Wells Fargo & Company (WFC) 14 Oct 222022 Q3 Earnings call transcript

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

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

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

update quarter I the John our before take to Mike good results about more some operating quarter I in third then our on your Thanks, detail brief we call and environment comments make will over to priorities. everyone. morning, questions. and will you the results, turn review third

Let me start with highlights. quarter third the

of customer impacted and historical variety quarter significantly operating $X.XX this by performance related related share business was primarily to regulatory losses remediation billion solid litigation, $X in Our matters. per matters to a or

Credit improving and to platforms, resulting excluding delivering earnings in to continue driving and impact lower capabilities the invest continued operating interest losses. been growth digital strong clients. of on remains and know, products our our operating customers our technology in rising and we As remain see focused rates, have positive on focus quality strong income our net interest and and we expenses, you capacity efficiencies, increasing additional

given solid with trends we cash rates, at performance overall balances second instability, the a still decreased are year higher monitoring resilient While price deposit from energy closely per our quarter, account weaken consumer across and When interest to with conditions entire portfolio, volatility customers be continue looking but strong the credit expected inflation, averages and above geopolitical to economic levels. remained ago simple were flow. than pre-pandemic rising and

segment spreads However, by cohorts for of we for closely potential and continue to monitor customers. certain activity of signs

We our a pre-pandemic Overall, a card fuel all ago, linked year up a on spending was coming second the up and quarter, both the from recent the from showing have decline seen are a decline. overdraft quarter. spend risk what across spending quarter. strong was X% spending consumer this Debit XX% debit but ago, This base. are compared in last I the up the declined to to increases spend ago, basis. spending quarter, not the year customer had average note significantly card balances home prices to remained third with but that it’s payroll indicators, concerns. cash still levels ago fuel below steadily the deposit including decline improvement small fuel percentage important quarter remains flow, trends, and Entertainment customers’ Apparel second in quarter and pre-pandemic now increases compared total to our continues their is health above in Spending year double-digit with categories. and continuation elevated and of largest and second third a drove referenced of levels increase. spending Credit year card and to remained consistent quarter a from modestly decline

and to inflation-sensitive net to continued from growth banking, market. exceptionally offset this of tell products, inflation, us charge-offs decline commercial and Clients banking. non-accrual our with tight were interest which where strong, profiles. by Period-end in taking strong continuing and stable growth have we compared Credit levels. loans impacted that and in proactive they investment by So portion remember, across quarter, the are strong, be low quality loan warranted. the credit continued do to rates rising actively significant performance to remained with while And actions from persistent second credit labor declines continue is balances commercial new monitoring businesses remains our industries corporate

priorities. update Now, you progress let me the on strategic on our making are we

the appropriate implementing risk to an across resources this continue devote remains priority. framework and and control We company significant to top our

to We remains. are on plans, our and progress work executing continue significant make but

in As a remains and though company. work, to significant work body ability focus am of our primary a confident it the the the I complete reminder, of

it and We have work, of our remain our is quarter in Expenses risks for of said much we we ongoing reflect set nature high of resolve the until at risk standards success given complete. and efforts these them. to longstanding the that setbacks have

address control and our issues significant. identified continue work, we issues be behind infrastructure historical our put As as outstanding work quarters, coming which could still that expense remain we the in are to likely that advance issues result in will to us additional our risk

possible as the with resolve right these to working regulators we working growth. to same representative moving for quickly of committed We we these quarter efforts. are businesses implementing are our and doing importance closely customers and others the remain our these and We the changes the and and time, are help our investing to At matters. in serve customers forward our of close in to better expenses as drive to recognize

and the business balances earlier goals, we more financial to customers give grace made customers consumer fees. achieve to this period their As the limit cure options announcement implemented day and of third avoid to overdraft-related provides year extra an which day part we extra negative quarter, overdraft fees for

scheduled, several potential direct to to deposits receive ability further access the states X provided also We who Notably, clients meet million up funds over while eligible than we of account qualifying give overdraft to offering payday, the that another any will began overdrafts. that rolled out including those was ago. days the which rollout last lending customers option on provides mentioned reducing an weeks $X complex X.X does short-term years, rollout X earlier billion clear customers incur a services only track not this that developed These are to enhancement actions introduced eligible accounts, needs. quarter, of new early an offering to we in towards X.X Wells Premier. consumer now we quarter, customers of access more our I personal the banking banking, X And on quarter a build in integrated up XX% product their have easy-to-access that during needs investment past for Fargo million have from we year offering have and as to over And charge geared We enhancement, of this first fourth fees. a called direct funds affluent in credit financial deposits. financial from access the is the early third

the programs better branded and learn we initiated Fargo about During customers a help serve Premier our marketing can to footprint, entire branch across how more introduced affluent launched digital experience Wells them. quarter, we

new tough drive the more offering Wells flexibility corporate in We APIs, quarters. quarter, our Premier helping a them In efficiencies. will coming clients to and continue Fargo providing in and build to third we the the commercial launch continued

a For allowing payer payment to example, send that send credit API we launched requests can digital approved new a to to real-time real-time clients be a easily transfer.

strong are cards configure capabilities for virtual our better which in our volumes. accelerating a talent card enables create drive helping We in clients BXB CIB trading coverage API, And also and we our clients, payments multiple fee-based businesses. and which as the to virtual relationships our businesses, existing build across we to investment launched and into gains focus of we purchases. product evolving to our trading asset electronic adding are classes strong needs investment leveraging our on In areas meet Markets banking is vendor to selectively our

to quarter, make our We we highlights report, our at on In we We progress ESG social published underway Fargo. work latest governance consider the this the the on also XXXX in environmental, Wells ESG third that continued make made Wells is progress and affordability, economic sustained which sustainability a that in difference. of believe the well energy supporting $X is amount positioned renewable commitment We housing second bond billion transportation. a our clean and programs issued to work opportunity, long-term and will Fargo and projects efforts. finance

create we $X to in home donation commitment this Foundation quarter, Wells officially This through improve Diego we year. a by of home across Hurricane third this Fargo $XX color have the of homeowners wealth XX,XXX and the the – coming Houston, of the Florida markets of more aftermath ownership During the This worth. of before and equity million in provide we aims year markets restored is grant XX,XXX access to earlier to program ownership color We part XXXX. effort homeowners million Milwaukee or San relief Ian. following announced made the of end a urgent racial X end through launched help opportunities new to to

In caused be support reserve inflation heightened the summary, by continued to the markets about rapidly housing the events kept the In available uncertainty has volatile. employee and addition, high storm. economic those are customer aggressive to financial the market rate better accommodations with geopolitical and outlook slow to leading hikes, impacted and directly the

healthy, condition remain remain customers Fargo continue business and Both demand customers to have from our rates labor and payment However, strong sheets rates well and consumer to historically higher capacity we low disciplined is see balance benefit and to we high positioned financial portfolios. Wells robust, remains as expense delinquencies will management. continue a borrow. and in consumer across ongoing

as monitoring unclear. do well continued the and timing are credit of delinquencies to and we risks see expect losses, high increases inflation to broader but impact remains the We in increasing related closely as and geopolitical risks ultimately, rates

As remain opportunities. we our look forward, business bullish on we

stock macroeconomic strong have for capital a above higher we current range XX.X%, us our XX% and prepared operating of CETX margins by ratio including ratios minimum, was scenarios. common increased Our and XXX buffers. the regulatory In our third quarter, our points dividend basis wide

continue capital levels market prudently to economy appropriately and slowing will to prepared volatility. our be manage We for

as our the earnings know plan provide on Mike. our to turn our in on expense expectations net ROTCE. outlook path the I as over to Finally, many XX% interest income more interested I of to color you cycle now call, call our are will an next we of XXXX and well over XXXX and

was you, diluted Thank for Net morning $X.X income and quarter $X.XX per everyone. or billion good share. the Charlie common

Charlie billion accruals share expenses our primarily variety historical results related of higher. our highlighted, matters. drove or These per to of $X.XX total accruals a included As $X

interest net would our in income to higher continue the Revenue However, we from income, if as second quarter, also non-interest declined on quarter. you exclude while grew execute operating the increased initiatives. losses, have driven third our expenses efficiency by

effective tax for income was capital the quarter on Our rate highlight Slide third X. We XX.X%.

quarter points CETX Our ratio was quarter second basis down AOCI from XX.X%, as earnings. the our basis decline from is payments impact XX by point dividend as the as from offset X third well nearly the

above buffers, basis regulatory required the Our start minimum the effect. X.X% CETX new to well capital our remained quarter plus at our by points as increased took XX fourth ratio which stress buffer of

GSIB prudent of in will to and regarding our will reminder, We third timing quarters be the XXXX. second in a stock not As any share did amount and increase buyback not we repurchases. or the common any surcharge continue

the XX quality strong, third in with to remained performance only net Slide credit on X, charge-offs quarter. basis credit points of Turning

increasing slowly we However, continues time them to historical pre-pandemic continue Reserve as inflation. to levels are over to the losses towards lows actions combat Federal to as expected, from normalize expect and take

commercial portfolio actions standards. for only underwriting are targeted of net further million are net consecutive risks for third portfolio remained and the We some our potential Commercial tighten continuing estate charge-offs to in strong businesses, recoveries our with to across monitoring and our credit closely commercial quarter. performance $X take real

We portfolios. also in our estate recoveries net consumer had real

auto we increase loans the net However, loans the by of in originated from and of credit charge-offs part in portfolio. – linked increased this which the net loan charge-offs quarter taking have the primarily basis portfolio. on total quarter auto rates originations. earlier latter loss XXXX in started an impacted in increase second loans million the year, Higher in contributed loss started improved charge-offs points the actions driven the rate, Lower consumer average certain auto $XX balances on quality to tightening to also XXXX delinquent which XX

million third these the down or down of Non-performing X% actions, and a quarter continued result third constraints, the competition industry quarter over were $XXX and XX% As year declined ago. from origination second a increased chain quarter were volumes assets compared and in pricing down a from year supply again XX% to ago. the

levels lower primary programs. payment to of residential commercial the accommodation continued lower from COVID-related non-accruals While non-accrual assets non-performing customers’ mortgage driver of to impact of after were a in due non-accruals the loans decrease consumer sustained exiting performance decline,

and spending Our yields portfolio. Business basis our by alternatives. by clients as relatively allowance $XXX and increased highlight which the nearly partially while a stable for will loan a On by environment. consumer in declines increased first from were as Compared ago auto driven second yielding outflows second the commercial deposits quarter. credit our Wealth driven specific are I loans a results. in year increased less commercial increased across driven in from sensitive customer stable source and reflecting holding X% fifth Investment the the million Management Average we points declined both when segment seeking were points and X, continued grew outflows and Slide lien highlight the growth decline higher drivers largest quarter, the basis from more from the mostly of had dollar loan yielding discussing funding. growth deposits, higher favorable Period-end offset year quarter, Average quarter, businesses. the expected, deposits. credit year third Declines declines mortgage by quarter loans, deposit-gathering and quarter, but loans by growth slowed the with operating losses with from of amount non-operational and from with higher loan looked and balances price less quarter, a economic loans second XX% second reflecting can for Outflows businesses ago and loans residential consecutive our card primarily the XX grew products. ago second customers and the environment. be XXX Small from for X% Average Consumer in Banking rate our continued

Our to with XX businesses. been has and deposit deposit holding points. the quarter our trending relatively increased other cost in consumer Pricing average across lending, points stable higher banking basis second while from basis XX expectations, with costs consistent

to rise, would increase migration continue customer products deposit to yielding we As also to rates yielding continue in higher from expect deposit betas to to lower increase.

X. interest Turning income to Slide net on

second amortization XX% XX% or higher was net income ago $X.X quarter increased from yields year impact by $X.X quarter. asset the and mortgage-backed from and growth The securities. interest or primarily driven second quarter a rates, earning Third the reduced billion billion from from the premium of which increased

months benefit We net In a billion. expect interest currently with funding approximately net quarter also compared year fourth expected year a with be XXXX were this We ago. approximately balances XXXX interest income partially first up in benefits higher income XX% than X full to $XX.X X and be interest higher ago, to quarter. year the income These net by from costs. was offset loan of XX% the year, higher day additional

in expense higher due from year I and that both on from was quarter operating to the second X, ago earlier. Turning increase the a losses to expenses the non-interest Slide highlighted

losses, expense efficiency X% operating continue from run-rate a revenue-related ago divestitures related our other came had down on year out expenses progress non-interest as Excluding we initiatives. lower we of to make to compensation, and the was

six for consecutive have Excluding year-over-year been a quarters. operating on would basis losses, expenses down our

lower of year Another for which the X% consecutive way and initiatives declined nine a is impact was from you ago. can headcount, our through see efficiency down quarters has

expense the year. will also losses which expect for of full outlook this of XX% higher We have billion reduced X cause for expense losses the first XXXX, expense us by expenses, operating the and professional $X.X by included during level fourth third billion. billion The services $XX.X X% currently quarter approximately quarter our in and occupancy We other outside be $XX.X our to operating exceed excluding year. losses, to months operating

and will additional significant. will highlighted, – could remediation coming still customer which that be in expense and remain quarters, in Charlie As outstanding regulatory remain matters still the likely result litigation,

rolled quarter. revenue operating from Consumer interest XX% starting by year Turning Business of fees the X. with of August mortgage and in basis deposit the our points balances. impact increased some expect Association further at ago fees mortgage Banking mid-September, low the of which by since and The extra rates quarter year, overdraft this weekly impacted quarter earlier by we Bankers fourth the deposit-related so in and applications eliminated early Lending a period Banking to grace select since beginning measured have the a the other and payday fees. begin the at over increased out would were driving segments, beginning Deposit-related and the as highest XXXX, non-sufficient the XX-year higher policy states level we Small and launched funds end. Slide to rates higher changes day ended Consumer in Industry our decline year on to driven in XXX Mortgage

result, a and lending year purchased as resecuritization mortgage as securitization originations loans pools. the sale gain by declined ago, from lower well our XX% As on revenue from a driven from revenue home of margins lower

While market near-term in it challenging the possible adjusts the seasonally when fourth originations lower mortgage further are quarter we we remain have and the banking in mortgage volumes, to decline the slower. in to revenue it’s that a expect

demand from origination We a ago up volumes. by from by excess higher was due declined card benefited capacity continue Personal driven ago growth to couple balances higher balances. year year compression loan loan which expect in driven to loan to by offset reduced ago partially year Lending these with due X% launches. Auto higher higher X% and a new balances, loan and spread product will And was revenue and to remove align from from revenue point-of-sale Credit of quarters. over next X% continue adjustments the a volume the

to originations business grew I key decline from originations. in quarter, the in as XX% from third Turning declined year our second the quarter, Refinances loan balances XX% in of non-conforming a by XX. portfolio. declines ago auto quarter. driven XX% already both in and correspondent the Average X% a the to declined in originations. total drivers Slide Mortgage the lending drivers some retail home and second growth highlighted of originations on with percentage

card spending quarter. turning to debit year increased while second card, debit a ago, X% from from So declined X% spend the

were travel. up point-of-sale reflecting XX% increases ago, from accounts fuel Charlie year sale strong volumes up launch of largest balances were Average up As which XX%. the highlighted, and from year a a benefited card credit XX% also from with in percentage of purchase point with the the new products, ago, new volume

remain in card of will to credit our accounts. disciplined We continue new underwriting

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

year offset Lending in loan ago, continued from net our quarters, higher revenue expense challenges year investments. Banking rebuild Asset-Based fairly loan increased primarily operating Line remain growth higher to year come losses. the XX% efforts to a from securities, Leasing. were by Market stable balances costs Asset-Based higher Loan have the and in from than chain quarter, operating from from and higher declines smaller inflation and the driven a for relative ago. ago, higher to balances were customers’ larger more driven consecutive clients. from X% a from clients, second supply which and Non-interest Average growth Middle Leasing revenue Lending and gains up as inventory five drove and XX% rates continued energy by equity increased renewable grown utilization

quarter. XX% strong was mortgage quarter, in Slide but XX% rates balances, year broad-based banking of the exchange market reflecting real revenue revenue Investment increased fees as loan results, a revenue activity. balances X% lower to well from on commitments higher write-down year working banking well estate Investment loan rates down a in year and to capital as Commercial by Management higher of the average Wealth impact from net stronger a decline XX, with declined commercial grew reflecting from gain the rates growth interest the Banking On with year Average valuations. ago, unfunded the increase second by higher the balances. bank-backed due ago, ago, higher clients’ of XX. management a interest X% driven equities, quarter. with XX% businesses a ago fund and growth from rates interest higher leveraged as year income pace securities impact reflecting and improved increase from driven as driven of fees the driven Corporate and loans Banking Turning up commodities on trading. Compared grew ago, fees by treasury and loans volatility increased period-end revenue the X% impact in X% second last needs, investment market the client-demanded and a slowed third margins. of sale asset-based finance as from to by from grew Investment ago across the foreign quarter Markets offset the year in our Slide lower

decrease As steep the again the of priced the beginning the And are as quarter, was quarter reflected market of income at S&P third fixed a X. WIM the quarter, indices July results in quarter decline. majority the as lower not XXX as of third while the the assets valuations and declined so advisory reminder, second

in will lower in given venture Management. to quarter quarter driven year revenue-related current So asset-based ago our fourth high the securities-based another continued a compensation. to affiliated X% it will underlying income would significant year the be equity loans in a year from conditions, exclude the quarter. fees don’t and highlights from third you Expenses due continue in Asset a step in rising growth Revenue XX market execute to gains from were in of net operating expect momentum ago decline. quarter results for businesses, lower due ago our ago there reflect efficiency capital our fourth be less lending. than we increased on while had Average the down year the from accounted X% Slide by decreased although million and increased private businesses improve Both declined services of the from also and losses revenue we and had impacted last expenses of equity In in operating Trust gains and corporate of Corporate our due significantly revenue Wells approximately losses. $XXX by quarter higher business in Expenses summary, equity our impacted $XXX the contributed level earnings strong. million a These levels year XXXX. losses, results. Both third capacity. divestitures operating to declined Fargo of results, our strong rates, expenses to as have performance we the our if We initiatives. continue improving and credit quarter interest the and to capital remain our expense

will take questions. your Question-and-Answer We Session now

[Operator John Instructions] will Autonomous McDonald today from question Research. come And for first our of

Your line is open, sir.

Mike, Good you. expenses. morning, I on guys. to the wanted ask Thank

– loss to this future, or losses, some op you answer, those? that have accrual? the of first about to happened reassessing should this in the loss you but The terms in and you’ve stuff you might some got already up? op expect How as quarter we what of I accrual didn’t Is what should combination the pay quarter it’s there operating of think with we the paid tough think you hit with know

done accrue pretty put so are things way be mean, the clear that you I’d generally, know Charlie. you pretty it’s when sense to it’s you and Look, going guess you it. the I on or like think all it have is, good I I something rules accounting Hey, describe on is know upon, when can based probable, estimate something an a and John,

do be things, significant. be us get with what that interest could seeing these behind to – also can. to we’ve transparent as been the it’s financial there trying It’s quickly And work both our we’ve that’s and our so very do, very, And the in you’re as impact but tried much said, quarter. what possibly we of as that best will things be have to that that we lumpy, we’ve in as

of the Okay. And of annualizing maybe, puts that? year? some we be quarter of million expense the just next outlook then I think And that what’s for this non-op next And – for driving on for what fourth fourth up and Thanks. follow-up of Maybe quarter? applies then thinking would $XX.X that seasonality? fourth could Mike, takes year can it off context jumping quarter. beginning the in the roughly from quarter the as from the the point million about Is $XX.X the

Yes. No, about thanks, change quarter third you think quarter, And John. things. just I fourth think to is seasonal when really from it some the

back go different bunch story related accruals there in time, period year-end the other just you you of see over that quarter, a and than a If long no that. of to so of items fourth sort there end up is

come to through and track well in continue as numbers some be that think we year, work of the so I you’ll see there. out the on those on of efficiency that we laid at the beginning

XXXX, we in said As to that in detail out it will January. Charlie remarks, relates lay more his in as

to are Okay. efficiency where and relative Maybe comment a broader your targets? you on just longer-term

track And $X.X about we’re on would on do track and billion right in John. impact – that. out, laid that’s we’re on think XXXX, deliver said that I of No, we the we we to Yes. plan

we’re Charlie I now, as And going more and more – our those the of both and process unpick conversations budget to still opportunity. we through continuing a said As is not there onion there go think number we where as opportunity. we’re times, I through is around done, and

continue program got for we’re opportunity drive on to feel we but to So the incremental will we’ve still that I laid track those more think evolve, efficiency, out. and – things we

more it’s cycles, and specifically our are the And just from talked – through future. the is makes we sustainable different terms thinking where about that I nothing including because add, that’s a thing people’s about that on I in do what only we when also we’ve of mean, our for we’re is when how a from I fits and expenses the end next thinking that what an last sense we about John, how quarter, like opportunities about looks to it standpoint, quarter, And both in in, talk know opportunity talk lot ROTCE, minds, there would the our of it year. path next XX% think to get to of new

And we budget so have by that point, process. our finished will

all We puts about really good a to and understand be talk takes, the it. will and in position

it. Got

thanks. Okay,

The come Piper Sandler. question next Scott you. Thank of Siefers from will

open. is line Your

guess NII Thanks, how the rates, you Fed guys. for for taking Once you on momentum? sort broadly positive long discuss broadly NII. I stops question. Thank how can you to ask of wanted and the maintain raising could I

is and cycle about you last deposit lag pricing, is again normal to on I think think terms you a expected. of as and mind play only the it you just Once right, lot stops keep that of out happening that the out thing every that Well, what’s happens before lag and to in will see need with seeing in for there But be loan raising and there economy, I in happened answer degree what do going stops that’s would deposit rates, in to happen Fed deposits growth, will we’re with the point us forth. so that a pricing the in any cycle. accuracy, be It a to Scott, here. up, will needs and

point, that those expectations have some even days, that it what-ifs scenario. at the into to as And over of to is a last As overall to that seen, continue NII there we of evolve. all relates think I few go lot need

as pricing I think about in – mind the would lag. that, you So deposit but keep

Yes.

them And what of could have backdrop it just the operating put had sense. taken, keep been and high just them you Wells of for what quarter But already Thank And issues ask I point, just context, the $X given losses – weren’t how many when so there what what’s curious you. within guess, years, high these the a third so for took high Okay. going forward? level? like this losses guess those to charges place. just given pushing at returning that second, such just Makes billion really I help know, I is keeping in at guys they to a magnitude the targeting I like,

take again, regulatory I’ll things it, of build we the past. to go in. which free relates that continue we past we’ve I disclosures, through open at we do and the litigation And you do if that in through Charlie. have said We find do lot is a still environment, those feel our things, Mike, to series remediated. that to to be forward shot this relate past, of do – and a had and things environment cover in make just a and and those that we disclosures. to the Scott, that to move matters control have pipe things ourselves as our the go think, have Listen, relate do we’ve it progress other thing in I which the the Yes.

try as just, both things I both like get The clear we as when to again, – whether – to the as done and we you we as So to said charges, just it’s quickly operationally dictate want and would on and earlier, can. can. financially, be we accounting as take rules appropriate

and that’s it. surprised. behind when end the position this clear of reality that remarks the we is move We us. to like the us, isn’t quickly things the in to I I just that But as we for the can on as be these to it don’t say remaining are sure. would of we’re in we like not try charge get to get everything But surprised, not mean, behind

Okay.

that underlying one sure we we’re invest with Yes. And businesses, overall. these and in the continuing thing costs even I make the And charges, think too. to

got highlighted doing – earnings we’ve we’re some where in adding the bit I of that some capabilities where we capacity are opportunities but And we little of to to that remarks, think get we the company we’ve we’re need also to. past, executing making the sure need to, Charlie as people building keep out about the those but continues his as efficiency a sure better. the that agenda to make talked well of on in

helps. It

it. Thank I guys, perfect. Okay, you, appreciate much. very

Ken Usdin Jefferies. from come will of question next The

is line open, sir. Your

protecting Thank in uncertain environment. Good comments an Charlie you morning, want your a ask you. I to your Mike. follow-up about Charlie, on and capital

CCAR, flexibility. got back Going room, of when lot a lot stated to a of the correctly you you’ve excess

of keep in, it share keep where mean doing just want do build – you that what prospects Just to how a that you traject protected the environment does repurchase? it? to relative it you. wondering for is and this environment? to And expect in Or CETX be Thank you just

Ken, and start, I’ll Maybe add can anything. then Charlie

much quarter. hasn’t thinking last need to our build like think since changed I we We don’t feel here. from

environment as be continue As we’re minimum be sort do cushion of and to buffers you about I in, when – we the we you our we know, buybacks. just reg want how we’ve at – basis got prudent points and together. of look do about XXX think to over And

if number seen think look even the of of now weeks quarter, in you the volatility last of I the saw bit rate X happening. volatility the of in the last the quite and the and days quarter we’ve quarter third fourth about we think at even beginning, a in

opportunities it. into all just to the we’re we do quarter risks managing things look about sure that it’s the just smart that so And are, at every those go and of where being calculus and make

to We see, on very we we’re position swings that And would could of said, the There trigger only a conservative Mike And when very capacity all And feel we forward are rather conservative. is are conscious less in of I there these in. in should also capital as comments, us. of just, us. AOCI to to what about have feel around sit good geopolitical given the based risks look on about growing could it are many impacted capital, just be good we earnings and sit which managing reasons which are those that thing the we think, as be broader trying extremely There ultimately what company. out impact and the we economy. the certainly, more risks that the the upon add where than today, have most something, something point are I comes – out that actually we

in, our this things of for how capital. probably us we’re that, issues best lead those use a so own environment combination with just those play And that to the see of out. say is And that things just let’s

of capital, Got it. that other uses terms just just in of follow-up in And a question.

little and to alluded quarter the the did uncertainty. this a greater You for potential bit reserve a build

live you of now in can your turn, a but your Charlie, help things – to say Just in point understand where scenario reserve? weightings prepared just in terms how. us your And might you it’s just remarks just unclear is

how So view has your mean might sense losses and how how we better potential what changed? do of on that for you a get contemplate, reserves, do

hard one to That’s answer. a

happen through credit. what bunch will of depending we weighting we impact as to and and we figure series results. of our we I economists’ when go we process upon that the produce think reserves, those, is that does scenarios everyone then look is at else – view a of So that will what set when calculations, with based are out think the what in we variables environment, which then series here right our We through go set a models have CECL sit do the we for of economically-driven the on of a

on just is and right. things can so But the let think here we there today, So is be it say trying judgment lot can that also many of be whether on conservative, be. these to assuming a how are you’re top we’re – there you – differently. factors you but is There into things, me I just we the way of think fairly to it’s go there relative signs formulaically-driven. We as And ultimately relative it. a behind weigh basis, sits a build, not to about would that, you got sit it, models the extent say that to

the factor scenarios. making have environment I into to risks think do different the the comments that’s scenarios so weightings downside in think that and And the we’re I the different we [indiscernible]. weight about how we

maybe weighting add, we’ve for significant pretty last just haven’t scenarios And changed now of while a couple the for I’ll downside had quarters, we’ve the a that. this said and on

you – that now. of during COVID, we at build haven’t built – look all guess, to I if a today, years that we’ve think Relative ago released couple happened. are what where I you we of the over

the about And into talked goes so what conversation. all of Charlie

we very feel still we point, this at comfortable where are. with so And

Understood.

Okay, thanks guys.

that that view very But if The only – be at our have risk potential be level change. is, again, we’re I try to on realistic forward-looking, are. the trying could you Yes. want outcomes to be what the deteriorates thing and same we there, so and clear about to just about and of be out time,

perspective, level, predict. weird the of about we reserving way through to all – have it’s income back our it’s this to I statement. for kind the the much the are think about getting capital very we so And comment, that think that hard to way do same. And we capital From think do the and runs

Great. Thanks, again.

question Ebrahim of next Poonawala Bank of Thank you. The comes from America.

line Your is open.

guess just Hey, good around credit. quick I morning. a follow-up

seeing crack if if bit comes little weakness that from signs your a of can And any in lending just on one, and you. careful think any Are over in portfolio, are about seeing the level sponsors, more particular? book, areas fundamental or standpoint, the talk how past. a in you’ve exposure your I in volatility book around being within create talked think the credit Charlie Auto – of some Mike, to lending? areas extending any where there you Thank also, the there within some any that you’re I new C&I of about kind comfort to whether credit coming financial back the quarters? or

think I’ll Maybe piece. Sure. the start last I’ll on

think of in terms significant I in story so any there no in impact anything the the referring to leverage immaterial very nothing bridge, bridge you’re terms – It’s finance of quarter. this quarter, book?

investment shape same most average, performing thing part, credit, more you bit bank. in go on it broadly corporate As good bank, the little for the really if the are are commercial really relates And the in well, on right? portfolios a still in look customers

out the consumer pointed good. side, look health a of really Charlie lot On still indicators

seeing not systematic stress. We’re

of lower little a a seeing spectrum, for certainly the big in more is You’re the on stress end, bit which portfolio part us. wealth

And good so overall, date. of performance so in terms to the so far,

time spend industries. looking I of Ebrahim, a on say, the inflation at – sensitive would that wholesale we’re we side lot

consumer we and see try digging. just we’re side, just remarks and we’re where but my be As we very And ahead we’re on problems, in to forward-looking. get mentioned I – trying just don’t the can,

stress. We’re for look that to of digging of we all through the have information signs

and have thought. some to consumers rates. impact the start up on those were I as scales lower-end and payment haven’t progressed we But the scale several very you think change quickly saw small see would impacts low very, like the to if you as ago, we quarters significantly, to

and again, their we So, sit and the are have don’t what to listened word, in – have extremely just it’s sand. is at here doing We take we they and heads powerful. our Fed them the

to relative But but be higher risk our trying multiple impacted. categories could production markets risk Not will big be and just I that of part to but of the same we products, the at we Again, are just prudent. any so up layers – thing and the providing have we prudent, some to of say, the just credit. just to are are only them. be would in to And the the last products, is on be of time, our be – a trying slow, in tightening smart things our to continuing I would some edges. And who say

Got the to just I referring what follow-up, financials, book was it. around a quick C&I on Mike, is ex-banks. the to disclosures And exposure except

like this equity about I uncertainty at. there a am asset should in how holds rates? in around of private world is management, That’s we was where some about estate I when anything up higher thinking that environment sort what there getting worry real finance, so And of

Sorry. Yes.

can So, subscription at the space the some point, see is well, those are as asset-backed well as – finance exposures, And this Q, all we breakdown – if there you really in performing of you those finance both and that. at the space. those look

out. And to call so nothing

you. Thank it. Got

come will question next of from ISI. Pancari Evercore John The

is open. line Your

efficiency look about January. $XX On morning. as can know on move – that early have from that Good at cost this yet And on potential improvement. see target talk as you could year again number your all gross about $X that for talk year, of the end, I I front Can side this in still the to you you the in you – you? billion higher billion mentioned you saves? substantial the know that you increased opportunity the opportunities

remarks look, more been specific we John, sure efficiency more back I would on But that on am are just we the have saying, guidance journey. go disclosure leave Yes. I that will in what there. not will any so or to I on like we provide January, done

I we us, parts of execute in on the really of most that’s to stuff to front think As the we continue more so company, opportunity and evolve. will across find that continue

that I And Can size Mike. mortgage of Okay, indicated maybe the you there. you the help incremental you could in Thanks. expectation, then see you in the us could fourth incremental decline? see an think terms magnitude in some that pressure up terms quarter downside of

Banking little have It’s at banking a I we a only there. mean the [ph] quarter. for look and million segment, you the the in Yes. Lending income mortgage over the Consumer if – got $XXX Well,

relatively came a what if August than forecasted, probably quarter, at decline in we little percentage you better these days the in that they what July. Spreads but a what September, to were small think happened came so guided a down given bit little substantial we I pretty is we run look than rate. in a bit better dollar continue. even expect this decline But So, back had in and would we

off a some be this downside could pretty point. So, at low while think run rate there I there, it’s

Got it.

the one if how about in the deposits impacts of the declines more potential talk balances, terms sorry we pressure the rate you can maybe sheet, incremental should about of and on this in to then follow-up am you I positive And pointed think as on hold? had balance just already. hikes take the to see Okay. we continue But

here, see think to one, you while. as going said to are a from think continue now for I Well, I pricing have increase we

in. given as somewhat to of up the right, the so go rates we will all it is And increase. then on side, environment And are continue natural, you deposit see pricing

in to is in pointed my in cash So, the moving as saw wealth biggest our we I clients out decline dollar the higher-yielding alternatives. – remarks business, which

move cash from cash seen just Now, into of broadly, we are clients have substantially, couple they we migrate grow a seeing deposits. in areas away alternatives where not also as more there

it. So, see, seeing the well. book, I And think is clients migrating that’s – of of seeing the rate-sensitive on a what – still us, side as much activity are of lot into moving some other your which are there with that, And a we of it’s which then maybe going alternatives, the but rest expected bit the in we really to piece but people be spending. there a the little there consumer away clients we or investment is Not some then is corporate the most on are we much people to it’s on spending. us of are bank, as see staying cash deposits, out many from

we So, I as be going – there is some declines would expect could there to go. that be further

Got it.

Okay. the Thanks Appreciate color. Mike.

The next question comes from Erika Najarian of UBS.

Your line open is miss.

Hi. Good morning.

on think forward, I look core... expects as am you billion long so Street market the contemplate be is Just about we guess think what to expenses I Mike, be expense expenses, the the to and budgeting improving $X.X I are another the year, improvements as Meaning, operating off op seems continue expected, telling to you as that may. of the wondering, next as Charlie for losses as losses. process forward, the original do core? core on strong the a question going be to even if today to cutting just And that expectation. market market us think I higher the adjustments budgeting, contributor you about through looking – is

or expenses, operating losses Erika? losses, excluding Operating

expenses, operating I losses. meant excluding

meaningfully think I to $X.X I the your original core? that are on billion down number. wondering investors op contemplate am expecting be losses are from you to if continuing even

significant matters. first at to we of that to significant it’s that it. related we historical let to losses would in can, all, – have a would we think want we again, likely that more just these I said, take remind just that quite highly as said we I of will some possible. me And likely, be – want potentially we I comments transparent the prepared Well, that say, shot you as

to the about to see until again, coming we radar excluding So, I be that, down would wouldn’t want we on high, actually personally encourage that our just point And it people the ops advanced work happens. screen. we is we op I and I of model down. again, work Because things. still show the losses said, need and that when think on expenses, for are make get in just to them through as I coming question, them No and is fourth budget, see proposition, very through we that guidance have are the specific a we think what us. important talk we because quarter next go will we see of build things we behind more control that going and to the me should we all as are need of environment, into also that sustainable to because we you be because we provide what much think want those And we find to know XX% doing, a notice plays our And also to And little ROTCE. how to going the are this year, relative done rest to about bit but it know I it everyone.

past, our that’s much fixing expense from the to we both we where to of are which all earnings. down it live one the we work no I rectifying these what mean, risk necessary – the in the are we and – But worlds, are we falling intention when the very But is our wants structure. issues all hand, extremely building have which and two does and control businesses. in even want go On everyone regulatory because these behind work also expenses of

be. through And to ratios the efficiencies. we conversations are of two categories. no in that is them appropriate are question and process our from the where are those that not we that investing going we they of make the efficiency want getting we so to sure have where we Overall, see budget each have amount And there obviously paths is what are to

will how are goes. clarity, just that long-term. just both thinking of how when we that directionally, – about tells – what sides thinking more process, But But we you be should we about provide So, equation. finish know that we we where but understand that where the are more

is with obviously, And sense. think Fargo I Efficiencies, question accelerated Charlie, so conversation is makes next for that the sense. Wells you, I think terms And investors, right? sort in makes follow-up of spend, step a Mike. the my of maybe ratio, for No, investment that

my So, two question. second I to am squeezing parts

ratio setting? in The first previous could today ACL we second, funds could And you if us you trending just deposit give where your the for is, unemployment what points last added relative the tell talked to we quarterly your you now a onto to ratio, you comment XXX contemplates? Fed that on earnings since expectation betas basis have have see expectation

first. Yes. the Well, take first let me one

few weighted look them. So, rate blend our give one the you a kind of give unemployment of scenarios we data we of do a if economic is you Q, at and you points,

XXXX. this the of one. was weighted third we the right on – quarter of will As not The based X.X%, there. update the end growing June, and of of the that when number Q And the the end for X% we actually, to year get at rated end the

that. On repeat – was the am the second what part? sorry second second can about question, I just of the you the part

thinking cumulative that betas your we outlook since to Deposit given you [ph] points the XXXX, contemplated of deposit funds on last added quarterly we this betas, Fed’s spoke changed basis has earnings we setting? as in XXX

to as analysis have so going And we environment. we think to and do the would and the cycle. the we I think far, point the was to go I up, the way that part played them had out increase, playbook continue expected at them this done of the rates expect betas in into Well,

expected, rates to we continue And so to that. the originally go with are up to will even higher going than thought, that’s And – the be then if go up right. and betas

would. And thought this playing so the point at we largely think it’s it way out I

Thank you.

The Matt next from comes question O’Connor Deutsche Bank. of

line open is Your sir.

on give potentially is update lock rate your level about kind expected, are lower rate it in at you to what’s of Can are your on perspective on from that? an that morning. we what how the here, rates, thinking thoughts whether or yourselves or you and Good Thanks. want you us protecting positioning,

other Yes. But thinking go the changed you throughout where today, as sensitive lot. have the about think since today, those think asset down. I when – quite as where we we the the get still we we rates still suggest, but to Certainly have I expectations are start quarter of rates and the benefit around also – expectations as changed but them have And I not back up. so second side mean peak into continue banks even stand quarter, are to most stand that just will come about third about and we a will today, substantially.

haven’t from decline. at in how of want rates So, this But to we this when would sheet we I point, and way would a say a balance to at of anything spending are start that protect lot time the material thinking done we part about point. question

you. Thank Okay.

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

is Your open. line

Good Hi. morning.

Good morning.

more questions. context the within maybe Two the a about grow so as think room percentage am to what you book you I understand time One, trying you the long assets loan is grow much that for how can’t GFC? of how assets should I a could asset but level in cap, know to that there total constraint you is get think have ago, of before loans, that? it’s or room you earning total to we to just on the loans realizing a there running

have to pull room we as have when need more got we last even for to we there grow we clients. I And and to think I Betsy, said we and quarter, capacity if be to have levers got to that. think think Yes. continue do create

in at your be feel comfortable this we to point can continue certain there are think going got – can that so portfolio, discretionary that loan we of and we we be And so comfortable have is that there point, to you still this are pockets at able be do for stuff clients. to And we always I there.

model pull us that put should the the as for we And to separately on give can Okay. then AOCI should how part, long in you to what a sense take?

How long – what part of that take? should

if you The XQ, got… underwater flat AFS with end have Like were book, right? rates quarter

AOCI? to back start you do When the accrete

Yes. the AOCI? How long does take accrete it to back

It takes a while.

we come bonds really So, mentioned the changed you while guys – a and to haven’t I as take will back have think much, last maturity It quarter up – the sort came and it slowly this come year-by-year of just shorter. the will get of back. expectations

other didn’t put pace, changed it’s to places obviously, and Okay. have some would the outlook. just was that Alright. capital because portfolio hedges we I restructurings had seen meaningful the have know if because at No, you wondering on

any wondering color guess Thanks. am not. if is I Alright. I just but So, there, there

next The from you. Partners. of question Thank Charles comes Peabody Portales

Your line is open.

follow-up wanted question. deposit to on beta I the

assumptions and a into As am what market of was advice that I thoughts get you out affect potentially therefore, funds next are liquidity I on how and curious sure that committee how banking aware, system, about your might some would year? deposit money flows, treasury to to buyback. are your the the beta trying TBAC affect talking Treasury is

an cause deposit that from of bear, one what that to would that go question hard mean into and to over will will will that betas I a like many – will that comes betas really time. deposit to be effect I be levels, how answer. play into therefore, different and if factors think expect

So, attempt I this wouldn’t to point. behind put at some that try to math

But at as the a it or very or view in least, in would is isolation, isolation? net positive it non-event you a

I hard be or depends so I think non-event It a big to full you and say. it have think until in could mean and it what But be matter. size, how it really I range. on could that better it’s is clarity,

$X And trillion of assuming have? I they the type which think it’s capacity a treasury buyback, is

Yes.

at a hard this math behind just it’s to question think I point. really put to try

Thank you. Okay.

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

open Your line is sir.

below wanted of to in have cohorts. are below I of kind little about What talking Thanks. a Mike you about, are talk about how Charlie, – levels? gone cohorts pre-pandemic comment you deposits in down balances that? Charlie, Can much level – your bit declines pre-pandemic before you seeing levels follow-up just earlier and certain on they

that lowest – entered begin with those same for that it that had started will whereas would quarter have the pre-pandemic Mike. turn of said we time have remarks, pre-pandemic of where declines now are I expected It’s just prepared with, we levels, to Yes. we this base. pandemic I balances talked levels. had But in to and part to spend thing the prior I the period spread, for remains exacerbate a that. see hasn’t they would ultimately small over I and above But averaging and about the that is our balances that it to of customer still in below as deposit expected levels a in group and that the really.

there that Yes. of And a there in customers fact, declines. kind of per and have some haven’t, have customers these month, also seen $X,XXX or balances or $XXX a average is that those is And $X,XXX are customers percentage – generally those percentage that of some right.

higher So, wealth just cohorts. at. really hasn’t But cohorts to the in up that of said, it Charlie started cohorts go different as is have we one income or looked

Okay. has your that like start And quarter. this that happened from sounded comments – it decline

guess the gets as that worse it we group remains are for So, I probably inflation high? seeing,

as a trend in is of we continuation this No, quarter well. saw second a

it’s continuation not for any a seen So, we way, of but it’s necessarily a trend of in accelerating a have number months. now

gave break little those Can days delinquencies, a XX this to you. what you that did for quarter? one days delinquencies, down plus. early the XX Mike, Card of to XX you

we are Q, There will think that. I the back on more in be

Okay.

the suggestion on. change environment, are to we okay, because, Thanks. given at obviously, it’s it starting have an – don’t earnings eye just out You to to that metric important an keep

The from line RBC. for Sir, is Gerard will open. question today of final Cassidy your come

in balances seeing can are real you morning You estate aggressive Thank Good you the very banks hearing up, and The risk had the are trends the the down. you with lending. Charlie. real as you. tighten might from in year-over-year. aren’t color to morning trends in the revenue Can But this you in quarter that were – starting us as estate slightly commercial we real mortgage on commercial area? course, dynamics being that estate real be you seeing strong any seeing growth, share of folks commercial different estate mortgage? market Mike. are commercial guys estate real commercial Good Mike,

Sure.

Let driving growth some seen, right. me start you with have just what’s of the

and loan some growth Really some balances up two industrial driven multifamily, year-over-year. growth and apartments, in So, in things, by properties. are year-to-date

we And so see still really strong demand.

homes look even if – you months, demand like new strong last there. really the over still multifamily think I single-family new turned number growing. really starts, has still Hasn’t of at housing, housing so

you some when look Good impacted fine, we of categories think pandemic I hold flow, portfolio, are hotels, the pretty back. performance most at up seeing retail. that were the the are well. are and most by the cash cases, of that In values

long-term You and have yet space, because leases uncertainty still hasn’t the still into you given things. stress have translated forward-looking really just office significant some that in other

sheet, are about what to hear the you as you and just that’s you continue try think but on – your anecdotal others year-to-date. of – context have into of uncertain for doing. some you environment, good – you growth always put through smart the what this growth You it yet are things to I year. us, that. portfolio. an do And to seen But I nothing going an But about be are on in you can’t put the has go balance issue property, good about speak new rolling systematic we seeing

already I think drew ratio? XX that do you you well through CETX available-for-sale out down you guys Would AOCI portfolio of and What required Obviously, would your kind mark taking repositioning mark if are make since basis to by above to need that? good. it dynamics the Very sense points. you CETX your the see your you about level, consider for guys’ pointed your would ratio is

mortgage second on did we – quarter have better You Mae different name, always bit the look Ginnie [ph], but blanking in a ways at you some securities get treatment. a optimize. do little We to the little – where we mortgage-backed traded RWA you some – out did for

at sort size something look done little we contemplating of the something over this we – repositioning it’s do But in at and some think you always have of So, at. not bit we that are point. it’s big And time.

Alright. of Thank you. End Q&A

look next very you We quarter. to much forward care. talking Thank Alright. to you everyone. Take

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