Wells Fargo & Company (WFC) 14 Jul 232023 Q2 Earnings call transcript

Welcome, and thank you for joining the Wells Fargo Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Please note that today's call is being recorded.

I would now like to turn the call over to John Campbell, Director of Investor Relations. the begin may you conference. Sir,

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

wellsfargo.com. get would available like on materials, second earnings you our to are started, I we presentation the deck release, remind our including quarter financial Before at that website supplement and

call that I'd those actual to found materials today's available materials. forward-looking filings you statements Form about including financial uncertainties. we earnings and any measures X-K in that and results materially from measures, cause make the website. subject non-GAAP our of also expectations in may are Factors referenced, the including are to also can our today like caution filed GAAP filings, differ our SEC be earnings may risks Information to detailed during that SEC measures on reconciliation our containing a to

will I call Charlie. to over turn now the

morning, And you, John. everyone. Thank good

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

start non-interest reflected revenue the well income. as and some ROTCE, The higher interest had quarter Let all higher profit, ago. We me earnings net in with growth share, per second a income with results as pre-provision solid highlights. quarter diluted revenue, pre-tax strong than growth year

from we ratio efficiency to had expense While a make growth improved our progress initiatives, continued we ago. year our efficiency modest and on

million, remain in levels, portfolio. balance driven to credit by office growth continued overall and was as We by for our portfolio our our increase Net allowance sheets increased credit consumer $XXX quality as losses but credit and charge-offs well historical primarily strong from low business healthy. have card

loan portfolio loan play review given has out. our the our us seen of we how today, a could in by portfolio haven't significant quarters losses sense detailed office While the several next

a our actions this want and statistic lease content by stressed notice is but considered all the including more a also discuss be determine renewal of look the type, structure portfolio. detail, number the any scenarios, one rates, property but I hard will at lease location, We've very of Loss and of it that to quarter. point will risk in this to limited Mike in which make combination to, dates, driven behavior. not borrower loan factors, informed

our CRE some ago, as quarter on year portfolio down commercial teams surveillance with our up were to from the loss taken slowed were minimize actions. tightening credit but and focused average and remain clients’ working the we've and a de-risking importantly, from Both Most consumer loans has first economy content.

driven of the down Credit Debit spending rate in flat XXXX. remained while lower slowed. decline in throughout spend. card growth the saw commercial but from from slowed were in deposits non-discretionary growth quarter, card was growth consumer by year Average the ago by has the a we declines spend from offset discretionary first with deposits outsized strong, rates spending deposits,

is intensive with and Now as risk risk ours of the of our let Regulatory build-out our and effort with and our control an complexity me on on we've complete as for strategic on company pressure and critical. to grow priorities, our you appropriate to continues update size made framework progress banks work. issues control starting such a long-standing continued such

do have the changes sure as implementation over effectively the work this required, more that top emphasize make priority portions to to as and so remain and continued have is implemented substantial time. our will that work we operate we well I've while to of

the work until we remain before, said I've As is risk regulatory complete. actions at further of

drive all devoting our our resources business control and to necessary better to invest help to also serve risk customers in our we're we're While growth. work, continuing and

active have and over logins a Our the continued mobile added customers past over mobile their to consumer from customers mobile increase app. increased use X% of year year million X our ago. We

help AI-powered new at We've to app our end Barry bringing new interacted and & over business. new He’ll million virtual named is now better our Fargo, Wells Management. Sales we to Head April, their our looking National of assistant, grow customers. to consumer our on clients with grow. Since businesses Fargo Fargo the hires, expertise live Investment important make X all of continued to in efforts serve in are be Simmons for have launching Wealth mobile advisors We the times. customers as in critical

attract to healthcare Banking, Co-Head and and division of in media Financial hiring a continued Institutions technology, markets, directors equity banking in new growth Investment Acquisitions, areas, and telecom. Global managing bankers veteran including new of also We sponsors, priority in Corporate Mergers Co-Head financial capital heads of our and and

billion focus a million XXX serving America. across on vitality The with communities. Habitat $XXX donated and for to XX-year build homes We Humanity economic financing continue since in $X nearly could also nationwide. strategic Group announced and capital up repair to million communities and inclusivity to decades and in XXXX. Wells better for Fargo Jakes for drive T.D. in more to Wells with to Habitat $X.X partnership for We We've awarded Foundation than Humanity result our more three than that worked Fargo

fund business owners FinTech X to capital credit on funder homeowners for create XXXX. underserved launched groups, grant Latino and who small UnidosUS Wells initial of Fargo to the Alice anchor as including women. initiative We by access start provided Hello improve the of are members signed HOME by million to new first to a

centers end reach open XX centers XXXX to made published empower achieve We which one-on-one in inside our our the DE&I coaching. both and where and and and Inside help company our during live financial goals we to community XXXX initiatives, through strategy and HOPE we've including to of six free The diversity, half We the by Wells this financial inclusion the Fargo work. communities continue report in with progress year. the of equity their markets members plans branches, first education workshops highlights

However, require more we long-term will achieve enduring to commitments. do to results work have that

Looking although serve test will to shareholders. franchise US our reflecting to affirmed while stress scenarios of of we better model. excess our narrow value remain of Reserve the continues the capital continuing uncertainty and to our likely continued quarters. to over a customers' is financial few economy expected there year's the slowing economic position, capital This and and This strong that be possible range needs capital ahead, many us perform return the strength than it Federal quite remains, our will prudently allows benefits operating in next

stock stock regularly quarter third share, As we expect we at scheduled $X.XX we subject to We've announced, of billion by the the approval Directors per have of dividend common to year repurchased increase the month. capacity to XX% to half meeting of this $X this repurchase stress common later stock. by previously continue demonstrated the during its company's and to our first results comp that Board test

to which the this capital be that as Endgame be higher banks. the Regulators skewed country's will soon summer, proposal, III out Basel requirements largest include have as will signaled that could

the could XX%, know speculation don't be While increase there's we capital requirements what that by will Fargo. to impact some Wells

will capital requirements However, we do increase. our expect

are phased gradually in to the expected in to our over are we of potential changes be amounts contemplating capital regulatory any considering years, future While several requirements repurchases. impacts the

variety control cycles. throughout for Our focused position. a our allows like with is We We've customers our our remained commitment economic financial earnings sheet prepared management, credit competitive our coupled strong. support and build-out, and remain balance and increased continued steadfast to and of on and risk capacity to increasing focus on continue our us risk our to scenarios

now over to the turn will call I Mike.

good diluted from $X.X Thank or And morning progress Net throughout you, income second year for performance, improving the the I’ll up reflecting quarter Charlie. we common our the are ago, per on share, billion call. highlight $X.XX a making everyone. which was both

Slide and capital with X. liquidity Starting on

quarter. XX the down Our CETX points was XX.X%, basis from ratio approximately first

subject in expect During the repurchased dividend the to billion to second as quarter. stock third our we quarter, approval, increase Board in Charlie $X common common and highlighted, stock we

buffers percentage above our the points minimum in buffers year. quarter regulatory CETX plus minimum this points ratio starting percentage plus fourth X.X was of new was X.X expected Our above and our regulatory current

While is appropriate common capital significant to stock highlighted. there's more until repurchase to continuing we this clarity the excess expect maintain year, new on we that more believe Charlie requirements capital

regulatory liquidity position strong points coverage Our remained our second ratio with minimum. XX quarter liquidity approximately the above in percentage the

of exposure increase the points Overall the the to points net increase to continued historically weakness expected, across the million on commercial in XX quality share second X. of estate, details offs strong, was was some low losses slide. and were loan the CRE the driven banking little were loans of first net in increase from in portfolio. average more on Commercial commercial portfolio. quarter loan borrower-specific real signs losses where systematic Slide half of the as charge levels XX The but of on higher $XXX increased average credit quality I'll Approximately Turning to office credit charge-offs primarily from rest by the with in next the office basis quarter. basis remained loans.

recoveries mortgage the and Consumer points as came to from credit first loans increase of increased from basis $XX million quarter charge-offs loans. auto losses net to portfolio The declined. have loan XX continue average modestly, residential net up the primarily card

While will net we’ve gradually consumer actions loan credit we performance the overall, increase. expect and tightening across portfolios, continued to continue to consumer credit incremental solid remained take charge-offs

as were commercial by offset Non-performing than non-accrual portfolio. portfolios the assets lower in the more increased primarily across estate first from higher real quarter non-accrual XX% consumer commercial loans the loans,

loans $XXX balances. -- allowance credit real for million from Our increased as losses higher commercial primarily second well for card the as estate in quarter, office credit for

billion real updated highlights $XXX.X loans our X, which office from of were real modestly commercial of outstanding our with commercial the down loans the We of which and quarter second at estate loans, total outstanding. We've the portfolio. estate of first represented quarter X% billion $XX.X Slide had end

relatively shared to with what weak of and first composition office office was you the be market consistent our with quarter. The the in continues portfolio we

CRE teams our closely mentioned, are includes and Charlie reducing on exposures loans. and which focused surveillance de-risking at-risk As monitoring

This quarter, our in table context the office that disclosure portfolio. broader slide we CRE down this our a CRE added breaks of to

first ratio primarily the office end investment is X.X% which from of at first the for in As corporate and increased coverage investment for the time to allowance at level quarter, the second allowance were X.X% corporate losses. quarter of where disclosed banking quarter losses the the the for end that quarter. portfolio end of and slide we Last second also we at the our loans the in most loans non-accrual office credit bank, credit had the the for the highest shows, of the

credit for CRE quarter. office end for at allowance of our providing the the the at also are losses our second we was X.X% X.X% quarter, quarter, This the end portfolio first which total from up of

providing into we regularly this As data there performance, loan-by-loan we you this give why are on but which portfolio, highlighted can and the each is to more that last is different insight property we're variables a situation basis. determine many review portfolio quarter,

we to have experiencing inject example, the cities where make equity and difficult increased property more decided are that have properties For with improve borrowers vacancies even to fundamentals. in investments

with workout cases We are help asset. also or balance. in in performing, are leased those many need which paydown working of refinancing. to but are situations properties also restructure, a some borrowers situations, have that and result that borrowers sale in the There well we includes In

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

loans in and higher first I'll deposits. banking higher X% discussing specific loans results. and due first from points year industrial we our On the credit when loans from up and environment. from ago loan points from operating XXX drivers Average rate to and interest highlight highlight quarter a loans. ago, and X, stable commercial the a yields basis basis driven increased segment card relatively XX Slide were year the were Average quarter by commercial

by our in and alternatives. outflows and spending Average ago, customers deposits businesses wealth a declined consumer predominantly X% yielding deposit driven cash from reallocating year into reflecting consumer continued higher

average investment corporate ago, relatively year a the in quarter banking. in from down and average grew were stable deposits first deposits and commercial While

segments deposit to average continued quarter deposit in from basis points increase, XX operating higher across rising points first the our to costs expected, the XXX with rates. interest to basis all up As response costs

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

X. Slide interest on Turning income to net

one year a quarter lower of impact as benefit to by net up XX% $XX.X full beginning rates. XXXX. approximately the additional interest ago, first XXXX The quarter million the currently partially XXXX. income from offset interest expected XX% with deposit year to day billion, net income At the $XXX was grow primarily We increase full we in Second year balances, the from by decline the of quarter. from we compared net was income due continue XX% approximately year, to to compared with interest higher expect

variety There of in considered that are rest the our factors for of year. we've a expectation the

We are some as bearing bearing non-interest modest including on and competitive growth assuming in interest deposit continued repricing outflows from deposit additional commercial loans, well pricing deposits, deposits. to as migration

is recent are rate which curve the the Additionally, we on using shown slide.

remainder each the of net of income year. driving assumptions are a we many need out how to will the plays and uncertain the As during see these of interest reminder, factors

expense expense to beginning excluding year, X. of million full on Turning Non-interest $XX.X ago. non-interest our from $XXX approximately At Slide we the be the to year or expense, billion. operational grew full to year losses, X% our be currently expenses XXXX take to We and XXXX expected a slower actions $XX as taken excluding we has non-interest higher increase expected. plan severance year due been in expect attrition XXXX billion. to approximately than operating losses, The includes have expense,

each Of first headcount since of ago. third XXXX a declined reduced X% and X% headcount the quarter from note, from quarter we've quarter year and the

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

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

by to digital, our underlying and customers by the branch migrate costs number X% business reduced to ago. reduce We branches XX% mobile. from the around We've as including year staffing continue of a

ago, revenue net spread driven loan from Home due mortgage compression year interest a XX% originations. declined to lending by and lower income lower

quarter, due a second continued We second card the the loan levels year year. down the in will to expect during X% higher revenue decline XX% from further we the and reduce balances. increased half Credit a headcount ago to staffing of from ago year

remained rates were have three down but pre-pandemic levels. a Payment ago, stable from last above been quarters, year over the

continue loan up continued strong, the booking of a spread year were New than and Auto ago ago declined importantly, to what higher and a Personal up ago, quality XX% better a lending be due account XX% to year loan growth revenue loan historically. we remained from XX% revenue lower the year new balances. was balances. accounts from from by driven compression

balances our reflecting quarter borrowers Mortgage ago serving loan year some funded and customers on being focus to compared declined for a XX% as portfolio XX. Slide reflecting as increased seasonality. auto our as of We declined to XX% well the drivers year the business at Turning continued quarter five a our size price volume our originations competition. from were ago. well the in has key end from consecutive X% declined current Origination a ago quarter, first tightening from of The credit second second actions the communities. bank down as last XX% in minority year corresponding quarters and with

travel second due stable year-over-year. the a prices, and debit from fuel the card to up the flat were last only year throughout to Charlie Growth category to are a with improvement year Credit down continued XX% ago, compared in spending be home fuel to year. declines spending ago. strong spend quarter the card rates highlighted, As second gas lower on quarter compared was largest the and was

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

Average and higher year-over-year, line up driven revenue primarily balances. to and year balances second XX% increased to lending utilization. leasing XX% growth quarter due Asset-based loan new by were compared customer higher loan in a ago,

driven have levels consecutive asset-based thought balances loan flat. X% the inventory were the of Average loan banking slowed. first has loans quarters seasonally and quarter were in from up leasing Average middle loans with market by growth higher for lending pace while growth grown eight

year XX. increased Corporate finance impact treasury interest stronger rates revenue ago investment by Investment XX% driven Banking second on lending of leveraged higher write-downs growth the in commitments. management higher ago, fees Turning in to of taken the a on results, banking Slide Banking revenue. reflecting unfunded from and from year a The reflected XXXX quarter

ago, revenue driven the from higher higher a across XX% classes. results by the balances. revenue from impact loan year of Commercial year a interest grew XX% trading Markets most and ago, real rates asset increased by higher driven estate

Our first driven us benefit and were and year the to of conditions underlying have strong our allowed generate broaden which market half of also more trading by our in investments talent, results technology during flows. the franchise the and reflected trading

down decline from X% were reflecting and quarter. and ago X% utilization. lower loans by of banking, demand modestly Average from combination the quarter slow was from a driven the loan the year first The

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

into outflows However, the in second alternatives slowed cash quarter.

majority As the at WIM a of of advisory priced assets reminder, the beginning quarter. are the

from as X, a quarter down market second ago. So which year April valuations of results reflected were the

of valuations down X. due third Average were securities-based decline Asset-based ago, primarily quarter will fees the loans year a in to from market higher X% July reflect lending. as in

by $XXX private capital impairments ago, equity of in higher increased Revenue impact million highlights securities of driven interest affiliated businesses. a equity rates XX lower and Corporate our venture from results. Slide the and our year

second in our reflect a continued in growth quarter provision strong our pre-tax the results improvement and capacity. We earnings in grew revenue In summary, had profit.

continue expected, our and lows increase net to allowance historical for from As credit charge-offs slowly our increased. losses

taking We are portfolios actions closely our credit-tightening appropriate. where and we monitoring believe

Our common continue stock. strong capital repurchase remain to and we levels

take We your will now questions.

from Thank will come you. Usdin first Our question Jefferies. Ken [Operator Instructions] of

Your line is phone. Mr. open, the sir. on button check mute Usdin, please your

and Ken. take back we'll come we don’t to another Why one then

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

Your line is open.

NII likely about important just we're arrest Thank it question. see able everyone. a what NII of higher to the performance factors you the chat your of, That I other down broadly Fed In you great dollars words, when that come move might be for of are sort morning, end ability if the kind tightening to from quarter. ideally close here. seems getting guess taking NII. speaking, It guide to and Good of most this cycle? was said up out flattening to end in in would and it why downward a will

if Yeah, in kind that at got Charlie you take underpin want. thanks, you assumptions modest go of loan It’s in script, I'll Scott. little my and I through a of that, in back can When there. them. I'll that Mike. some growth this highlighted bit jump look and We've but the of

we or that's sort from So what others probably that seeing just not that not loans. we're a you're same big on And demand driver ago that saw seeing. a of seeing year think so we're of where I

then more money. assuming also non-interest outflows, bearing time. betas space some deposit will we'll see will -- And the evolve we'll continue interest And We're some as bearing to migration from deposits. particularly spend pricing people see to in that over additional then consumer

then the side I on evolve. and very will that on think side competitive think I continue and the it's consumer still commercial

think quarters those we've make for factors you think assumptions you But been I combination least we're continue, assuming got through that start they year around the think that look of stabilize. to trends now last at those at will of the seeing when end. So I to and some

above down just And I settle sense bearing. bearing are maybe from would a if why the but out? still particular, non-interest Okay. for one into levels, down have could those pre-pandemic drill Perfect. Do and we where you start to believe. to They've those of in interest come migration

that. underneath factors few a there's mean I Yeah,

deposits we've upper-XXs down look out, As XX% from if the the mid about you in -- XX%, mid-XXs, commercial you the the pre-COVID, Part pointed go exactly quarter. on end prior were when of the at that on quarter, it. they side. when at you to about think been trending I we're And downward. depending is back of kind And of excess

earnings up accounts. people migration checking fees the some As people you're from you've they're their use for primary side, And their there. then paying, on again seeing That seen consumer credits stabilizes. the spending

So been on last look those that down but at stabilize, starts slow quarter for two. least pretty the at to consistent and factors are when the it's I'd that or

Yeah.

Thank right. All Okay. Mike. you much, very

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

sir. line is open, Your

good Hey, morning.

So, on Mike, thanks CRE for the the details book.

mentioned just knowing you it comment to the book, that CRE the as particularly your what loan terms quarter, us through identifying of idiosyncratic on in comfort cetera reserve And et given of we around every Charlie California of loan. bank a well nature But level CRE you. how taken within that Francisco can sort appreciate San I give visibility or just reserved think the and by market? the relates I the know apartments is the this you've and you've of in around Thank rest gone your today, also loan macro-outlook? of of sense if

take I'll back and the office. to point broader I'll it’s then Mike. start thanks. Yeah, that, on on I'll Broadly, come CRE

portfolio think gone I'm right? about broader And the in quite in cities. portfolio about detail. talked And lot a so multifamily first, I talking we've no, the -- of you through some think apartments I

declining most I And at in including all so the rates think I they're slowing portfolio in cases. seen rents, certainly a well. you've but And you look multifamily, quite think of performing broader not growth it's when

many good in construction new online. the that's occupancy rates seeing coming of You're

applies the same overall, to for that so portfolio. of quite it rest theme the constructive still feels And And multifamily. really

of portfolio, think we've next time. level the a be that's through quarter allowance. do you out specific over as appropriately where quarters of the couple of estimates feel think up, over On play reserved -- number next could next we we could at And seeing weakness. be put rest office, embedded and what few some place office as at that's on in have -- depending gone certainly we're loan the about and the And this plays borrower out we like of we're very scenarios to deal stress with look how scenarios different the then number you able the it point what a allowance

it. And just guess Got I question. separate a

have You obviously ample capital.

Charlie, your think cap the take impactful to is issues, is asset not the the you today challenge would in on of all timeline, cap Wells asset given I'm rest from the squeeze is your But Just give share? a standpoint, terms to and actually how to meaningful still the market of the regulatory going a would ask share. that market industry, I gaining but ability us be

of mean the I where a I the is think? it trillion, can you sheet which asset Well, and our balance is size look see at $X.XXX to cap, relative

cap. asset the That’s

a remember, cap, over is daily quarters. couple actual Yeah, a of the that's average which

work the to pure we something statement of at it when to the that work have it's a cap reality the we feel have always relative fact serve So think to there aside, we it's standing today, that, of is where we have our we case, we that and are plenty that. the where are of do. today. in that's to but the economics we customers more not operating asset like get done, still the just Hasn't still been putting sheet But look way I is the balance of

that critical And we continue our to that so on work. complete road it's

And about today. that's we're the way so it thinking

exposure just client base part, of the I'll banking some opportunities hires one When there. look have, growth of have you In the at we investment we're maybe And highlighted making. we add to some large thing. already out Charlie

now wealth go come the about we fee think to to sheet. even support got the look out theme. didn't got there. we've it's to opportunity, extending to opportunity to product have the in more there, card really at, right balance not line we the people I it. as growth plenty exposure same a management, have lot We've -- So sure even well. End got room put we space more growth is refresh we support of The And the necessarily making opportunities after many more more doing if continue of the

Thank you. Good color.

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

Your line is open, sir.

morning. good Hi,

morning. Good

outlook. of your does start level So But growth. a other comments And wanted it on encouraging loan some off seen credit contemplate question lending noted, in parsing slowdown see increase. loan NII Mike, guidance growth especially with alluded just economy, a where some that modest around activity, you signs broader of given to Certainly just to the of in to the inflection that gives this confidence flattish the tightening, we've you what you the quarter?

we're Yeah. certainly seeing seeing Well, I growth card. think we're in --

and leasing in bank. we bit that would the think lending I but So items. business the little consumer then then a see of growth the is of see least at you commercial continue. this in of to expect And asset-based can kind Middle and in flat, the rest market the portfolios, quarter, we

growth it go to as to necessarily -- do in we we're assumption hopeful But you quarter. guidance second give I the favor. think Steve, try is guidance doesn't every that go some So as see that into always, what we'll with our require we

uncertainty NII and to be degree. deposit quarters. matter, near we've of the ones to So It's the same bigger be deposits pricing. the now of drivers of loan couple the about anywhere same will year been last story the not going really for the but talking The around to for rest continue

on to headcount the a exit the as actions driving business how plans expense, the windfall just expense. on and and rate just NII potential rate run And maybe cost higher But there's think the severance you in cited the benefits year. to about understand we back of better of the reductions cited color. you reinvest captured helpful in redeploy that should some you higher some we are some it's the follow-up be No, NII this in about whether fully headcount wanted any upward Once guidance thinking the pressure cited?

the over last our think I hasn't or focus quarter Yeah, two. on really changed expenses

to about a around As while, very the to be going for disciplined we've we're base. expense talked now continue

our and we'll focused about. normally for of budget perspective think like that do we've year all I making end, to around the execute sort do through and we'll the very sure much hasn't go talked downs year, on thinking and get some we're look we work we But really -- after around changed. and as efficiencies there. we And we it achieve give the you next back at the ups

Steve, add, if let just And me okay. that’s

a look at I how I a our we of how our strong. results But the an and think decisions think when hit expense rest that will to we environment series number. we're the think variability about we for of questions us laid impact we wouldn't make be to that and results bunch -- out we of the think number. our I got expense of And number to we guidance, of is, point relatively it as performing, hard have -- been the

to is one-time we amount we it of series decide there each have that relate quarter product the how to development, enhancements business year, we subjective but so And fair that I much are don't have doing we're to want look -- spend. and think a each at about how as things of things. we performing that, a and expenses do expenses, like ability

of think see in next as we scenarios so process we I a things that and do make said, out And we do drive we're lose and But how that from Mike believe series determination. year then is separate out year. our budgeting wait efficiency to go as terms talk fact think We're that and separate as of could end that through look forward, that. play I of more we how to not that. we from of we And are opportunities continued away much company. the continue do the the spend that to there And want to going the we'll sight to towards throughout going about

so my Thanks color. Helpful taking much questions. for

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

Your sir. line open, is

obviously contemplating continue from your I buyback you billion thoughts Endgame $X see if as on can to Basel wanted we III that here. out indicated and XX.X% expect factor you and you Good But here. to on the in to you're from -- morning. buybacks CETX a I buyback is heard when XQ of some get updated look here. you buybacks

terms for could that So the frame in of repurchases? could us? you that mean pace help of Thanks. What maybe

is that's what I I we any we want give -- clarity really more than said at this much time. as -- as Not think think

-- are excess the capital we think regulatory talked I at. above we about top regulatory have of buffers and buffers level we have substantial on that of requirements the running and

month the fact that in think going prudent the requirements the terms are question, the we up. of this it's is. early terms the from answer to later that reality answer proposal so you thing to everything next ability it's will just learn that's -- But in read, we or that And likely exactly is we the the same given timing the -- of capital read that that likely what month

at for room we And there see, us the how based us exactly for But most help upon that buyback of that, the program inform we have is continue scenarios room much a required it levels will to in buybacks. in keep. to have the to still be them -- keep buffers want we'd kind way build required require and and to to of build to that capital we prudent whatever

pieces bunch moving there So here. are of

to put doesn't what proposals just until more And it are. so make we on numbers see actually those any it

the Fed And could forward reach XX%. the as the talk around of also you you if for for you. much you ‘XX size on curve, Okay, again, the near-term just forward deposit look what for then look to curve, side, NII kind Thanks. a continued when of implications help could I be thank we updated XXXX, be appreciate it out into separately Maybe mentioned you know -- that, about could that guide And you frame curve the do up? you? That's talk can at of helpful. the how the forward fund further maybe NII can if X% trajectory. headwind about implied a you if by still of NII decline,

are at And much up are on not I rate -- give you pretty commercial high. things the betas betas as going the on about moved going hasn't side betas to -- on on the you to the this much are way side, be way high, John, Yeah, should pretty clarity the point. XXXX. really down consumer think think rate But obviously I'm

at the into continued do And little about so lag, each over I to for your a looking differently. think I after once have there peak. repricing have -- a while others and we of components modeling, peak, you of likely bit talked And rates sort go many as time, rates some like is

about think that how your model. to got goes all you've into so And

I my not as think pretty big couple shifts over at this across in quarters. And point. in deposits then of the I we've And last think script, seeing consistent I said behavior performance seen we're

the over go And the you see you in how through a have But assumptions that still here. that so quarters. lot we'll of there's uncertainty goes that coming

to got make lot But on and you you you happen. closer your to best of think mix of going you’ve already. to the so seen the is shift rate get cycle, a judgment what probably end the repricing And happening as

that goes. And so how we'll see

I can And just add?

Thank you. Yeah.

whether -- It's very series been expect XX% specifically broadly, our looking to yet. Just there don't of we we've about, about we are at as towards talk things ROTCE we And But to are time, same a normalized the just XXXX NII. as been broadly a that in clear guidance we environment. targets. be even that we're about same more more do card getting middle stay it's businesses. in of we're the as of in investment business, fruits And do things business on that in part big see whether growing it's asset A the focused to constrained we expenses. in Mike we bank the forward. is our the our as business, to very existing time, spoke it doing, about. look the lot continue At well, of corporate a expect or We're fees wealth same capital the market in be in just whether at able the in the and to that more out-earning giving have the at just not speaking, it's of by time, But terms labor. we not clear

the I to around required CECL be lots things is thing remind are we and forward-looking as we that. everyone like of just other as all And remember, think about then when can. conversations But we there's would possibly charge-offs

with how know scenarios. different up come the we all You

fifth And I P&L, which through of here. which is level to the an of this EPS our expectation what's the at the very so upon that's will consecutive than the environment some be quarter running impacting based reserving what is different the reserves, is point company, we've been sitting added think has been

you things it's just think to opposed all just I those I those as and together, you about things add think So itself. think, important all NII

operator. Next question,

Certainly, of we'll move on Morgan to Graseck Betsy Stanley.

Your line is open.

Hi, good morning.

Betsy. Hey,

already. from we follow Street ups. discussed at know build California, and traded you of on sold that property to in wanted much how that understand reserve estate, know two a that One coming a Just was there I the really I bit on just commercial real discount. all California was

So is of I'm broader just office wondering versus based much Thanks. anything beyond that? it how California more

in are low even empty into many property Betsy, even buildings, it's California. it weakness see a mean as I they got days are lease are these cities specific down or where Yeah, as rates stuff. we've even a examples isolated I to And going some actually not California, and really lot cases workout. you in clients to reinvesting if of in think in comes

just I of depends the borrower the things and it think really So sort about less on and we in talked it's script all California. building, focused on

talked to time review going prepared is a of bunch saying which very through we detailed just portfolio. is we want this I the reemphasize Mike about remarks, all office in a of and have the what Yeah, spent and

big things about examples lease property the I Again, is. want content is where period Just the have underlying it's whole loan mistake we a high series we very -- think I in which through day, at And struggling And make extended my of the then is quite doing property a to other good. The point, where are our loss cities just really an we looking loan seeing. not which we're in structure it's for the in have script, of market just went just to a can by well. that has said a of that rates very time.

there property, in of But shorter issue bunch termination for specific whatever term. that the that a -- in reason, are dates property potential the

the of think to that itself that as reserving as that's we've the at is. tried we think to of appropriate detail we've And with level And used up we can see the level diligent scenarios I be what look we stressing out. so play come in

we requires and we're to reserving to understand that accomplish. CECL that's So trying when what we at do, us what look ourselves

two-year estate -- reserve right, we of in there's question builds? that forward? rate for comes the much further entirety all of you would entirety are wondering, real for the bullets, part or reason the role stress ad like, -- and, the increases for And this like related the So understand reflecting part I'm the for CRE I risk most role. there reserve how is know, commercial this if think where risk loans of the to is And is is book guess a at CRE trying I asking if

in Yeah, your either give I’ll opinion. chime or Mike, and start then

risks again, can add something that. that do at say the the the range business we're possible risk all to risk portfolio know. just and what rate never in holistic it no. in people, to and people trying time rate expectations room is have portfolios into there's take the the everything be when we we exists refinance review as upon we including you to we like a because environment, learn imagine, of based have of But looking run estate things would the Is as And opinion. all of goes current sit that that that real the the with the tried future We the more account on? in in cap We

scenario all based assumptions There stress money play to amount in say are is there say, underlying we then losing the because want as. have see thinks that -- the of are this we weighting upon there actually And it of to where possible and to out people just that others it's individual we that. hard to give will what we themselves

trying the be reason we're we're -- all what we exist. again, you and we're know, reserving I that don't part can CRE to to, how isolate with to of disclosure And the of show the substantial. we rest that point where to this of -- holistic be just the issues come is. exists, And forward-looking, see trying in at so But portfolio of the relative level is, so that's just the is is risks additional which trying up the office that are made exactly this those to you rest and again,

I you. it. Thank Got understand.

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

open. line Your is

morning, how with you're in liabilities, what balance And a can -- measuring the or Good you're different are be questions, looking little your this managing year assets one when us, you next how may share into for the year of Mike, can treasury you're the than on sheet that terms with but year that? what the us you. guys. you thinking you half second you Thank positioned of ago? guys your a your balance how at and sheet response earlier on bit in functions to you of share touched and

say point here George. we this haven't changed sheet Yeah, and duration marginal a substantially decisions margin, at there, that the add little but balance making you it's may is the positioned. different, Sure. really It's be I'd how to or right? not On

of from your real us in the commercial then good through share cases, been you've estate? seeing in additional real working problem. Very payments to this to Mike, to good. able of prepared details And with I some know you're that can have And your so follow-up, estate equity think get you you just investments on we're adjustment guys said borrowers workout I through you given remarks, you portfolio. or some commercial here other potential a get some period in maybe, cure, the using Can solutions

partial can And trading time then you through sets some look it. And Yeah, think a I make of at of then you And these There's term, feel there refinancing you're in to work a structural bit sure. enhancements better cases, about to give mean, getting paydowns. little also, people issues. for I more and are of you those plenty lot

I punt down not think hard road. really issues the try we

deal that with if to so sort try up setting the we of But we work need for to there there with, comfortable borrowers structural enhancements And the we of loan ourselves in that to get issues moment. them a that are we're on are number with real success. deal

Very Thank good. you.

Erika question The UBS. Najarian from you. next come of will Thank

Your open. line is

taking XX, work you're standard allow my operating out for borrowers. I procedure OCC the on ask that how really borrowers your classification their and that or solutions June that encouraging put a on accommodation to thanks solutions of short-term interpreting joint question. Is sign wanted anything Hi, lenders and temporary to with Fed help statement question just that reiterating they to or you that with would Is sort deterioration and TDR? to new? classification delay they're -- classification can provide or this loan perhaps

very we've really borrowers in circumstances way being find help terms to our in -- change back, but to what difficult work Hasn't could that. issued I think, anymore, but classification, with what And much. is changed doesn't the Yeah, be exist was originally in I'll of interacting solutions it's them work with the really take XXXX. already doesn't proactive to Mike. them guidance TDR to that really some been cases. similar the through

classify it -- you give So you leeway for how doesn't or and loans any classification. criticized other

anyway. continue borrowers is we clear So all time with intent to be do the to solutions, really to should find that work just people is what the which

Thank think billion I a is you just And in are loan size your With for the it. of investors wondering Got Slide disclosure follow-up X. what CIB, on $XX the here. average loans there? again question

we something range. very wide there misleading. give a are think Average sometimes and don't is I Yeah, that's

range. it terms And matters property. loan really happening really all the matters so of the about And -- in variables a really that with is size, what's what not earlier Charlie there's what is wide matters talked

I -- I think So there. think be that focus would I would

hit whatever this not it the back just company. question, an you're expense doing you Got number your into I investors Charlie, it. can much think that you're one more to in expense squeezing ask appreciate very just reinvesting question. And and I And before

year severance? how $XXX has of the in wondering and the that this to for if So I'm with to increase have million you do outlook much disclosed

that exit by far by other largest give for exit of the we single didn't is and exact it. severance number, some But space the -- but costs part it, of piece. an largest there's lease the to is And that that's some other far things. We as is piece properties

Got Thank you. it.

Thank you.

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

line Your open. is

morning. Charlie I follow-up your of on remarks. some Good want prepared to

address you're of examples if to still regulatory needs when to you issues implementing of terms done implementation wondering there's you a still that to You what couple completed? expect some be be in talked can and about and give things of that

lot, thinking thinks environment. the multi-years’ but of do do. we've still all consent lot done. orders I'm think a more a is said generally And I there's cap. everyone what speaking has I just to all getting we when as -- we've of one say Listen, be have build said, there of I've to the to in deliverables. lot is about And control and the the that we work we've about the consent asset orders work which the to What of -- want implemented do. speaking related a We're -- to work that that, to worth have clear, I is It I'm

each regulators getting But and quality our things you ultimately what that for time and matters, about from the getting with finish done line we them It's an this. the on get A over in other. expect don't effort

you we their if see to And take as know, it at work process, do continue have our regulators we put satisfaction. ahead a very to then so move it's forward. of don't We to and want have dates that because to look done careful we've and to out been our not to there get but

lot are you that, perspective things? innings a basis? on a implementing in what that percent but you've And that or on terms frame done of you an are what you've of to there's from them control you But done, process, want acknowledging Anyway do signing you far terms it I that what can in to to these you understand like frame of where accomplish, to speak you accomplishing how and lot. want for you along off whether can't on kind

matters me that desire satisfaction. done to answer again, Listen, the to all it's work at appreciate I have of their look matter. your that doesn't What matter those our regulators it view -- Yeah. and say But questions. our is accomplishing

helpful think why So understand you're it's what this But to point. I at or really don't I beyond go I've said appreciate asking. do productive and again,

Thank you. and Understood fair enough.

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

Your line is open.

the or you thanks. Hi, your second into can Mike and loans quick Charlie, us maturing half XXXX? maturity schedule? give percentage one. or in office A What of amount the CRE are

disclose don't we But are are five-year real in loans. Vivek, three these space, commercial specifically, that. should which course estate generally you standard assume the loans to Not

been And last the you really years. in haven't much of couple Okay. originating

Mike? that? you I origination it So CRE, at, to new guess it ago? when looking office go did the three? back years we Was could slowdown color of Was two Any on

you Yeah. that refinancing been we've along have Look, existing I that remember think period. time to facilities

assume sense some the good take average you approximate basic if schedule. the think I what I a said, portfolio I get of and but life pretty -- kind think of maturity you'll on So based

in your factors about how -- And comments much and recognize those that loans Okay. better are average all multifamily? of those position there? I heard maturities your the I the life already What's you given cited.

a than office. longer, longer few Slightly years

Okay, Thank you. right. all

of will for Peabody our today's call And Partners. final from question Portales come Charles

sir. open, is line Your

remember, morning. please with I three I correct six somewhat there's and correctly of but wrong, and on were asked to call want follow-up a you've of mortgage and started of what orders if planning executing give answered, if already last I the me Can If know is consent do and simplify questions you you just fall, I remaining those my Most to issues. need I'm operation. order consent deals that Good you them, sense banking starting And to banking year. on mortgage that and orders? this related it downsize the effort to been consent us in the

Yeah, sure. Mike. It’s

there are first all, out So all orders public are there. there of nine that consent

each can clear of think what see of to When terms orders satisfy those. you needs actually mortgage in happen quite at to is that the look those. consent ones, I So the you

point documents sense just pretty it of I a which to little So you would and themselves, the each bit can good give a you different. is what is one back

present with do you're something the regulators Follow-up, basis, quarterly about banking and does mortgage to talk on end? basis, go? the in the How monthly do the at you you or progress interaction the a making regulators semi-annual

talk at to the company. all our all We of regulators at company, levels the time, the all of parts

And actively so you all regulators with should consistently we're the time. our engaged assume

to add we talk would I is, them that on-site, again, the thing only the But literally here, they're to all time. but they're

understand but making… to the that, you're related I Right. No, specifically progress

Just the a of And them. consent give in the to We of orders, given second. order. that's after the about do assume it me matters we it's them the of can to end order the is work talk consent going you at consent about everything. underlying the they importance what all But submit that on said that, having the work

order about when But their to we're on up consent making. them, we submit be what how to they come doing. review. that we we're can the can feel a they so speed in And know and holistic do They progress

satisfaction. it's And where made their their so or is to really about determination not whether done that's

on regulatory they do be just we the that from review them. get the that conclusions really to reason any the internally not our interim they process So view go or holistic very and from What to want might again, through the organizations. that is our drawing why work I gets comments about matters in any careful

submitted my part mortgage is question yet of you anything was that So have banking? on first

not and going and over that over about to talk said over again. that. We're I

Thank right. you. All

the appreciate you very soon. talk We time everyone. much all and Thank we'll you to

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