Wells Fargo & Company (WFC) 14 Apr 232023 Q1 Earnings call transcript

Welcome, and thank you for joining the Wells Fargo First Quarter 2023 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 first 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 are may we also caution remind that earnings Before today's like to including financial available to deck release, make you and during uncertainties. and the I call at on started, would our materials, you our website forward-looking first risks get statements that subject quarter presentation are we supplement that like wellsfargo.com. I'd

Factors expectations that found measures on financial SEC filed Information materials Charlie. SEC in the the earnings may materially including over website. the cause materials. our actual and our GAAP reconciliation results a non-GAAP X-K are those filings, referenced, be measures to filings available of differ Form today from earnings any will our containing our to to call now I detailed in turn about including also measures, can

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

some first start me highlights. Let with quarter

and reflected to results in the continued quarter were returns. progress we're Our making the strong improve

We and quarter from grew ago. revenue both a year the fourth

but as quarter change make trends for as we And of of expected. net saw majority of classes to our speaking, and on continue charge-offs customers. expenses looking fourth quarter. ago, consumer from to accelerated Delinquencies the and a or and expenses continued controlling signs operating asset have we the our slowly strong. little on progress prior both the remain increase segments to year losses, the in businesses deterioration broadly continue in by declined The We efficiency initiatives our be from and well. other driven focused lower We're

this more However, weakness and detail. Mike in discuss office, commercial continues estate will in develop to real

credit to actions quarter. risk we're to fourth Given We but taking continue broadly. what tighten for incremental lend segments for higher consecutive credit we're seeing, losses allowance the on our increased

allowance to but Our asset do the the estate the to support economic expectations appropriately continue used not at to of as assess look we real specific adequacy allowance. changed classes, commercial have such meaningfully

credit in continue with to spending the loan Both were of monitor began our in fourth will loans We quarter. and but spending to the were future and but trends debit up year to a consumer each is spend, growth quarter. determine from portfolios relatively remained average card in commercial warranted. soften ago, strong late from stable Consumer the action both the

primarily a higher-yielding decline inflows in consumer in average specific from the have few by The alternatives in the spending. continued press see seeking started first some inflows in have deposits and abated. continued quarter driven that the but been ago did banks that highlighted moderate growth year We customers those

which ratio, the in as CETX to was common quarter already billion first XX.X% Our buying $X common strong, repurchases in we even stock. back stock resumed increased

on some banking share the recent impacting events industry. thoughts the me market Let

with First completed help have and customers. to and our billion utilized system Republic banks, a years us its provide position over U.S. serving to a liquidity, deposit confidence banking the in support strength help country's we has We're $X uninsured work to large liquidity in and made into we Republic last Along glad system. reflecting that the other XX we the financial continue several with the Bank, our put First

different uniquely of serve fail done in bank. from that and what think that were as period customers think quite when sizes regional the during this have people positioned there recognize operating different each first have system our an their of and to that our to We proud banks historic everything to of our typical customers. is communities. for are It's be all part banks about believe models banks quarter I'm they employees important the of important the financial

deposits. with particular had These reliance uninsured business on banks concentrated models heavy

and broader other sources. even a business many banks those more own with like franchise diversified of that funding many and of franchise model times these benefits our operate It Our clear. more the become is

services Our our concentration Most which risk. benefit we diversified model the relationship us size build a helps provides of opportunities our full reduces and customers with across elements individuals customers which the business our companies. from of to broadly, serve importantly, range risk different banking and provide,

to We our also risk sources access to mix focus deposits allows a throughout have strong management financial of and and include customers cycles. on us credit and support which continued funding positions, economic multiple our liquidity capital and

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

XX,XXX risk and Our and to remain place to as a culture more door investments building on weekly remains effective to the processes work, recent operating out and and execute oversight priority across which groups committee and regulatory adding progress appropriate and to I escalations our much reporting framework control-related complete including ability of my make management commitment close and the letter our people the needed reviewing basis. govern building risk in why in to includes we numerous confident for and control the part provide discipline our spent highlighting in work, to complete company. top this having risk appropriate annual time our

mortgage we we've our bank continued to the the customers exit correspondent work focus also the the plans underserved predominantly lending simplify of home as business as business quarter taken of in I and the our business. to we also that way actions largely This communities. to completed simplify part on narrowing first summarize retail operate. We're

our deploying the $XXX include in an to million in investment loans, broadening advance from minority homeownership credit Our purchase program special investing local additional equity existing additional strategy consultants purpose mortgage includes racial home to communities. and

transform innovative products customers offering solutions. to we and continue serve We way our the by

and creating value. We a We best-in-class two credit which bring month deposits direct Hotels experience days this with new early. early Choice announced pay enhance a to more to multiyear out designed year, last card launch co-branded card them a available agreement day eligible rolled up late program our customers' makes to credit

this quarter, the convenient In Flex a affordable we've expectations, customers, access over loans quarter, deposits. fourth early We response billion $XXX to XXX,XXX over digital-only November. the that in direct exceed dollar small Loan provides to funds. enhancement customers our eligible in access launched and to first loan provided continues Customer originated since

in late corporate customers year, last year enhanced digital our for our usage increase. digital feedback adoption overwhelmingly from positive quarter our XXX,XXX ago. new consumer added out user We and to received Digital and the customers logins new first Vantage, active increased mobile experience we've a among X% rolling over Since the on clients commercial experience. and continued

clients' and specific uses a provide AI learning on based Vantage machine platform intuitive and needs. to tailored our

to racial efforts continued to our equity progress also announced America. to environmental, We and grant work. social, in We support governance a $XX advance make on the NAACP to million

affordable largest meet than with single through ideas to and the homes Wells more at the has the affordability spans housing years. XX Fargo is NAACP the to breakthrough the country. from across that This donation million Foundation ever corporation need our long-standing more affordability advance another help received challenge housing expanded NAACP commitment for to the $XX The relationship builds on its

sustainability. commitment million health in economic announced American $XX addressing including business, small a communities opportunities housing, Native advance to also and We financial

highlight I wanted management to yesterday. we changes announced concluding, the Before

She her has of company Small Business career can time. communities business. Fargo think the Wells defining the visible consumer I path done have and have and Consumer colleagues such who banking the period led spent of is a long past for of forward this business CEO retiring the we a entire a our to Mack, much that a including and new as banking Wells at seven Fargo change, years amount serve Mary in over small through been summer. for and few as significant

Mary. announced small We also future. Van he consumer a a Wells Sal to and Saul at banking Fargo Technology Head and the is how strong business technologist him of into knows run Beurden, leader lead business. This ideal person succeed a that makes to the will

But Our products ability to new Saul services customers and Wells the will banking has Fargo. and consistently the branch provide continue convert be digitized and with us this expect them his business. our channels. seamless all across across experiences -- deeply key increasingly business to understands to proven network to

become with initiatives led our the worked Karen, Tracy Consumer technology of more Head industry and technology to businesses. consumer our has platforms a currently of critical across will for technology has than Technology head and for of years the Finally, business modernize to Tracy finance company me. reporting XX series

with her. Mary Wells leaders truly strong a can the our tap to is It's company, It's want I done own during for for roles pleasure when her we results-driven been a everything working she's Fargo. She at great and always within thank tenure leader.

environment As our carefully own activity are customer on of the estate, as are we likely how commercial is increasing. look Customer risks they delinquencies pockets forward, for though and is we're proactively relatively we're real differently, strong managing will impact institutions such still behavior changing. exposures. There remain and watching which office clues low, economic

we preparing for to We to a slow, of are scenarios. continue expect growth economic and range

continue customers to our accordingly. We will both monitor and and will react the markets

enable economic to over should customers Our will Mike. cycles. diversified now to throughout support our call business turn us the model I

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

and us, our we banking continue lot reflected results the throughout going are a which progress there priorities to industry focus making, was While I'll the our call. the on highlight we on around in

Slide with liquidity X. on capital and Starting

quarter XX.X%, share CETX first quarters, stock quarter, pausing reflecting $X the in million common the points assets. of ratio repurchased up in and our for the the fourth was quarter. earnings lower risk-weighted prior basis three Our After from we repurchases approximately XX

to In percentage buffers, ratio Our was to minimum. approximately above coming liquidity return regulatory first shareholders minimum regulatory above well prudently coverage the continue our we in ratio CETX XX to the quarters. and required expect capital quarter, excess plus the our points remained

quarter, our a continue XX% base of deposit as deposits pandemic. over percentage a higher with benefit in than diversified is before We the Consumer first of from to and Banking the Lending segment which our

to X quality but to loan loan quarter decreased were still XX points. first charge-offs below basis Turning million to to from the quarter points charge-offs credit Commercial basis on X. net Net continue pre-pandemic increase Slide in the levels. slowly fourth $XX

continue losses nonperforming However, gradual see underlying weakening we to some including credit performance, higher in assets. improved, while

higher and when clients' actions monitoring rates inflation to and are We our appropriate warranted. proactively taking are sensitivity

are portfolio, exposure on closely real on slide. We more some office next monitoring and the estate share I'll also our details our commercial

increase. we've As gradually consumer delinquencies seen losses expected, and

driven consumer million Total increase loan loans, net basis XX the in portfolio. from increased of an average card by the to credit points charge-offs $XX fourth quarter

gradually take credit to financial continued to and for consumers resilient, weakening most the we've from a we've some a taking remain While portfolio consumer health seen slowing year economy. actions ago, trends position

driven by the nonaccrual first loans loans ago as commercial both a quarter, due fourth recurring Nonperforming the year note, Of commercial the quarter. increased higher real on and lower interest of were assets XX% the real from loans. our X% residential from to end of XX% over principal and on nonaccrual current estate down portfolio estate nonaccrual mortgage XX% in interest of

for credit card model credit first Our office real as the allowance increase $XXX for million an an loans quarter, loans. reflecting loans, primarily losses for well commercial as increased estate in increase

on Given Slide focus the X. on we details especially commercial real office, our estate on provided loans, increased portfolio more

have the end with loans X% represented quarter loans loans, real first at of commercial XX.X% We total of the office outstanding. $XXX.X outstanding our billion of which estate of

higher capital demand, continues lower market challenging show conditions. of and costs office weakness to The financing to market signs due

While we we to this stress see loss meaningful time. more haven't over to yet, expect content seen translate

with expect, and we manage declining portfolio, office our as to year the which and exposure, borrowers we structural continue commitments in a would ago, derisking you enhancements to have X% from work proactively been paydowns warranted. As including resulted

a loan the had you occupied. third than slide, mostly flow the including can owner a tied approximately is guarantee. rents portfolio, some recourse the of Nearly paid see data to business the typically tenants. guarantor provided XX% to through additional operating one performance As in owner's office is on the repayment rather cash we've by Therefore,

the institutional expect, loans office and is largest are estate and Over portfolio of geographically our are high-caliber the majority New vast investment banking in business, sponsors. and California portfolio the two third with diverse, corporate concentrations The you'd real quality is in of as York. this

that single While to approximately is is its this cost, XX% mind in hard that isolation. in measure of a evaluate keep

may perform or of A they properties For example, whether B. refurbished better at newer are or regardless

can more determine rates, situation as review you usually leasing variables, We as yields are portfolio, debt providing in the basis. the this we give of to but case data a loan-by-loan performance, portfolio why commercial and loan-to-value insight is and estate, real such regularly a each into on which different myriad is the other property is

we've conditions and the bank for and quarters. allowance office the of past at portfolio nonaccrual the result ratio increases was losses first assets end quarter for The loans in in for criticized four our losses a loans, credit the for X.X%. the recent office market As the allowance coverage credit corporate investment of increased for

We this we be extended to portfolio, will been over monitor as with period cycles, the of work actively continue prior closely time out but they case it help to an in will this issues as likely play borrowers may solve facing. has

commercial fourth portfolios. and deposits. from period-end from loans lower a fourth quarter, and with Average On our from the declined X% Slide X, were while quarter year we relatively across grew highlight loans balances X% and loans the ago consumer stable

deposits for and to yields basis a Average ago customers quarter, reflecting outflows from rate year our and drivers spending. fourth from continue when continued the interest loan XX into increased quarter higher I'll ago X% fourth highlight year the operating basis and XXX Average as consumer cash points the segment environment. from results. a deposit declined points higher-yielding to the specific alternatives X% reallocate discussing due

and beginning experienced the were at brief has of balances the higher they're that last the in expected quarter, abated increase inflows we fourth from deposit than the deposit a month, market our During still we slightly X% period-end quarter. down since stress while

in across to As rising XX expected, average operating with segments rates. fourth cost deposit costs quarter deposit the points points basis increased response all XX interest to higher our basis from

Our pre-pandemic declined XX% remained in in the to above mix first quarter XX% quarter noninterest-bearing of from fourth deposits but the levels.

Turning interest on Slide to income net X.

interest fourth to than for due was to as days. we net business ago XX% from two quarter was impact the which rates. decline year million the a higher continue higher $XX income The First $XX.X billion, of quarter was fewer benefit

grow will the repricing year and the not net compared deposit net interest of And and XX% on mix XXXX Ultimately, guidance year of we with of XXXX. income depend income interest the of last shape by as variety quarter interest full are this net Our from interest to yield has which level loan expect still income including changed earned we amount the curve, rates, a factors, balances, uncertain, absolute many of approximately demand.

personnel expense by the driven The visions. X% lower losses Turning including from a to payroll by approximately ago, expenses million impact expense expense on retirement taxes, and expenses from Noninterest employees eligible fourth was contributions. seasonally year $XXX Slide the declined and X. operating of XXX(k) driven restricted in quarter increase for quarter, stock in higher the first matching

Our approximately billion, excluding expected operating from is the we losses, to quarter. guidance provided still year noninterest $X.X XXXX expense, unchanged be full last

operating have litigation, reminder, matters outstanding we could losses. regulatory a customer impact and As remediation that

of the driven with interest we a higher Small policy driven Consumer to interest on the Turning lower from starting segments, fees Consumer operating Banking and XX% our by XX. partially offset impact rolled income last deposit-related overdraft out as increased by year. by lending net changes was higher Banking year and Slide revenue ago Business rates

indicators and We spend. investments our active branches, activity customers. efforts make better mobile our Wells capabilities to accelerating Fargo business. more We're we're after for are positive to last and users our beginning to We're were enhance up refurbish and bankers, year-over-year of to personalized We're advice marketing mobile we're in in our increased seeing X% premium app and continuing the provide this rollout also and investing to year. initial new renovate tools to and continuing increase

the initiatives. starting transactions shoots. Teller on for on from We some branches we're with these continue reduced decline down a by At headcount to count. see and to we head reduced efficiency execute initiatives, ago. time, X% X% same of our to continue green all It's early but were total year

elevated remained rates market the mortgage lending, continued home to In and mortgage decline.

channel from home purchased lending the from year revenue significant driven a XX% revenue securitization including the lower resecuritization loans originations decline declined from mortgage from a and correspondent Our pools. of lower ago, by and

we in channel to January expect strategic the will to We earlier book. to the due and applications continue correspondent as from of continue the headcount staffing this the changes the first We reduce we reduce begin announced announced decline complexity the servicing and in stopped to quarter, levels size accepting year. and

marketed servicing for quarter, first close serviced loans the of for billion During others $XX we we mortgage rights successfully expect to this year. approximately that later

continue ago from the will card to loan revenue a to additional higher simplify of driven point-of-sale We balances look to Credit X% opportunities volume. for our servicing higher year reduce due business. and increased by size

year price driven spread ago year rising declined from ago, tightening a loan continued rates. revenue was actions revenue compression balances. from balances credit Auto interest due continued by from and up higher lower to lending loan loan Personal a XX% due competition to X% and

on key drivers quarter Slide Turning both with XX% from XX. year and declined XX% business a to from originations. Mortgage some originations correspondent fourth and ago retail declines in the

mentioned, I accepting applications we in As January. correspondent stopped

originations customers on So, communities. Fargo and our forward, Wells will focused underserved be serving going

The size balances the of volume the for has year Origination declined a compared X% year at the first ago. were year card and to four credit increase ago, declined in our ago, of auto from and XX% quarter competition. compared an first actions quarter a portfolio XX% quarters Debit spending to the increased fourth tightening down end price continued the consecutive quarter. from year-over-year reflecting X% growth in a the

throughout still in year fourth with levels spending double-digit from growth growth quarter the XX% sustained Discretionary growth card the discretionary in was the increased from March. year-over-year the spending spending quarter slowed spending. both in drove and fourth at a with line ago, Spending levels. quarter the with stable Credit nondiscretionary growth but nondiscretionary in

were but levels. in some see well above payment in pre-pandemic rates moderation We the first slight they continue still to quarter,

Slide results Commercial Middle Market fees lower, Banking grew impact XX. interest the were by reflecting and higher loan on while higher balances Banking revenue due rate credit from on a XX% deposits. of deposit-related year ago Turning noninterest-bearing earnings to to rates higher

partially from X% Asset-based leasing was lending lower equity revenue which by net and gains loan by year-over-year, growth driven increased offset securities.

the Average year line in in compared year, customer half volume a balances growth X% driven the inventory. and utilization. last first were of client utilization in fourth loan new Average have and were being to leasing After with balances asset-based seven continued consecutive loan XX% growth by quarter. the from lending growth quarter up second grown first in driven and slightly quarters by for stable higher up ago, increased in quarter the

in Growth driven by than once both smaller including again offset clients. middle banking clients, market more was our and declines larger existing from relationships, new which

Turning with Slide management major Investment industries. revenue the a interest results, reflecting market investment by of ago, to Banking activity XX. impact treasury stronger driven Corporate rates. from clients all management lower XX% Banking across nearly fees ago higher year banking from Investment on increased year reflecting products in a declined all

industry, estate down real and transactions are ago, higher commercial grew rates year commercial XX% balances. real driven impact While a by market loan from higher interest estate of across revenue the our the

relatively environment XX% real of and combination Lower from higher but trading rate slow from in year grew quarter. ago, a sales utilization. a increased across banking from payoffs X% line increased balances ago reflected commercial estate real lower estate stable commercial loans by balances decline the the in a volumes. driven were demand classes. The and revenue fourth Markets all were driven down Average asset by higher results year

Slide partially Wealth to of to by cash income into interest compared alternatives. Management higher-yielding rates, impact Investment by valuations. Growth XX, as customers to driven reallocate continued revenue asset-based was in lower balances by was lower net market offset lower the year which driven was due fees ago, higher down and On X% deposit a

approximately down Expenses from to first from lower end of lending. cash loans XX% a up and were X% securities-based compensation assets, decline Average were of a a decreased year efficiency quarter, total initiatives. X% ago. X% At due a ago, from approximately by the impact the alternatives the in client driven primarily of year ago, revenue-related year

was from lower and year results XX losses $XXX quarter declined higher million Results of net of more million results. venture a Slide by equity first XX% private ago capital or businesses. interests. highlights as affiliated than net included offset in million on pretax noncontrolling $XXX $XXX corporate or equity interest our in securities net and income Revenue the our

improvement pretax our reduced and quarter and in in earnings grew free revenue summary, growth We In results the capacity. in first had our strong an expenses provision reflected profits.

we expected, net our our where increase to monitoring continued portfolios slightly taking actions and appropriate. and charge-offs As are have from closely tightening lows, credit historical

Our not interest expenses, to provided we resume continue. capital repurchases levels expect and repurchases, has income excluding quarter even stock we net In year stock last losses, common as grew for and operating the full we XXXX, guidance changed.

now We questions. your will take

Siefers today of [Operator Instructions] for from Sandler. Piper Our first question come will Scott

is open. line Your

Thank Mike, just you, side. to out for was question. I the on hoping taking deposit start my

So, about bank? of Does leave when talk the of sort that money actually just stopped? sort some abated. Or of have inflows special is of the influx that it the you from the deposits situations having

other for thanks side stopped, short time a you're Yes, the spending across came businesses. then the the those in And Scott, inflows what in, normal question. normal right? and And they Look, and think I in is since stop. of activity seeing inflows -- just pretty consumer the period the

to Okay. Perfect. maybe a guess just gears switch then And I bit.

cross excess prudently I plans of sort it's on got, had discussed think against your to strong of we've very capital in was the the just countered to the or that currents you uncertainty the capital kind levels. first given all on quarters. regulatory in But the coming prepared resumption glad I kind uncertainty see in environment quarter. whether return very your economy remarks, of in repurchase

would how on through the for year. share the curious about be little repurchase you maybe -- color of a remainder in thinking Just more

is Charlie. This Yes.

the it we we a I quarter-over-quarter capital after even listen, is about take levels way feel of grew say, stock. me billion our Let would purchased the stab. think I $X

that. things or to regulatory ability if because generate of our or shows the like just it changes environment capital, So, necessary,

have capital that, shareholders ability to flexibility of our have we plenty to to way. come with because of to continue do still while return we we which like deal anything So, could the feel

what our prudent regulatory so, that be the with continue can we excess buffers so think and still we to manage that needs beyond above address feel it extremely And to high be is -- bids capital. how plus we we very

Wonderful.

a I questions, feeling asked but going they'll as be more have bunch have a forward well. I Okay.

Charlie, So, much. guys Mike, you thank very it. Really appreciate

next from Wolfe of Steven question The comes Research. Chubak

Your line is sir. open

Hi, good morning.

wealth, So, seeing. trends across is to more profitability every running consumer efficiency efficiency little peer strides the improving on and PPNR in We've some the we're segment, exercise I wanted still peers. well get bit that a ratio virtually through granular significant are the gone of which CIB segment you've the with really peers. ratios in expense commercial the made of line It's versus above Clearly, margins benchmarking running your group. mid-XXs, the

efficiency in do hoping was mortgage? the maybe could the consumer. should opportunity And retrenchment the a mix see see speak current for segment you I from what of How to your you just benefit given a business? And on you normalized the of expense target within much just side as

and like. be and Charlie and lot thoughtful it's we the or requires that more think if And takes little have The about to of technology some of side to chime cases, the both space servicing in still do of consumer, the needs you wants. I'll simplify we lending he it's to the investment Steve, in work as in Mike. I a think work can bit -- when time consumer think and a in I that little bit just way there. its space business, a through start mortgage

footprint to teller decline. then the banking And things set to branch the up. and continued consumer continue transactions other we we've on side, see and branch We've rationalize

And focus see other hopefully, continue is And to hopefully consistent state And one. case. about our you've different peers headcount including that sort is, our the think segment a shouldn't that peers, in seen best-in-class what there. you of the you'll segments, each of for just so, that I we then think be than factors, end when look and in our any will us decline quarter-on-quarter and where

that's a over of time, So, period goal. the

is just versus would when people at we other our that mix obviously -- And segment, add, look I issue. you an

home which extremely part inefficient, of reason is is business today Our made. decision we we made why lending that the the

consumer play So, to the time And as which more years a of Mary I chop talked many, that for make many done, got business about think, after wood banking will over to side, we've out we've period we've there, job lot she of small a efficient. her more banking and exceptional efficient, which consumer the with done they've becoming consumer our an and worked hard about focus got job in our then the attention to bank the operation, turned dealing really business has cleanup, on. was in on which

last that's And to on footprint, branch at digital, behind staffing to two our the migrating years. there branches, looking of combination people years a we're has that. over lot X.X But the and within been a of made progress

in a still it's opportunity there, but amount tremendous there's flight. And of so

color. helpful Really

some yield-seeking to higher Just side focus rate environment on seeing within now NII for wanted persists. wealth we're behavior of the trends my specifically. follow-up, right I And that unpack a there's the if big for longer the

continued outflows. deposit your in and sequentially peers seen You contraction NII and have

hoping of as pace was abatement at yet any to speak if whether you're or pretty a yield-seeking behavior in cash of could or I just the healthy it's seeing continued clip. you sorting

Yes, buying I'll in we're pretty that would days business. talked When not quarter stable, people that not in It's cash sequential there in the been the fewer when be at look it's Otherwise, are it. in thought when It's pretty wealth, we see quarter any at the we the alternatives we that take it's really accelerating. that capturing significant drove change about think the you to -- trend. January. decelerating clip that. this those at flat it fourth And you point. is as what two NII, the cash wealth And it's

continue a capturing will in longer. that case pretty we're And And little to a trend the be ways, think for other so, while. is the that's good probably but news for that been I trend and the going has stable,

Research. McDonald will question The Autonomous of come next John from

the second for quarter Mike, outlook I is was NII. wondering what your

to Thanks. If bit the you quarter. thinking for and what puts takes could talk about second you're and little a that

at Yes. John, an trending, basis. as can things you look are a deposits -- you on average period are end where on see

input the then to you two going number can one. things deposit increased, that's probably So So, right? biggest And those yields see be that are driver. have

that expect kind a So, range outcomes. bit variables quarter. step And get a bit down little are exactly QX. the there what of as little from see of we'll like sort to you a But come we QX I of should a into into of with the think up looks

Yes.

for embeds outlook the any more year point. mix give Can starting a step into of shift from year embedded types the the us pretty full deposit you assumptions and the you color reprice full have about the flows, data? big on outlook And quarter Okay. obviously first down

as it's sure. there inputs will the really few talked the And that still mix there's into quarters, be. And out pricing level regards a all the uncertainty over the go ton of last Yes, we've deposits, where or whether with that, right? to absolute of

to trends see so, happening side some it's pretty moderate happen. for deposits be mix will on we that to that and still pricing some going the we'll still a assumes And space as that our people continue shift spend competitive and guide declines the see

as more So, last time -- quarter, talked get think we'll about by, we and more we as I goes even get information.

be see that we'll all some out, and the the of that hopeful upside, upside a that and so, we're but hopeful And of will half forecast, but -- it see that there's function in but play be those there. second the to we're factors year, there'll we'll how

Jefferies. The comes Usdin next from question Ken of

cost I just ask side. the to a follow-up want on

But on over crystal out, the ball Like, you about clear an So, the can I look as I related to compliance, core term. think no we et I from sight cetera? as gross we're of know related the talked extra you you when Because there's medium line you give just I and hold know think buildup the the risk the up view to big question here. on pretty saves a ongoing would next flat all to duplicative of you that your and start of of to is the get that continuing wave line of in what point sight that? When all how get infrastructure here. sunset ROE when further

a Yes. clarify Ken, to that. little let of me bit try

we're the And in cost expenses before that look a medium be ROTCE some out that to really It while. at that we a will a So, take when -- about significant on that little could would have to risk in of didn't those you years in terms talked we've and of build-outs I doing. assume the terms quarter be what related regulatory to that. get we at we think of XX% getting the efficiency term, last of amount out

then about So -- having get talked we but and XX% benefit across I we'll not in sustainable sheet rely optimized, continue investments think our the the focus us on It of to just to return on the years. requires medium but of been the now what to term we've by shareholder of to start is a couple back outside for that. regulatory capital and also efficiency the to the work, initiatives return, not last risk sure that really in making some the making terms really balance to to goes of of gets get execute the

to that, not efficient Company, to related continue regulatory not drive everything us the just to about be -- necessary, expenses be work we those are think add we're think doing. efficiency clear, we framework risk even in expenses they're just in those to don't -- That do. the work is I'll else not the for when to are and about that that and all and opportunities to we're we the And -- excuse

so, to significant across the and some achieve we do, efficiency efficient the that forward. risk become not more to the our opportunity and there's to look base or at we invest capacity ago, become on businesses and all we the can run we reduce probably. us And not talked efficient how consumer things goals. screen still infrastructure in just necessary in of And second about more more Company, radar that's a the for But going expense provide we point, as either the

One, that than for peers. statement thanks income just question bigger at clarifications. $X.X some of watching results face I looking on But watching the on lot And of a a those the trading are know just the in we the Yes. context? us result side. billion just your as the that exceptional be fee an quarter, forward this there? of can it mindful quarter? and that environment, should we think into this the outlook put context Was you of have Did help anything general your just you. different Thank

the other at some rate in in can We core platforms. those the And the in of investing of -- see platforms from Yes, But look just volatility saw, and in the you consistently that market the FX been asset and some certainly some benefited particularly classes we've results. of the other when we other sure. you quarter. areas, in that

the good So But the quarter hopefully, the by across was results there. volatility we influenced saw definitely that over time, see market. you'll

America. come Ebrahim next The Bank of will question from of Poonawala

the data the optimizing talked to Is about we stress us I clearly, guess, X Basel the that just maybe capital in you likely RWA. of be comments. the higher we while follow you right capital Is stock? mentioned this. secondly, near and think, about XX%, will test, for back fair SCB wanted assume I assumption? point the I the Mike, up you it reforms. to have and for that on Charlie, that then assume, term, CETX the buy maybe higher, drift coming out still And Should

to do is can where if that few can optimize things balance call the RWA out relative maybe sheet a today? Just you to you

Yes, sure. Thanks.

else that line then, question CCAR And time June. continue with than those XXX of And deal get -- basis got the above of we'll XXX points minimum to We've above we -- we're whatever buffers. or time, as simple think with keep capital results the to closer to we've answer so everybody first is don't X.X%. Basel got to a points your that. I drifting in regulatory We basis Certainly, of find the over little is And IV, up. above said, the longer plenty bit out but no. to we'll which comes that. expect out

think of to The… comes -- plenty there's so, Charlie share back And money and deal with said. capacity shareholders, to continue to as whatever I return

I second way. is of was say to deal things I all flexibility that have trying just and with we -- to part think the lot come again, a our to

we anticipating not that significant were And All need capital potential so, with the because of to that things capital any have anything of existing business. inside we the the anticipating that as we capital additional earnings create both excess we're have. we're of downturn We're as could have saying additional that, happen, flexibility of not needs. is if that to the those well amount deal

back billion So we those take -- you'll add that, while we stock bought bought those $X you -- all this -- you quarter. of say things happened

conservative and So, we we'll to very continue maintain be able feel still capital return to position. a

to is give them. illustrate capital then And the exposure, to one of Yes. securities. buy optimization. can If examples couple just help mortgage like a we we want you The business mortgage

You the don't hold have mortgage. always to

If don't have could you're you buying you buy UMBS, securities, to buy Ginnies.

there's a that corporate return can plenty point and bank. underlying relationship and the in make portfolios commercial look getting the view or that's the of from investment And -- so we the whether of we're think, each then at bank you sure

of that or better we will areas reallocate to And so, clients returns either get the plenty portfolios. can I capital underlying for some that think of optimize we think there's

Got it. And question. just one separate

since closer you've You line level comment risk There compliance on expect regulatory the opposed made that another setback is just and about to I to efforts actions shareholder a -- us don't a the made finish confidence the could from on give of some article last all Charlie, dropping big OCC MRAs. the you give on back the that can, sense taking management us around progress, of the major just as perspective, over setback to another front. address was your been push shoe again. to But, talking a to risk that. news tremendous night that that's progress orders, to the extent to taken comfort getting you us

about Yes. I feel I think way exactly refer you we the would back it wrote still we shareholder continue when Listen, And to to letter we wrote my felt where extensively. I work to get ability to long that wasn't that the is we're have feel It very which ago, do. letter. our work and in confident we making done that progress. We continued

environment things where come we can so, case. live always the And That's in an up.

at So, that are we attention sure there that confident like best out here. good against the that the we to we've there. we was do let we're things of Company you other and things when feel But And all don't specific, would that about the the the But making that are close will got there no got to extremely risks our want on it. we if existed decked we're we're doing gaps focused anything progress making pretend know.

from The next of question Pancari comes Evercore John ISI.

to here deposit beta I in the side, And some your as then you updated regarding back -- expectation thinking do how but total on updated give trends separately, drivers, you're on the an some the on continue? an favorable the the you side, the commercial. pricing know of through have On deposit still pressure consumer see can growth NII you cited pressures maybe XXXX. look about expectation as us you you of loan

Yes, thanks.

places growth for of definitely not pockets loan we the been bank, has So, that's happen on overall rate when of It's and pretty quarters, -- consistent couple the three is a were last side, the we're like what seeing for I last but -- talking growth in quarters. now think which might exactly we commercial summer. total moderated across and loans the thought

And be guidance of growth I terms expect low-single-digit in rate rest the loans is so, wouldn't the some will of over for I our still embedded year. huge pretty loans growth And think year. in it the moderate. in

part again, was assuming we're What I And there. what second the John? so, think Sorry. that's

the around Yes, it was update…

beta, sorry. Deposit

Yes.

will side, almost here, exactly Yes. from matter. think the No. the I to we would. of they date, matter. how have And will Look, thought on Competition rates what out we betas deposit path -- played thought

I And give it's going so, guidance competitive gave be we earlier be will the there, betas that that you competitive. side, -- but when we're assuming that on And it maybe think that pretty find stop. when may I be after pretty at it the mentioned we're we hopefully we reasonable, look to I you. you gets still being as point, think call, in we rates though will the think do rise And a back this still the consumer little conservative the

Got it.

know as maybe refreshed could refreshed some to basis, happen that office. because commercial you're the estate change separately reserve LTVs have your you impact just where Okay. come real of clearly if between the talk I levels seeing front, well you bit portfolios discussed motivating Thanks, Mike. and about in we're the behavior. if in versus the other you maybe maybe then around And origination office what can a on clearly is that are little seeing. on stress you a Maybe on in LTVs elaborate

that can if be a us helpful. So, you little would color there, give

basis will Yes, to play big many now, sure. you time. Look, L.A., of over reporting weakness on that lot in expect the like is places a little see stress think issues in are to point, in or And office We're this San and will period right? as in cities in seeing seeing particular, very have not terms out clients said, of near-term that going of like do space right an is I extended everyone of And at be Francisco of all this whether what others -- a bit Seattle. a but some in come. property-by-property too, we on, current that be for it reasons the it

haven't property all more and average around going by already content to little take we granular the lower -- it's it lease changes lost or the bigger bit very it's than seen rates here, places the into are so, And changing going national And either back a secular And just way. office we're time. property. but where are translate to a

of at are look like of giving and happening helpful a numbers basis recently. seen from And going this a a properties portfolio -- to each issues really these what at is haven't a isn't trades that because LTV portfolio you of point be underlying it And the like really we either what there. so, matter lot

issues different it what on that And making to might bunch whole sure about basis of will think how just level sure a potential really come impact you we we're is the make also understand stress so, valuations. from. in ways we the doing And a where property

Graseck of comes question Morgan next The Betsy Stanley. from

those recoveries of credit the couple little follow-up. deck a down, know I that commercial. any And higher to due how on I is there here? just long a see from persisting. were part commercial in increasing bit But you the side, bit A I wanted little to NCLs wanted in of recoveries for recoveries. in about understand actually And understand the to you questions, one driver mentioned a them just

quarter, into we individual And underlying one Yes. really back come change and the too wouldn't I there, or other. it's But I the Betsy. issues quarter-to-quarter. again, every isn't recoveries story mean There read a way trend. to there get that isn't really any significant down it or to going much trend drive situations

this in you of I'm current separately that assets then on a in on time. know anchor us And I that modeling you item? percentage that you should a regard or at outflows little deposits. we can expect anchor so addressed call, least for at to of with bit the as there would that maybe pace see Okay. is continue wealth earlier to the give deposits pre-COVID wondering, wealth that client line back existed any wealth

was it now cash mean, bit of drivers, hold lot right before, quite alts, going as assets. what my of of just seeing is now, asset X%. you're to Yes. other than of out a as commentary a XX% coming cash are going percentage in subcomponent there I we that. cash be are what gave And it's was a you And classes. is of it's how And a people versus deposits obviously, And assets. into higher a of going much right, about other percentage to

seeing specific to up people number a equities not harder other little it's classes and it's -- and a because so percentage sell asset So deposits drive a give cash assets you you're of as balances. those like of

and bills, is like you Right. it's for treasury including things MMF like that? things cash And

yes. Absolutely,

a a in pretty bit. stable assume wealth so, that a -- deposit at continues side pace the the down would And come see balance take and you current just the little for it at to I space and

just should And Any indicated here betas sense you Higher? be last okay. in that question think guess, versus would how deposit it cycle. last to wondering betas. cycle I I'm then be deposit this cycle versus as know magnitude I on Lower? Thanks. Similar? -- prior you about great.

pretty think And period mean tell, -- excess different, over I you long rates it particularly performed going And the I up to relative find stay you out of how betas that have as that will But Look, we'll time. how is rates drive last last look a at so time. cycle, be given far, what part obviously. where Yes. in to have well far that when of happened performed it will of moved what's higher. they've can

on They're rate quarters. they're And of of behaving a commercial we've rises the side, corporate portfolio in the as so you the so now nature bank client by that exactly if And the amount base. portfolio, right? in seen side. little far. you high they're consumer bit -- betas go lower couple a relatively pretty might the that the the given and think, given of low And large case for are been That's

be the all corporate a talked side the on large and things so, be see side, here think we those consumer earlier. I from will function pretty And you'll about consistent the of

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

on towards guys and of Any you the could the hoping driving on elaborate color I that? any end was what's spending there consumer slowing the thoughts month? more

pretty Yes. It was when change. at you that look small

into read much wouldn't I So it. too

activity and I credit on there's of are a out side. the there -- still out spending both still the consumers debit still think lot people are and side

wouldn't read couple weeks. So, I of into a

always specifically on obviously, extremely then appreciate York But your allude to And article of it concerns well. on. know Post you of And I can't these business? yesterday, it kind I performed comment the did New reg I trading harp in separately, issues. And Okay. some some

that business, it investing your while think ago aggressively. You've been shouldn't in these you markets be six you're But was, growing it, some don't areas. although you're maybe other months capital I political there's super comments, growing I growing don't know, been or so, it

like how is of management address tell. I terms Thank fine. in risk businesses could overall guess a growing I you're everything -- mean you're externally, So hard to there is well, in the but of responsible it's oversight way you seems it again, the really going and trading sure is them just because, maybe how making you.

have We're continues. and activity, business. any we're think the way. no business, not risk in in that what focused strong concerns we We've increasing over doing meaningful from customer it on benefited which We had And in flow. oversight is we business

have and financial the period of in have for long had We strong that management time. risk a Company

We was controls. whence came. that would into our to And take anything and the taking be over just to risk anything source beyond using and businesses think And have that it's that really it trading that strong you're careful I from meaningful it management If to good it. the -- really And on I report, we I making, we of about the and its we're about said, good stands feel progress company. own. we feel report as the that performance expand

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

are for weak than are and customers balance us, Are Mike, commercial quarter you coming possibly your growth year-over-year weak guys from reasons DCM are more It you loan market that with sheet where the the basis. you where the a of using any benefits to X.X-year guys you the seeing seeing share reintermediation talked was people about strong your on industry? in commercial some year. why was Can you quite was ago? -- last very so corporate

wouldn't way. meaningful an story, meaningful. but it's I any say I'm always anecdotal There's in Not there, sure, out

They're I income Very And good. results... being gave a first you quarter interest the net some this then, about know us the as [Technical Difficulty] annualize year. growth follow-up, details still

second Can there repeat Hey second. a for part? Gerard, we you lost just the whole you

Sure.

I a though up you lot you the quarter there's hard. uncertainty. gave first for coming But the the and -- has your of to us some XX% reasons net your thinking outlook outlook, on thinking I are for curve if would going gave can has when us is You sooner be changed, why The interest a the comes curve yield specific your it's greater interest details -- or the Nobody very yield number, is, income rate outlook than the rates look is full you course, predict the be. growth, And that's year. that where question. one for guess, maybe on of your XX%. the the know cut that yield could you and curve And question be annualize down and this at growth

part are Well, the that implying late I a in be expectations of year. think will certainly, there decrease the the market

so, I that's certainly that priced And doesn't. think possible But at being it's do And to going that's the not to in prepared think it I you moment. that think be I need happen.

rates upside we'll a is So, -- little is So, then implying, as is and do get the right? I there. be if try market will what higher you'll in than market think we little all use -- us, to what doesn't that a And know. our happen, we guidance are telling closer, there's the what there

what market all is in the we know I'd right knows thing Who this, to Yes. holds. the saying. remarks, there's what the We is don't this I And of listen, is our see the wrong. said tried or which we've constantly, future only where is, in add say -- market

who's have rates the Fed about higher You longer. share for expect talking

we and market, your giving what choose which prepared is and own you but as for that you try you we're can. be, and of apparent determination just benchmark, upon range be there scenarios. of just to be a based guidance, just could When so, a both there, out to give your alternatives a we're about benchmark all scenario also trying it is make but the result can which make as pick what And own that trying we a scenario benchmark, clear supports are like what we range the think think it's a which differ, and will

the very Thank insights. helpful. appreciate I No, further That's you.

Sure.

David of James. comes from next The Raymond question Long

a it down, quarters? expect all over let little the to on that deposit way. flows. deposits next But I number, in the how the color ask concentration noninterest-bearing different course of appreciate the you the change just figure, percentage me come of several some a has the do From

if try And back was I I predict it you number Well, years, over couple wouldn't pre-pandemic, you think the of mid-XXs. about -- of we're exactly next XX% go But in the at to look if quarters. quarter. that in a the

that there. start trend down -- And I it other Unknown, there? towards see it could this but so think we've Will trend said to could so you'll get down see a in little you bit and -- it forums more. it

Sure.

had the If to a the since crisis brief numbers you deposits look Do back just Wells before see there the been high you pre in going over, close call periods, financial for of noninterest-bearing or rates have levels last Fargo years zero industry, XX financial teens? the crisis, great to it, great outside but pretty back mid the to pandemic. we

predict. almost I think that's impossible to

Oppenheimer. last The question for today from will of come Kotowski Chris

must the last across quite year. it here? wonder, the how industry. from so, securities mean, mark-to-mark I mean, managing the you duration do I about kind is that quarter. do obviously, I HTM guess, quickly down? running down during out it does have if investment I the bit X% saw nothing? we how extended a anticipate your of on if portfolio do it noted But And increase And of you run portfolio I down the And anticipate you

and at bunch mortgage function as loan And we're the growth time. of really everything in bit on a including including a that's other AFS. portfolio expect of mortgages decide to we've But HTM portfolio that's and in the we worry else, portfolio the of be down. be securities size the comfortable what much about some period there's is. and the look we of over of see the point, we the the makeup in thinking feel terms where much a in about of of liquidity got thoughtful it have then, around think, terms portfolio. the going how to to continue the size the things, little the into total, we to to rates burn And both dependent duration and quantum a obviously, and I and of given I at on of constraints go, rates that with we And this how all around Well, going think in - of past goes

Okay.

size, keeping all anticipate it being roughly or you it So, the does things equal, run down?

over make on think here that few portfolio that portfolio over make And but over natural decision now burn getting of will then, we'll think the bigger quarters, decision I we'll anticipate the much time. what it I I be next from the and based go. rates the where maturities is don't time.

appreciate much. talk And soon. We so to Take it. thanks care. Alrighty. we'll Everyone, you

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