Wells Fargo & Company (WFC) 12 Jul 242024 Q2 Earnings call transcript

Welcome, and thank you for joining the Wells Fargo Second Quarter 2024 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, everyone. our CFO, where second Michael and your joining Scharf; CEO, quarter for answer our and Santomassimo, questions. you call our today Charles 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 second risks get statements that subject quarter presentation are we supplement that like wellsfargo.com. I'd

Factors expectations that filed SEC the may materially cause materials. actual results X-K are filings, to differ Form today from earnings our containing our detailed in including

our on non-GAAP any those GAAP also about SEC measures our Information the to in can filings materials earnings website. measures reconciliation and referenced, available including a measures, of found financial be

the I over will now turn to Charlie. call

Thanks, John.

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

let second quarter start some So highlights. with me

benefited performance our financial quarter Wells from the in transform ongoing efforts Fargo. Our to

in investments year We due across most results than in investment a with and interest banking. continue to activities fee-based investment increases net favorable decline generate compared income. offset our These to more both with to growth categories businesses in particular strength strong revenue we're the the and conditions making ago market advisory, expected trading

portfolio improve, recoveries home expectations. prior have labor and performance and portfolio. market in performance actions consumer of The during quarter strong net continued the lending had reflecting Credit benefited wage from with to second our tightening consistent auto Consumers the credit we was increases. our our

increased our performance in expected, recent expectations. vintages While credit delinquency portfolio was losses with aligned early card of our as

deteriorate losses across country. estate to portfolios, as driven by commercial to be office market the lumpy. continued we real losses Fundamentals in remain real reflect many leasing the expect estate the institutional areas weak properties, owned metropolitan continued office to market where lower our appraisals in commercial In large

remain allowance they assumptions the made we losses. credit setting our However, still within when for

execute deposits and from which has decline commercial commercial interest the were efficiency have to declines offset card driven not both consumer credit we than Average in to first growth. for our businesses. result more continue portfolio anticipation head first to other to loans consecutive rate growth our and changed across tepid with standards XX in on by underwriting quarter. quarter, The higher demand quarters. in of from chase of grew was modestly lines down We portfolios. cuts count and Average balances the environment rate loan our Balance higher consumer our continued initiatives, of consumer-facing our all

our starting strategic let with on update priorities, Now you our controller. me risk

We from I are a when Fargo arrived. Wells different

Our compliance culture and we have and until so build-out all our our operational to we deliverables and into risk and credit is remain for completed, today. this and mindset control embed discipline risk will financial top the are similar priority

of our part continue We plans. are completing deliverables by make progress that to

control internal show numerous improving clearly track The the we our environment. metrics is work that

have and our necessary size company rest the our we until for kind of change of and tirelessly will my has While it's to we their standards for make easy, a not the when of of deliver work regulators their momentum, see at judgments high and to regulators for complexity, tens partners expectations own Wells is clear up but to satisfaction. forward our have we not and we worked thousands of decide set to the done now Progress satisfy years been Fargo the ourselves.

regulatory and we actions. and operates we regulatory of While further in a heightened control oversight at made changes meaningfully the environment, industry have have environment, substantial risk our improved remain

Wells also are better higher on our over in strategic help are other time. we a drive We customers returns Fargo and to different serve executing priorities how

examples few we're a progress highlight me of making. the Let

For card platform diversity our more important and revenue net is with -- and offerings, competitive customers company. interest are which is both credit for sources our reducing which on income, improving the both we our for strategically reliance

During X are quarter, new Since initial business almost product launched launched our a in we we complete have card XXXX, cards consumer build-out. a cards, new the and and second credit X small card. credit

spend The momentum in continued is and new business growth. card by strong account this demonstrated credit

matures. in little assumptions long which lowering great the to credit profitability new as allowance, to are the by promo meaningfully drive and rates, as early market. to an the as as and portfolio larger significant standards, play strong expect years. continue costs a growth credit on in the out card onboarding we as credit But but brand not a business spend, see is have that future related upfront to growth and contribute Building being proposition balance our the received investment business We value expected, well card profit our are products our marketing,

and a We a have been continues has bank, investment methodically growing significant our opportunity be priority to for which corporate been us.

multiyear our strong our We risk and plan momentum positive are while executing discipline maintaining on continues. investment a

in significant areas see opportunities have added growth. past We will and several continue the where over to so for years targeted talent do we

our Corporate knowledge to skills has complement Weiss recently of and Banking. Rivas industry Fargo his team as Fernando Wells background of Co-CEO terrific Investment has and put the joined Jon together. deep Fernando

see banking in of are as our we the expect results in strong long-term year. we already by While and term seen growth during medium encouraged the here investment half work improved fees first performance we've short commitment, a the and the with view to

substantially help and Management banking on focus consumer increased Wealth independent and adviser advisers ultimately have our growth. Investment retention the serving improved which business, we and clients, should our In have drive

our are significant and the In opportunities cover to we our and clients we treasury the where years to focused and ahead. believe have we growing management markets delivering adding Commercial investment in business, on Bank, segments are underpenetrated bankers banking capabilities

business a more be to And we of banking important small continue growth. franchise for source to consumer, see significant and opportunities

Let me a here. of just of we're give some doing the few examples you things

network. invest We our to in continue optimize branch and

ago, count from X% we being a branch year strategic about declined branch strategy. more our While location are

We our of first efforts branches track are of year our all years. half are to during to this update refurbish XXX the on next the branches, within and our accelerating completing X

which including As to part branch opening of our we been efforts experience, in investment also new account enhance our the positive and and our our for our digital improving a employees both experience, increasing a branch bankers has are customers. technology,

Fargo, assistant, nearly we year mobile users million We interactions. users XX continue and growth have AI-powered active with customers over year after from X% our million to virtual had launching have mobile a in up ago. strong XXX A

additional customers features this including and and continue expect momentum insights subscription enhancements spending. value-added to We balance we to offer make trends further as self-service our

ahead, and Looking from market solid continued and the rates. slowing healthy is elevated overall, U.S. still interest headwinds However, labor remains the there elevated economy inflation economy driven by growth strong, a are and

complex front while us. the As customers for have we risks of a work the and actions us in for both opportunities of a serve company managers to about And of building the while significant ability and risks institution, think to to prepare helped opportunities large our strengthen continually environments. economic exist, variety taken clients. and we see we financial have prepared The the downside be

appropriate foundational making and are management the progress to resources risk is our to continue framework compliance to will operational dedicate company, an commitment for and prioritize all and build complete our Our and work. necessary we we

and early broader the stream progress in We diversified and build and strong are a results, have to seeing risk maintained sheet. a a discipline opportunities earnings business we balance have model, financial see our strong

with our and resulting imposes strong financial our has Basel large It regulatory to allows prudently return of capital us for requirements customers' committed our the Operating from to in III test banks stress finalization capital to capital on the as serve shareholders. the remain and a increases potential anticipation we excess to served needs, position well. uncertainty also regime

And scheduled As this by approval share, we repurchased to later the common common stock. pace repurchasing and previously during the make billion continue $X.XX to $XX We works we at stock to to the XX% Wells its Fargo. ahead. we regularly progress while who capacity the we to the increase quarter thankful year. of subject half meeting of everyone our have of first announced, proud per at Board continue opportunities I'm this dividend about to month. slow, I'm stock the company's of the will Directors by expect over excited third

I'll now call over turn to the Mike.

billion common benefited $X.X a environment good everyone. second was and grew diluted the share. the from reflecting from per income been in we've quarter as and and our market Charlie, both fee-based or quarter you, performance investments Thank solid businesses the year $X.XX for Net ago, making. first the we the morning, EPS

company. the across efficiency driving on focus to continue also We

by our reflected adoption also investments, accounting impact the our quarter will the which of income credit the effective rate had X offsetting I of tax tax an approximately effective note in quarter for standard to ago. on income. tax a that rate minimal increased new percentage first renewable energy points year second rate This it a had versus effective income increase net increase the since tax impact noninterest

to Turning Slide X.

yields or costs, including This and net As a was higher year expected, decline balances X% funding down, noninterest lower down from $X.X the of was driven interest as balances. ago. products businesses billion income was migrating income in by deposit impact partially This higher loan businesses higher-yielding deposit by and higher in was commercial on earning our assets. our deposit offset customers consumer to well costs as lower

first interest Net or X% income from $XXX quarter. declined million the

lower our deposit quarter. meet of in This to our basis after growth loan balances XX our basis We saw pace all points average higher-yielding the including second decline higher the deposit with quarter also including as balances customer-facing loan Customer in positive the points quarter pricing businesses, cost business. Given first growth rate in environment deposit first consumer the in quarter. trends, migration in growing from the with slowed the increasing XX expected. demand, to commercial was within continue of average up alternatives

start with commercial pricing to betas expect were where for as rates pricing increase, Fed decline. deposit promotional this that expect the decline also later to in impact consumer and begin of would cutting new faster would the we immediate and business rates deposits move as If most higher year, pricing our rates rates be we standard to

a grow deposits. loans most I'll Slide categories we both X, ago. growth to first while highlight discussing in operating businesses, our alternatives continued and from other loans were spending. customers declined. Average corporate declines and loans quarter offset consumer when card specific migrating segment continue a relatively Credit were as and driven Average year highlight ago the On drivers businesses down commercial higher-yielding consumer funding in our stable and deposits results. to from our year by

deposit consumer $X.X we deposits. from consecutive years, X clients' After grew for quarter. from balances have grown for the modestly as deposits deposits quarter. grew operational quarters Commercial first attracted billion nearly Average declining the first successfully X

We've acquire retention-oriented used Management seen to seeking and as in into slow rate and customers promotion cash alternative Wealth products new strategies we've banking. retain many and and outflows Investment moved already have in business balances consumer small successfully and

The deposit was deposits cost noninterest-bearing interest-bearing from to trends improved quarter reduce similar to declining percentage with These us higher migration the to deposits our market XX%. of noninterest-bearing from first XX% quarter allowed to in funding. last

will from Charlie Turning of than year-over-year XX% increasing growth year operating segment reflecting the increased from discussing as expected we've to been of ago, the noninterest market year income most both decline categories, in the interest across well with our revenue our as income with conditions, This on in benefit quarter of Slide I sixth making revenue offset the a growth businesses specific ago, growth goals. as X. drivers investments income growth. this Noninterest when highlighted. the consecutive the highlight more a

X. Turning Slide to expenses on

X% efficiency lower and including offset driven revenue-related and expense operating noninterest impact ago, salaries and increased higher of a the by equipment year expense. increases losses, increase by and were professional expense. expense quarter an technology outside Second services These from in higher compensation partially initiatives,

quarter accruals in behind first working Operating The losses by expense noninterest get historical us. the first expense are primarily customer increased a included hard quarter. for the in that and from ago personnel higher decline in small X% seasonally year matters was higher we a driven to of remediation number

in points quality of to Turning XX charge-offs X the of real were average estate primarily higher increased reflecting credit to points increase quarter losses loan Slide loans. first first commercial $XXX from X. up basis million points XX The basis which was loans, commercial Net basis portfolio. the quarter driven on net charge-offs average office loan from to higher by our

quarter with While losses last they the real the portfolio estate increased in commercial office in were after second expectations. declining our in quarter, line

continue will commercial with be continue to estate stated, been to have clients. have losses real we previously office As lumpy and as work we

work These monitoring exposure, commitment office We our helped office rigorous continue X% XX% balances by reduce from process. including loan a our by efforts and a to ago. to actively to year derisk

card XX increased million charge-offs stimulus benefiting we of loan -- starting more implemented The Auto first from from no the was net actions vintages $XX as basis continued XXXX. loans. our Consumer older to in the credit losses line quarter points pandemic vintages average decline, credit losses to tightening expectations increase mature. as in with are from and recent longer benefiting recent as vintages more in late

with Importantly, newer rate currently expectations, our third the expect card and to the the decline has credit we in credit of charge quarter. our performance been consistent vintages off

the estate Nonperforming higher assets commercial nonaccruals. real driven increased quarter, X% office from the by first

to Moving X. Slide

of classes, quarter, by allowance card loans balances. the from asset Our credit partially driven allowance across driven by by for offset modestly was higher declines most down credit a losses higher first

loans coverage remain total past as over credit stable Our consistent. has been generally X the relatively allowance quarters for trends

for coverage also has for approximately estate allowance the quarters. real office relatively commercial Our stable XX% several been our portfolio past at

capital XX. to Slide on Turning liquidity

well XX% capital CETX continue current to be minimum strong, buffers. ratio position Our X.X% above and regulatory remains plus our our of

expected our as the buffers to CETX year capital from above minimum plus also quarter this in increase of of expected X.X%. stress starting is are buffer regulatory new We to X.X% our X.X% fourth

common approval. Charlie while second to dividend $X.X the we by to of stock, expect Board repurchased We slow, to stock billion pace third highlighted. subject quarter. capacity Also, increase to in in XX% our will stock repurchase common common the we quarter And as continue have the

from to segments, migrating Business customers lower higher-yielding driven Consumer Banking year and Turning Lending a and and by of our with operating Slide impact X% ago, products. Consumer, to balances deposit revenue XX. starting Small deposit on declined Banking the

a as from balances by loan ago driven volume X% lower to down offset new lower year continue point-of-sale higher was was loan Credit revenue. other was from fee revenue year due lending income card as ago revenue higher net decline. to Total a interest stable growth account balances by

lower spread XX% loan revenue driven Personal spread declined compression. from and a was down ago, revenue X% by Auto loan year driven last lower continued lending balances from loan by compression. balances loan year, and

Since at business on well key on Retail the the XXXX, to from the some year home simplifying XX%. announced originations a strategy mortgage lending mortgage new the in XX. reduced our as declined by Turning we start our business drivers XX% Slide head home reflecting lending focus of ago, as decline we market. have count in approximately

portfolio origination auto year year down XX% Balances a from our in credit-tightening reflecting driven lower actions. compared XX% with previous by ago, were ago, which the declined volumes

a While debit from spend increased ago. credit card year and

in deposit lower year Middle Turning income growth The X% to Commercial Banking by by was fees. to treasury management results Market Banking XX. a from on revenue down ago, driven net Slide interest partially higher offset due costs,

income with investments. higher remained Average and Loan ago. been rate a balances and income, X% down structure. lower lease compared aggressive pricing lower were Asset-based a XX% include loan where from has demand interest year competition revenue the loan lending year-over-year, more tepid, longer and reflecting on revenue and decreased leasing environment net for has market equity

by of due lower Turning to investment X% results revenue treasury products, higher ago on the Banking Investment rates higher driven banking year across partially driven revenue XX. on Corporate deposit a activity and all by increased offset Slide increased to Banking from accounts. management impact by interest

in markets strategically office XX% year ago, estate our than in X% continue X% credit products revenue growth commercial reflecting revenue more from as clients goods where we and real remain balances. real equities, driven a impact products. lower offset funding. reductions in from the balances performance Commercial Markets by a year estate our was as loans from ago, in Average by and capital declines declined originations ago year access where well muted, structured portfolio, of a was loan strong have reduced in banking to down grew as

On net by lower into deposit reflecting market by revenue Higher Slide in were increased alternatives. and a asset-based yielding reallocated Management income, valuations year offset interest an costs driven with X% deposit XX, balances customers ago. as Investment lower and increase higher partially cash compared fees Wealth higher

of and beginning the quarter so market year in the valuations up X. a assets at from will as quarter As third majority the are reminder, of which a were advisory July WIM priced reflect both results the ago and X, from April

capital year due from results Slide our ago XX venture investments. results. highlights a from Revenue improved our grew corporate to

to our income we interest net to year, beginning than to outlook approximately XX. XXXX XXXX. for Turning XXXX X% income Slide expense the the interest X% be noninterest expected lower year net and of At full on

half income the a net as expected where year, the us year in During well largely this same as Compared year, in deposit the funding. we ago. cuts the period our income with current played reflects interest reduce had benefit began market helped down interest expectations, first of has from assumed rate original net our our drivers which what than outlook businesses the with of we X% of out as fewer higher balances

during costs the this the slowed. Deposit of the increased but increase half pace as first of expected, has year

and in with we income is interest reduce However, change Management not approximately deposits Investment and this was accounts. rates on This late in expected increased our million second advisory and paid anticipated net guidance, in by aligns money original rates pricing year. brokerage in to quarter, sweep market $XXX the Wealth better funds

second year, to balances. current start full slow in for half year the of lower decline At slight and which modest year. loans reflected we Our the after in the the card reflects year, commercial growth the loan loans of beginning average outlook a a also in credit the assumed

than into expected, first on call, trend weaker our loan balances second quarter. the that highlighted and earnings continued we were quarter As

We expect to with second year underperformance balances from second declining quarter loan the the half continue this slightly levels. of into

a full to net expect of January, the interest approximately be full income result factors, As XXXX in year year X% from currently range of we these upper were we provided half down our XXXX. the in

interest trough We towards year. will of income continue expect to net the end the

We are continue we of during interest year. the assumptions the net income to out many remainder plays and only how see of are factors will halfway these through the the each and year of uncertain, driving

We the to be billion. expenses. beginning At full are for year year to X There expense XXXX expected expense to full noninterest this noninterest primary Turning increase. we billion. $XX.X expect be approximately $XX year, our this approximately our of XXXX drivers currently

First, markets Wealth the in expectations, Management. outperformed our have higher compensation and expense equity Investment driving revenue-related

a noninterest reminder, higher As expenses this than a more thing is income. if were good higher by offset these

Second, other than expenses during we of and operating the year half customer remediation-related been higher first losses the have the expected.

reminder, impact that operating we customer litigation, regulatory of matters the and losses have a during outstanding year. remediation could remainder the As

first not we the of Finally, results and the We'll to we expense half FDIC reflected million performance. year financial the the our the year anticipate did the which making as In in special quarter our in is transform progresses. now are summary, Fargo included continue improve you the progress of assessment, second Wells $XXX in guidance. our for update updated to

initiatives. growth businesses the progress made We strong net decline income. further our Our in efficiency offset expected interest in fee-based on

of capital Our sustainable capital we return XX%. position excess enabling to continue to to make shareholders, ROTCE path progress and to our on remains strong, us

We will questions. your now take

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

you those wonder could points little latter on changes on bit I side. detail made the cost provide on if Mike, more the deposit you a

which also in that all, -- look generally do you to the will lower And what that a that cost pricing of How interest-bearing saw was than forward? number to you like increase, XX%. First I going how terms that points of going basis relative look forward? part and guess, is sweep expect the XX just of

Ken. Yes, that the worth the about made Thanks, -- we included forward. Yes. you be quarter, month's in we in about will -- June. saw change a going But mean sweep pricing in the -- basically

number. we're I'd of saw deposits. the on in things. not X/X So the think what's a I few about overall Look, side, in say you lot drill pricing into quarterly a you seeing deposit already impact pressure in of when a overall, One, included on going

that On as or the pretty but it's or of from that's been it's the now checking consumer migration last definitely can at And it's the quarter. over savings a happening, this quarter CDs, into while but see you couple a over the look pace. side, stable slower you still at slowing years two been last happening for as

but I'd we continuing And anticipate as look to forward. so you'd still more migration, slow see

side, competitive On been pricing a that's case. we and pretty while, the the the now wholesale -- has for

we've deposits. see able we're to grow so And that good to pleased been operational

the deposits rates given valuable of so little there, start NII, puts be very are competitive pressure time, back on a down. And particularly pricing those long to but come a that term going as to near over period

as And time, positive, saw line long a business in and overall, to for in every think, so slowing the grow first deposits is I the alternatives. you of time higher-yielding that migration

so are it the out plays of that there's trends And think positive some rest good see but the there. for how emerging we'll I year,

Great. of and new just good Where you continues of trading to were it's guess, market we of right, forward? that measure forward, in follow-up. terms do do guys The how how are to zigging the run versus understand this taking a you of really outperforming going And there. group sustainable you business and market that are trading doing? do think think definitely I share. kind And is is rate how going what You demonstrate the gains? kind share fees

to I'll line look single and wants. it's Charlie going around, The at at in So you necessarily straight -- that right? Yes. you trading quarter. given take bounce any if chime he any can can't as quarter,

investments classes, I equities forward. the of look credit really been we're incremental asset but making FX, places, in in of an degree investments you methodically the part basis. think good lesser quarter careful other is But So each we've getting I'd of be sort those on to like the and there benefit as all

cap. by that asset the think still business I is constrained

are would at if assets be which not we the growing asset the level go. as drives we cap, also same assets have we we didn't clients trading financing then more so flow or And

be I'd sort so quarter around happening from methodically But while. we opportunity say it a prudent getting for may bounce good way we're that us grow should we're or given engage for to little as see and And any there to in them out reception a of building bit more in asset clients with us. depending more on the what's And an market them class. flow move and a

And this Charlie. is

me which the a Let the is, we as flows side. of think banking on and in add couple invest risk-based. of to trading the It's improving about expanding the focused investment things, not just the on side. it's our banking coverage and things product It's both -- franchise, that doing actually markets capabilities we're franchise, banking on customer focused on it's side

on we at as very we're institutions can are. and also look you returns what other overall, focused So large -- imagine, as very, all the financial

expect all the would looking share up. across So at continue do progress, categories our tick see those different we and we're look as to to at to

as through that marketplace, the don't the you And are we the in looking recognizing growth, volatility we a control level at so volatility. look of quarter-to-quarter sustained that exists

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

maintaining it the bottom If the what could back towards growth And guess Your that that kind walk that expressed go your inflection. gives dynamics this you view towards you mean just in XXXX? loan confidence in year. end given I backdrop? mentioned you you just into you the us Maybe could just the the year of us, funding give and NII or could what confidence half in of rate that mentioned confidence you just through the as cost should

sort flow, as XXXX, on But this you side of mentioned migration I seeing happening, what's look Yes, we you're deposit John. about as won't talk at much of the earlier. pace

So goes time you're as there. by stability seeing more

of You're later on side -- to way once betas see the the on the year, which start Fed to in the deposit you'll starts down . market the the happen base. lowering rates, expects wholesale

of more see to asset securities as gradual continue on sort more loan repricing you roll. and sort of side see You'll the some

little got feel all sort of look you it's of over look pretty trough exactly as the calling components so to the is to be coming sort quarters. can few about the be, still see tough, And that which -- good we at you going of a but happen sometimes to it, being able quarter

I first about over if $X.X to buybacks, bought And quarter. hop billion this similar the capital, quarter, just Okay. somebody back to

slow. give the how how us you that were how You a of and should think until we on bit little rate long previously? pace indicated color you could this persist could long could the moderation at point? that back you will Maybe run about And if be at

III take we my can you up. of on uncertainties know to one. as we've ultimately me things I that and with know exists then where The as in add reality at color Mike, shot a been this those it, running don't I Let comes when are, III trying mentioned we've the winds this capital, point. SCB the prepared Listen, remarks, at is where look anticipate, SCB uncertainty think way for well exist you find been Basel the that around where the at out. about the year out where still Basel We we as this X ultimately

specific think return we capital in here then I be shorter we the today, we wind more continue that returns. we will as So about sit conservative get ultimately up exactly -- learn on term capital means III we'll can where what will more for Basel until and about

III a sized capital remainder just dividend has significant that's -- earnings towards The reality power and given want we Basel is that fact capital what the a goes capital generating to pragmatic. see increased to reasonably of still I we're very where generation increased, of return, I of just we're winds amount the our up. So be as but our have constraints. trying Most we ultimately think

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

in buffer and Charlie, sand significant capital. be for pace of CETX what but the there, line right as Basel buybacks you're wait ratio the not for go still now the first, that the Mike return? about about Is -- guiding of think Just on XX%, at maybe follow-up it, you capital I one with in clarity would you might as we how we XX% appreciate least context and could or the X.X% minimum. think below as

are be SCB a place little is right we bit, a probably expected. minus bit, where think I plus Remember, but was higher than at point. we plus the some a probably to not the this little

that's into our thinking. so factoring And

think thinking on know clarity our future clearer get much so we've that's always hopefully, looks more of capacity this at And prudent. -- we Basel what's you still We But We we buy really about pace want as But again, of what slowing then III. like again, the be we been, overall, the we'll we'll driving and back. buybacks be terms just the point. in to to know, have some there. it

then And moving to Understood. just expenses.

get should guide big of has the the part expense the maybe, a to thesis anything changed gains, But first, Charlie, lead I from remind you wealth us, increased. on expense So which that's efficiency guide? of the around path it for of IB? assume are revenue that you trading that of for terms does back the as XX% half part in ROTCE? elevated Like And fee the levels in, what baking in flex

part. take just me first the Let

question. the So I you asking just -- and appreciate

efficient. nothing we yesterday has far more to think as today us or is different quarter. think the continue it we about opportunity from -- I as look story last was become as changed -- to forward, for where That no than

that a payout. upwards. the Mike higher thing, always head expenses business One Wealth higher where in it's results expense broad the X that for estimates number to year, are that's actually we And As increased even the that have relate points we of really embedded as though which Management and variable reflective good it's the line, causes Investment revenues in to categories. our out,

The fact remediations than year and contemplated guidance. half we've first of in when are FDIC thing second the higher had customer the expenses we expense the the that

customer the said the -- On these new in they're items. closer of finalization getting it's historical to end we've We're remediations, not things. items, they're

we things something amount all really historical see -- and a flowing full forward. to it that -- that as of that's response the rates what's embedded rates making And through. the sure matters and we've in occurs, the that's fine-tuned, what But and gets identified not going business every population like in that's

So and base would is -- out what expense we the as earnings sorry, I'm the the expected. rest of of you're playing with the it's have company left

we we the and which We're we're statements not business. We're in it's made right are efficient out focused build investing on and the true, as as is spending all look here exactly to what's the the to as so be -- need driving on forward, and And is, necessary efficiency company. focused we're of that lever to focused in on I growing And what been. be. the control risk still sit past continues infrastructure,

Got it. guidance? elevated assume the half part back in staying you as the And fees of

We equity are are pretty Yes. staying markets assume about so they still today, elevated. where it's

UBS. come Erika The next Najarian question of will from

because question to to didn't isolation just just it it put ticky-tacky, seems but in to this context ask it's I want First, because I want not.

So isolation. in of the down I just end to range, that higher adjust X, would would X.X% consensus if is X.X%. the stock NII your consensus And imply that take to

of why context a expenses. this is I'm just on asking this So question

from went FDIC special and assessment. those original up of -- expenses billion. guide laid out X guess you -- you bullets quantified $X.X your I in So and terms your

terms the of going in as that's is of I of sort coming is I guess, it, the we understand down expectation? and want on the the to PP remediation op But the is could because okay, versus more your deposit wants -- up get up, I little just original what EPS wondering indicating. how going this of I'm bit market core detail as losses is PPNR outside just out expenses to have us assurance were right? much if NII, happening Because much market be give think repricing. of a that you to that more

I Erika, in you We line Mike. give it's supplement. loss No, operating the question. the the appreciate Yes.

up So you $X.X was you the about you full can across on the just million year-to-date assume that year a if see had rate. you if the $XXX that. January, And on operating what billion in said split based see -- over losses are run quarters, all can evenly that basis we that

is So half. the that's first the impact to of way that approximately year-to-date think the about what in

take So the that, FDIC it. you add then to you

Right. is expenses Management. roughly And the revenue-related Wealth the in remainder

what's expenses. in it's It's it quarter. would the its variable when expense increase seen, -- that expense I guide, and talking increase the first look in have playing else in second So that's the was Erika, we when Everything you and remediation why, out is the driving expected. before, FDIC is the as at you've

it. Got

here maybe of on to further message issues, the to in how release you of in quarter. the sense. And we you've continue comments of most from should deterioration this quality from That here. think trajectory Is economy? about that makes second And charge-offs? CRE-related some a a just about Okay. credit of how you're thinking looks like the reserves you the It relative captured the your absent reserves course, feel like

bucket you -- different well, look when at reserves, we you when to I say into Well, have think pieces. the

exposures just changes the are and losses. consumer are balances, in down underwriting but parts coming also we've it's of actual based not business. Our on the made,

the balances. really part on increase reserves card side, driving by credit So driven side. And loss on the of driven the reductions -- that's that what's the is really the in consumer it's

So different releases out that you've got the still than no portfolio then representative quality being the going ACL, very the credit uncertainty in a just of our is when performance portfolio. worse losses -- higher there. credit we've expected we're but side, our set seen X there, with And would wholesale the there's CRE office have CIB on smaller, and dynamics we credit we playing on

coverage. we're the So maintaining

trend of other real the content credit part still the -- we're in than episodic some actually fairly real of in where in terms business, portfolio, no but benign what which our really events So there's expectations, loss things through. are CRE change the is there. wholesale no from elsewhere, seeing And overall, is coming

with come next The will Matt question Deutsche from Bank. O'Connor

just bit of Was for why some is you to logic deposit What you it pressures? up cost wealth? the the competition? Or ahead increased pricing potential was get a with Can elaborate keep kind there? of it trying on to

Yes. It's Matt. Mike,

to was wealth very business. the in this a sweep specific product So

it other that products. and portion overall deposits, of it's a So doesn't any have any bearing on

I individual very So or that in accounts accounts. one advisory that product specific leave would with to fiduciary

Okay. big deposit And is balances? that, how those

But the We impact the you of there. the second impact the the roughly -- something highlighted $XXX -- can we we didn't year. of is is out see not don't have half rest sort million normally -- for the for I year of that's

embedded just So that and I of already would -- sort in use gave. as that's the guidance we

I Okay. here. credit And then been very topic separate has growth a mean just good. the card

was You new in if sense growth anyway rates quickly. have were one gone always as others, more as up even still highlighted cards. little line makes question Street rolling of category, are much you they There some Wall with too what The than maybe growing you when a certain not from -- on article that not some kind products. And is the peers, negative of out loss targeting. obviously your Journal in

taken sure you're and So just for kind what initiative the of somewhat you that make checks together, kind right to balances growing you of that at a have new place?

Yes.

and you in. So Mike, I'll start then chime can

but we product. first early in look credit performance with they're at at pre-pandemic So well at when right? terms as by the card of have credit total, out in of that early on when well look product. vintage. we're out the do seeing, our as as we playing we books compare anticipated balance at look And launched look -- at look it performance, results we not we results would each We We losses, of build both not all all, broken And how the very we performance, versus starting as delinquencies. individual we what

at As actual the quality look overall I credit that quality. we we're the consumers of said, underwriting the and

look probably would We the is with really time haven't what it's actual a as little on have expected. the has we on compromised tightened we credit gone relative quality up vintages but all. had been where you We've at at bit spot to performance when

seeing new a our small So of launched the in the very when we of you're is cards just just is, what last loss think about just a of that terms size portfolio. And Wall -- article, cards. bunch and of -- you relative it. a thing and the the that's maturing piece strategy we've Journal increase I'll very, Street the That -- of in the that is lot rates say to credit of the issue what scope very, the all a is

Yes. piece. And add I just would one

at As new XXX. originating we're not than you anything less account growth, look

mentioned, sorry. So with of some as the XXX FICO, tightening credit Charlie

back And card, back coming in originations the are bigger the higher cash a when the back box as all. not at at has -- cash, credit So of mentioned, you the new been look Charlie was. really than brought quality cash book some like credit active at in the products

said, weakness a right are start quarter results to each adjusting we go very, all, at where at kind we Charlie it expect. so And point, as kind this through we're And where and of we level, granular very see at if needed. of any

this Lending a that the whatever. see always isn't not which It's the we've the here, it, and again not us. comment we've thing in seen people seen do growth for you last this people a the one risk that this just lot And not are to product the a like We're right questions. happen well. doing has past, business, Consumer well, myself, -- because in question, this, I is ask whenever it's do product of -- appreciate We've both -- seen this runs in our in is Kleber new card people this

And so other you're very, go on of as just as the we're forward, that in. out pointing we're we very we that conscious investing risks businesses the are

talked Okay. That's helpful. And down in obviously, going card losses XQ. you about

So what said with it's as consistent you well.

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

get is better to make point that So wanted on expense revenues related I of that guide, I sure the a Wealth bunch from just to the Management.

that that a in be as to be least that, part revenues should Management Is or for we the at going so And even X/X higher. of is little second fair? half Wealth anticipating a at maybe

in covered that I Betsy, mean, I Yes. script, too. my

they for assets the in on advance based priced and advisory So there, as you at quarter. priced most them get get look the -- of

quarter not you we'll a know But like like then market. now, income get now. And equity as and as quarter looks where you in obviously, there all we see it's the the into are looks on markets third on when what well. fourth what you are where little bit There's should increase based based see quarter we some the of go fixed third there. So an

Yes.

Okay.

not up wanted know the with just expenses balanced to but I guiding out path. sure make leads I revs interpretation So you're that the down we rev, you

And the question with, had business discussion was your I going of today. interest that in there's view what's the to loan markets had the piece just I so of the guess then balance I earlier. realize And into other opportunity. relate leaning on

the cap. at the still cap There's not but you're asset constraint, asset

even are space. So room is you there for on more little constrained bit in. lean you a who that than There to in players capital are

and loans area that into, is now, in as are C&I other when of an interested you would leaning be low types indicated CRE this and especially right So demand you earlier.

Well, let me start.

cap there we don't all say got I want to sheet, so not a want because and as were the and there of think lending an be a both appetite event as through balance you've see we're balance me when sheet COVID careful -- is, we draws, and how deposits prepared basis was we let it on of of about have to to relative within right, live sudden, is you a where to first we well asset -- for bunch that where lived operate terms customer of all, in regular cap. to at we're -- overall we the run which the running

is So to we running can think, it some very smart with you for argue do, profit. up thing, though even a us giving the cushion we're shorter-term

of just the that's we reality live. So where

other we demand markets finance do the there company, for in and that. But as out are so be inside perfect allowing there's the to where where doing more. get been opportunities about more And able about that of the them the demand think means, side. are and we trading more demand, as there there's the and be returns we company, more think we less the is, sheet demand parts and in what less us to most the been and balance to on optimizing has world, what business There some we'd

assets XX-ish our percent. up So are actually

trading. Yes,

little on to trading an you up supplement go on the a are XX%, average a assets deck, more If basis basis. spot

mentioned. what for keep reasons So so we've -- reflective we're we're got to trying capacity of to are, those the opportunities but I just

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

mentioned Fargo. comments in about you your opening Charlie,

You Can in over in savings us real go any or to year pickup. other share or now lead even you a progress work Fargo ago, launched with increased and guess, you're are programs that cost efficiencies you having good orientated forward? AI guys right enhancements that I could revenue as

Sure.

it break we first when -- AI, there different do AI and into think we GenAI. is As traditional we categories, There about then right? is

huge already we embedded provide marketing, of in it's a And have cases that discussion across number the it's bankers decisioning, entertain wholesale, the as AI. is respects, might in of on -- willing with customers use in the in We and lot company for consumer or just it's that's credit business is on that that usual be information a -- traditional willing what so about about, be to us. a could both side

things that whether opportunity of it's haven't is in with creates upon exists data new data The public terms on AI something where existed. our GenAI that based own

to also We are contributes experience customers. for it can just in the term drive of on the most things But quality our efficiency. that focused shorter

that answering they and center rep. sure -- sure that and at change. work go bankers go make that what the we AI get to like also what gets of case that's into information, done then the call put look it a a that be a of done go root have about, telephone actually cause cause of correctly. root they is, to that to the But call lot to have was center the can we've that rep, get we all bankers and examples GenAI, automatically. centers. and be to capturing effort in, so these can so we for opportunities make to have on great the making and calls then It cause of enter someone identify we're aggregate across phone us that means through could lots back, think be done calls to understanding things call root forth. Through answer immediately, But question So we got those that and are lots so can We take call questions once before

So much so ultimately, that what it results takes also but of do. effort defects going we out in forward, manual fixing

sure place something as the the And move by very -- that. side. on the we're well consumer so a an that things slowly understand consumer, impact side where that's wholesale impact they so to automate that. extent something to of is exist going to and we analyzed is the To the as got make opportunity written, any we've individual, Those

part our the prioritization in of work is so about we And terms think meaningful spend. as a tech of

quick I good. And just as a then insights. follow-up. those Very appreciate

your or that mentioned I higher recognize You Investment flat revenues second brokerage quarter in fees Wealth more seasonal been improved fees quarter. over segment, they've year in investment And it line commissions are not are for Management look this customers about so? a more just and main to at also that, X% year. getting They're just business cash driver advisory and service that division. I when and the rate in where the of up ago. Is assets the are adviser environment asset-based leaving retention the in in -- gets because other down you this But Or is cash they're it in soft? noticed

item to time, long actually next period of that more see how But volatility, necessarily quarter. Obviously, no been activity. a goes as exactly degree, you X rhyme ongoing some the Yes. moves productivity as and the second market of up, in to really well. there's probably and large might in from very an and item a revenue more necessarily. transaction declines over That is Gerard, from perspective if a that's certainly really thing to necessarily, the line equity reason advisory bouts like line There good the case hasn't or that that quarter

Chubak question And Research. will today for final Wolfe our of come Steven from

peers some amount about have cash what to on given the late many an hoping and talked maybe innings of pressures Was of, potentially force changes impeding or is that offensive at informed very the sweep this your your sheer or we've I your better share wallet? more impacting guess, lead I the you suit? or sorting could in abating want pricing being deposits effort given to it was received provide deposit least Just I wealth, decision the -- context understand questions and market recruitment investor additional the adviser ability to and follow And pricing adjust retention? it the Was others to retain pricing? go and on to of on in

reaction things. Yes, cash to Mike. Steve, is just it's I'd couple not a sorting. One, say of in this

We are business the just cash wealth consumer slow in we're seeing business. the seeing like that sorting in

is there. product, relatively this a this to of account within And It's overall deposits where very portion So it business. there's in reaction the wealth is a way. that is an to any small specific the frictional which not advisory in sit that cash

growth. drive reaction to So that or seeing we're to to it's us not be forces a somewhere proactive, competitive trying

discussion making especially follow-up wealth segments. what clearly of within profiles do relating one been payout both sustainable different. just And those are I XX%, in just north CIB think on the the and And momentum of quite half some as believe about to expenses. and running we actually that are you're year time, the last. margins CIB, that being same the CIB have in margins you're and where Understood. given it's the to first durable of just incremental you hoping recognizing perspective incremental this investments seeing fee versus At or sustained high, some was momentum Wealth fee get within

back me on banking I'll start let come side, iBanking Well, to the the and wealth side. or

doing what's continued talked asset the side, then client margin really better which in One two, you time with are over can much and forums, help products. kind drive growth So and business and productivity a on job other the lending is of really penetrating wealth in that X going things. in base advisory to that we've us And happening. about it's see side, banking this expansion

than in base for loans us, our at look business much we're you the of wealth the the look peers. you or and adviser penetrated asset overall when at less the So some

drive time. And sit get those to so more And some are which we today. really best-in-class things that to help higher takes us I than think where margins

down, to you'll the rate little to more as demand that it's growth. side, And harder a start lending this there. come On in see probably drive environment, rates

to And right it right so But timing the cyclical and team in come there are Summers a and of are Barry, the the on support the that so forth. things very that sort got management sales force for from perspective. the sales making capabilities, the right and are aspects some of we've sure Wealth focused those whole force,

On side, we've we've making business probably. making also of good in X-plus been the the the part than investments also not sure people, better -- got we're the now And a for iBanking we're -- adding years, people seats. longer right we're that as necessary in little that right that

not And this in headcount. huge increase senior so you're really seeing overall

got making we're right the sure actually -- You're right seats. people we in the

you've seen And so some reductions seen as some you've growth.

investment. helping overall moderate also so the And that's

is, revenue you getting by as the what already when paying seeing piece some the and we those degree. to full recruit adding brought on, rate the benefit you're run And but now, then those people right? freight also, got So investments you're the you've of them people, expense you're

And the they're people made you're good but is think what you'll quarter, time, the of each productive so and should see. which we see you like investments, what moderate pace expect, paying becoming seeing margin that's expansion to you're now I is that incrementally over

much. Thanks We'll to you very right, All everyone. soon. talk

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