Wells Fargo & Company (WFC) 15 Jul 222022 Q2 Earnings call transcript

Welcome, and thank you for joining the Wells Fargo Second Quarter 2022 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. [Operator Instructions] Please note that today's call is being recorded. I would now like to turn the call over to your host, John Campbell, Director of Investor Relations. the begin may you conference. Sir,

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

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

before make some to review quarter second very much, John. update take call to Mike comments priorities. questions. the we over detail Good your morning. the I'll about quarter our our Thanks in second operating on brief I'll results, you and environment, then more turn results

was business conditions. capital, higher offset by rates as banking, predominantly in quarter, and We more lower of venture securities, million results venture $XXX $X.X investment income our Let and conditions negatively capital interest included rising income impairment non-interest with advisory me mortgage billion driven management businesses. loan in quarter growth market in as than banking, start wealth our net impacted due the Revenue by interest balances second second earned some market highlights. equity declined to our a

losses. broad-based our reflected first both ago consumer initiatives declined allowance growth pressures had We efficiency from remained Credit quarter due our on an to continued operating the and ago. and a to increase growing a expenses year strong, loan and year with inflationary loan from with higher even execute We growth. performance portfolios our commercial our and

health While entire high rates, consumer and we're consumer first so increased to our monitoring the related customers, year and will simple increasing per deposit are levels. cash businesses concerns. flow, economy, not continued a payroll, portfolio, overdraft have and interest impact risks and Overall, deposit which from indicators, quarter customers' far. and account at inflation, across balances elevated When consumers our resilient above including averages pre-pandemic ago been looking remained risk slowing showing our trends

of average for cohorts However, stress we're signs by customers, of potential balances segment closely and to for decline levels. we pre-pandemic certain have steadily seen activity monitoring

categories consumers all year Following year, higher by new compared increased the appears debit spend debit apparel the across ago card products spending with XX% in like by driven trend spending, and year has transactions. increase be Credit double-digit fewer and when digits, driven also while a X% prices, final launched up to certain payments driven fuel categories. increases Overall, from spend including down federal card stimulus payments were discretionary and double home XX% improvement by a to we industry declining. of Above last categories spend the ago. spending their was early card receive sanction last impacting then been stimulus year a

low. and rates rates However, started pre-pandemic delinquency spending May to in slow remain below while strong, Payment remained rates Consumer and June. credit utilization remain still card strong levels.

do deposit levels, not perform losses. yet small as strong debt Our trends Leading indicators such in customers broad-based demand commercial of payment and portfolio to commitment remained balance in delinquencies and both signs and with from well growth. indicate business stress. rates, Loan continues revolving aggregate our the utilization

strong commercial level remained years. credit Our over customers' non-accrual loans low at in were with performance XX exceptionally net and their lowest charge-offs

indicators industry monitoring cash portfolios line credit warning flow we inflation However, including utilization for rates fundamentals across activity, are early impacts. and

Now me on our we've progress made let on you strategic update priorities.

we to fourth risk and the our build past priority, credit Our businesses continue year, work our card new customers better ongoing This offering and Fargo an we control invest to our is drive infrastructure growth. remains in to also but serve top launched appropriate week, our and Wells Autograph. in help to

new delivering growing competitive to We're card based first with accounts latest introduce. card and our consumer offerings stations. up including categories our travel in of This from credit restaurants, the reflects points plan Our year across provides XX% new times top and three our rewards over business is cards a ago. spending we card momentum on gas focused several reward

account our the We both simplified to process investing a quarter of automated investors. and experience experience Investor, better continue created improve We the the relaunch for platform. digital experienced and faster Intuitive in with and opening digital new the second

out which quarter, growing on During provides affluent relationships. client our began products and Premier, and we rolling Wells strengthening the Fargo focused differentiated second experiences

businesses. We individual within are regardless and of offering working are towards where tailored to our customers needs products sit of the one of that services set these they

roll protection the in the for We started included clients. coming funds a compelling fees more non-sufficient quarters which overdraft rolling and policy first overdraft Premier more elimination the offering in of out to changes for quarter, will be out transactions. to We enhancements provide late

will rolled deposits XX-hour and an account balance a providing fee, before to out giving short-term early providing negative incurring to product. half period eligible credit direct easy Additional including the new a overdraw cure year, overdraft a their access in changes who grace be of second this with customers

of overdraft needs, and consumers We expect their review help manage finances. we consumer ways we and other can these changes millions short-term will meet cash continue fees avoid to customers help

strong Banking. Tim insights will O'Hara the joined and the greater Tim's better dialogue strategic leadership quarter, and customers of institutional We team We commercial And businesses, works second maximize invest that to serve our us our risk BlackRock also for and corporate early he us existing volatility. who Bank and even achieve corporate we opportunity continue market to existing our in commercial complements estate Corporate expertise customers. with have clients, commercial potential and help our our our markets have and Investment as helped banking Head to partnership real and serve in way believe a a navigate in recent with the significant investment products within tolerance.

Otis set joining the Wells also the community and announced Social as leading Fargo Rockefeller Impact, as a to the stakeholders will Fargo in successful company, a Head must including Wells for We actions. Rolley decisions Foundation that be us and enterprise from philanthropy, consider believe week, we broad Foundation. that of our be engagement we of Last

oil to financing emissions sectors. area of the move activities in in the attributable continue targets gas forward ESG and announcement greenhouse with gas XXXX power to We of the our for and reduction

homeownership reach with rebuilding effort As for than and home an to of XXX we new renovation Habitat out remains together. repair US affordable of and more families, for homes support too construction, in collaboration many Humanity the announced across

minority credit We Fargo also special services. currently purpose that mortgages Wells launched program homeowners to help refinance our

through through country. resource community which We across this continue financing to business of small financial the Navigator, time connects owners launching the technical development institutions small business customers potential options small our business assistance uncertainty, including to support and

initiatives. for businesses mentorship we've helping the diversity, with program our also opportunities. women our doubling are inclusion entrepreneurs DE&I inaugural equity We We women-owned through meaningful on Connector our and support highlights made results which by the published complementary report, positive

in US, external the last year in by and XX% from example, For approximately diverse our ethnically of XXXX, ethnically hiring racially compared were or all one-third promoted of XXXX or to populations racially internally increased individuals diverse. executives

Wells is ways project past, and initiatives report look a long-term in DE&I continue advancing deepen to the said impact. I've we pursue a commitment, many our Fargo and in for of at As the to the not

we to Let summary commercial consumer should is optimistic the over our offset Federal than to before customers. continue inflation tame of economic persistent impact confirmed discuss income. market Federal remain ability I cycle target rate communities we've return this our discussed in a second on and then year's comments which growth We given will basis excess means to and environment, Credit and our Reserve to a ROTCE, more continues to interest subject Reserve's on and net income strong shareholders on to the which support commitment non-interest position rate to me customers near-term XX% to same our future. half dividends volatility just XX%. path as high our pressure the while expected and to capital aggressive some to we the stress year, repurchases. our Mike. achieve economy, slow strong, This hike The turning any and stock fuel an expect rising make through common Despite also continuing to test about capital a past, run sustainable quality in rates remains and further assumptions to remain will interest it the

increase per later As at subject stock dividend to quarter XX% scheduled I Mike. now Directors third this regularly we over to its will share, Board the month. expect by to our the common announced, we meeting approval previously $X.XX by to company's turn call of

of beginning net higher $X.XX for we growth $X.X good interest to income included Charlie, in share, or common and was Thanks, morning, rates. interest the as which per positive quarter see billion Net are impact everyone. the strong income

Our to when a a the market of a impairment equity year of equity million capital results securities, drove on securities. $X.X the equity results from quarter. markets strong, gains included second the our conditions, were due securities $XXX billion of predominantly venture in loss in million included ago, Recall which business our that total $XXX

for in $X.X increase remains quality first this We quarter a quarterly billion to ago. allowance, X. follows $XXX Slide a credit highlight strong, due in capital the credit results the six the our and losses consecutive decreases in included allowance on growth, including loan million year $X.X billion While

payments basis our was quarter declines offset from dividend Our XX points in CETX as ratio down first AOCI earnings. and by approximately largely the XX.X%, second were quarter

of AOCI manage we risk-weighted the Our portfolio. by sensitivity assets to reflected and moving held reduce CETX also capital as ratio more maturity our actions our to and our securities took available-for-sale as securities in well proactively hedging level

to confirmed buy But the to through quarter. return common excess not Charlie in recent stock shares Additionally, capital the any second we back shareholders repurchases. and results capacity as did stress dividends test our highlighted,

We loan risk-weighted consider rate asset potential any coming conditions, well will and quarters. the market as the to share respect with amount uncertainty prudent timing over as current of including economic growth volatility, interest repurchases continue to be and potential and

CETX required regulatory buffers. ratio remained XX.X% Our above plus minimum well our

XX based XXXX is basis XX, points increase buffer capital be test, by our federal reminder, the which minimum a stress XXXX for September X.X%. expected on our to would to X, stressed plus As to recent regulatory October buffers X.X%,

credit to Slide Turning quality on X.

charge-off the was remained only near and historical ratio points XX Our basis lows quarter. in second

customers As across closely of expected net points our and disciplined recoveries underwriting. discussed, these levels commercial are Commercial losses commercial in remain signs remain of consumer with not are only charge-offs in included stress, our quarter, performance our credit businesses portfolio. which monitoring to and in basis very and we strong for net we our remained real previously second at low X estate commercial the we

Charlie from million residential also are consumer consumer exiting the were to assets mortgage losses in portfolios Commercial points in offset quarter slightly at card auto partially performance XX lowest decline of non-accruals as basis consumer other real $XXX by loans non-accrual total levels sustained continued We net Lower over by decline, Non-performing non-accruals a declined had their charge-offs XX% first higher losses. consumer payment accommodation due recoveries lower driven net highlighted, in our decreased credit of after of loans to loans COVID-related to average from programs. as quarter. were and first in XX or and years. we the and borrowers estate levels

growth higher Our Average continued loans results. segment increased and a On end deposits. highlight X% as first year quarter. quarter, basis Period losses from a at and from deposits second year ago, credit from points clients. the quarter operating average first reflected an The performance, reflected that portfolios. growth. and of we quarter increased grew first offsetting in with from allowance a commercial up well X% with loans the the XX% banking a other fourth slide the and both strong due in outflows lending, rates. year payments growth wealth grew for X% loans our Average declines for tax ago commercial with specific or to seasonality were billion discussing X, consumer yields and increase increases as reflecting basis loan operating when consumer a from year our credit of end the and decline the from quarter across ago the of and was XX the ago, for deposits I'll consecutive in from benefit segments. Average loan ogres points XX $XX highlight

the Our banking. investment average point basis deposit first cost quarter, driven from corporate increased and one by

I expect well. products from betas to lower As yielding as deposit would highlighted, previously likely customer we continue increase higher rise migration and deposit accelerate to would as yielding to rates

to Turning X. income net interest slide on

quarter. asset Second quarter net million rates, driven quarter from impact or from quarter. billion higher interest full the The first We interest to premium compared by income increased or with XX% from earning and benefit of ago we the the growth mortgage grow year additional by $XXX raised and in net loan yields year XXXX. the quarter, the a increased increase guidance XX% balances backed our $X.X income we to day approximately in an from expecting X% was from Last reduced amortization mid-teens. started the first and one which primarily year securities, also higher

net rate more the but larger loan a of hikes including increases, expect by also XXXX. With interest rate and be increase Fed factors, magnitude approximately now XX% variety in net income. X XXXX not and to from currently income growth. and timing ultimately a expecting we as interest slide the betas noninterest income On deposit will market And reminder, only of driven ones,

equity to we Mortgage show primarily noninterest was has to businesses. a two the conditions. and year decline market to generated a year interest which income private gains driven capital different income recognized included but response the this noninterest ago quarter, cyclical higher of due in this quarter, in which ago quarter our both -- and from quarter rates that highlighting first the year This second by slowed venture and affiliated impairments significantly businesses, banking, elevated

from and noninterest was by last first negative impact the included income income slightly in quarter. positive year was other actually ago a both other all the driven all divestitures. from While year's impacts, The primarily decline up of noninterest it

last related the expenses expenses our year on for declined million $XXX and year resolve losses recovery matters ago a primarily X. the from a from by increased in as to to litigation expense, expense significant which a of increased amount to higher matters. Customer and came quantify progress rate, included customer on efficiency a X% slide historical Turning a to driven variety ago, we time run predominantly remediation divestitures Operating of are make second of the Noninterest continue out full expense quarter year, and impact. take initiatives. remediation complex of and

resolve progress, And related expected. to While higher we are than had year. trending to we've We're the through expected, the made lower halfway than revenue remaining operating do have we've while we losses items. more expenses

initiatives expense reductions with in both expense. Our our efficiency and we're of services progress on in and headcount also results lower occupancy outside the first professional the reflected the half making year and

our exceed to continue on to these full offset is still operating higher billion customer factors make But predict, all which lower expect could and cause to approximately as regulatory $XX.X significant and us initiatives. year reminder, efficiency We be have hard we to as a outstanding our matters expected expense billion, could XXXX we revenue-related Putting our expect together, to expenses remediations losses. outlook. expenses the progress be to litigation, related and $XX.X

segments, rates a Business the increased by deposit and and Consumer and on impact ago, higher Small year of with higher XX. Banking revenue lending operating our balances. interest XX% to Turning Banking from slide starting Consumer driven

to expect deposit time. betas pricing been over increase stable, has deposit but we Our

started in highlighted, funds the protection fees elimination were the nonsufficient overdraft out roll of we the policy by first included impacted Charlie deposit-related As to which changes and late the transactions. quarter, overdraft for fees

from and Additional over purchased to quarter a in in the declined revenue revenue higher and revenue points resecuritization in half higher competitive ago basis mortgage response securitization pricing also further in quarter, in Home it's originations expected first this environment changes second rate capacity pools. in The over term, out basis the and rates by deposit-related XX% further continued the increasing year XXX industry. The from increased After quarter. the in first be lending of XXX from the impact second driven market third will will fees. the challenging XX% given margins, reduce mortgage excess is points the that have of the lower rolled which reduced in mortgage compressed banking from remain of year, we a quarter. decline rates loans the near possible mortgage to and

adjustments volumes, lending from revenue continue these adjustments revenue expenses higher in was We and X% reduce Credit X%, quarters. increased a balances. up was and card the will we ago, over X% next origination making to of to primarily lower due response are auto loan to personal couple up year expect

to XX. Turning drivers business on slide key some

loan mortgage declined XX%. which quarter, declines growth balances in growth originations Our percentage in the first total in for quarter or grew offsetting loans than EPBOs. of X% Refinances the our with the of for declined by purchased consecutive in home retail nonconforming offset partially a Average correspondent fourth the pools XX% securitization from quarter, portfolio, decline originations more as driven lending to originations. first

quarter and industry pricing auto. an to increased Turning pressures. from XX% competition, a to XX% and volume from credit declined Origination ongoing year first actions the due ago tightening supply

card. debit Turning to

drive XX% up launch in increase underwriting relatively spend credit and apparel credit ago, travel point-of-sale increase XX% volume volume and in and in improvement. the with in debit offset card credit increases in home Credit as were ago a entertainment flat purchase our a card balances card ago, helped year card new year X%, remain in products were the point-of-sale in from by increases XX% was largest declines and increased travel -- card transactions a year While from entertainment. of from fuel we disciplined The and accounts. new a

revenue Turning impact Middle balances. driven year to ago, Market net on loan banking XX. Banking slide income higher from and by XX% a the results of rates Commercial increased interest higher from

quarters ago, from from increased higher headcount driven revenue Noninterest four back expense balances of up rates operating a a loan Efficiency Average from X% working which Utilization lower from X% year to loan ago, still by increased primarily year and XX% with ago. capital Asset-based driven inflation. year impacted higher both been drove have by rebuild leasing down not growth, they but were Clients costs. grown historical and ago. have X% to for balances. expense consecutive have a to continue lending personnel increased borrowings support initiatives a inventory year and are increase, levels. higher to by

loan also asset larger growth to stable, has deposit momentum We prior to banking middle driven pricing had clients. cap. increase. been Deposit ago new actions we manage the clients to betas continue but was and from declined periods, expect will Average adding X% from a by by relatively in deposits market year similar under the driven

as recessionary the to Banking as declined, loan fees XX% Turning commodities driven balances million broad-based to working year increased ago, deposits utilization. continued given tightening Corporate year concerns ago, well widening. pressures. stronger market higher loan from Average and balances. balances as and write-down rates. lower higher in interest cap. from a actions year in banking higher results for real rising demand impact deposit pricing corporate ago, rates market Management Investment and from as year were equities a themselves unfunded Investment loan a treasury year under driven as than modest activity of revenue been demand in were and ago, disruption to driven X% loan capital were and commitments and revenues a from loan Banking. inflationary from declines trading. well fees, a up XX, XX% higher $XXX income of position Banking Investment a market Commercial down Markets grew interest due higher for increased ago, by the asset growth financing up Average due loan the increase X% on transaction ago due the from quantitative ago leveraged and activity. net bank from spread to the grew with exchange trading revenue finance higher to valuations and estate Corporate markets, more needs brokerage pressure rates on to the seen year increase Investment reflecting offset increasing well slide XX. impact rates growing primarily increased Banking given as a in with XX% primarily interest On utilization the XX% capital year by we've the line management more driven Average banking as by Wealth asset-based in due balances lower retail as in Commercial manage and by lower clients rates, revenue higher in revenue X% foreign than by slide There's driven a

the equities. advisory WIM advisory the assets approximately at reflected quarter as of valuations Xst. majority lower quarter, the results second two-thirds our and of reminder, so The are quarter declined and third a indices beginning Xst, XXX of the the again of and fixed valuations April S&P in second in reflect July quarter assets of are as income results will As market market priced

for the of ago XXXX, year ago, businesses revenue the by of with divestitures quarter approximately compared our the securities-based be from Corporate step of were and will on million our into Average loan $XXX quarter. a Both $XXX first The of cash our due highlights associated quarter in clients modestly. loan in business gain portfolio, there decline down to accounted higher So, and the they goodwill quarter driven gains from These net ago declined student decline second of the while alternatives. portfolio. the equity were in the declining was the Wells in Deposit of businesses. summary, in by X% from income deposits Average student ago, results, declined second the write-down reallocate the loans Asset sale lending. down expenses asset-based of continued including next and and with sale loan corporate momentum second our and yielding Trust million expenses Services fees our In also increased portfolio. equity capacity X% increased venture private in lower our sale pricing a and loan year venture impacted reflected in Fargo and our quarter including in improving X% income driven another expenses a as Management growth and year a balances. results. capital our banking and Slide our net student XX by in strong and contributed corporate declined higher revenues revenue from underlying lower mortgage our interest trends earnings with affiliated capital from rising rates year the

any look on the further to we the growth than pressure second to the As income. ahead net half offset interest more non-interest income year, in of we expect

consumer we While are and of our to credit customers stress. increase commercial losses not signs expect low historically from levels, meaningful any showing

unchanged I earlier, expense the for earlier. at subject approximately risk to to is billion outlook outlook highlighted As $XX.X year our the discussed the

shareholders, quarter board dividend stress our common demonstrated the third to including excess return to results capacity capital in increase XX% expected Finally, approval. our test our to stock subject

take questions. now will your We

will we Instructions] the now Usdin today Jefferies. time, At this first Ken question will And question-and-answer come our session. [Operator of from begin

sir. open, line Your is

expand continuity are than could expense also that. wondering they this year and you potential on was the had appreciate higher hanging Obviously, of just I the I Mike, guys. if guide morning operating variability. been. the losses Good Thanks. the

because going as sense also mentioned, underlying, coming you just a the start net your all of Thank revenue, as of then get are the And to any surface saves just So what how you. look underneath wondering you forward? sense well. better just in how like looking those just of

Hey, Yes. Ken. thanks,

of with that's efficiency start the And part for years. that all of thought I'd about it as now would. talking we've X.X we been program tracking First, better the

losses business pointed groups way as When sort at through at things beginning year. lines what times backlog unpredictable of is operating core just out, the thought. those So year, kind the we this higher we operating of efficiency assumed And the as of can the the what's core, than at working the through of and items. happened you work be driving you we are just look

the still You we we could for flagging work we have of right? -- stuff continuing by now, as would flag operating estimate accrue would as pipeline we -- accounting by just line you for it. through. highlighted, something year, loss with, a standard we But know it, it. If about accrue that have work the then we're about the If knew this And revenue-related largely in the think offset been to offset increases the we lower expenses. we

items. continue be still And as it highlight sure that significant the we something is tops, will through pipeline about to we in billion the out good feel forward. to number so we the that to of we $XX.X And if going set at beginning of year. go work we're And

XXXX, Yes. you parts a confer I it's through season, the just to continue recent talked the crystal a And you think follow-up, down push know as to to but try towards about at so moving think guys least us year? ball next can with you get many through as as you and pushes us to and can some of Thanks getting start costs guys. help takes hard

this Hey, is Charlie. Ken,

really do as know and we starting increases is mindset we see And pressures insurance just been the impact same with going to with such we the been getting And investment process – The expense full increases we've that. inflationary want the what Let into next look to as have premiums. work start efficient. it got we that year. that year, it's have about nothing in the contend terms into see we budget more efficiencies of it talking all reductions. sit towards this expectation way with, to out more next year it of some we about. But FDIC we We've become go has continues. of that me year, we've to about that But do the this process, and risk-related and assumes our in thinking of think know we as that some opportunities net significant we certainly we take just this we is of

core Now, see some see it just up the of base, lumpiness talked about, as – think about go could just this revenue-related expenses, we you as but continue which we'd to we've well. excludes to we like as usual caveats that we do that think that and opportunities, – or expense

question next comes The you. Thank John from Autonomous Research. McDonald of

line open. Your is

to paused ask should next SCB capital uncertainty. wanted capital. I pro you'll buybacks forma looks your quarter points about over some for we buyback level think forward? Will you guy. potential given you minimums. XXX of going manage you're like to reg likely with you. to SCB It basis moving where to And of about How morning, your Good Hi. buffer Thank partly here? forward because capacity and get that entering

us Yeah. we start in. SCB it's point think mean, Why Mike of Hey, – does Yeah. really and I no your for John, then at help. question, don't I clarity this Charlie. can – chime I

about want was today at with just all in what's and XX but here of we capital what's at that terms to managing the and But XXX sit look year right think the now. we happening we we how do As conservative spreads happening be base. in

think little amount I of see we as increase that at we with we we rates including, sit that be bit We it. this us. So I what buy just points we're the today, before just here is. have about to that certainly as that impact and point, clear, We'll start be we very happens capital in that. – we back a will capacity point. volatility And Mike spreads XX want wait have, happy to basis of to at to see shares think alluded do as to certainly think terms probably we'll But a in when do the to, exactly just just to

or two I'll Yeah. add things, Maybe just John. one

well. are. I as we into we stay highlighted, is go same – the about I good to we not as going would out, think year next we G-SIB Charlie score where are point as our feel just

beginning the as another of next year. So we uptick into don't go have we

good. build build as and from go we this through that's bigger the to buybacks few where we'll we we So we need at prudent to next capital and be point, a then feel And just through, are buffer don't quarters. on like

is kind It follow-up revised the coming and ask see have Mike, there outlook. between quarter the on this then third this do And you plenty the maybe and still I What next cash fund two very you. in cadence if the you'd quarters? And of equation, step-up gap big to of both that Thank between deposit then can being quarter growth have the you Okay. a growth? loan growth still again loan and strong NII like NII slowing, a funding within seems fourth?

Yeah. Sure.

moves couple progression the will Fed exact how of up somewhat on the But rates. it I the a next over function would ratable ultimately, step think, I of of as quarters be quarter-to-quarter. of think a

you'll a And deposits little some continue what So you'll a some not you as the think through. think from in to we the first come see And well outsized as loan see industry that but down a come the growth go. seen growth there we you won't little has year, as it bit loan up. We bit the moderates half as of I see -- results probably little bit. in other saw steps versus say, one of

version the can and Fed look that the If of you as latest you data, at results our well. in see

each little the the in with of being percent them the bit can Now of for the and in of each -- us, little in reduction it's a lowest reduction period bit it's been see balances consumer space. segments, of been you end a

-- out So our good you we've of that funding down last wholesale And couple of the we've years, a over brought much know, got there. we thing. that's as

And so clients. or we've got liquidity liquidity plenty of we capacity to provide need support to to continue the get

growth that loan your funding other that coming So balances sources and you of have? cash from liquidity is

Exactly. Yes.

Okay. Thanks.

question of you. Thank next The Steven Research. comes Chubak Wolfe from

Your line is open, sir.

Hey, good morning.

NII implies want half going year north us the is because billion be make for or to run at for rate that step guidance. a it's Is it that expect for sure an the So you the FTE about clarify back noted to NII just some Mike, with up I start just off I of $XX wanted it to question imply the I a – to and basis. exit ratable billion? guidance a least of rate, $XX the reasonable in clarifying assume on that.

really know Well, stuff. I you're Steve, this modeling good at

the let quarter -- the next third about continue are the go And the where a they're four, lot we of quarter. last one of, as even I have rate modeling. you as last point there that fourth whatever quarter. I'll into the run long can is like a of as end going exactly to we're what But getting weeks, does out there we what it's to we are hard to is will amount what And now over pace. as at six to even build it's see, and last it's environment it the whether growth, pointed from know, be the the -- we'll today. off certainly, you do loan with the year. away. So same exit on that been, the did run out, think as you over for three, happens then the just how you this that's than higher clean the see just think for step right, see through things that's volatility keep ups, or at and to five, And rate going use -- rest But the And -- following rate to quarter, other

of And rate our healthy. think, a exit look. you lot so what factors, be as will out, that into there's pretty XXXX I pointed would But go

for guide. and one also the Mike, just follow-up NII on Thanks.

being to get the paydown of Just just wanted beers much sense what's in repricing than to deposit better as contemplated and better came paydown, terms in deposit a this quarter.

cited the years. executed You've past few funding optimization of deposit benefits and these the you've

wanted deposit NII some the sense how underpinning you're about of thinking to of trajectory guidance. that get a Just that's

grow well, Yes. they put think from came of I percentage that far and are. see see we're were to the consumer they not are And think expecting as continued out, we like you if but as deposits, of outflows mix where our that's -- it I much balances -- I mean we'll see couple deposits happens pretty where a the you this us of the deposits in sets can in as years of just ago. we so much up results overall than bigger pod a what environment

basically so they've we you As of the beta, think each in about progressed far, segments. as thought

And seen the in thought so what we this haven't at point rate much variation we to cycle. really

next rates Fed starting get meeting, you're at rising last the points rate cycle. raise basis into the territory that now rate XX -- if does see to the didn't Now we in cycle

that's wholesale not to And so side we're and react the And so from I going of or be you we're as the what pretty see we'll there. increase think pace to exactly need it. and far, where would. to has on it everything to at start betas we side, able the But -- and commercial see, on progressed nimble to are thought defensive

think, lot into this think to a interesting the data to eye will -- And think about that go the period so we it a time. points fourth I over of of know how as few on and we're will next longer quarter, I going quarter keep close us over it a And to months. give pretty

for taking color. questions. Great Thanks my

you. Thank

from Siefers Sandler. of comes Our Scott next Piper question

Your line is open.

Good Thank for question. morning the taking guys. you

self-evident But cetera. discuss, I hovering overall, a a Mike, quite in relates was that could maybe you wealth, hoping, could, quarter in trajectory, marks, billion puts and as please? from detail. and if down revenues know $X strong are a you sense just mind, as from noise and a securities I see please, billion then NII where and In bit base? more now. $X.X touched range Just to in it exclude at mortgage, but we equity of your trajectory obviously, some the a without we or takes that, if I coming fee low can the games, for sort of seems et grow mostly guess, that we the you you on

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going spend, much hard still And going Card levels. see activity but good, we're be in still card really that by good are so a lower, June. seeing it's outspending. May really maybe that's too although in slowed to and to space seeing little and driven activity the the people We're it

in smaller third quarter, likely banking, more So much helpful. little come but you down a I base. think, as to the is off going it's that's Mortgage highlighted, a

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year. underlying keep like so go causes to much it in any the to into mind, have what we or down given up in have of only you drivers visibility Now

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And so, we out. pleased were that’s working

Perfect. Okay. appreciate you Thank it. All guys very I much. right.

of comes ISI. next Pancari The Evercore question John you. from Thank

is line open. Your

Good morning.

Hey, John. Good morning.

front, that. deposit to go the just to back Just on

to confirm. Just want

as best you’re in your declines, to balances the relatively just half stable Or deposit from the So back overall do you betas year. are see are incremental could think now of is rising? estimate you some

here can I little potentially. you certainly bit see from more decline a think

little predict environment expectation. think it’s going possible, given they out that’s of But think more accuracy, any how progress, in the is to bit think, with Exactly hard not now. I that’s to degree I we’re timing be a right an can I and unreasonable here. real just

out this level CECL quarter to to a have growth perspective, credit this you see right. and as of the view you you a I can high -- what as Okay. where the this help warrant build with from term, a scenarios, you reserve as level reserve your to the of longer that on likelihood with as and the CECL but we get -- economic your do on continue an you the there? potential thoughts too I the terms added the Fed bill. to I guess, may a look bring to loan build? reserve plays us tightening, then And for scenarios overall with know sizable in front, didn't you see And reserve pandemic your at quarter, of magnitude as Mike. you All wanted do Thanks, that

think similar about a you go process most is you're that is which really in scenarios as at we of to Well, the of number through, lot ways, I think looking a And be downside and on about significant we've weighting had a to scenario need the thoughtful have of modeling. your now, in a a include you in for already. quarters number row,

you've scenarios scenarios And recessions, wild different pretty got right? severities a on term those so more downside. so And of that some severe them. number it's of severe, some But are labels have for waitings of could might what of a recession, you create lot

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couple life point, go And we the conversation the that. downside But as pandemic. imagine, feel already sure near on very it. we'll increasing look underlying incorporate that's It's those things term point. weighting to to can make had asset to a -- about each we as pretty you a evaluate how to throughout we that see of evolve have you a thing would see through quarter And this we But I the so that And as we'll level significant very have at appropriate. the to the through scenarios back what it's next sort think I those for appropriate we hard classes, this in today loans. quarters. think But the we again, hard we of to is what each we a robust of them feel have see in at it's have of feel already. over

on quickly. Is of And that you that risk outright credit Got exposure in it. more outstandings? One loan total what related commitments, there in predicated write-down then future finance is us marks Is primarily million on All $XXX unfunded there? took. leverage a to and of right. terms just commitments can spreads? market separately, leveraged -- what you your remind The both your

a think them, number -- over outstanding, is it's of think would unfunded don't differently. at environment sort disclosed you this, the term not to these we don't spread part. number, side, high-yield about think have as for stability unfunded -- our loan the we think the about about judgment bit we're see given to to end really them them you the we thinking And you term little and that as it best used has of All right? side, the We don't of it And took and balance commitments, coming on loans scheme disclose our deals to clear. but less we'll more sure. widening, versus small as of -- time, Yes, in, how best but funded, over the And the to months. market little we thought which quarter, the the are the sheet haven't So, generally bit a bigger really in yield the got subject one. further actual commitments, volatility about deals these high to, where

Mike. Thanks great. Okay,

you. from of comes Erika UBS. Thank question next The Najarian

Your line is open.

year-end And of Mike, peers that But terms range the if guides given sense deposit I'm was all that cumulative much guide? this us specific what on accelerate. in and over I of how just the that is better it a on some that your wondering for I your beta I said XX%. underpins better basis you you're NII. follow-up driving what's apologize your that would the cumulative quality a had you expect past if appreciate given basis. more you would morning. base changed by Appreciate color could if years, has X given the a of could good have of that Hi, wondering the of that on assuming I by NII quantify umpteenth give question the question. several guide you year-end beta deposit

trying Yes. going and number a with so and particularly the sort the year-end you. exactly -- Yes, And moving hard get about Fed when think, are that, is on pace get -- to confidence to I of pieces in to is now, think of number lot the that's to between that really going do lot if to think thing honest Erika, to at a be I my thing And with rates? it? -- of to what view. in they so it's and you a goes give into a as pinpoint many there's this there's point think a you cycle, one say hard do that -- I a And right

next can you're going acceleration. though I is rate think as start at to couple more of I think we what see look say rises, you the to

changed core rates the much haven't deposit -- core banks the side, consumer at yet. the big point for and retail the On this

So start see betas over still you'll next to small. rises, the of be rate will couple the that happen pretty

those then and you're on a spectrum the start However, I the to up other already. Fed And fast FI space pick it's will side the that in corporate depending just large of seeing by lot how think on goes betas investment the pick year-end. the on the deposits, bank those up space, corporate or whether

those So continue will to accelerate.

right look look at compare banks, to you're it. of at those just than CIB a the cumulative for you faster piece start smaller going are us probably but modeled, pie to move when of have will a those betas, so you mix and And And piece much small really now. deposits to the really have even at to it's -- look we've deposits. different the going are And to you of the

as insight we'll we'll think see is by much So to cumulative I year-end can. predict I as and how But think trying goes, it betas you we give hard.

so understand. Got much. Thanks it. I

The next Poonawala. from question Ebrahim you. comes Thank

line is open. Your

good morning. Hey,

Band America. of

Good morning.

up following that, Just Mike. on

how lower get should us given to mix want during last rate the or cycle? is see pandemic, but on in at relative shift you assume manage down line it the the appreciate in balance beta, to beta deposit just we even given sheet your for fair track I don't least deposits to pinned maybe deposit So you

then to-date, and mix close the deposit, cycle. -- type base, saw you Well, each go substantially look what last at the But to pretty we've changed of deposit about I think last think as around. our asset, they're that's tracking what's each you we since of pretty

beta. has stayed the of deposit play beta our as rest as same you cycle so changed, And year, would But a underlying if out each mix lower lot we the but go products. of to byproduct, see in last there's the through a the given average

That's something make we last fair. are sure expecting missing to probably beta who there cycle. I because just wanted are than higher a weren't peers

I there's we big expectations anticipate quarters. markdowns, that for where next to the But where should talk of in set and give extremely I turnaround private just think sense that. And equity PPNR? know the tough equity investments. like about terms make few taking how when over a just in are the to level So impacts of follow-up, sure just some a and terms you markets and wanted through on that hear market fees your of negative these in these a in want I you market, line more are us no marks markets as valuations world are

all is declines. Sure. driving really Yes. depends happens markets, in those and what the part Look, which in on it again, equity public

constructive. stabilization, to that's constructive. more evaluate even if see investments. So that's see how rally, impacts deeper declines, If obviously, that And portfolio if market that's to we some these we'll the we much have starts

here So be think or good to a or whether guide I we about markets to and not. more to think not the equity will whether public reductions there's have evaluate how

to we're the it. my XX% was taking I for And respond. of like a looks expect maybe tracking Got statement. the Thanks year? say, end a That drop, didn't questions. by it to you

made rhetorical. you glad I'm problem. No it

Gerard comes Capital next Markets. Thank you. The from question RBC of Cassidy

open. line is Your

next activities gains give good Mike, you. us securities. color can with two? Mike. had debt us guys the what drove some just the that generating Thank Good be Charlie. and might quarter in and quarter some your morning, trading in from Can what your Good your you expectations or share you morning, success on you in

was Yeah. training on I FX, a fixed bit businesses, in macro the income of side, little mean, really performance our it rates. good commodities,

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about securities think the there'll be continued I wouldn't you assume, there. portfolio, As gains

small, a small I our think portfolio. remixing we securities of did do

Some was of it RWA.

optimization at of Some UMBS time it tight selling Ginnies was buying think the I it. RWA some pretty we is spreads that did where were

did And there. much minor don't optimizations give other few yield. we You there RWA are save a you up an

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This is Charlie.

series the saves the risk lines. take from. come talking radar for work. And technology headcount. start bunch cuts It's whole a those to about of it's we're don't really going not at just on which infrastructure of a or I anything the us like think the on matters. really it's I own Listen, we supports regulatory shot a about first. It's even where of all go me our what have time across screen It's work think just professional. Let where this genuinely And work, in It we're and thinking of that. right could doing it's terms a to

just rather point. the this I'd at question So defer

just and about then, mix of comment well. this Understood. Mike, as coming back deposits, rhetorical the is problem. to No your a And question

you for stand over guys some As we rate years, environment, out see time consumer the make XX higher like first in maybe a deposits guys we'll in of peers. your

So, good luck that. with

Thanks, Gerard.

will question Stanley. next Betsy Graseck Morgan The from you. Thank come of

open. is line Your

Hey, good morning.

Betsy. Hey,

Betsy. Hi,

the where mentioned you're mortgage Charlie, understand, thinking recently you're think strategically what under. you kind I that? And framework I of about in that you're thinking to process in. about fits mortgage assessing wanted guess What I of

you by meant if we mean, runs how ever and new mortgage a was, a who back business, just at Kristy that That's big And and Fercho, go the been business. lot comment. we've than got in here, something we a not And we way, be look of bigger doing that today. since including the we were Yes. Sure. hell a brought to the new management, I are were I

We're would And so terms base on just have guess us extent be I home serving own extraordinarily of for of our we business the is sense do, both been focus mortgage the that reassessing we're being the have to context And But -- in was be we what the business. makes in for just efficiencies, an makes large the all for what talk business. should mortgage other point dictate being not customer to should sake focus that for to interested sense service my primary in about. -- the we the be our of do to in then to will along want customers we lending big product and us our our how size because in us lending appropriate home it think business it. ultimately of to important in

as requirements size think and business when much can going for The we're our going that us you us -- necessarily for else of that's everyone will and make and at originating for And so that where returns servicing -- make just versus sense become not good look in sure that the have said, over the banks of focus the over of time a would have the given And complexities many just right make we reasons. servicing I it. the on we're to smaller. I the context business. products how we're for all I to smart And thing cycles, all getting we're money

Yes.

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spectrum, originating which so it sense and sell, which balance today, will have naturally keep makes mortgages will will Again, others we originating at sheet you how and And on much originated of when some be still what look across just versus of we'll just down the time. we're if historically we an come MSR. we'll over it

your your of what I Could And is in other that? new recently change rationale the speak two through think head. questions. you Then for head a you consumer One, announced for wish consumer? list

Yes.

our to Mike So home in Put personal you come a of all home business, including run card the who place, lending business our lending businesses. plus in entirely across and all our that's our in our leadership different. lending business, things series through And it as and in of other had can at all talked Weinbach, about go of look auto place, that if well. put heads new business, -- those wanted new whole to management team, I do we -- functions Mike an the he something

closely to we're One role. And was extremely who Kelber to and have him to he have Capital years lucky that us Santos, McKinsey together Kleber just gentleman so and worked prior have that, two prior and I to and X.X years a enough that to ago. in a Background named joined thrilled

again, have the around side, that focusing And the I out on about. customers the capabilities on product the the franchise. focused customer see business, build-out service Building that underway. other we've card We're credit and significant parts work are wouldn't I of expect our and things all the is our in digital that think so spoken broader we on changes in to customers that continuing building which

from and any things we trends been continued So anticipate are about. I just where material with talking we've the don't that changes

just strategically I'm solutions. on what of lastly through be your what's couple there? of wealth. and product It's consumer, to going with give bullet offering. you're just structured wondering then you part to an your Great. it Could integration either how or And points on offering a platform important your on doing IT you're clients, us enhance that

Sure.

bank entirely involved those had or operated today they was And but digital start, then independent to We And in with it's our we platforms digital a it. wanted different had it the and historically than of both private independent. banks run had and had me I years we We little -- would are I platforms Mike separately, very investment platform, that separate Let separate with ago. you and for all brokerage wealth these technology. brands. were businesses, go platforms between We run platform had advisers our businesses completely if channel. had product here those several a and advisers two run as separate The two business. platform team separate that under in very conversations business, different at And Barry Mike. his and think different look our

to. and of set digital And And those we're combined capabilities the done service entire under have we've those we're is so in what investing the one of want independent. have products in to capabilities, product of and capabilities investing now our lines one all field we that access leader. that go And we've

So here do want if as stay they can to that, opposed elsewhere. they to

that access the capabilities the lending investment the distribution past. offering capabilities, all of in out from our trust building dimensions capabilities, across banking have to the other in those capabilities are areas to the We didn't

move our things capabilities. think something huge it's about, it. so it which the at be common or Fargo it’s that independent to And towards -- of make end, in a the been attractive an be for a will it's we're really and advisers, want of set changes, extremely set we're be, going the work also with financial they changes our want us benefits one beginning it's employee Wells they of excited -- for to of And bring appear place which And moving I to of we're platforms. to access just whether seeing we're and to back the and

platforms. the to of changed to that? moving that And common timing What's

a move. technology Yeah. It's not

of talking about of the terms we the platforms business. I operate think he's in overall sort way

isn't Betsy. technology there dependent So -- upon isn't a big it conversion,

great Wells then highlight last remarks, Charlie offering talked and just would part differentiated clients do. I going So be to in have affluent Wealth in a holistic already provide thing. And the already in Premier. That's system one to -- have and the really plus our step business helping in the X,XXX one Fargo and platform. about that. piece branch his advisers We big is consumer to investment more service prepared of we

offering days, of but so there And early differentiated forward. part big service businesses wealth we're a the as the in be building going out a which well, will

conjunction consumer Okay. in And business. with that's

Correct.

advisers really wealth that the Berry is not to of a -- say also expand Betsy. yes, offer just I has even business. products in would combination further, our the It management Yes. It's and Mary's for, Clover mortgage with products there. and lending potentially, responsible including and the bank other offering integrated auto who leveraging things now including In that affluent. is card some credit are customers and

done directed ever past. we've our in all in segmented a way much across offering more an product of it's sets So than the

talking more about we'll going capabilities extremely excited to things about were be we're so the were And and that it, throughout be rolling that out year.

Great. Thank you.

Thanks.

comes of Vivek next you. Thank Juneja question The from JPMorgan.

line is open. Your

the moderate for my Which growth do your wanted moderation? from to loan taking your -- think half? color likely first Thanks on that? What drives questions. categories? you that to just Charlie, about follow-up comment Any question on I

what just maybe the happen think just as it's that we've at I'll I We some any might think. pace. may quarter the feel, a take at Mike. point, -- just Vivek, we continue that. there get be seen we other better than think Hey, uncertainty it or to and of seen a you little at shot look -- will the in But surprised be we come. just don't I'll second factors same at as Look, moderate I we've wouldn't look will that being through warning that go It's it. their may are at causing today clients some big what a on we lines a we're be I being about as now. use upside anything of little just that it it's rate we're of the right terms but the just prudent -- a seeing we'll surprised to and maybe way we're think in little, that little growth

late Is starting not of seeing show that sort like with indicating already or some I that? quarter, slowdown that… So the you're clients are signs to any some in think, conversations

like the in some okay, point. say what we're the the Not economic a the environment, that of are well, the given But certainly, seeing year. estate, real card continue when slow we'll this second see would category-by-category maybe that real again the little appears estate go market say, half of in super bit given I commercial it in there, will you down significant and uncertainty at to spending space in at same pace increase the

markets what side driven well. business seeing we're Somewhat the capital by as that in of

natural in And that's a rising, there. so with rates just happening the as slowdown deals slowdown and

of little by of And the feels year. so go though moderation as we class, we'll asset the you think a rest class I just bit asset just it as through see go

or for that you a one loan net And Mike, gross us, minor you, the was number mark fees? it one, hung Okay. it of loss gave is

Vivek? one, the -- The leveraged loan finance

Yes. Yes.

That's after fees.

fees. after That's

Okay.

So the mark gross that? then on what's

the have materially front me. of different. exact don't I not number It's in

Okay. All you. Thank right.

Thank you.

Deutsche of We have Bank. Matt more one today, come and from O'Connor time question that for will

sir. open is line Your

if was you you that from the us wondering remind plans credit within into do business? as could about Hi, think lean talking? recession you the customer slowing just I expansion maybe given there, all And targeted the card

This Yes. is Matt. Charlie,

modeled our that we a all, of the just can we that offering, quality relationship this new do we card We're would on to rolled terms to any across for either been is you said we a have we're on in things franchise. we still due We out competing a spenders the or we or we've that have those expect out. in other have that. And want had and First stronger borrowers not with. the to just actually have products What credit way, targeted terms. credit look form set, our been it with our competing than to shape broader it want It's is customer, have as new would than cards that rolled when the the is high-quality stronger product when we quality of target giving customer be historically. not quality credit it at of

growing scores in FICO that leading just into? either any disclosure are the on overall And you're portfolio of or terms customer the

of can you go that the of think to little I you in the in the Matt, the some queue, Q, distribution get you table but deep got some Yes, a get Q. into can in that

Okay. I'll there. for it look Thanks.

forward all. very you right, Thank to All we look care. and Take everyone. appreciate much. to you everything talking We

Thank you all for all call. your time, today's participation At conference on this may disconnect. parties