Wells Fargo & Company (WFC) 15 Jan 212020 Q4 Earnings call transcript

Good morning. My name is Katherine, and I will be your conference operator today. At this time, I’d like to welcome everyone to the Wells Fargo Fourth Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. that is note recorded. Please Instructions] today’s being call [Operator call to John I like the over Relations. would now Investor turn to of Campbell, Director begin may conference. you Sir, the

you today Thank joining Mike being your Santomassimo, quarter Scharf; everyone. questions. Good fourth you, CFO, Thank discuss and Katherine. and our our our where recorded. results call will CEO, This Charlie morning, is for answer call

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

then before benefits the both, I’ll in continue comments about the Thank priorities. important step results fourth start you, by and we’re fiscal John, to we to and an and solid the important towards some COVID are negatively customers But path some $XXX to economic this is economy, there remain seeing. discuss still review the for uneven in on quarter, is to of stimulus levels in questions. and to everyone. growth support operating in end broad-based both to much provide need. environment, comments what Mike accomplished. confidence pre-pandemic dependent levels stimulus more our about our quarter I’ll I’m many, the an in those fourth good billion brief was your brief going morning take Overall, monetary to cases vaccination we based call on results, levels, from continue fourth the additional than until The high, I’ll Though make detail the anticipated over quarter began. turn remain crisis the recovery. be increases our continue to we stronger see helping invest who when be impacting quarter in unemployment lower have and bridge inventory would an to than recovery position can and effective making is

there potential we if get strong will for the XXXX, expect to the especially but significant second start, stimulus package. of a another in Given XXXX there’s a slow this, off year great half is

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competitors, more with understanding see the like our to our the you goal on to results, As our now our is businesses ability what investors What and you meaningful performance compare can reviewing internally. to we’ve now clear giving a been as as basis we as see, do internally. track we’ve changes made our a reporting of also well for of like external

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sheet on begun cap. curve the And for have given constraints While our we the limited offset net these rates move of to under overall of to upward, level balance yield continues with our to have an a growth, significant now, operating interest headwinds be shape and flexibility drag income. asset

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take is clear some but making it Our agenda time. we’re will and progress,

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broader role XXX from including are senior Nearly half over the team. to who new their the leaders Our new group a organization. start is of of our new XX, are of top to leaders also XXXX,

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Reserve’s Federal priority. have the remains the under million, in a $XXX first of Board declares Returning share the quarter dividend, with repurchase the capacity criteria, compensation. including few capital employee shareholders quarters, past stock common repurchases to expect approximately quarter consistent to a for Assuming we first

XXX million repurchase In approved shares. Our to amount we stock double-digit an million meaningful in summary, have taking of also line total believe our to an freeing and actions XXX authorized Directors shares, sight Board increase to ratio. the we’re of additional has common by ROTCE authority a

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and everyone. you, morning, Thank good Charlie,

to challenging partnership then we on year, proud and share. like provide quarter on success We expectations the all a the to our X. quarter Net $X.XX months information our for our over slide I’d highlight I to the for going the quarter a him support and results his thank and summarize and fourth results per employees, was or additional provided billion John which will Shrewsberry on $X communities First slide financial customers, on income I’m we of was I’m topics. review X. wish common XXXX fourth the consolidated few for future. last in some few our

due legacy tax X.X%, tax effective Our resolving income matters. which was tax to expected rate to benefits than related was lower discrete we some

mid tax full rate We to expect the digits. the year income of single XXXX our for effective in be

footprint. in charges. but the and included third also quarter quarter related charges software $XXX results for to Similar expense the estate reducing fourth fourth included costs impairment million Our our charges restructuring severance included also these real to quarter,

half the we expected our which close had student portfolio, is to first $XXX due million this that year. announcement are to selling in a the loan of also We release reserve

remediation historical primarily a $XXX customer accruals, $XXX from million Finally, million of variety for matters, we had third down the of quarter.

capital remained liquidity and Our strong.

XX.X% to increased approach. under ratio CETX XX.X% the Our standardized approach, and advanced the under

ratio XXX%. coverage liquidity was Our

to minimum, have excess return to significant and capital shareholders more continue We year. the this billion regulatory with we hope over $XX to

credit Turning slide quality X. on to

basis was the earlier charge-off net Our what certainly in have quarter the in and years XX points, we better than of it’s in ratio fourth would predicted the lowest number been year. a

of helping recognition than previously the be accommodations forecasted, to better we’ve our the the shape lay the would our start since to are the increased nonaccrual increased primarily commercial we’ve level. small the have Nonperforming X% commercial charge-offs, although third loans from which million, assets in is of quarter, to reflected customers estate mentioned, in $XXX of allowance As exposures. also number seem we a due provided pandemic real

real interest approximately there’s of commercial nonaccrual that a in loans our is were our rates, lot XX% million principal to them low fourth the are note as increased end It’s on While consumer higher helping also liquidity. auto still than important of performance the regarding of benefiting on better uncertainty commercial preserve nonaccruals. has $XXX from expected been as current estate, quarter. estate of real customers the interest nonaccrual which Consumer loans and

to versus the Similar significant the of our end ratio in unchanged was uncertainty allowance third amount third of fourth quarter, performance quarter. level there coverage allowance the the was was at a Our quarter. strong, still observed while reflected

quarter the that reserve the entirely in Just the almost a announcement that we’re was loan selling to portfolio. reminder student the release due fourth

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run fourth Banking, in corporate under However, the cap. average the certain deposits actions a targeted driven reflecting off of basis, quarter asset linked treasury modestly by intentional primarily manage quarter Investment in to deposits, and decreased on Corporate

net repricing to declined securities interest income X. as sheet. balances higher mortgage-backed interest income balance interest ago, amortization. income Net declined also of declines modestly Turning a higher higher year on which investment loan interest balances assets, well XX% from the premium the lower The as loan investment Net security decline mortgage-backed as reflected lower drove a third impact slide lower offset of from drove and loan by quarter, amortization. lower trading rates, the sheet repricing. reflecting These interest security hedging the and higher results lower commercial balance affecting accounting premium partially securities and were and fees, rates

a As flat quarter. the compared with was interest net our third result, margin

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a quarter typically we on Our as reflected restructuring reminder, fourth call. higher seasonally expenses highlighted in the personnel the the quarter. the expense earlier first And I also see in charges that

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were to Included Turning noninterest slide that outlook of expense our XX. charges. on $XX.X expense of billion $X.X accruals XXXX. and of remediation customer billion restructuring We in reported in XXXX $X.X billion

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made on significant be for While issues, took we through headcount litigation legacy our we progress XXXX can outstanding will XXXX and The regulatory in we be believe have what that significant unpredictable. issues we working charges still needed reductions. restructuring reflect

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expense Now our our We’ve updated we’ve finished you and on slide expectations. XX. on business reviews

growth-related clear reduce Now, are approximately initiatives, tangible as approximately our of sight is in believe we returns. our clear, business would process controlling we on and environment. on as this operating in on believe work. economic over improved we an short the XX% able well execution our continue requires to let’s and a have expenses investments a incremental increase to if We focused turn term dependent what on management businesses, expenses ultimately model controls believe regulatory a small efficiency and combination risk, our the from to returns. the from continued our factors these combination our to to progress to we increase capable we’re of lifted, in takeaway impact improving producing equity To time. common or as XX% on team equity tangible growth is execution of that, The our successful a we interest recovery line that of of in on After of returns take levels return modest target. part, on return be path But a improve returns rates our closer our our the the is the steepening asset once we and to balance further ongoing common is through curve, we cap approximately or optimize capital XX% factors, internal our can these sheet believe including multiyear a particularly furthering moderate the

We will now questions. your take

with line [Operator McDonald first of Autonomous Your Research. from Instructions] question comes the John

you’re right in you that ‘XX? to the $X.X XX. identified to saving you ask $X opportunities at Is slide the realize expense page $X that of I -- Hi. said of about Mike, on expect look way gross billion or it realizing you’ve and could Good so billion billion morning. if over

throughout said At little $X thanks year. probably we -- point, a got the commentary, as those for over savings a the that of sort in the as $X.X get Hey question. we’re in working bigger as this year. John, Yes. go you we’ll get I billion are. we on billion where And and little that’s We’ve speak

that implies So, the than exit better the rate’s billion. $XX

achieving. saves gross think the to maybe billion gross, is? $X.X what of Okay. to billion based net you’re ratio on years of gross in about $X.X out could realizing of the you’re your that that spend XX% of net $X.X net, Is like you And investment for billion if -- improve forecast the

Yes.

about it you -- You get benefit all executed of the that think year. one. have get the day sort to These sort don’t of take things throughout

couple it get at the period full you look of benefit the -- billion year $X coming X $X.X I’m all you as P&L. to billion, you’re of to sorry, seeing, of to of at sort over that the that So, saves that have annualized really net ratio into of ratio the you can’t sort look or the a

the $X.X infrastructure to John, increase significant add this broken billion How does that’s expenses and the in related on slide is XX, to out that are you would that include have. -- doing? we risk of continued build-out Charlie. I also in just investments a that that

is And -- point the forward, so, that at move there as we continue to certainly a increase slows. which

question with Morgan line the of next from Betsy Stanley. comes Your Graseck

with Charlie, do color you give that? there’s that what And One, else you just process identified or the versus and contemplated to to at beyond you’re that the some the the areas sale how then, not sold that are on retain? what like maybe contemplating business businesses model this are was anything in for of have what for full or that’s keep, being we us stage selling. take you to bar sale, looking Couple those questions. extent through of the of Should mean that walked

Sure. Yes.

answer the yes. I think is

whatever But, you aside gone a publicly. the are relook an at with You should complete on always the do to other as report bunch with we’ve look review list thought by at up one make business detail of come We’ve we regular of basis through things. should that that well these at made assumptions of this that sure exhaustive this the accurate. all level business whole we a activities. level about beyond that a everything companies We’ve

is this good so, And everything about actively we’re the list we on, very and feel that else. working

we’re is we to use, it As we given of people heard -- that’s one? part a about we because targeted logically comment starts a that offered they looking lens a It’s -- that core quarter. think customer that return -- a base, this bit. not of part of at would serve. to package little we customers it on the want as about risk Also returns the at either little our or And just the towards a that with I are make have customer risk look look I’ve base we at returns. capabilities risk talking

life much over at We’re looking return risk of a the businesses. longer these cycle

with that at we good arrangements probably looked again, do best to perfectly housed point think means. ways very businesses different things we of the certainly there are thinking there’s terms But is this we’re you that they together they someplace the in so, within the enterprise. businesses answer get Wells feel -- different and that else. we’ve And question folks that good best There that we’re and so, housed about, exiting, what across And add that the I is the Fargo? have are and are can

creating about space, cap out asset you and you been where you earning businesses are that to what because for you assets exits. outlined it’s into there’s the as or when loan do in you’ve know, a about get with know but discussion, pullback then, there? thinking core of that a do grow lot or it, to balances you And your that? But opportunity of of there’s mean, I these how are well room hard

with that’s is under you the lens view Fargo is driven not what the $XX have I most the we with belongs announced, done, guess, But would was The benefit. us was in I for To to significant cap. extent helps billion Yes. education the that which When this. we’ve asset term. actually the piece. this view assets. businesses or long was the we’ve by within cap, room think what to start really a create Wells at things certainly with look business exercise the with we it not It approach that roughly sell finance that did we that we so asset the

there’s that to time, sure, the capacity us creates so, -- elsewhere. no ability And over redeploy for

rate. just then, on And Okay. lastly, the tax

like is? speak difference it’s what’s rate? going driving I that Can single the or tax there year Is seasonality by it think you your it to how sustainable just up through you is rate starts mentioned super also, this is to throughout, low a goes what digits think And then tax XQ? single and normalize be to there. the digits. that Help and us throughout year

amount it’s quarter. a tax bit sort bumps But statutory credits. rates Yes. what’s that are of investments the about more complicated -- credits no are It’s a offsetting the And that. create to significant it’s have. little that driving the got it’s normal It what’s that kind we’ve and investments of Mike. income why than think housing, around in other Hey -- way multiyear the I tax those whether based Betsy, past low renewable think energy tax what’s is simple of on lower than we’d in earnings

of have over And seen couple the time. those you’ve years, over increased so, bit last as a

look big look we the so, of -- that’s And driver. sort for as at XXXX,

yes, go The sustainability -- ahead, sorry.

of so bigger dollar on those rate much up is you’re the but a earning was when to less. impact say, impact going bit, I little a obviously has the

Right.

you obviously more, as learn your higher, will tax mean rate a reason. bleed for good I So, but

correct. Correct,

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

even way a ways us step, that to a slide be it’s just do that that think about you But interim to of middle XX, hypothetical back and that away. your step, that path type of -- Coming might what XX%, frame ROE that wondering, XX%? and a possible on time a helping the have know I is to get it’s long-term long

Yes.

I think, -- you. hey Ken, how are

think, is describe to the have we’re we is it trying where of way sight. line clear that I

we actions also But, Fed XX% without at taking. expenses, order which So, to would the these the optimized when this get of have we’re to restrictions. impact we in are equation at point, also capital are actively look relax that to changes to levels, revenue have means -- the that we any

of And so, we’re the you able will And because sheet we’re have, happen. it excess is not balance reason the frame being use we not why in know, because we talking about the also limit. significant. the of as But, extraordinarily time capital when don’t the that is amount know that to position we have

really are with piece, a a as really there It’s would that we this can we some off the when what which as there in be about, minds, frame. in something become term dependent so, And two, get, -- possible that it in do we there’s again be just is But ask timing. those clear timing rate And just clear, time not what short we look of on think very steepening will sheet the the sight to and to to we I efficiencies about position because is modest that around didn’t in right or hand be to those about. When our again, describe believe I -- curve not you that control occurs put is the balance on But things a words increases line dreaming timing on don’t clear that again, you when a position just side. longer that. of growth, most we’re believe able timing with on at items. we we’re moderate But achieve. get then, we the in relatively should

or sales? And at on point, earnings get generated capital a extra kind offset of if sense get were And we the sales, capital in those sales, might Yes. go then, incremental to what the that would do improvements, some also the and how earnings? the you’re those follow-up contemplated to potentially capital potential or a ROE business is lost that able business then use be you something business away -- of gains that do with these to to with of to on

Yes.

of couple things. a think, I

it’s the Ken. Mike, So, question. Thanks for

of of give by we’ll more low think But Charlie we of four come sort I of of single things think, very -- you’re each outlined digits, around revenue. more impacted sort come clarity businesses. of announce detail plans think, revenue you you as for the the as sort sort And they focus give percent the a few plans with we’ll into timing. And right. as the I the of

As if as that’s in capacity. gains, buyback sort -- items, of business we perspective get we helpful we the either divest that or can through of redeployed from a capital book

is this And Charlie.

Let me just add.

announced are closed. not those announced, we’ve what Given transactions,

a So, of these time for close. period will it things to take

sure will businesses the it’s that impact capital exit at those certainly obviously we factor a hard get we amount. we smaller It So, that we’re out. invested as games. frees making expenses well into have as once up what businesses, XXXX, the working you And when in

minus why things, things And just we cleans on Company putting properly don’t of gets to those material set making focused the we’re the for up sure right these put forward. it it and the or that’s And it But, together. of us resources that we’ve impact towards got the Company, so, going plus on a ratios. either what think you our things means being as up

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

upper lower XXX wanted of are basis question some range the maybe guidance. yield of And back reinvesting versus the the on off of for NII What ‘XX? and I you a guidance points? informing where book today the specifically, bound with are to more start the So, assumptions

even Yes. day, here of week Look, day of by around the of couple we’re bumping Hey though end as assuming forward you think over I it’s week roughly that’s last the the top sort range, weeks. Mike. implied by about Steven, think, the curve,

from of where much relative assuming assume the to top So, not is range. we’re -- it improvement the to get

commercial portfolio, not to big. the a on they And in assuming expansion of balances we’ll But classes particularly little see in other corporate get to see side very assuming we as in, are are and the We’re into consumer modest very we so, then, mortgage spreads asset but in think where need go some are, side, that about We’ll of we and loan year. to and securities the there. this relative growth book, declines will the a would we’re roughly flat. total, then, bit invest -- we

So further overall steepening are kind relative our increases positive of the curve sort assumptions. of to of

the the what be latter potential biggest the part of of a sort commercial what to the the the of for constructive lot activity terms loan and of think, the growth, I could corporate in risk But, happens from particularly is stimulus loans, year on recovery, downside should and we’re seeing that. particularly be side. in

book maybe top of not quarter. of then, range, growth a I bit doing you it today. -- the a is a we So, mortgage of to think it’s in I the I’ll the little -- where little market just, the require Herculean from give related, does sort And task loan sort in end mortgage sense to first but are from of get how of guess the

We in are it’s pretty mortgage weeks to on origination And still -- have strong volume sort did quarters that couple of margin of the last we the we the relative see been first and -- have for January, of pretty of -- couple both origination market. strong as balance.

also of into we should be constructive sort that So, look as QX.

just on loan to The track actions efforts, you’ve strategic the should given there versus been derisk my color, outlined you’re record that. follow-up conservative, and running just your a internal significant lower feels all capital, that given running with is I portfolio. that room capital. Mike. the XX.X% that target bit little too derisking manage taken. be you just above And a That’s you’re And objective? great have excess these actions know to It for overall significantly strong CCAR mentioned might like the

think Yes. what’s optimal the a terms about in I to lot, run. that’s level certainly something of mean we Steve,

we publicly, well we’re you running And XX%. that think, said as above noted, around target. I it’s

point. and something to with shareholders And start underlying that’s point, the allocating as this businesses returning And that But, returning. in back you So, we’ll mind. in them that restricted from of Company. grow we we’re we’ve at with always keep lot know, just restricted to the capital been a conversation ensuring we’re invest from the enough first inside at this

So over time. hope change that that will

what conservative And you’re think time, add, that with could us we talking then, that to we the agree If when performance rethink about over look just position this and as at Charlie. about allow as is we does, CCAR completely about. I capital does our

just allowance we about with credit You our losses. we also -- the think have also for position that

substantially so And than this, which is have is that start established. it else is when to which those reserves CECL went and when is of what would seeing, were everyone and exist. is into But believe very the really thought so, terms when takes do of better like uncertainties asked -- we’re been we clear -- more a we seeing recovery something, see lot performance also to sustained we’ve which because we’d that, we’ve to equitable more we use many what in

positive. see be prudent we there. So, right the is we think extremely to to But, everything thing do that is

sheet do. quality which us positions only even reversed into really the the were a stronger had -- student we because of meaningful the of just only loan overall, sale, perspective going XXXX. reserves so, balance And from we But that to that

question next the Your from comes line Scott Piper Siefers of Sandler. with

that with I what are wanted plus are billion Would in ongoing? I revert I deck. peer of noticed the a the or completely that I gotten guess savings billion that sort got guidepost the billion back $X to kind slide you extent have the reviews a that guess, those about a noted the the of you to of And done to of as context say, formalizing for potential number, that question one gross you sub-bullets towards guys $X talks to $XX of of you have would guys program past, additional feedback. kind is, you in number efficiency.

to square $X or the of more is as all two is unfolds? sort trying of there’s if just billion if sort together, So, time there

for Charlie. is Thanks question. This the Sure.

talking think, I things. we’re slightly different actually about

let me $XX competitors, ratio between that mean on the say I simple so, And just when through billion difference we the run don’t a believe they these period with a in the that. in very -- and should we the call math doesn’t efficiency Wells is what we mean our that of number just that our I efficiencies both by we’re versus that going That and also that look company. time have. company which build at try The And efficiency levels that walk the referenced run to time that short take based get what but is, in. be why long revenue They’re to the expense meaningful to difference of there’s people that other levels, any because to different. upon was

more didn’t And versus say, overall. We I And it business. my direct by why sit was comments, see And to can where of it so, bit do again, are where that us little business, looked But at to mentioned seen. in we hey, as you guidepost served as and a ability so what what we’ve the look you’ve a it we by at math certainly are got comparisons others for they more just now is. the are?

each will we’re of from executing Away operating onion it’s that, committee which still of operating back. a $X base the gross able an believe what are progress the list are is are plus, of list moving -- it we in a the to a initiatives XXX they’re that we forward as as basis, reference reduce these We with. in peeling we like slides all, we billion initiatives expense It’s and So, of and is done. be billion. go the $X process member through that first have that an have by of mentioned, really -- -- on on we there committee XXX says not

a once that’s you left else helps at you series efficiencies, it so, everything And as look get well. of

think And help first our them with that, get comparable years time confident to reasonable multiyear efficiency period more be which is there’ll to took it so, level. all, continue that after what we this competitors, Over a we’re be of get there. a of to to will drive

of fair amount will accomplish interest some a lot time it why growth certainly a would it noninterest that’s income But, so, as We’ll expenses. there. income, help expenses us and our in take And us of well. higher a through need net we certainly

of still returns, competitive I specific a focusing a the on to efficiency as will just opposed our as specific as So, something that term getting more ratio expenses think focus on become longer efficiency in year. out naturally and we target

Yes.

the Okay. cap, so a bit it becomes line That’s this a the relates of just more that. asset context, as to under new good separately, and And reporting, business self then I evident. appreciate lot

that. money you at XX the unfortunately, of point? into what the just asset been at manage doing have for company-specific a such as embarrassment guys I to an just it that system X retract and or But hurdle form of excess But over has on washed deposits you So, guys dollar is that’s months just amount. to past basis, a in appreciate your the all customers the this having to liquidity feel the this day-to-day I ability cap look in like attain industry.

potential interface ones the is point? this sort So, how at with customer impacting it to as cap relates of and things existing ones,

Yes.

pick Mike start up. So, let then can certainly me and

well, prioritize to sheet early to be is look I create the and to able as a performance asked that an in our between one, And it usage at fiscal impact were say when we’ve good first the you deposit material and in we franchise. would think, room has certainly and also refinance deal on then, the elsewhere. our financial on financial additional monetary. certainly we were to draws But think, the need where to that I right? manage look separate on the balance seated of all, the certainly actions I cost be -- having to to add to sheet people’s question no stimulus, on, just take is stimulus, to we way impacting about then need cap there with to impact us. about conversation we I’d and at think the or this environment question And that performance environment, interesting had inflows is there a you that, we those balance things to those been asset When or with -- ability significant

but to both our went just we’ve addition And And requests to asset capacity and then, look at versus the not cap to is focused flat running it. we’ve through we to when were so, create had that staying yielding into the sheet. to ability add management think on the sheet take just because lower to to manage even to we of we have when the to balance balance on increase that able to side an specific Then, lower environment, when was assets higher you our this are we balance where liability ability asset that had, pandemic, were we went below do actions able sheet versus need for that of about it the of keep others the also we be something the it the because the have in crisis, the others’ do. incrementally not

in no doubt things drag a those that add our together. ability is meaningful really financially, And You it offset environment, to there’s this on certainly NII.

very, the we and regularly, we’ve daily, don’t is do as strong impact? do doing separate you gone seen growth all we’ve is done, or now not which our through around that closely create we’ve have and we changes consumer daily very we the where can has which franchise, which we we’re franchise exercise, conversation of limiting it deposits, do look if but least question, a terms make as So, what capacity, at In there. were we the

more have corresponding for our pulled we’ve actions on of the Certainly, think period by that the we’ll wholesale on, they’ve a right we’re market that price, we impacted turn if the time. nonconforming back our been We taken. in then back businesses, when on at for be provider that. business We right

and I to versus is where side, customers the try and on team don’t about we our position on I mean, -- Banking think, Corporate understand have the we’re smart smart. side. the the thing Perry nonoperational commercial Investment choices and other we I trying same very very, say in to team there, the the operational very be be they that

as say why understand have a good gone very that’s of very done we’ve having we’ve people possible. little a So, doing. I just are long think think the franchise that places that to as to nothing, the impact job where Hard but I places we’re saying, of sophistication way

anything it’s else business with And We continue continue be to about. thoughtful that do you’d the obviously Mike, really we them. add? other something to

No.

any and good almost that’s that a And on think we’re I what And us. just is right. with the deposits. in a putting doing restrictions consumer consumer I seeing increase underline us think there. side about I kind Charlie in people feel of to a kind said of that we’re not that’s sign And more think good of deposit -- XX% how

see the that’s And on consumer so, think I encouraging to business.

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

quick questions. Two

base does relative imply reserve to we you if we’re potential year-end? return I normal. at mean the a reserve the year-end, if you much noticed reserve on you to of I you stands related that equate But this about if think where quarter. one could where guess they’ve it I had lending to that relative, something and I the reserve reserve. than a like you the case, kind had worse mean, as they for First that for to student base move mean case. it of release said how seeing now what release I seems

the mean, Brian, levels, the base works, for could sort I right? that number whole necessarily out anybody, I think, Well, I of for worse You far play are way standard you reserved about than accounting think as scenarios scenario. of just not reserve for case, a that given potentially potentially a reserved the you’re think base a case

And so, today. are we and -- that’s kind where of

-- And bridge plays kind outcome. over we’re for I the think we’ll feel path said, But more we I as has quarters. hopeful to and provide see I many think, couple all accrued it the and forward I help different how potential ways case, that out the that positive stimulus as the sort in of think -- for that recovery, look a that of side. conservatively government think that been good of sort think should in, you if other we’re of of see we Charlie the its next As and putting very support we’re of the I that’s the --

here only about quarter-over-quarter, a add, than better you be loans to is mean, sit up again, I’d -- would I of the to position we a which off we to a better the as certainly thing just today think But we reserving. suggest we’re unknowns, good performance to it’s allowance the better do, And the the wind just basis feel and same. when in even and prudent be given we And feel percentage say thing our -- we expected, continues but is quarter-by-quarter. level it’s

walk then, And one, on know there, that Could are two summarized different kind expense you savings? kind had with XX. you efficiency what’s which to overall number to those regards number biggest just of I impact initiatives Okay. five saves? the on just separate you a expense of through, outlined potential like the the but slide question ones ones selected

page to Yes. in bring presentation. back I it XX would the

the to categories billion, Brian. the On percentage side, $X that the dimensioned hand right the we’ve of contribute each

where relative are somewhat categories, Company structure of we’re it’s the you that -- from. the then, that piece, a across terms And the but look the the they’re good I relative impact basis Company. in optimize most contribution. on sense of really to and streamlining you biggest comparable in And doing of -- really, terms impacts will So, the think finding -- of as their sort probably is single a groups many other coming ways it of most at things give the across

So, you can see what like. that looks

Your O’Connor Matt next with question comes Deutsche from the line of Bank.

bigger nitpicky question picture. and one One

nitpicky. using the low you the fourth ROTCE, rate. tax that to had as obviously a a the When look path one, we quarter at very short-term First base, XX%

strip out I we the think, points it’s if X%. And basis release, XX charge-offs. about it’s reserve about

tax driven and by is laid the capital in ROTCE term, kind kind So, the unusually what whenever the release, dependent expenses that is that is, and on that or incremental of low you’ve too? obviously, that XX% out, still really reserve beyond rate short of

Yes. of No, forward, look the you different you question. Look, of it’s what I tax think I XXXX, through, to about think, of -- good as the walked as think, as for going sort the said is the components we be we -- a mid-single-digits. in rate sort it

got have And benefits so, as in the you big the today to and stuff a we expense how of -- really all more outlined the while. we’ve And the the little annualized get here getting the though of impact a And doing think down will that lifted the we restrictions of stuff XXXX. and obviously, sense driving we’re be sustainable going how drivers that sort is on really, then, are for buyback.

X%. embedded So, in on because one-timers you are things quarter some the the that in that you that see other sort by look and the charges releases of I offset over-index wouldn’t of that of reserve restructuring are sort the

as each could The said, full go would just very I being point minuses, is, are of about we add them, there we thoughtful But, good we a is through only is really starting thing reasonable we and do starting think of about into and lots feel I plans think obviously add year the and the is, have Mike we it point. do as very pluses XXXX think, detailed it thing as would look I this a at by for and -- quarter point. and that

guess picture way and question is lifting that ask this same be time and a and to things you’ve employees, a little bigger would banks no targets there disappointing the you’ve a lot the then, cap at no distracting. guidance, to over customers, can this, firm of Charlie? and probably like And here lot but to do Okay. articles will I hasn’t least a tactful but it in time, build and media in for But, of by general asset of the been there’s cap your assumed that team, for the we super from that look at of year been been it And the you, months. kind a that takes And management and was out some if recent telegraphed be it lifted, of asset now the year. years seemed be done I here, for the appreciate COVID, have which being two things

takes, sell kind and place side in of at and lot but a puts us cap the for And some we’re obviously impatient on there’s too. the know and impatient time. investor I you’re So, I’m of being look quite sure asset some all

So, you it’s a from how here? would feel now if year still

the which of you listen, very, of in lifted, tactful be think question Matt, asset know a position way to we the asking when I’m answer. will a very cap It’s that not Yes.

think, takes right are And what a about management so, it sentiments I team. takes it takes, it your time,

the think are chosen. call, I prepared the you in the remarks of at what carefully made say, we part very I’ll if the words that look

do And believe progress. so, that we we’re making

of great place, As what I done we I understanding get order and has the about even have feel to broadly, team in for our this consent the others. work for

are quarter, you’re said As I which I execute share they’re and said, share too. do. believe that specifics implement the order, anyway. FRB why do words making I I you the consent to you wish I can’t last to I And work if this really wish really plan I in And I do. I that. understand at progress. statement, up that, I I But, the the believe made I with and we’ve can’t is what we’re and asking. do required the look significant with that it’s got -- you. is. the ultimately, could of clear,

position frame time a done other in not than than I we’re what just feel wish has we to And I more get it, could be I’m very moving that -- put around and really to confident know I specific the So, forward. that. I

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

wanted to know let process includes at cap? one the is you asset see let third-party hop you Charlie, order know. back sorry on the of that. the I if you’re cap. the the review. us of to review part stage asset if that Are consent I to that But to that right yet thing can us third-party able more know for

I we’re we able where a talk wish I’m to the can’t. the that progress. where we making I I I back -- about continuum. believe just along words. to just back are CSI stand, be again, in more, do that I I say to could because really go we’re go progress, position not Again, -- of I --

it’s said, what I have we clear As do. to really

and at understand needs I implementing, or I think, what to have that’s this just review the at but which say of people all done we is the just which capable that once are to accept. could at Fed chooses the required what’s point point. adopting -- really ultimately -- And the for don’t be third-party accepts

your on That’s reduction already fairly mentioned? estate the you but a efforts, front, that does the helpful. cited substantial And All the cut expense reflect the XX% right. real that rationalization? billion around on you I rationalization, the know XX% footprint. I’m you. estate Because not whole Thank it that’s saves, then, that real $X sure separately, the reflect expense to slide cost in does to

The of billion Yes. the bulk we you, gave number so. it’s included in $X that

thing Okay. on more One that.

cadence know realized I in still savings the XXXX? years. we the than what that will realized indicated remaining that several that could XXXX meaning should billion of over it? of XXXX, the billion more be in front-end to higher Regarding be be $X.X going Is Is think $X loaded, be about beyond how you

that a year. years something, end Well, the we sort as will so. And list. the that of take that that we’re better add being done. through said, Charlie But I are as you -- guidance as you other XXXX way sort speak list, we get bedded to it’s think we’ll something on not list as our few of that work of of a to towards give There’s long items it’s

we’ve to do is me just just any to form. trying said we’re thought our do, would in not be line what it, would is we’re or quarter let so do trying last add for was to what we is, said to which that we our XXXX, done. way, give we And expenses of you we we clearest shape coy What which sight what

we’ve we continuing front. that we to on as understand include look significant saves ability we’re the making to also we sure out. to the that, But, beyond through which there investments do believe As go need year additional the that need get do are doing what got to gross we cost take regulatory risk everything made, and

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the remarks saves what And the are so, significant. prepared laid out gross was

is -- reductions show We expect what to to targeting to we’re year-over-year. continue net

to you So, we the continue this this we’re acknowledging specificity efficiency, path not increasing beyond on giving at that XXXX point.

next Long line David James. the Raymond question with from comes Your of

operating Charlie, team? that you’ve a positions XX one your prepared And changes additional management team. remarks is there bank’s in would near the Are in on and the changes you Obviously, months building last lot right number specific team that mentioned to for you of top needed any like focus still CEO. the still since the that top been your fill?

risk so getting the priority which first I just one team the in our management enablers Yes, we is the consent listen, key The management about team these we feel Well, all, that orders great resolve number there. that Yes. getting of will -- done, -- building of have. management and the work have. is regulatory ultimately one

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changes and the dramatic foresee the don’t I that made. So, pace we’ve

at happen is continuing point, and there reasons. think, some always changes I build for then the that to that lower here it’s are recognizing of that just done levels this most there different and and

additional investments And operations at Do I to you and out your of about then, improve earmarked spend? it. think needed remaining talked still color. to in the appreciate costs consent -- do have all you XXXX where the the you the to Got orders, still areas point? you this need get any

to, in the to that out break foundational that adds part, it? page going build infrastructure. necessary work look -- the Yes. are building and is we’re so, are we doing $XX the we series we so Those everything of continued when out that functions but billion, that show break XX $X.X is and reduction are billion billion risk page required in the work I It’s OCC to operational shows the where to orders, Embedded and third then the out Fed adds of and -- compliance, $XX for that the it what gross that’s the compliance, infrastructure most is billion versus consent Roughly net at in mean, continue do. and from from the right or risk the a on control all the a we $X.X things. you and the investments. specific independent

series a in have are of which We in technology. investments embedded there, increases

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in is. what’s $X.X is to gross year, embedded XXXX our So, I’ll that billion on just numbers point basis, that you this back a

[Technical Gerard from of Cassidy. next Difficulty] the comes Your question line

you good morning. Thank and

given Gerard, it the good better be a one anticipation.

so. There you you you you taking savings, or Anyway, maybe something expense guys they quarter-to-quarter. off go. I net your you always cut income on quarter? short this paid Maybe volatile it’s -- But Mike, you minutes, and for know XX don’t what quarter-to-quarter. the thank us number. question. -- was only I -- again, it know the hedging share Obviously, went I negative a is servicing Can on the with for with volatile

a in impacting Gerard, maybe couple drives a I in saw there. what’s the that may prepays obviously happening, servicing of things I there’s cost the then And things MSR think, market of of of the mortgage impact servicing And velocity Look, at quarter. income modeled. which limiting by sort think was way the that you sort you as look I as sort the you that. and on sure. also higher of saw of And of up bunch you the sort the Yes, idea call, asset, take next

those. at -- bit with you up look these you as cost extensions modeling you a which programs then that to or probably have servicing So, look of know, reduces the of costs, the your period. And little assets, of income future might like the some the given and sort you’re increases incur, your as at the in going current you that forbearance income

of outside And so, there the wasn’t driving items was anything results. really those that

guys asset XX, Very but follow-up paint the slide would balance had then, -- you good. that cap do, to rate environment about your need go you as for I’m expectations drag in and and kind the you understand analysis, net to to need you in slide we interest disappear? a I give the your see income If for that of sheet, away? rate druthers, And us assuming sensitivity the you to the what interest in for that would if what that could interest environment, see

get sort said as the over using that the it of Yes. or curve week to stands implied Look, top as end I to implicit, earlier, of forward the the so. range, we’re last

so, steepening overall any from And increase as equal, else think about or just from I think and that. here, would I all be here additive think, you helpful to

And the of have Najarian America. from one line time and comes question, Erika you that with of question Bank more for

$X.X long on versus the wanted get I to for net. you And And of wanted call. patience on back clarity investment my the spend. Charlie, you to question on this question. taking get Thank gross I just to for thank billion your Hi.

I about in of that of peers forward how risk of mentioned which laid the we think think think, was go for gross, it net out and to the potential investment a ratio was of $XXX and I today $X.X expense offensive, regulatory-related And call, versus more investment? mostly higher related we billion as offensive of million and work. should about to in still your think, earlier type one tech. spend related you we

Yes.

control could risk But, reality doing roughly the the the build-out. be -- in is in be clearly line, to the want of other we’re don’t and investment I of $X.X there remainder. to just that the things billion So again, that’s third clear, because a is that’s very that

doing efficiency build Another we’re the that obviously big chunk of that doing what’s of in in increase to we’re future to that then, Company. are business. drive And things the are there things the

that’s to reasons and future, how of -- is very beyond and one why we’re being the -- the investments think question that’s for to of not just that careful of gross the Your I think about to commit XXXX. net anything quite level frankly

we increase through building beat be For the think which and at Ather we beyond, we becomes more what here. do capacity have hopefully do. to been point we digital And very we don’t actually services time we’ve more do reflected products both want people, this as business on about believe side. the of what expense side could about very, to the over do, that series the we in marketplace. new And could want what a ‘XX in as what and we be, XXXX, to need effectively from to know well that We’ve what and these what’s that’s base in hired as thoughtful numbers the

to still how expense believe be we want we sure be And everything in want we might do that make some sure to base we time to what that. other today, do we’re on that We understand able numbers a At saying the of do. based net basis. embedded question and down than we the not the best to on again it same to should have expect we doing know that we so, answer But, drive I’m today. the

what the today. net is Just not number sure here sitting

comes Morgan. of Vivek And from Juneja your last from the question line JP

saying -- start know one firstly squeezing you’re so Mike jumped over -- pleasantries go with be is reduction. a expense with, That’s I hello Charlie, quick to didn’t because in. the sorry, and I’ll of I me which

How said exits. digits reduction? about low the You business from expense down digits single revenue

not Yes. to of revenue and of as it’s we But, transactions. more we Vivek, get contribution. relative of color to those closing those the I you announce we’ll sort think some different give that the probably

the Three just to I because Charlie, lot have making only opportunity is changes. question of have a you a strategically Okay. this talk areas. we understand you, are to since to And

that trading? the Firstly, you have business, thinking pulling you’ve trading back back of CRE. since disclosure, you’re are what year-on-year, is in you And Since since mortgage your also player, your outlook biggest plans banking cut lastly, estate or that your outlook including Charlie, a down for been, real sign that are are for commercial that sharply terms for little? assets UK there a

as have. disclosures -- franchise, base, Yes. but the you in customer our have is Listen, for the it’s we CRE, that important is an extremely great us. mean, can also We a business think made people I which see we of it’s up

when from We’re not hopefully tell. that, not time to, more we a look we to of this in are, that of for because structures will The is is you level detail obviously inevitably who our when the that the it’s talk the about separate immune have. space, at commercial losses broad what but caption. devil of reserve be real appropriately out office believe security big than in will hotels, are you estate, a taken very portfolio But, terms retail, -- you you’re that difference environment, between -- lending

the And so, important it Vivek, little they’ve And appropriately think, continue we believe certainly team we’ve us be do. said going really I to of got part COVID done reacts will a actions will what I listen, I a think, and serve -- even before, we taken that bit. expanding impact into you’re I that Trading, well. continue a properly, to as

side bank we to where we’ve a that place to addition our that’s possible. it’s at financing true as say well here. to terms well, in I asked sheet, side, look there’s when trading the on of also our corporate it’s people And commercial both would I deposit bank, investment but where trading think, question reduce customer we’ve on no when true thing in gone. Again, as take balance assets the the same actions as

a to away, think, asset reductions, had we’re eye make and we’re understand past. put to the were continue of where we does we building we’ve in want there, like to Wells. latitude have our I we would we the certainly we’ve where understand why resources at business that looked we’re building They build to eventually it. bring then our line doing were with the build us We towards when it’s an more in at when doing to rest customers in. as been the what I position see expect back go cap And and and to the think businesses

as on was that? color your you’ve piece that, banking, What’s Any correspondent. G-SIFIs. you That great. Obviously, making than Charlie. a leading back? been cut It’s are cut You’ve the for for that? you just player. bigger you ahead, a plans Okay, on last thinking that one mortgage was me you’ve much One wonder. back What your on given thinking other look

wealth Wells bank consumer mean, as No. great Listen, important when to got at consumers, as across look well consumers Fargo, I we home are our we to that serve important a channels there. it’s I to extremely in. be with products both when think, business lending don’t and lending their as -- in relationship. small that as -- deal lending to business I well directly -- through a I our us really customers Home is what do say We’ve home they own segment. team for want

look you know, the business. it’s we profitability Kristy servicing for what to sense job done. the have make service. joined where home by does going done where on how us on probably us versus the we servicing like, side level more be in are Home what going how about we’ve origination is do CEO do a what originations of it to by more which thoughtful think the banks the us profitability, runs our makes And As sense us side understanding it being we detail, to digital generally have not as portfolio, for to effectively portfolio Lending Fercho not service, do that next more channel, drive Weinbach of others Mike does economics, lending. compete think, for And been than great continue where of really all to I

see think -- looks for but what becoming so, perspective a like you’ll us And profitability side, finer what important that and more us. on from a on the putting origination is, I it’s driving service point

Thank you.

Listen, work bunch but you Okay. much. of hopefully, put us create about But better helps Certainly, going revised forward work the very for what disclosures time this we that conversation on a all not you’ve just know future in, it to we making you is. a actions really about opportunity the of thank as all. we talk the we’re have taking appreciate call, good a reflected we’re think, to the got in progress. we’ve when I feel I the performance, Company of as I And headwinds our what I still believe said, lot do. And for that abate are us. continue these great holds the and

again for Take you care. to forward look and the thanks time, So, to talking more. some

call. Ladies your We this today’s and for concludes you thank participation. gentlemen, conference