Q4 2023 Wells Fargo & Co Earnings Call
So our improved 2023 results benefited from the strong economic environment and the higher interest rates are continued focus on efficiency and strong credit discipline were important contributors as well.
We grew net income and diluted earnings per share with higher revenue and lower expenses.
Revenue growth was driven by strong growth in net interest income as well as higher non interest income.
Our expenses were down from a year ago benefiting from lower operating losses, as well as the impact of efficiency initiatives.
As expected net charge offs increased from historical low levels and our allowance for credit losses increased as well.
We continue to closely monitor our portfolios, taking credit tightening actions as appropriate.
We returned a significant amount of capital to our shareholders, including increasing our common stock dividend from <unk> 30 per share to <unk> 35 per share in the third quarter, and we repurchased $12 billion of common stock.
Average loans increased modestly with growth in the first half of the year offsetting declines later in the year, reflecting weaker loan demand as well as credit tightening actions.
Average deposits were down driven by consumer spending as well as customers migrating to higher yielding alternatives.
The financial health of our consumers remain strong while average deposit balances per customer continued to decline from their peak. They remained above pre pandemic levels as wage growth is more than offset increased spending having said that there are cohorts of customers that are more stressed.
Tumor spending remains strong credit card spend was up 15% for the year and was remarkably stable throughout the year with growth rates strong across all categories, except fuel, which was impacted by lower gas prices debit card spending was up 1% for the year discretionary spend growth slowed through.
A year ago, while non discretionary spend with stable.
Our risk and control work remains our top priority and I refer you to the comments I made last quarter regarding both our progress in completing the work as well as the risks that remain weak.
We continue to execute on our strategic priorities and while it is early and we have more to do we are starting to see improved growth and increased market share in parts of the company, which we believe will drive higher returns over time.
We provide just a few examples.
Our new credit card products are driven at the recent consumer spend at a rate significantly better than the industry average.
We've also been investing in the corporate investment Bank CIB revenue grew 26% from a year ago, and our investment banking and trading market share has increased.
The positive results in both areas were accomplished while maintaining our existing risk appetite.
Additionally continued execution of our more focused homeland strategy should also produce higher returns and earnings over the next several years.
And while our consumer small and business banking commercial banking and wealth and investment management business remains strong opportunities to increase share are significant.
Other accomplishments include we launched a new co branded credit cards with choice hotels building on the new products, we've launched over the last couple of years.
We continue to enhance our mobile app, which is driving mobile adopt adoption momentum, adding $1 6 million mobile active customers in 2023, and increasing mobile logins, 11% from a year ago.
Consumers interacted over 20 million times last year with Fargo, our AI powered virtual assistant.
We exceeded our $150 million commitment to help advance ratio equity and home ownership.
Our special purpose credit program lowered mortgage rates and reduced financing costs to help thousands of customers for.
For commercial clients, we continue to invest in order to have the right people and the right capabilities to better penetrate our customer base.
We continue to attract experienced bankers to our investment bank, helping us drive growth in priority products and sectors.
Throughout 2023, we added new heads and co heads of equity capital markets global mergers and acquisitions financial institutions financial sponsors healthcare and technology media and telecom.
We've also started to see the benefit of the targeted investments we were making in our trading capabilities.
<unk>, adding talent and improved technology with a focus on supporting our core clients.
Finally, we are launching a partnership with Centerbridge, which helps us provide our middle market clients with access to alternative sources of capital. Another example of how we're providing solutions for our clients.
Investing in our business and introducing new products and services remains a priority in 2024, and Mike will highlight some of the opportunities later on the call.
In 2023, we also continued to take a closer look at the businesses that were not in sync with our strategic priorities as I mentioned, we simplified the home lending business, which included exiting the correspondent business, we are reducing the size of our serving servicing portfolio as well as.
Our retail team to align with our narrower customer focus.
In the third quarter, we sold private equity investments and certain Norwest equity partners Norwest mezzanine partners funds.
We also continue to invest in the communities we serve throughout the year and you can see many examples at the beginning of our slide presentation.
As we look forward our business performance remains sensitive to interest rates and the health of the U S economy, but we are confident that the actions. We are taking will drive stronger results over the cycle.
We are closely monitoring credit and why we've seen modest deterioration it remains consistent with our expectations our capital position remains strong and returning excess capital to shareholders remains a priority.
Mike will talk more about our expectations for 2024, but I would like to make a couple of points first we have seen and have said that we expect net interest income to decline from the high levels we saw.
As rates were rising last year, and given that we remain modestly asset sensitive the implied fed rate path reflected in recent forward curves impacts our outlook for NII.
Significant uncertainty exists regarding the eventual timing and extent of federal reserve interest rate actions, Mike will give you our expectations for net interest income, but please recognize that it is based upon a series of market assumptions, which may be right or maybe wrong, we hope for.
Overview of our assumptions is helpful.
Second we remain focused on tightly controlling our expenses, but there are several moving pieces, which Mike will walk you through.
We will continue to invest whats necessary for our risk and control where.
We continue to realize expense efficiencies.
And at this point, we are planning to increase our investment spending to create better growth and higher returns in future.
Our expected efficiencies roughly offset our planned increase in additional spend at this point decisions on how much to invest are dynamic.
We closely monitor the outcomes of our investments and we will adjust our plans based on the success we see.
We are focused on our shorter term results, but remain committed to building a well manage faster growing and higher return company over the medium and longer term.
I have said and I remain excited about the opportunities to increase our share in returns across all of our businesses. We believe the actions we have taken and continue to take provide a path to 50% ROA TCE.
I want to conclude by thanking our employees for the dedication talent and all they do to move our company forward I am excited about wells fargo's future and all that we will accomplish in the year ahead, Mike over to you.
Mike: Thank you Charlie and good morning, everyone. The first couple of slides summarize how we helped our customers and communities last year, some of which Charlie highlighted so I'm going to start with our fourth quarter financial results on slide four.
Mike: Net income for the fourth quarter was $3 4 billion or <unk> 86 cents per diluted common share.
Mike: Our fourth quarter results included $1 9 billion or <unk> 40 per share for the FDIC Special assessment.
And $1 $1 billion of severance expense, including $969 million or <unk> 20 per share for planned actions.
These expenses were partially offset by $621 million or <unk> 17 per share of discrete tax benefits related to the resolution of prior period tax matters.
Mike: Turning to capital liquidity on slide five.
Mike: Our CET one ratio increased to 11, 4% in the fourth quarter, two five percentage points above our regulatory minimum plus buffers.
Mike: This increase was driven by our earnings and an increase in accumulated other comprehensive income, reflecting lower interest rates and tighter mortgage backed security spreads.
Mike: During the fourth quarter, we repurchased $2 4 billion in common stock.
Mike: We purchased a total of $12 billion in common stock in 2023, and we currently expect to be able to repurchase more than this amount in 2024.
We will continue to consider current market conditions, including interest rate movements risk weighted asset level stress test results as well as any potential economic uncertainty with respect to the amount and timing of share repurchases over the coming quarters.
Turning to credit quality on slide seven.
Mike: As expected net loan charge offs increased up 17 basis points from the third quarter to 53 basis points of average loans driven by commercial real estate office in credit card loans.
Mike: The increase in commercial net loan charge offs reflected the higher losses in commercial real estate office, while losses in the rest of our commercial portfolio were stable from the third quarter.
Mike: As expected losses started to materialize in our commercial real estate office portfolio as market fundamentals remain weak.
Mike: The losses were across a number of loans spread across various markets and were driven by borrower performance lower appraisals were the result of properties or loans being sold at a loss.
Mike: We substantially built reserves for this portfolio throughout 2023 as criticized and nonperforming assets increased and while we expect additional losses in the coming quarters, given market fundamentals and capital markets and liquidity challenges in this sector the amounts will likely be uneven and episodic.
Mike: Our commercial real estate team has a rigorous monitoring process and continues to derisk and reduce exposure and we're using this information to evaluate our allowance, which I will discuss later.
Mike: Consumer net loan charge offs continued to increase and were up $118 million from the third quarter to 79 basis points of average loans. The increase was driven by the credit card portfolio, which performed as expected with increased losses, driven by our recent vintages maturing.
Mike: Nonperforming assets increased 3% from the third quarter as growth in commercial non accrual loans more than offset declines in consumer the increase in commercial real estate non accrual loans was driven by a $567 million increase in office non accrual loans.
Mike: Moving to slide eight.
Mike: Our allowance for credit losses increased slightly in the fourth quarter, driven by an increase for credit card and commercial real estate loans.
Partially offset by a lower allowance for auto loans.
Mike: The table on the page shows the allowance for credit losses coverage ratio for our commercial real estate, including the breakdown of the office portfolio.
Mike: While the charge offs, we took in the fourth quarter were contemplated in our allowance. We are still early in the cycle and after going through our quarterly quarterly review process. The coverage ratio in our CIB commercial real estate office portfolio remained relatively stable at 11%.
Mike: On slide nine we highlight loans and deposits.
Mike: Average loans were down from both the third quarter and a year ago.
Credit card loans continued to grow while most other categories declined.
I will highlight specific drivers when discussing our operating segment results.
Average loan yields increased to 122 basis points from a year ago, and 12 basis points from the third quarter, reflecting the higher interest rate environment.
Mike: Average deposits declined 3% from a year ago as growth in corporate and investment banking was more than offset by declines in other in our other deposit gathering businesses.
I think continued consumer spending and customers' reallocating cash into higher yielding alternatives.
Mike: Period end deposits included in the chart on the bottom of the page.
$4 2 billion from the third quarter as declines in consumer banking and lending were offset by slightly higher deposits and wealth and investment management for the first time in over a year as well as higher commercial deposits, which included our efforts to attract clients operational deposits.
Mike: As expected our average deposit cost continued to increase up 22 basis points from the third quarter to 158 basis points with higher deposit costs across all operating segments.
Mike: Based on the increase was similar to the third quarter our.
Mike: Our mix of deposits continue to shift with our percentage of noninterest bearing deposits declined to 27%.
Mike: Turning to net interest income on slide 10.
Mike: Fourth quarter net interest income declined $662 million or 5% from a year ago due to lower deposit and loan balances, partially offset by the impact of higher interest rates.
Provide details on our 2024 net interest income expectations later on the call.
Mike: Turning to expenses on slide 11.
While our fourth quarter noninterest expense included the FDIC special assessment and.
And $1 1 billion of severance expense, including $969 million for planned actions expenses declined from a year ago, driven by lower operating losses.
Mike: While most of the planned actions should result in lower head count some of the actions are related to our workforce location strategy, which should lower occupancy costs and provide other benefits, but may not always reduce head count.
Mike: Total expenses increased from the third quarter, driven by the FDIC special assessment and higher severance expense.
Mike: Personnel expense increased $554 million from the third quarter as higher severance expense was partially offset by lower benefits and incentive compensation expense, including certain year end adjustments as well as the impact of efficiency initiatives, including lower head count.
Mike: Turning to our operating segments, starting with consumer banking and lending on slide 12.
Consumer small and business banking revenue increased 1% from a year ago, driven by higher net interest income, reflecting higher interest rates, partially offset by lower deposit balances.
Mike: Been focusing on controlling expenses and lowering the cost to serve our customers, which includes driving digital adoption simplifying our product portfolio and using technology to automate our operating environment.
Mike: As our customers continue to shift to lower cost channels, resulting in fewer teller transactions and handle the call volumes, we have reduced our total number of branches by over 286% from a year ago.
At the same time, we've been refurbishing our branches as part of an accelerated multiyear effort to transform and refresh our full branch network.
Mike: I'll highlight other ways, we are investing to improve the customer experience later on the call.
Mike: Home lending revenue increased 7% from a year ago lower gain on sale margins in originations as well as lower loan balances were more than offset by improved valuations on loans held for sale due to losses in the fourth quarter of 2022, we continued to reduce head count home lending in the fourth quarter down 36% from a year ago.
Mike: Reflecting market conditions as well as our new strategy.
Mike: Credit card revenue declined 1% from a year ago, driven by the impact of introductory promotional rates and higher rewards expense, partially offset by higher loan balances and interchange revenue.
Mike: Payment rates have been relatively stable over the past year and remained above pre pandemic levels.
New account growth continued to be strong up 17% from a year ago.
Mike: Auto revenue declined 19% from a year ago, driven by lower loan balances and continued loan spread compression.
Mike: In personal lending revenue was up 13% from a year ago due to higher loan balances.
Mike: Turning to some key business drivers on slide 13.
Mike: Mortgage originations declined 69% from a year ago, and 30% from the third quarter, reflecting the progress we made on our strategic objectives for this business as well as the decline in the mortgage market.
Mike: As we executed on our strategic objectives. We've also made significant progress on reducing the amount of third party loans serviced.
Mike: 18% from a year ago.
Mike: The size of our auto portfolio has declined for seven consecutive quarters and balances were down 11% at the end of the fourth quarter compared to a year ago.
Mike: Origination volume declined 34% year over year, reflecting credit tightening actions.
Mike: Debit card spend increased 2% from a year ago with both discretionary and non discretionary spend up 2%.
Mike: With growth in most categories, except for home improvement fuel and travel.
Mike: Credit card spending continued to be strong was up 15% from a year ago. All categories grew with double digit growth rates in every category, except fuel home improvement and department apparel.
Turning to commercial banking results on slide 14.
Mike: Middle market banking revenue increased 6% from a year ago, driven by the impact of higher interest rates and higher deposit related fees, reflecting lower earnings credit rates.
Mike: Asset based lending and leasing revenue increased 9% year over year due to the impact of higher interest rates and improved results on equity investments.
Mike: Average loan balances were up 2% from a year ago, driven by growth in asset based lending and leasing.
Mike: Turning to corporate and investment banking on slide 15.
Banking revenue increased 15% from a year ago, driven by higher lending revenue.
Mike: Higher investment banking revenue due to increased activity across all products and stronger Treasury management results.
Mike: As Charlie highlighted we've successfully hired experienced bankers, which is helping us deliver for our clients and positioning us well for when markets improve.
Commercial real estate revenue grew 2% from a year ago, reflecting the impact of higher interest rates, partially offset by lower loan and deposit balances.
Mike: Markets revenue increased 33% from a year ago, driven by higher revenue in structured products equities credit products and commodities.
Mike: Average loans were down 3% from a year ago with growth in markets more than offset by declines in banking and commercial real estate.
On slide 16, wealth and investment management revenue declined 1% compared to a year ago, reflecting lower net interest income driven by lower deposit balances as customers continued to reallocate cash into higher yielding alternatives.
Mike: The decline in net interest income from a year ago. It was partially offset by higher asset based fees due to increased market valuations.
Mike: As a reminder, the majority of win advisory assets are priced at the beginning of the quarter. So fourth quarter results reflected market valuations as of October one which.
Mike: Which were higher from a year ago.
Mike: Asset based fees in the first quarter will reflect valuations as of January one which were also higher from a year ago.
Average loans were down 3% from a year ago, driven by a decline in securities based lending.
Mike: Slide 17 highlights our corporate results.
Mike: Revenue declined $345 million from a year ago, reflecting higher deposit crediting rates paid to the operating segments. This decline was partially offset by improved results in our affiliated venture capital business on lower impairments.
Turning to our expectations for 2024, starting on slide 18.
Mike: Let me start by highlighting our expectations for net interest income as we look forward. There are a number of factors that could impact our results, including the ultimate path rates the shape of the yield curve quantitative tightening in fiscal deficits consumer behavior and competitive behavior to name just a few all of which we have little to no control over.
Mike: This makes it particularly difficult to estimate and interest income for 2024.
Mike: There is more uncertainty than usual given the market strong view of breakup timing and the quantum.
Mike: Looking at our results, while we had strong growth in full year net interest income in 2023 versus 2022, our net interest income came down modestly each quarter last year, driven by the higher deposit pricing and mix changes.
Mike: You can see this impact when you annualize our fourth quarter net interest income, which was down approximately 3% from our full year 2023, net interest income of $52 4 billion.
Mike: Our current expectation is that full year 2024, net interest income could potentially be approximately 79% lower than our full year 2023.
This expectation is anchored on the forward rate curve and a series of business assumptions, including.
Lower rates and the recent rate forward rate curve.
Which given our modestly asset sensitive position would be a headwind to net interest income.
A slight decline in average loans for the full year, which includes modest growth in commercial and credit card loans in the second half of the year after a slow start to the year.
Mike: Reinvestment of lower yielding securities runoff into higher yielding assets, which would also modestly extend the duration of the investment portfolio.
Mike: Further attrition in consumer banking lending and deposits as well as continued mix shift from lower yielding products to higher yielding.
Mike: Deposits in our other deposit gathering businesses are expected to be relatively stable and market funding replace the declining consumer positive as needed.
Mike: We currently expect that net interest income will trough towards the end of this year.
Mike: As we've done in prior years, we are also assuming the asset capital remain in place throughout the year.
Mike: Ultimately the amount of net interest income we earned in 2024 will depend on a variety of factors, which many of which are uncertain, including the absolute level of rates the shape of the yield curve deposit balances mix, some pricing and loan demand.
Mike: Okay.
Turning to our 2024 expense expectations on slide 19.
Mike: We started our focus on efficiency initiatives three years ago. When we successfully delivered on our commitment of approximately $10 billion of gross expense saves.
Mike: Through our efficiency initiatives, we have reduced head count every quarter since the third quarter of 2020 and head count is down 16% at the end of 2020.
Looking at our expectations for this year and following the waterfall on the slide from left to right. We reported $55 6 billion of noninterest expense in 2023.
Mike: Which included which included the $1 9 billion FDIC special assessment.
Mike: Excluding this item expenses would have been $53 6 billion, which we believe is a good starting point for discussion of 2020 for expenses.
Mike: The next bar, we expect severance expense to be approximately $1 $3 billion lower driven by the 690 $969 million expense, we took in the fourth quarter for planned actions.
We expect expenses to increase by at least $300 million due to higher revenue related expenses, driven by wealth and investment management.
Mike: Revenue related expenses will ultimately be a function of activity and market levels and therefore, it could be higher or lower than this estimate.
Mike: At this point, we expect all other expenses to be flat. So there are significant efficiencies and increased investments included in this expectation.
Mike: We expect approximately $2 7 billion of gross expense reductions in 2024 due to the efficiency initiatives.
Mike: We highlighted on the slide some of the areas, where we anticipate additional savings and continue to believe we have more opportunities beyond 2024.
Similar to prior year as the resources needed to address our risk and control work are separate from our efficiency initiatives and we will continue to make significant investments in our risk and control infrastructure.
While we remain focused on executing on our efficiency initiatives. We are also continuing to invest and we expect approximately $1 1 billion of incremental technology and equipment expense, reflecting higher costs related to the amortization of investment in prior years as well as new investments planned for 2024.
Mike: We also expect merit increases of approximately $700 million.
Mike: Which are primarily awarded to employees with lower salaries.
Mike: We highlight some of the other areas, where we plan to invest in the next slide.
Mike: Our 2024 expense outlook includes ongoing business related operating losses of approximately $1 3 billion.
Mike: Similar to the level, we had in 2023 as.
Mike: As previously disclosed we have outstanding litigation regulatory and customer remediation matters that could impact of operating losses.
Mike: So putting this altogether, we expect 2020 for noninterest expense to be approximately $52 6 billion.
Mike: It's important to note that while we've made substantial progress executing on our efficiency initiatives.
Mike: Charlie highlighted we still have a significant opportunity to get more efficient across the company.
Mike: Given how critical it is to continue to invest in our business on slide 20, we provide some examples of our areas of focus for 2024, let me highlight a few.
Building, the right risk and control infrastructure remains our top priority and we will continue to invest in this important work.
Mike: Charlie discussed many of the technology investments, we've already made to transform how we serve both our consumer and commercial customers and we plan to continue to invest in these areas this year throughout our businesses.
Mike: We are planning to hire more bankers and advisors to grow our wells Fargo Premier offering to our affluent clients. We plan to launch a new travel oriented credit card is part of our autograph suite of products as well as a new a new small business credit card this year.
Better serve our commercial clients, we plan to continue higher with them within investment banking and commercial banking to support priority sectors and products to help drive growth.
Mike: Now, let me conclude with slide 21, where we will discuss return on tangible common equity.
Mike: When we first discussed our path to improving returns on the fourth quarter of 2020 earnings call, we had an 8% our OTC.
Since then we have taken multiple actions to improve our returns including executing on our efficiency initiatives.
Investing in our businesses to help drive growth.
Mike: And returning excess capital to shareholders.
Mike: Including increasing our common stock dividend from <unk> 10 to 35 per share and repurchasing $32 billion of common stock.
Mike: These actions helped to improve our OTC.
Our reported <unk> in the fourth quarter was 9%, but as we highlight in the table. Our OTC was impacted by a number of notable items.
Mike: Our 2023 returns also reflected the benefit of rising rates, which helped to drive strong net interest income growth and as I've already highlighted we expect net interest income to decline this year.
We still believe we have an achievable path to a sustainable 15% our OTC over the medium term as we continue to make progress on transforming the company there.
There are several key factors that support our belief.
Mike: Our ability to return excess capital.
Mike: We currently have a significant amount of excess capital to five percentage points above our regulatory minimum buffers for CET, one and as I already highlighted we expect to increase our share repurchases. This year.
Mike: I highlighted the progress we've already made to reposition our home lending business, including reducing the amount of third party mortgage loans serviced by 18% from a year ago as we continue to streamline this business, we expect the profitability to improve.
Mike: We've grown our credit card business with balances up 40% since the end of 2021, new accounts, 25% higher than the fourth quarter of 2021.
Mike: However, the current profitability of this business has been impacted by acquisition cost and allowance build.
Mike: We expect profitability to improve as the portfolio matures.
Mike: Finally, we've made significant investments last few years across our franchise that better serve our customers and help drive growth.
We expect the revenue growth that these investments should generate in businesses like corporate investment banking and wealth and investment management will help fund additional investments.
Mike: So we have many drivers to close the gap and improve returns.
In summary, our results in 2023 demonstrated our commitment to improving our financial performance. We grew revenue reduced expenses increase capital returns to shareholders and maintained our strong capital position.
Mike: We will now take your questions.
Mike: At this time, we will now begin the question and answer session.
Mike: If you would like to ask a question. Please press Star then one and record your name and institution at the prompt.
Mike: At any time. Your question has been answered you can remove your request by pressing star two.
Once again that is star one for questions at this time.
Mike: And our first question of the day will come from Steven Chu Bank of Wolfe Research Sir Your line is open.
Steven Chu: Hey, good morning.
Steven Chu: So.
Steven Chu: Happy new year.
Steven Chu: Like I always appreciate all the NII decal, just given all the different puts and takes in your side Ed I was hoping you could provide some context as to how youre thinking about the exit rate for NII in 'twenty four per the guidance just given the expectations for the street that NII should inflect positively in 'twenty five.
Steven Chu: I just wanted to get a sense as to how youre thinking about where NII could potentially trough our stabilized based on the forward curve.
Speaker Change: Yeah No I appreciate the I appreciate the question when you.
Speaker Change: Based on what we gave you Steve I think.
Speaker Change: We said in the page in my remarks that we do expect it to start to.
Speaker Change: Inflect in trough.
Speaker Change: As we get towards the end of the year exactly when that happens I think.
We'll we'll sort of see we're not going to get too specific there, but we do expect that you would start to see a trough as we get through the end of the year and into 2025.
Speaker Change: Very helpful. And then just for my follow up just on expenses. The core expense guidance shows another net reduction in 24, you noted that youre, making investments, but those will be offset by efficiency savings and just wanted to get a sense as to how long you can sustain that why that core expense trajectory.
Continue to fund investments with future efficiencies.
Speaker Change: Yes, I think when we think about the efficiency journey that we're on I think Charlie and I've been pretty clear consistently now that there's more to do.
Speaker Change: 2024, it's just another year and the journey right and we've got more to do post that to continue to drive efficiency across the place where we're going to net out on a year to year basis in terms of the net spend.
Im not going to try to predict but but as you as you look across the company I think we're just continuing to methodically make progress.
To drive automation efficiency.
Speaker Change: Reduced third party spend reduced our real estate footprint across all of the different dimensions.
Speaker Change: And I think we think we've got more to do and that will continue into 2025 and beyond.
Speaker Change: That's great. Thanks, so much for taking my questions.
Speaker Change: The next question will come from John Mcdonald of Autonomous Research. Your line is open Sir.
John Eamon McDonald: Hi, Good morning, Mike I wanted to ask about the fee income drivers for this year Charlie mentioned, obviously some examples of progress that you have gotten leverage on investments and then obviously you've got cyclical headwinds in tailwind. So maybe just could you walk through some of the bigger fee income drivers and give you a sense of puts and takes and how you are feeling this year.
John Eamon McDonald: Going into the fee revenue outlook.
Charlie: Yeah sure. Thanks, John when you look at the components there.
John Eamon McDonald: The largest one it's going to be our our advisory fees in the wealth and investment management business and <unk>.
John Eamon McDonald: Market levels are higher than they were this time last year and so if that holds or or gets better as you know many people predicting that should be constructive.
John Eamon McDonald: Or for that fee when you start looking at the <unk>.
Other line items like trading you know the market's got to cooperate we're happy with the progress we've been making across the different businesses there.
But the market is going to have to cooperate as well for that to continue.
John Eamon McDonald: Continue.
John Eamon McDonald: We had a number of impairments cross our venture capital portfolio. This year at some point that should start to Peter out and we'll see that inflect.
John Eamon McDonald: And then the other the other fee lines should be pretty pretty predictable for for.
For the most part as you sort of look forward.
John Eamon McDonald: Okay, and just to follow up on the net interest income idea of bottoming towards the end of the year.
John Eamon McDonald: <unk>, what would be the drivers of that kind of bottoming you have fixed.
John Eamon McDonald: Asset reprice that helps or is it kind of assumed in new asset generation.
John Eamon McDonald: Maybe you could just wrap that into.
John Eamon McDonald: Some thoughts about what would drive that inflection in the context of any update on rate sensitivity as well. Thanks.
Speaker Change: Yes, sure maybe I'll start with the latter part first.
As you can see in the <unk>.
Speaker Change: And the data we gave in the presentation.
Speaker Change: We're anchoring it to what was in the forward curve as of day last week, which is not that dissimilar to what you have today.
And I think when you look at sensitivity to that or our interest rate sensitivity disclosures. In this case are a pretty good estimate for how to think about whether if rates are a little bit higher a little bit lower than what's in that forward curve and if you look at where we were at the end of the third quarter, we were still modestly asset sensitive that will still be the case.
Speaker Change: At the end of the fourth quarter, it will come down a little bit from where it was but it will still be asset sensitive.
Speaker Change: But it is.
And if you look at the forward curve I think on average rates were coming down something like 50 basis points and so it is pretty linear math when you look at the sensitivities that we include included in the Q when.
Speaker Change: When you look at the underlying.
The underlying assumptions as you go into the year.
Speaker Change: We've got loan growth being pretty muted in the beginning part of the year that will start hopefully start to pick up as we get later in the year. So that will be a driver of it as you get towards the.
The end of the year Youll.
Youll have some stabilization, we're expecting stabilization of pretty stable deposits across the consumer.
Speaker Change: <unk> and wealth management businesses.
Some point the consumer deposits will also stabilize and the mix will stabilize as well you've got continued.
Speaker Change: Asset repricing.
Speaker Change: That happens in there as well so it's a little bit of all of that that brings me to.
Speaker Change: The point at which it starts to starts to trough and inflect, but again exactly when thats going to happen, we're going to sort of leave.
Leave till later in the year, but we do expect that that'll that'll happen as we get closer to the end of the year.
Speaker Change: Understood. Thanks.
Speaker Change: The next question will come from Ken Houston of Jefferies. Your line is open.
Ken Houston: Hi, Thanks, sorry, if I'm gonna stay on theme, but just is that.
Ken Houston: As you start to the beginning of the year and deposit price.
Ken Houston: <unk> continues to flow through.
Speaker Change: And the mix continues to change I know as far as the DDA is I'm wondering if you can just help us understand.
Speaker Change: How do you expect that trajectory dda's definitely still got flowing which is expected but in terms of mix and then just how you expect the deposit rate of change or the downside beta to act through the cycle can you help us understand that Mike. Thanks.
Speaker Change: Sure.
Mike: When you look at what's happening just on deposits the trend that we've been seeing now on the mix shift that's been pretty consistent for the last two or three quarters at least and so.
Mike: So at some point that will moderate more but it's been pretty consistent and so that's probably a decent assumption as you sort of go into the first part of the year at least.
Mike: When you start to take looking at deposit pricing can later in the year as rates start to move you know on the commercial side.
Mike: Rates in beta has it been competitive now and pretty high for a while and there'll be just us.
Mike: As recent rate sensitive on the way back down so that's part of the bargain on the commercial side as you get good competitive betas on the way up and you also get them on the way down.
Mike: On the consumer side Theres been less there's been less movement on standard pricing across many of the products, but but <unk> had the introduction of Cds and promo rates and all that stuff will start to move down pretty quickly as the expectation for rates do as well.
Speaker Change: Okay. So if I think about that then.
Do you imply that like the first quarter, starting point, we see a little bit more of an NII step down and then as you get to that hopeful stabilization in the back half just because of how that moves.
Speaker Change: Well I think based on what we gave you right. So we are expecting full year full year.
Speaker Change: NII to be down 7% to 9% hopefully.
And then if it starts to stabilize as you get to the end of the year, then that implies a step down.
Speaker Change: In the beginning of the year.
Speaker Change: Exactly we're not going to give you a number by quarter, but.
Speaker Change: You would you should expect a step down as you go into beginning part of the year right. Okay I understand okay. Thanks, Mike.
Speaker Change: The next question will come from Scott Cyphers of Piper Sandler Your line is open.
Scott Cyphers: Good morning, everyone. Thanks for taking the question.
Scott Cyphers: Hoping you might be able to spend in just another moment on the longer term cost opportunity I guess I am just curious if there's a point where some of the investment spending pressures ease and there might still be an opportunity for costs to decline more visibly on an underlying basis.
Scott Cyphers: By contrast is this level of investment spending or is that something that it'll just be sort of pretty consistent here and in Europe.
Speaker Change: Yes, Scott it really is going to depend.
Speaker Change: I will highlight one thing though.
Speaker Change: In the slide that we have there we I noted that.
Part of what's driving.
Speaker Change: The investment spend this year is the tech and equipment line moving.
And so that.
Speaker Change: It won't continue to move up at that pace forever and so that does start to moderate as you go out into the future.
Speaker Change: But as you look at the other investments, we're making we're going to try to be very thoughtful about.
Looking at the opportunities that we have across each of the businesses thinking about short medium long term results.
Speaker Change: And making sure that where we are.
Speaker Change: Were sort of calibrating, all that right, but I would expect us to continue to make investments in each of the businesses.
Speaker Change: And I think that ultimately that's what's going to drive great returns and better performance over time.
Perfect. Thank you and then maybe just a question on credit you all have been very proactive in dealing with sort.
Speaker Change: The the office CRE situation, just curious to hear how your what your thoughts are on how the cycle that asset class sort of plays out from here you know does it just remained a long slog or.
Speaker Change: Is there, perhaps a point where youre conservative conservatism has sort of gotten ahead of issues when you might actually be able to relieve a bit of that.
Speaker Change: So really healthy double digit reserve.
Speaker Change: Yes look as we as we look at the reserve and then I'll come back to the broader point there at some point, we will start using the reserve more fully and then that allowance coverage ratio will come down.
Speaker Change: No doubt I mean, that's.
Speaker Change: The way it should work when you think about seasonal in the way the accounting should work.
Speaker Change: In terms of your broader point its a long movie.
Speaker Change: We're not we're past the opening credits, but we're still in the beginning of the movie and so it's going to take some time for this to play out.
Speaker Change: And as I noted it'll be somewhat of an uneven and episodic.
Speaker Change: Nature to the the charge offs and as you work through this because every property has a different timeline in terms of events that it needs to sort of work through so so I do think that we've got a while for this to play out through the through the through the system.
Speaker Change: Okay perfect. Thank you very much.
Speaker Change: Thank you. The next question comes from Ebrahim <unk> of Bank of America. Your line is open.
Hey, good morning.
I guess, maybe just two.
Ebrahim: Thanks for all the details on ni expensive than being at OTC.
Ebrahim: Yes.
And it's not lost upon anyone with regards to the investments you made in the franchise.
But when you look at the slide fourth quarter 'twenty, our OTC, 8% fast forward just gone from eight to nine.
Ebrahim: Assuming there is no real perfect world to operate the bank from a shareholder perspective.
Speaker Change: Quickly do you think we can get from 9% to 15, given all the moving pieces, but I'm just wondering maybe Charlie Mike How do you think about it at all.
Speaker Change: Slog of it longer than that love some perspective there.
Speaker Change: And I think maybe I'll start and Charlie can can chime in so I think when you look at that page Ebrahim I think you'd really have to.
Speaker Change: Look at the impact of the special assessment that in the results right and so that's four percentage points of our TCE. So yes. So think of the underlying operating performance from a returns perspective more closer to that 13% range and so there has been quite a bit of progress since.
Q4, Q4, 'twenty and then as you sort of look forward, we highlighted some of the key drivers on the right and in my commentary look we've got a lot of excess capital despite whatever happens with Basel III.
Speaker Change: So we've got room to continue to return that to shareholders.
Speaker Change: Or in the middle of repositioning in the home lending business, which will drive not only good better returns in that business, but.
Speaker Change: Proven across the franchise, we've got the card business, which we're seeing very good performance and as we've launched our new products over the last couple of years and as that matures will be meaningful contributor.
We've got to continue to get the benefit of all the other investments that we're making and so we feel we feel like we've made a lot of good progress since the 2020 and.
Speaker Change: And then we've got really clear plans to continue to see better performance.
Speaker Change: And I'll, just add a little bit to it and to be a little bit repetitive.
Speaker Change: When you look at that slide again, those are reported numbers.
Speaker Change: So the way we think about it is the earnings power of the company today on an Ro TCE basis.
Speaker Change: You've got to make your own assumptions for what's in and out and what normalized net interest income is because we've been clear that we've been over earning but when you look at when you add back.
These expenses like FDIC, which relate to the past in this quarter and aren't going to go forward.
TCE is up 50% from where it was so that is significant change.
Speaker Change: On top of that when we look at the actions as Mike said that we've taken in the home lending business. When we see the trajectory of growth that we're seeing in the card business just as those things mature let alone.
Speaker Change: Being able to deploy the excess capital we have.
Speaker Change: Those those are things that are in process, we don't have to really do anything more other than let them mature and let them play out.
Speaker Change: That has continued.
Speaker Change: Uh huh.
Movement towards the 15% ROE TCE and then the last thing I'd say is just away from those things.
Speaker Change: When we got here these businesses were not on trajectory to grow our card business wasn't growing the corporate investment bank wasn't growing.
Speaker Change: You can go through them, one by one and so.
Speaker Change: We've talked about making investments offsetting some of these efficiencies that we've seen and making determinations on whether or not they are paying off.
Things that we're seeing these increases in share.
Speaker Change: We're pretty confident that they are going to continue to drive.
Speaker Change: Improved results over time and so as.
Speaker Change: As I said in my remarks, we're clearly susceptible to.
The market environment, both for interest rates and the overall <unk>.
Speaker Change: Economic environment in the shorter term, but we feel both really good about the progress that we've made.
Speaker Change: We feel really good about what the path, we see going forward is recognizing that theres still a lot more that we have to do.
Well thank.
Speaker Change: Thank you and just one quick follow up Mike on CRE.
Speaker Change: I'm, assuming you had some assets moved off the balance sheet I'm. Just wondering did today relative to a year ago do you have better visibility on where the clearing prices for some of these nonperforming CRE or challenge CRE loans and are you seeing any pressure spreading beyond just yet. He also has two other parts of the portfolio in any meaningful way.
Yeah, I mean look as time goes by we got we get better and better information around where where things are going to play out but it is still somewhat specific to the asset and so I wouldn't try to generalize yet until we see more and more transactions and more data points.
Speaker Change: When you look at the broader CRE market at least in our portfolio.
Speaker Change: We are not seeing the stress spread to other parts of it.
Speaker Change: Thank you.
Speaker Change: Our next question will come from Erika Najarian of UBS. Your line is open.
Erika Najarian: Hi, good morning.
My first question is a follow up to <unk> line of questioning on RPC.
Erika Najarian: Charlie.
Obviously, you have plenty of excess capital as we think about your outlook for not much loan growth in 2024, and obviously theres the asset capstone clean.
Erika Najarian: How should we think about what you were looking for as guidepost to potentially accelerate that buyback from the $2 $4 billion level.
Erika Najarian: As far out as the Basel, III finalization or would you.
Do you wait for more clarity near term on the on the T cell results in June.
Erika Najarian: It's Mike I'll take a shot at that.
Mike: When you look at when you look at our full year numbers.
I tried to highlight in my in my comments that we do expect that our our repurchases will be higher than what we did in 2023, the exact timing and pace.
Mike: I'm not going to get into but and then we will look at all of you know as we do every quarter, we look at all of the different.
Mike: Risks that could be out there, including you know thinking about where CCAR or the stress test will come out.
Mike: From a Basel three perspective, we are we're in really good shape as we said last quarter, we're already above where we need to be from a if it was fully implemented as is and we're hopeful that that won't be the case.
Mike: And we're going to generate more capital as we go through the year and so we've got.
As I said, we've got plenty of excess capital we plan to buy back more stock than we did in 2023 and will leave the exact timing page.
Mike: To to future calls.
Speaker Change: Thank you and my follow up question is another one on NII.
Speaker Change: I did notice that your short term borrowings went up a lot.
Speaker Change: In 2023, and just looking at the asset side. It seemed like it was funding that increase in liquidity to 204 billion.
Speaker Change: Cash and cash at the fed at period end and I'm wondering as we're thinking about your liability mix in two.
Speaker Change: 2024, and then I think your average balance sheet size is $1 nine one trillion at the end of the year.
Speaker Change: Just wondering if.
Speaker Change: We should expect the balance sheet to shrink because you don't you may not need all those short term borrowings or is there a reason why you feel like you want to hold that much liquidity at the site at this time.
Speaker Change: Well, it's certainly possible the balance sheet will get smaller throughout the year I think that will just be a function of what we ultimately see on loan growth how much we end up deploying into securities as.
Speaker Change: As we go through the year end.
Speaker Change: Where it makes sense we will.
Speaker Change: Let the balance sheet just.
Speaker Change: Ebb and flow back back down.
Speaker Change: And I think that's the way we started thinking about it now and I think at this point, there's not a lot of cost of leaving out the fed given where the <unk> and so so that will that will change as rates start to come down and we will calibrate. The overall size based on what we think the opportunity is.
Speaker Change: Thank you.
Speaker Change: The next question will come from John <unk> of Evercore ISI. Your line is open Sir.
John Eamon McDonald: Good morning.
NII outlook of down seven to nine can you maybe help us think about the expected net interest margin trajectory through the year, how we should think about that in the context of what youre expecting in terms of earning assets.
John Eamon McDonald: And the dynamic on funding cost.
Well, we don't.
We're not going to try to predict exactly where that NIM is going to go quarter by quarter, but I think as you as you would guess right assuming the balance sheets that are relatively stable size as NII starts to come down the NIM will compress right.
John Eamon McDonald: There'll be there'll be tailwind and headwinds related.
As assets as the <unk>.
John Eamon McDonald: Security is.
John Eamon McDonald: Portfolio re prices that'll be a tailwind as you know as you start to see variable rate loans come down as rates come down that'll be a headwind and so I think most of it should be relatively simple to do.
John Eamon McDonald: Estimate as you sort of plug the assumptions into your model, but.
But theres no theres, no sort of magic to sort of to it but you would expect NIM to continue to come down as the balance sheet stayed stable in NII comes down.
Speaker Change: Okay, Alright, Thanks, and then separately on commercial real estate could you maybe give us a little more color in terms of where you saw the stress what types of office properties in and what type of marks.
Two the underlying.
Are you seeing as Youre reappraising.
The properties and does that give you I guess, maybe just talk about the level of confidence you have in the updated seven 9% off was reserved at this level.
Speaker Change: Yes.
Speaker Change: The allowance I would allow.
The allowance coverage ratio I would pay attention to on this slide is that as our CIBC.
Speaker Change: Our office portfolio, which is close to 11%.
Speaker Change: That's really the institutional style office buildings.
Speaker Change: Where we're really the stresses.
Speaker Change: Coming through.
Speaker Change: When you look at the the charge offs. It was it was across a number of properties it wasn't one or two.
Speaker Change: It was pretty geographically dispersed across different cities in across different parts of the country. So there wasn't an over concentration anywhere.
Speaker Change: Each of the properties have very specific.
Situations and so there was a pretty wide range in terms of where the price cleared or where the appraisal came in.
Speaker Change: A good chunk of these a good chunk of these properties are being marked because we got new appraisals for various reasons a.
Speaker Change: A small amount of it was actually realized because the note or the property was sold.
And so so far a good amount of it we'll see how it ultimately plays out there could be there could be recoveries as we go but it was a pretty as you would expect you know it was a substantial decline in what people thought the value of the properties was just a year or two ago.
Speaker Change: Okay got it thanks, Mike.
The next question will come from Gerard Cassidy of RBC capital markets. Your line is open.
Good morning, Mike Good morning, Charlie.
Gerard Cassidy: Go ahead Mike.
Mike: On the.
Mike: Guide for the net interest income on the forward curve.
If the forward curve is incorrect.
Mike: We're sitting here a year from now and rather than seeing them for 15 or 16 fed funds rate if it's closer.
Mike: 5% or $4 90.
Mike: How much is how much of a positive would that be for a higher net interest income for you guys have you guys I'm assuming use different sensitivity analysis.
Mike: To kind of give yourself a sense of where net interest income could go under different rate scenarios.
Speaker Change: Yes, I would.
Speaker Change: Just like I think giant at Mcdonald asked earlier I would I would.
Speaker Change: Look at our interest rate sensitivity, Gerard and as I said.
Speaker Change: Were still modestly asset sensitive a little bit less.
Speaker Change: At the end of the fourth quarter than the third quarter.
And I think it is a pretty linear sort of equation there and so I would just look at the 100 basis point moves that we have in there is around a couple of billion dollars of move when you look at that as at the end of the third quarter again, it will come in slightly from that likely at the end of the fourth quarter and just use your use.
Speaker Change: Assumption you want and it is a pretty linear within within reason, it's a pretty linear equation.
Speaker Change: And then you guys, obviously have been very focused on the expense reduction and admirable job. Since you guys. All got there obviously.
Speaker Change: Is there any way that you could bring down the operating losses, I think they've been pretty consistent at $1 3 billion for a bit.
Is there anything in there that down the road you could.
Speaker Change: Change, where we're actually fall or is it just something that just the cost of doing business with fraud theft and et cetera.
Well there is certainly some portion of that.
Speaker Change: Well, it's just the cost of doing business now even on the fraud and <unk> operating losses.
Speaker Change: We as most people I would think work are continuing to invest in capabilities to reduce those more and more.
Speaker Change: And Thats and we continue to do that as well and then I think as we continue to put more of that.
The issues.
Speaker Change: Historical issues behind us hopefully the overall number continues to trend downward.
Speaker Change: Great I appreciate it thank you.
Yeah.
The next question comes from Matt O'connor of Deutsche Bank. Your line is open.
Matt O'connor: Any thoughts on where card charge offs go in 'twenty four.
Matt O'connor: You are about 4% this quarter and I guess, you've had really good growth if we lag it like we used to do in the old days, maybe we get about four 5% I Wonder if that's a good starting point or just any way to frame.
Matt O'connor: Losses from here. Thanks.
Speaker Change: Yeah, Yeah, I won't give you a specific number but the way you're thinking about it is exactly right I think as you look at the portfolio that we have which might be a little different than others is we launched the new product set starting a little over two years ago, but you've sort of seen more meaningful new account growth starting about two years ago.
Speaker Change: So you are in that normal maturation curve.
Speaker Change: Seasoning of sort of losses as they come on and so we would expect that it would continue to trend a little bit higher from where it is.
Speaker Change: And then we're seeing that's obviously not just with you guys, but kind of across the board in terms of call. Boston's go up even though we're still in a really good environment in terms of employment and well and still a bit of extra savings just thoughts on like what's driving losses again, not just for you.
Speaker Change: As for everybody.
Speaker Change: One part that can always happen, but it just feels like maybe card losses are getting a little higher than I would've thought with.
Speaker Change: With unemployment, where it is and again like jobs available in all of those dynamics.
Speaker Change: Yeah, maybe I'll start.
Speaker Change: I think it is Charlie kind of highlighted in his script. The averages all look fine when you look at liquidity our deposit balances.
Speaker Change: <unk>.
Speaker Change: And certainly even if when you look at the cumulative wage growth that you've seen over the last few years.
You know in aggregate you go it paints a pretty good picture.
But when you go below that and we've tried to highlight this a few times over the last year or so when you go below that there are certainly cohorts of clients or people that are stressed.
Speaker Change: And the further you go down and income levels of the further you go down in wealth levels.
Speaker Change: Cumulative impact of inflation has really taken a toll and so youre going to have some.
Speaker Change: Some <unk>.
Speaker Change: Percentage of people that are feeling much more stressed than what the aggregate numbers would would imply.
And in some cases their liquidity is going to be lower than it was pre COVID-19 in some cases, they've been having to build bigger credit card balances.
Speaker Change: And so for us it's not a big part of the overall portfolio, but but youre going to continue to see that which is something we should all have expected and expect to see as you go forward and the only thing I would add is that that is.
Speaker Change: Is something that is always.
Speaker Change: And we say always existed pre COVID-19 right. There are always people that were doing better and there were people that were doing worse and I think what's important ICL speak for ourselves when we look at our.
Speaker Change: Sure.
Speaker Change: When we look at our card losses, what we actually are looking at is how they're performing on a vintage basis versus pre COVID-19 levels and the terms are right on top of what that is and so.
Speaker Change: <unk>.
It's when we talk about getting back to normal in terms of what we're seeing that's what we're actually seeing in Karloff card losses were not seeing at this point anything that goes beyond that.
Okay. That's helpful. And then just lastly, if I can squeeze them remind me like a targeted customer I think it was like five plus but any way to frame that in terms of whether a spike or wealth network, our homeowner a percent or any way just to frame. It it is becoming a bigger part of the company obviously.
Yes.
Speaker Change: We're not going to get that specific but when you look at individual products that are targeted towards different cohorts of clients, but what I would say overall, we feel really good about the credit quality of the new accounts, we're putting on in.
Speaker Change: In most cases in most products.
Speaker Change: The credit profile better than what we have from historical back book.
Speaker Change: Okay. Thanks for all the color.
Speaker Change: The next question will come from Dave Rochester of Compass Point Research. Your line is open.
Dave Rochester: Good morning, guys, sorry for one more question on the NII Guide here, but was just curious how much of that decline that you're expecting for this year is driven by that continued remix of deposits and the lower noninterest bearing deposits you talked about and where are you assuming that that DDA mix settles out of this year.
Dave Rochester: Yes, as you would guess like when you lose.
Dave Rochester: Noninterest bearing deposits are they shift into higher yielding products, that's going to have a pretty substantial impact and so.
So that is a big driver of what the decline is.
Dave Rochester: For the rest of the year.
Speaker Change: Yes, we won't get it we haven't we haven't really.
Speaker Change: Talked about exactly where it bottoms, but it should stabilize at some point.
Speaker Change: Okay, and then on capital I was curious what more buybacks means for capital ratios.
Speaker Change: In that two 5% buffer you talked about by the end of 'twenty for all else equal is the thought that youll take those ratios in a buffer lower this year.
Speaker Change: We'll see.
Speaker Change: I think I won't I won't try to give you a buyback numbers lots of lots of things go into figuring that out throughout the year, but as we as we said, we expect buybacks to be bigger than last year.
Speaker Change: And the level assuming that.
Speaker Change: Nothing nothing significant happens in the macro environment the level that we're at.
Speaker Change: Is higher than we need to be.
Great. Thanks, I appreciate it.
Speaker Change: And our last question will come from mechanical failure of Morgan Stanley. Your line is open.
Morgan Stanley: Hey, good morning, two quick ones from me.
You said youre guiding to stable deposits, but a shift towards interest bearing deposits.
Morgan Stanley: <unk> to Q T stop that share shift or.
Morgan Stanley: Is it different given you are seeing their share shift from the consumer side.
Speaker Change: Yeah, what we said is we expect stable deposits on the wealth income in the commercial side, we do expect some declines on the consumer side.
Speaker Change: And then two and into Q T would be a positive.
And.
Speaker Change: Can you expand on that a little bit.
Why would that be.
Speaker Change: Well.
Qt is draining drains.
Speaker Change: At some point more meaningfully drained liquidity out of the banking system right. So once once you get the RP.
Speaker Change: Facility down to a smaller number which is likely to happen than any further qt starts to really remove liquidity more directly at the banking system and so that stops that that's a positive for deposits.
Speaker Change: Got it Okay and then.
Speaker Change: Just on credit.
Speaker Change: Falling rates impact your outlook for CRE losses.
Speaker Change: The margin do you feel better about working with borrowers and mitigating losses in Mpls and you know how long this takes to work out or.
Speaker Change: Have things don't change that meaningfully yet.
It hasnt changed that meaningfully yet really we're dealing with what is a structural change in sort of demand for real estate in some parts of the country.
Speaker Change: So you got to work through that.
Speaker Change: Then I think on the margin lower rates are helpful, but but the bigger issue needs to get worked through <unk>.
Speaker Change: Great. Thank you.
Speaker Change: And at this time, okay. Thanks, thanks, everyone for the questions.
Speaker Change: Next time.
Speaker Change: Thank you all for your participation on today's conference call at this time all parties may disconnect.
Speaker Change: Okay.
[music].
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Yes.