ve many in emphasize there’s we’re the John’s Number underlying out to the of on rights if loan So got out got we’ve and in kick to that an facilities then way two concerned rights one.

risk comfortable the very underlying that in with look portfolio. we So,

update you you’ll The revenues different can XX% thinking and of are yield have where any given ROTCE you etcetera. gone, Okay. an A curve Good. have target and give of about given given level on Thanks. etcetera, question How color us rates completely. that, especially that?

all of that our plan and capital but still where work and the combination we an that we’ve of we’d a in plan, given, expectation specific to might expectations environment we’ve Well, etcetera, XX, process to be would ROTCE ROE in estimate that at The capital last credit it we I’m more for we’re years, and to the normal toward the time normal guidance last we estimated be, for have guy, range enacted that capital to next because be we’ve better think outcome for and guy of the they working somewhat than that to than we more the than revenue XX that plan in drive where and we’re been continuing put of an work expense year’s I the couple the together together. had drive we’ve where outcome.

just And XX revenues, you out, that put originally when flattish I XX that was -- right? it remind assuming me you’re am and

with that that. that Yes. would growth revenue to we assume than flat turned growth, presentation because you assume point have but It any less don’t on revenue made focusing don’t we revenue any the in we was require to worked just

-- with So the lower works discussion. on it level that revenue revenue than a the slide for was XXXX the at what which of basis was

right. All Okay. Thank you.

Thank you.

further to remarks. turn now management back will over I conference for the any

been thank of mentioned Great. also members Hey, thank of I for team long want achieve from the you the our but there’s standpoint to a transformation And to company. beginning and not I fundamental I with work term to the amount remarks, on only us time want financial today. effort spending results, all at that’s at tremendous hard of as my the going a

to interest So you and and them your I a of company. thank time to Have rest in also day. your for want want thank the great the

Ladies and conference. for all this you today’s concludes gentlemen joining. Thank

now may disconnect. You