Q1 2024 Wells Fargo & Co Earnings Call

Operator: Welcome, and thank you for joining the Wells Fargo First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Welcome and thank you for joining the Wells Fargo first quarter 2020 earnings Conference call.

All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1. If you would like to withdraw your question, press star 2.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question during this time simply press star one.

He would like to withdraw your question press Star two.

Operator: 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. Thank you for joining our call today with our CEO, Charlie Scharf, and our Chairman, Mr. John Campbell.

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, Thank you for joining our call today, where our CEO, Charlie Scharf and.

John M. Campbell: Mike Santomassimo will discuss the first quarter results and answer your questions. This call is being recorded.

John M. Campbell: And our CFO, Mike <unk> will discuss first quarter results and answer your questions.

John M. Campbell: This call is being recorded.

John M. Campbell: Before we get started, I would

John M. Campbell: Before we get started I would like to remind you that our first quarter earnings materials, including our release financial supplement and presentation deck are available on our website at Wells Fargo Dot com.

John M. Campbell: I'd like to remind you...

John M. Campbell: We remind you that our first-quarter earnings materials, including the release, financial supplement, and other materials, are available on our website.

John M. Campbell: The presentation deck is available on our website at wellsfargo.com.

John M. Campbell: I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainty. Factors that may cause actual results to differ materially from expectations are detailed in our SAT filings.

Mike: I'd also like to caution you that we may make forward looking statements during today's call that are subject to risks and uncertainties.

Mike: Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings.

John M. Campbell: including the Form 8K filed today containing our earnings material. Information about any non-GAF financial reference, including a reconciliation of those measures to gap measures, can also be found in our SEC filings and the earnings materials available on our website.

The form 8-K filed today containing our earnings materials.

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

Charles W. Scharf: I will now turn the call over to Charlie.

Mike: I'll now turn the call over to Charlie.

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

Charlie: Thanks, John I'll make some brief comments about our first quarter results and then update you on our priorities.

I'll, then turn the call over to Mike to review our results in more detail before we take your questions let.

Charlie: Let me start with some first quarter highlights.

Charles W. Scharf: Our solid results reflect the progress we're making to improve and diversify our financial performance and the continued strength in the U.S. economy. It's gratifying to see the investments we're making across the franchise contributing to higher revenue versus the fourth quarter, as an increase in non-interest income more than offset the expected decline in net income. Non-interest income also benefited from higher equity markets, which benefited our wealth and investment management business. Net charge-offs were higher than a year ago, as expected.

Our solid results reflect the progress, we're making to improve and diversify our financial performance and the continued strength in the U S economy is.

Mike: It is gratifying to see the investments, we're making across the franchise contributing to higher revenue versus the fourth quarter as an increase in non interest income more than offset the expected decline in net interest income.

Mike: Noninterest income also benefited from higher equity markets, which benefited our wealth and investment management business.

Mike: Net charge offs were higher than a year ago as expected and stable from the fourth quarter.

Charles W. Scharf: Stable from the fourth quarter, credit trends remain generally consistent. Consumer delinquencies continue to perform as we forecasted, and year-over-year growth in consumer spend remains consistent with prior course. In our commercial portfolios, the weakness we see continues to be in certain commercial office properties, but our expectations have not significantly changed versus what we anticipated last quarter. Mike will discuss the specific items that drove an increase in expenses from a year ago. But we continued to execute on our efficiency initiatives, including reducing headcount, which has declined every quarter since the third quarter of 2020. Average commercial and consumer loans were both down from the fourth quarter as higher rates are impacting demand, and we are continuing to reduce our exposure in certain portfolios.

Mike: Credit trends remained generally consistent consumer delinquencies continued to perform as we forecasted and year over year growth in consumer spend remains consistent with prior quarters.

Mike: In our commercial portfolios the weakness we see continues to be in certain commercial office properties, but our expectations have not significantly changed versus what we anticipated last quarter.

Mike: Mike will discuss the specific items that drove an increase in expenses from a year ago.

Mike: But we continued to execute on our efficiency initiatives, including reducing head count which has declined every quarter since the third quarter of 2020.

Mike: Average commercial and consumer loans were both down from the fourth quarter as higher rates are impacting demand and we are continuing to reduce our exposure in certain portfolios average deposits were relatively stable in the fourth quarter as growth in interest bearing deposits offset lower non interest bearing deposits.

Charles W. Scharf: Average deposits were relatively stable in the fourth quarter, as growth in interest-bearing deposits offset lower non-interest-bearing deposits. Our capital position remains strong. And returning excess capital to shareholders remains a priority. As we stated on our last earnings call, we expect to repurchase more common stock this year than we did in 2023. In the first quarter, we repurchased a total of $6.1 billion in common stock, and our average number of common shares outstanding declined 6% from a year ago.

Mike: Our capital position remains strong.

Mike: And returning excess capital to shareholders remains a priority.

Mike: As we stated on our last earnings call, we expect to repurchase <unk> common stock this year than we did in 2023 and the first quarter, we repurchased a total of $6 $1 billion in common stock and our average common shares outstanding declined 6% from a year ago now.

Charles W. Scharf: Now, let me update you on the progress we're making on our strategic priorities, starting with our risk and control work. Earlier this year, the OCC terminated a consent order issued in 2016 regarding sales practices misconduct. The closure of this order was an important milestone, as it is confirmation that we operate much differently today in terms of sales practices. As I have repeatedly said, our risk and control work remains our top priority, and closing consent orders is an important sign of progress. This is the sixth consent order that our regulators have terminated since I joined Wells Fargo in 2019. Building our risk and control framework is a continuous, ongoing effort. And as we implement changes, we track effectiveness along the way. The numerous internal metrics we track show that the work is clearly improving our control environment, and we see that we are completing interim delivery.

Speaker Change: Now let me update you on the progress, we're making on our strategic priorities, starting with our risk and control work.

Earlier this year the OCC terminated a consent order issued in 2016 regarding sales practices misconduct. The closure of this order was an important milestone as it is confirmation that we operate much differently today around sales practices.

Speaker Change: As I repeatedly said, our risk and control work remains our top priority and closing consent orders is an important sign of progress.

This is the sixth consent order that our regulators are terminated since I joined Wells Fargo in 2019.

Speaker Change: Building, our risk and control framework is continuous ongoing effort.

Speaker Change: And as we implement changes we track effectiveness along the way.

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

Speaker Change: And we see that we're completing interim deliverables, but we will not be satisfied until all of our work is complete so it will remain our top priority and our approach will not change.

Charles W. Scharf: But we will not be satisfied until all of our work is completed. So it will remain our top priority, and our approach will not change. As I highlighted in my recent annual letter, we've added approximately 10,000 people across numerous risk and control-related groups, and we're spending over $2.5 billion more per year than in 2018 in these areas. And we are a stronger, better company for our customers, communities, and employees. While we're moving forward with confidence, I will repeat what I've said in the past. Regulatory pressures on banks with long-standing issues such as ours are high, and until we complete our work and until it is validated by our regulators, we remain at risk of further regulatory action. Additionally, as we implement heightened controls and oversight, new issues could be found, and these may result in regulatory action.

Speaker Change: As I highlighted in my recent annual letter we have added approximately 10000 people across numerous risk and control related groups and were spending over $2 $5 billion more per year.

Speaker Change: In 2018 in these areas.

Speaker Change: And we are a stronger better company for our customers communities and employees.

Speaker Change: While we are moving forward with confidence I will repeat what I've said in the past regulatory pressures on banks longstanding issues such as ours is high and until we complete our work and until it is validated by our regulators we remain at risk of further regulatory actions. Additionally.

Speaker Change: Additionally, as we implemented heightened controls and oversight new issues could be found in these may results and regulatory actions.

Charles W. Scharf: At the same time, we're making progress on our risk and control work, we're executing on our strategic priorities to better serve our customers and help drive higher returns over time. We continue to introduce attractive new products as we build our credit card business. Last month, we launched Autograph Journey, designed for frequent travelers who can earn points wherever they book travel. Our new product offerings continue to drive strong credit card spend up approximately $5 billion or 14% from a year ago. We continue to make investments in talent and technology to strengthen corporate and investment banking. Moreover, more than 50 new senior hires have joined.

At the same time, we're making progress on our risks and control work, we're executing on our strategic priorities to better serve our customers and help drive higher returns over time.

Speaker Change: We continue to introduce attractive new products as we build our credit card business last month, we launched autograph journey.

Speaker Change: Designed for frequent travelers, who can earn points wherever they booked travel our new product offerings continued to drive strong credit card spend up approximately $5 billion.

Speaker Change: Our 14% from a year ago.

We continue to make investments in talent and technology to strengthen corporate and investment banking more than 50, new senior hires have joined our CIP since 2019 with many of these in key coverage and product groups within banking.

Charles W. Scharf: with many of these in key coverage and product groups within 90 days. In February, Doug Bronstein, who has more than 35 years of industry experience, joined Wells Fargo as a vice chairman. Doug is a world-class banker, and he's working alongside

Speaker Change: In February Doug Braunstein, who has more than 35 years of industry experience joined Wells Fargo as a vice chairman, Doug as a world class banker and he is working alongside the great team we've assembled.

Charles W. Scharf: have assembled that continue to grow the franchise. In addition, given the breadth of Doug's experience, he's also providing counsel on broader business issues beyond client development.

Speaker Change: Continue to grow the franchise. In addition, given the breath of Doug's experience is also providing counsel on broader business issues beyond client developments.

Charles W. Scharf: As we look forward, it's always helpful to be grounded in the facts. We continue to see strength in the U.S. economy. Spending patterns of consumers using our debit and credit cards remain generally consistent and continue to grow year over year. Consumer credit is performing as we expect. Wholesale credit continues to perform well, and our views around commercial real estate have not significantly changed since last quarter. These are all positive.

Speaker Change: As we look forward, it's always helpful to be grounded in the facts, we continued to see strength in the U S economy.

Speaker Change: Spending patterns of consumers using our debit and credit cards remained generally consistent and continued to grow year over year consumer credit is performing as we expect wholesale credit continues to perform well and our views around commercial real estate have not significantly changed since last quarter. These are all positives.

Charles W. Scharf: In addition, we remain committed and confident in our ability to increase efficiencies across the enterprise, and areas we have targeted for investments such as credit card, investment banking, and trading are performing well. We're beginning to see early signs of share and fee growth, which will be important as we diversify our revenues and reduce net interest income as a percentage of revenue. And we remain bullish on opportunities across our other businesses. Again, more positive.

Speaker Change: In addition, we remain committed and confident in our ability to increase efficiencies across the enterprise and.

Speaker Change: In areas, we have targeted for investments such as credit card investment banking and trading are performing well.

Speaker Change: Getting to see early signs of share and fee growth, which will be important as we diversify our revenues and reduce net interest income as a percentage of revenue and.

Speaker Change: And we remain bullish on opportunities across our other businesses again more positive, having said that markets and rates will likely remain volatile.

Charles W. Scharf: Having said that, markets and rates will likely remain volatile, and as risk managers, we are prepared if trends were to change. We have historically managed credit through multiple cycles and believe that the actions we've taken over the last several years position us well. We have strong capital liquidity positions. As we build many of our businesses, we have done so within a consistent level of risk average. And our business model and franchise value differentiates us from most of who we compete with, regardless of the environment. So, what does all of this mean for our album? Simply said, our views haven't changed from last quarter. While we can look at specific data points on a specific date and alter our guidance, there is not enough of a consistent fact pattern to change our views. But what we see is helpful. Our focus remains the same. We are transforming Wells Fargo and are investing to build a well-controlled, fast-growing, and higher-returning company while we work to become more efficient. I'm pleased with the progress we've made, and I'm optimistic about the future opportunities ahead. I will now turn the call over to Mike.

Speaker Change: And as risk managers, we are prepared if trends were to change.

Speaker Change: We've historically managed credit through multiple cycles.

Speaker Change: And believe that the actions we've taken over the last several years position us well.

Speaker Change: We have strong capital and liquidity positions.

Speaker Change: As we're building many of our businesses, we have done so within a consistent level of risk appetite and our business model and franchise value differentiates us from most of who we compete with regardless of the environment. So what does all of this mean for our outlook simply said our views haven't changed from last quarter.

Speaker Change: <unk>.

We could look at specific data points on a specific date and also our guidance. There is not enough of a consistent pattern to change our views, but what we see is helpful.

Speaker Change: Our focus remains the same we are transforming wells Fargo and are investing to build a well control vast growing in higher returning company, while we work to become more efficient I am pleased with the progress we've made and I'm optimistic about the future opportunities ahead, I will now turn the call over to Mike.

Michael P. Santomassimo: Thank you, Charlie. Good morning, everyone.

Mike: Thank you Charlie and good morning, everyone.

Michael P. Santomassimo: Net income for the first quarter was $4.6 billion, or $1.20 per diluted common share. Our first quarter results included $284 million, or $0.06 per share, for the FDIC Special Assessment as a result of the regional bank failures last year. Recall last quarter, our results included $1.9 billion for the Special Assessment, and this additional amount reflects recent updates provided by the FDIC, including potential recoveries, which were highlighted in their disclosure. The ultimate amount of our special assessment may continue to change as the FDIC determines the actual losses and recoveries to the Deposit Insurance Fund. Turning to slide four.

Mike: Net income for the first quarter was $4 6 billion or $1 20 per diluted common share.

Mike: Our first quarter results included $284 million or <unk> <unk> per share for the FDIC Special assessment as a result of the regional bank failures last year.

Mike: Call last quarter. Our results included $1 9 billion for the special assessment and this additional amount reflects recent updates provided by the FDIC, including potential recoveries, which were highlighted in their disclosure.

Mike: The ultimate amount of our special assessment May continue to change as the FDIC determines the actual losses and recoveries to the deposit insurance fund.

Mike: Turning to slide four.

Michael P. Santomassimo: Net interest income declined $1.1 billion, or 8% from a year ago, due to the impact of higher interest rates on funding costs, including the impact of customers migrating to higher-yielding deposit products, as well as lower loan balances, partially offset by higher yields on earning assets. First quarter results were largely as expected, with loan balances a little lower and deposit balances in the businesses a little higher than our expectations. Our full-year net interest income guidance has not changed from last quarter, and we still expect 2024 net interest income to be approximately 7-9% lower than 2023. We also continue to expect net interest income to peak towards the end of this year.

Mike: Net interest income declined $1 1 billion or 8% from a year ago due to the impact of higher interest rates on funding costs, including the impact of customers migrating to higher yielding deposit products as well as lower loan balances, partially offset by higher yields on earning assets.

Mike: First quarter results were largely as expected with loan balances, a little lower and deposit balances in the businesses, a little higher than our expectations.

Mike: Our full year net interest income guidance has not changed from last quarter and we still expect 2024 net interest income to be approximately 7% to 9% lower than 2023.

Mike: We also continue to expect net interest income will trough towards the end of this year.

Michael P. Santomassimo: It is still early in the year, and ultimately, the amount of net interest income we earn will depend on a variety of factors, many of which are uncertain, including deposit balances, mix, and pricing, the absolute level of interest rates, the shape of the yield curve, and loan demand. On slide 5, we highlight loans and deposits. Average loans were down from both the fourth quarter and a year ago. However, credit card loans continue to grow, while most other categories decline. I'll highlight specific drivers when discussing our operating segment results.

Mike: It is still early in the year and ultimately the amount of net interest income we earn will depend on a variety of factors.

Mike: Many of which are uncertain.

Mike: Including deposit balances mix and pricing.

Mike: Absolute level of interest rates and the shape of the yield curve and loan demand.

Mike: On slide five we highlight loans and deposits.

Mike: Average loans were down from both the fourth quarter and a year ago.

Mike: Credit card loans continue to grow while most other categories declined.

Mike: I'll highlight specific drivers when discussing our operating segment results average.

Michael P. Santomassimo: Average loan yields increased 69 basis points from a year ago to over 6%, reflecting the higher interest rate environment. Average deposits declined 1% from a year ago, reflecting lower deposits in our consumer businesses as customers continued spending and reallocating cash into higher-yielding alternatives. While growth in average deposits from the fourth quarter was modest, we have grown deposits in our commercial businesses for two consecutive quarters, which reflected our success in attracting clients' operational deposits. Period end deposits included in the chart on the bottom of the page were up 2% from the fourth quarter, but some of this growth reflected a temporary increase driven by quarter end that was on a payday and a holiday. While the pace of growth slowed, our average deposit costs continued to increase as expected, rising 16 basis points from the 4th quarter to 174 basis points.

Mike: Average loan yields increased 69 basis points from a year ago to over 6%, reflecting the higher interest rate environment.

Mike: Average deposits declined 1% from a year ago, reflecting lower deposits in our consumer businesses as customers continued spending in reality reallocating cash into higher yielding alternatives.

Mike: While growth in average deposits from the fourth quarter was modest we have grown deposits in our commercial businesses for two consecutive quarters, which reflected our success in attracting clients operational deposits.

Mike: Period end deposits included in the chart on the bottom of the page were up 2% from the fourth quarter, but some of this growth reflected a temporary increase driven by quarter end. There was a lot of pay day at holiday.

Mike: While the pace of growth slowed our average deposit cost continued to increase as expected rising 16 basis points from the fourth quarter to 174 basis points with higher deposit costs across most operating segments.

Michael P. Santomassimo: with higher deposit costs across most operating segments. Our mix of deposits continued to shift, with our percentage of non-interest bearing deposits declining to 26%. Turning to non-interest income on slide 6, we were pleased with the growth in non-interest income across all of our business segments. Growth in non-interest income more than offset lower net interest income, reflecting revenue growth from both the fourth quarter and a year ago. Non-interest income was up 17% from a year ago, with strong growth in investment advisory fees and brokerage commissions, deposit and lending fees, related fees, trading, and investment banking fees.

Mike: Our mix of deposits continue to shift with our percentage of noninterest bearing deposits declining to 26%.

Mike: Turning to non interest income on slide six.

Mike: We were pleased with the growth in noninterest income across all of our business segments.

Mike: Noninterest income more than offset lower net interest income, reflecting in revenue growth from both the fourth quarter and a year ago.

Mike: Noninterest income was up 17% from a year ago with strong growth and investment advisory fees and brokerage commissions deposit and lending fees related fees trading and investment banking fees.

Michael P. Santomassimo: As Charlie highlighted, we benefited from market conditions as well as the investments we've been making in our businesses. I will highlight the specific drivers of this growth when discussing the segment results. Turning to expenses on slide 7, first quarter non-interest expense increased 5% from a year ago, driven by higher operating losses, the FDIC special assessment, an increase in revenue-related compensation, predominantly due to higher investment advisory fees in our wealth and investment management business, and higher technology and equipment expense. These increases were partially offset by the impact of efficiency initiatives, including lower professional and outside services expense, which declined 10% from a year ago. The higher operating losses were driven by customer remediation rules for a small number of historical matters that we are working hard to get behind us. The increase in personnel expense from the fourth quarter was driven by approximately $650 million of seasonally higher expenses in the first quarter, including payroll taxes, restricted stock expense for retirement-eligible employees, and 401k matching contributions.

Mike: As Charlie highlighted we benefited from market conditions as well as the investments we've been making in our businesses I will highlight the specific drivers of this growth when discussing the segment results.

Mike: Turning to expenses on slide seven.

Mike: First quarter noninterest expense increased 5% from a year ago, driven by higher operating losses, the FDIC special assessment and increase in revenue related compensation predominantly due to the higher investment advisory fees in our wealth and investment management business and higher technology and equipment expense.

Mike: These increases were partially offset by the impact of efficiency initiatives, including lower professional and outside services expense, which declined 10% from a year ago.

The higher operating losses were driven by customer customer remediation accruals for a small number of historical matters that we are working hard to get behind us.

Mike: The increase in personnel expense for the fourth quarter was driven by approximately $650 million of seasonally higher expenses in the first quarter, including payroll taxes restricted stock expense for retirement eligible employees and 400 K matching contributions.

Michael P. Santomassimo: Not including expense for the FDIC special assessment in the first quarter, our full-year 2024 non-interest expense guidance is unchanged and is still expected to be approximately $52.6 billion. However, if we continue to watch a couple of items, our guidance included $1.3 billion of operating losses for the year, which we still believe is a reasonable estimate, even with a higher level of operating losses in the first quarter. However, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating losses during the remainder of the year. Also, if market valuations remain at current levels or move higher, that would increase investment and advisory fees, and revenue-related compensation could be higher than we assumed in our expense guidance for this year, which would be a good thing. We'll continue to update you as the year progresses.

Mike: Not including <unk> expense for the FDIC special assessment in the first quarter, our full year 2020 for noninterest expense guidance is unchanged and is still expected to be approximately $52 6 billion.

Mike: However, we continue to watch a couple of items. Our guidance included $1 3 billion of operating losses for the year, which we still believe is a reasonable estimate even with the higher level of operating losses in the first quarter. However.

Mike: However, we have outstanding litigation regulatory and customer remediation matters that could impact operating losses during the remainder of the year.

Mike: Also market valuations remain at current levels on new higher that would increase investment advisory fees and revenue related compensation could be higher than we've seen in our expense guidance for this year, which would be a good thing.

Mike: We will continue to update you as the year progresses.

Michael P. Santomassimo: Turning to credit quality on slide eight, net loan charge-offs declined three basis points from the fourth quarter to 50 basis points on average loans. Credit performance trends were consistent with what we saw last quarter. The decline reflected lower commercial net loan charge-offs, which were down $131 million from the fourth quarter to 25 basis points on average loans. The reduction was driven by lower losses in our commercial real estate office portfolio. We did not see further deterioration in the performance of our CRE office portfolio versus the fourth quarter, and therefore, our expectations have not changed. We continue to expect additional losses in the coming quarters; however, the amounts will likely be uneven and episodic.

Mike: Turning to credit quality on slide eight.

Net loan charge offs declined three basis points from the fourth quarter to 50 basis points of average loans.

Mike: Credit performance trends were consistent with what we saw last quarter.

The decline reflected lower commercial net loan charge offs, which were down $131 million from the fourth quarter to 25 basis points of average loans.

Mike: The reduction was driven by lower losses in our commercial real estate office portfolio.

Mike: We did not see further deterioration in the performance of our CRE office portfolio versus the fourth quarter and therefore, our expectations have not changed.

Mike: We continue to expect additional losses in the coming quarters. However, the amounts will likely be uneven and episodic.

Michael P. Santomassimo: Consumer net loan charge-offs continue to increase as expected, and we're up $28 million from the fourth quarter to 84 basis points of average loans. While auto losses continued to decline, benefiting from the tightening actions we implemented starting in late 2021, credit card losses increased in line with our expectations. Non-performing assets declined 2% from the fourth quarter, driven by lower CRE office non-accruals, reflecting the realization of losses and paydown from the quarter. Moving to slide nine.

Consumer net loan charge offs continue to increase as expected and were up $28 million from the fourth quarter to 84 basis points of average loans.

Mike: While auto losses continue to decline benefiting from the tightening actions we implemented starting in late 2021.

Mike: That card losses increased in line with our expectations.

Mike: Non performing assets declined 2% from the fourth quarter, driven by the lower CRE office non accruals, reflecting the realization of losses in paydowns in the quarter.

Mike: Moving to slide nine.

Michael P. Santomassimo: Based on the consistent credit trends I noted before, our allowance for credit losses was down modestly, driven by declines for commercial real estate and auto loans, partially offset by a higher allowance for credit card loans. The table on this page shows the allowance for credit losses coverage ratio for commercial real estate, including the breakdown of the office portfolio. We didn't increase our allowance for this portfolio in the first quarter, and the coverage ratio in our CIV commercial real estate office portfolio of 11% was stable compared to the fourth quarter. Turning to capital and liquidity on slide 10. Our capital position remains strong, and our CET1 ratio of 11.2% continues to be well above our 8.9% regulatory minimum plus buffers. We repurchased $6.1 billion of common stock in the first quarter.

Mike: Based on the consistent credit trends I noted before our allowance for credit losses was down modestly driven by declines for commercial real estate and auto loans, partially offset by higher allowance for credit card loans.

Mike: The table of the page shows the allowance for credit losses coverage ratio for commercial real estate, including the breakdown of the office portfolio.

Mike: We didn't increase our allowance for this portfolio in the first quarter and the coverage ratio in our CIB commercial real estate office portfolio of 11% was stable compared with the fourth quarter.

Turning to capital and liquidity on slide 10.

Mike: Our capital position remains strong and our CET one ratio of 11, 2% continued to be well above our eight 9% regulatory minimum plus buffers.

Mike: We repurchased $6 1 billion of common stock in the first quarter, while the amount of stock we repurchase each quarter will vary we continue to expect to repurchase more common stock this year than we did in 2023.

Michael P. Santomassimo: While the amount of stock we repurchase each quarter will vary, we continue to expect to repurchase more common stock this year than we did in 2023. Turning to our operating segments, starting with consumer banking and lending on slide 11. Consumer small and business banking revenue declined 4% from a year ago, driven by lower deposit balances. We continue to invest in talent, technology, and branches to improve the customer experience. Our branches are becoming more advice-focused, with teletransactions declining while banker visits increasing. We are modernizing and optimizing the branch network.

Mike: Turning to our operating segments, starting with consumer banking and lending on slide 11.

Mike: Consumer small business banking revenue declined 4% from a year ago, driven by a lower deposit balances.

Mike: We continue to invest in talent technology and branches to improve the customer experience or.

Mike: Our branches are becoming more advice focus with teller transactions declining while banker visits have increased we.

Mike: We are modernizing and optimizing the branch network the.

Michael P. Santomassimo: The number of branches declined 6% from a year ago, while at the same time, we are accelerating the refurbishment of our branch network. In addition, the enhancements we are making to our mobile app continue to drive momentum in mobile adoption, and we surpassed 30 million active mobile customers in the first quarter, up 6% from a year ago. Mobile logins also reached a milestone, surpassing 2 billion logins for the first time in the first quarter, up 18% from a year ago.

Mike: The number of branches declined 6% from a year ago, while at the same time, we are accelerating the refurbishment of our of our branch network. In addition, the enhancements we are making to our mobile app continue to drive momentum in mobile adoption and we surpassed 30 million active mobile customers in the first quarter up 6% from a year ago.

Mike: Logins also reached a milestone surpassing 2 billion logins for the first time in the first quarter up 18% from a year ago.

Michael P. Santomassimo: Home lending revenue was stable from a year ago as higher mortgage banking income was offset by lower net interest income as loan balances continued to decline. Credit card revenue increased 6% from a year ago, driven by higher loan balances. Payment rates remained relatively stable compared to the fourth quarter and were above pre-pandemic levels.

Mike: Home lending revenue was stable from a year ago as higher mortgage banking income was offset by lower net interest income as loan balances continued to decline.

Mike: Credit card revenue increased 6% from a year ago, driven by the higher loan balances payment rates remained relatively stable compared to the fourth quarter and were above pre pandemic levels.

Michael P. Santomassimo: Auto revenue declined 23% from a year ago driven by continued loan spread compression and lower loan balances. Personal lending revenue is up 7% from a year ago and includes the impact of higher loan balances. Turning to some key business drivers in slide 12. Retail mortgage originations declined 38% from a year ago, reflecting the progress we made on our strategic objective to simplify the business, as well as the decline in the mortgage market. We also made significant progress on reducing the amount of third-party mortgage loans we service, down 21% from a year ago. We also continued to reduce the headcount on home lending, which was down 33% from a year ago; balances in our auto portfolio are down 12% compared to last year. Origination volume declined 18% from a year ago, reflecting credit tightening actions, but increased 24% from a slow fourth quarter. Debit card spend increased 4% from a year ago, with growth in most categories except for fuel and travel.

Mike: Auto.

Mike: <unk> declined 23% from a year ago, driven by continued loan spread compression and lower loan balances.

Personal lending revenue was up 7% from a year ago and included the impact of higher loan balances.

Turning to some key business drivers on slide 12.

Mike: Retail mortgage originations declined 38% from a year ago, reflecting the progress we made on our strategic objective to simplify the business as well as the decline in the mortgage market. We also made significant progress in reducing the amount of third party mortgage loans, we service down 21% from a year ago. We also continued to reduce the head count in home lending which was.

Mike: Down 33% from a year ago.

Mike: Balances in our auto portfolio were down 12% compared to last year origination volume declined 18% from a year ago, reflecting credit tightening actions, but increased 24% from a slow fourth quarter.

Mike: Debit card spend increased 4% from a year ago with growth in most categories, except for fuel and travel.

Michael P. Santomassimo: Credit card spending remains strong. It was up 14% from a year ago. All categories grew, with stronger growth in non-discretionary spend. New Macau growth continued to be strong, up 12% from last year.

Mike: Credit card spending remains strong it was up 14% from a year ago, all categories grew with stronger growth in non discretionary spend.

Mike: New account growth continued to be strong up 12% from last year.

Michael P. Santomassimo: Turning to commercial banking results on slide 13, middle market banking revenue was down 4% from a year ago driven by lower net interest income due to higher deposit costs, partially offset by higher deposit-related fees. Asset-based lending and leasing revenue decreased 7% year-over-year and included lower revenue from equity investment. Average loan balances were stable compared to a year ago as growth in asset-based lending and leasing was offset by declines in middle market banking.

Mike: Turning to commercial banking results on slide 13.

Middle market banking revenue was down 4% from a year ago, driven by lower net interest income due to higher deposit costs, partially offset by higher deposit related fees.

Mike: Asset based lending and leasing revenues decreased 7% year over year and included lower revenue from equity investments.

Average loan balances were stable compared to a year ago as growth in asset based lending and leasing was offset by declines in middle market banking.

Michael P. Santomassimo: Weaker loan demand reflected the impact of clients being cautious given the higher rate environment and the anticipation of lower rates this year, as well as some potential uncertainty in an election year. Turning to corporate investment banking on slide 14. Banking revenue increased 5% from a year ago, driven by higher investment banking revenue due to increased activity across all products. Our results benefited from areas where we have had strength for some time, such as investment grade debt capital markets, and from the talent we've been attracting into the business. While it is still early, we are encouraged by the green shoots we are seeing.

Mike: Weaker loan demand reflected the impact of clients being cautious given the higher rate environment and the anticipation of lower rates this year as well as some potential uncertainty in an election year.

Mike: Turning to corporate and investment banking on slide 14.

Mike: Banking revenue increased 5% from a year ago, driven by higher investment banking.

Mike: Revenue due to increased activity across all products.

Mike: Our results benefited from the areas, where we have had strength for some time such as investment grade debt capital markets.

Mike: And from the talent, we have been attracting into the business.

Mike: While it is still early we are encouraged by the green shoots we are seeing.

Michael P. Santomassimo: Commercial real estate revenue was down 7% from a year ago and included the impact of a lower loan balance. Markets revenue increased 2% from a year ago driven by continued strong performance and structured products. Credit Products, and Foreign Exchange. Our trading results continue to benefit from market conditions, and the investments we have made in technology and talent to round out the business have enabled us to produce strong results even as market dynamics change. Average loans declined 4% from a year ago, but banking clients have taken advantage of strong capital markets to pay off loans. In addition to weak load demand in commercial real estate given market conditions, balances also declined due to credit tightening actions we implemented last year, along with our efforts to actively reduce certain property types in the portfolio.

Mike: Commercial real estate revenue was down 7% from a year ago and included the impact of lower loan balances.

Mike: Markets revenue increased 2% from a year ago, driven by continued strong performance in structured products.

Mike: <unk> products and foreign exchange.

Mike: Our trading results continue to benefit from market conditions, and the investments we've made in technology and talent to <unk>.

Mike: The business have enabled us to produce strong results, even as market dynamics have changed.

Mike: Average loans declined 4% from a year ago banking clients have taken advantage of the strong capital markets pay up loans and.

Mike: In addition to weak loan demand in commercial real estate given market conditions balances also declined due to credit tightening actions, we implemented last year, along with our efforts to actively reduce certain property types in the portfolio.

Michael P. Santomassimo: On slide 15, wealth and investment management revenue increased 2% compared to a year ago. Lower net interest income driven by lower deposit balances as customers reallocated cash into higher-yielding alternatives was more than offset by higher asset-based fees due to increased market valuation. While cash alternatives as a percentage of total client assets was higher than a year ago, it has declined in the past two quarters as the migration of deposits into cash alternatives has slowed significantly. As a reminder, the majority of wind advisory assets are priced at the beginning of the quarter, so first quarter results reflected market valuations as of January 1st, which were higher from a year ago. Asset-based fees in the second quarter will reflect market valuations as of April 1st, which were higher from both a year ago and from January 1st.

Mike: On slide 15, wealth and investment management revenue increased 2% compared to a year ago.

Mike: Lower net interest income driven by lower deposit balances as customers reallocated cash into higher yielding alternatives was more than offset by higher asset based fees due to increased market valuations.

Mike: While cast alternatives as a percentage of total client assets was higher than a year ago. It has declined the past two quarters as the migration of deposits into cash alternatives has slowed significantly.

Mike: As a reminder, the majority of wind advisory assets are priced at the beginning of the quarter. So first quarter results reflected market valuations as of January one.

Mike: Which were higher from a year ago.

Mike: Asset based fees in the second quarter will reflect market valuations as of April one which are higher from a both a year ago and from January one.

Michael P. Santomassimo: Slide 16 highlights our corporate results. Revenue grew from a year ago due to improved results in our affiliated venture capital business on lower impairments. In summary, our results in the first quarter reflected the progress we're making to improve our financial performance. We grew revenue, driven by strong growth in our fee-based businesses. We continued to make progress on our efficiency initiatives. We increased capital returns to shareholders and maintained our strong capital position. I will now take your questions.

Mike: Slide 16 highlights our corporate results revenue grew from a year ago due to improved results in our affiliated venture capital business and lower impairments.

Mike: In summary, our results in the first quarter reflected the progress, we're making to improve our financial performance. We grew revenue driven by strong growth in our fee based businesses. We continue to make progress on our efficiency initiatives, we increase capital returns to shareholders and maintained our strong capital position, we will now take your questions.

Mike: <unk>.

Operator: Thank you. At this time, we will now begin the question and answer session. If you would like to ask a question, first unmute your phone and then press star 1. Please record your name at the prompt. If you would like to withdraw your question, you may press star 2. Once again, if you would like to ask a question at this time, please press star 1. Please stand by for our first question, and our first question will come from John McDonald of Autonomous Research. Your line is open, sir. Hi, good morning. Guys, I wanted to ask about your profitability targets and kind of how you see the journey to

Speaker Change: Thank you at this time, we will now begin the question and answer session.

Speaker Change: I would like to ask a question first on mute your phone and then press Star one please record your name at the pump.

Speaker Change: If you would like to withdraw your question you May press Star two.

Speaker Change: Once again, if you would like to ask a question at this time. Please press star one please standby for our first question.

John Eamon McDonald: And our first question will come from John Mcdonald of Autonomous Research. Your line is open Sir.

John Eamon McDonald: Hi, good morning.

John Eamon McDonald: Guys I wanted to ask about your profitability targets and kind of how you're seeing.

John Eamon McDonald: The journey to the mid teens or a TCE goal and Mike maybe you could talk about that through the lens of 12.

John Eamon McDonald: Mike, maybe you could talk about that through the lens of 12% return on tangible common equity this quarter. Where do you think you're kind of over-earning, under-earning, and what does that journey to the mid-teens look like over the next couple of years?

John Eamon McDonald: 12% return on tangible common equity this quarter.

John Eamon McDonald: Where do you think youre kind of over earning under earning and what does that journey to the mid teens look like over the next couple of years.

Michael P. Santomassimo: Hey, John. It's Mike.

John Eamon McDonald: Hey, John it's Mike. Thanks, Thanks for the question so.

Michael P. Santomassimo: Thanks for the question. So, you know, look, I think not much has changed in our thinking on the topic. And so as you sort of think about it on a long-term basis, there's no reason – there's still no reason why our businesses shouldn't, you know, have returns like the best of our peers. And as we sort of go through that, you know, journey, obviously, you know, we are where we are in terms of returns today. And as we get closer to 15 percent, it's going to be the same kinds of drivers that we've been talking about for a while.

Mike: Look I think not much has changed in our thinking.

Mike: On the.

Mike: The topic and so as you sort of think about it on a long term basis. There's no reason, we still there's still a reason why our business initiatives.

Have returns like the best of our peers.

Mike: And as we sort of go through that journey. Obviously, we are where we are in terms of the returns today and as we get towards closer to 15%, it's going to be the same kinds of drivers that we've been talking about now for a while we've got to continue to optimize our capital and balance sheet you saw us return some via buybacks today.

Michael P. Santomassimo: You know, we've got to continue to optimize sort of capital and balance sheet. You saw us return some via buybacks today. We're making investments in, you know, each of our businesses, and so we'll need to start seeing some of the returns there. And, you know, this was just one quarter of it, but a good quarter that shows some of the benefits of those investments we're making across a whole range of the businesses, which is good to see. And Charlie highlighted a bunch of that, you know, in his commentary. And then we've got to stay on the efficiency journey, which we continue to believe is not done, and we've got a lot of work to do to continue to drive efficiency across the company. And we're going to stay at that, you know, as we look forward. And so I think it's really those drivers that understand it, and we still have confidence that we're going to get there.

Mike: We're making investments.

Mike: Each of our businesses and so we'll need to start seeing some of the returns there and this was a one quarter of it but a good quarter that shows some of the benefits of those investments, we're making across a whole range of the businesses, which is good.

Mike: And Charlie highlighted a bunch of that.

Mike: It is his commentary and then we've got to stay stay on the efficiency journey.

Mike: Which which we continue to believe is not done and we've got a lot of work to do to continue to drive efficiency across the company.

Mike: And we're going to we're going to stay at that as we look forward.

Mike: And so I think it's really those drivers that get it and we still have confidence that we're going to we're going to get there <unk> it's Charlie.

Charles W. Scharf: Hey John, let me try this on for you. It's Charlie. Let me just add a couple of things. Number one is, just as a reminder to everyone, we've tried to be clear, where NII was rising and we got to, you know, certainly at the peak or near the peak that we were out earning and that we didn't look at those ROEs at those points as sustainable but that our clear journey was to continue to get there on a sustainable basis. I think second of all, when we look at, you know, obviously it's very hard to draw any conclusion from a specific quarter, right? We've got the FDIC, we've got operating losses, which, you know, we've talked about where our expectations are for the full year, which are different than a quarter, so it's very hard to draw a conclusion on a specific quarter.

Charlie: Just had a couple of things.

Charlie: Number one is just as a reminder to everyone with <unk>.

Charlie: To be clear.

We're as NII was rising and we got to certainly either at the peak or near the peaks that we were out earnings and that we didn't look at those Roe.

Charlie: At those points are sustainable.

Charlie: But that are clear journey was to continue to get there on a sustainable basis.

Charlie: I think second of all when we look at obviously, it's very hard to draw any conclusion from specific quarter right. We've got the FDIC we've got.

Charlie: Operating losses, which we've talked about where expectations are for the full year, which are different for the quarter. So it's a very hard to draw a conclusion on a specific quarter, but when we look at what is going to get US. There. We are very consistent on what those things are number one is improved business performance and we tried to highlight where we see them.

Charles W. Scharf: But when we look at what is going to get us there, you know, we are very consistent about what those things are. You know, number one is improved business performance, and we try to highlight where we see that, and those areas that we don't talk about are areas that we are still bullish on but would like to see some more improvement in the ability to increase our returns in those parts of the company, as well as continued capital return, as well as the limitations we have because of the FDIC. So again, our thesis hasn't changed, our views haven't changed, and our confidence in getting there hasn't changed.

Charlie: And those areas that we don't talk about or areas that we are still bullish on but would like to see some more improvement in the ability to increase our returns in those parts of the company.

Charlie: As well as continued capital return as well as the limitations, we had because of the Africa.

Charlie: So our thesis Hasnt changed our views haven't changed and our confidence in getting there hasnt changed.

John Eamon McDonald: Okay, and then one quick follow-up there. Do you think this 11% CET1 is probably kind of the ballpark of where you hang out regardless of the minimum? Just because if you...

Charlie: Okay and then one just quick follow up there do you think this 11% CET one is probably kind of a ballpark of where you hang out regardless of the minimum just because it feels like you have super regional banks that aren't G. Sibs are running at 10 10, a half your bigger banks at 12 to 13 is so 11 kind of feel like the right ballpark, which means you can read.

Website Placeholder: http://TheBusinessProfessor.com

Website Placeholder: The Bulletproof Executive, 2013

Charlie: Most of what you are generating now.

Charles W. Scharf: I would say... It's something that we continue to think through. You know our existing needs today for buffers are 8.9. At 8.9, everyone understands that Basel 3's endgame is coming, but likely with significant revisions. So I think as the quarters continue, we'll learn more about where that will come out, and we'll be able to be more informed about where we wind up. You know, we've always tried to be on the more conservative end, but there's a point at which too much is too much, which is why we bought the amount this quarter that we bought back.

Speaker Change: I would say.

Speaker Change: It's something that we continue to think through.

Speaker Change: Our existing needs.

Speaker Change: Needs today with buffers are at $88 nine.

Speaker Change: At $8 nine everyone understands that Basel III endgame is coming but.

Speaker Change: Likely with significant revision so.

Speaker Change: I don't.

Speaker Change: And I think as as the quarters continue we'll learn more about where that will come out and we will be able to be more informed.

Speaker Change: Where we'll wind up.

Speaker Change: We've always tried to be on the more conservative end, but disappointed which too much is too much.

Speaker Change: Which is why we bought the amount this quarter that we bought back.

Ebrahim Huseini Poonawala: Okay, thank you. The next question will come from Ebrahim Poonawala of Bank of America. Your line is open, sir.

Speaker Change: Okay. Thank you.

Speaker Change: The next question will come from Ebrahim <unk> of Bank of America. Your line is open Sir.

Ebrahim Huseini Poonawala: Hey, good morning. Just following up on that as we think about Basel and your capital levels. Even with a 100 basis points buffer, you probably have $12 billion of excess capital. Given what we saw in 1Q, and I heard you, Mike, year-over-year, you're going to be higher, but... That doesn't give enough color. I'm just wondering, should we expect the pace of buybacks to continue given where the stock's trading, which is still fairly attractive valuations?

Ebrahim: Hey, good morning.

Ebrahim: I guess just following up on that as we think about Basel your capital levels.

Ebrahim: Even the 100 basis points buffer you probably have $12 billion of <unk>.

Ebrahim: This catheter <unk>.

Ebrahim: Given what we saw in one Q&A Hood, you, Mike, Yes, the way youre going to be higher back.

Ebrahim: That doesn't give enough color I'm, just wondering should we expect the pace of buybacks will continue given.

Ebrahim: That's where the stock's trading which is still fairly attractive valuations.

Ebrahim: Yeah. Thanks, Brett it's Mike Thanks for the question.

Michael P. Santomassimo: It's Mike. Thanks for the question. As you look at the pacing, we're really not going to provide specific guidance on what we'll do quarter to quarter. I think, obviously, as you pointed out, we've got significant excess capital to where we need to be. We'll be able to handle whatever comes out of Basel III quite easily with where we are today. It gives us the ability to be there and invest as we've got opportunities with clients. We've got lots of flexibility. Each quarter, we go through the same process we go through every quarter, which is thinking about where the capital requirements are going to go, looking at all the different risks that are out there across the spectrum, whether it's rates or anything else, and then looking at what we're seeing from client activity. Then we'll make a decision on the pacing of it. As you say, we're still very confident we'll do more than we did last year, but on pacing, we'll cover that each quarter after we report.

Mike: You look at the pacing, we're really not going to provide specific guidance on like what will do quarter to quarter. I think obviously as you pointed out we've got significant excess capital to where we need to be we will be able to handle with whatever comes out of Basel III quite quite easily with where we are today gives us the ability to.

Mike: B, there and invest.

Mike: We've got opportunities with clients.

Mike: And so we've got lots of lots of flexibility and each quarter. We will go through the same process. We go through every quarter, which is thinking about sort of where the capital requirements are going to go looking at all the different risks that are out there across the.

Mike: The spectrum, whether it's rates or other and then looking at what we're seeing from our client activity and then we'll make a decision on the pacing of it.

Mike: As you say, we're still very confident we'll do more than we did last year, but pacing, we will kind of leave too.

Mike: We will cover that each quarter after that after we after we report.

Ebrahim Huseini Poonawala: And I guess just separately, I think there's a lot of focus on market share opportunities for Wells, be it in capital markets, I.B., corporate lending, and I think Charlie referenced the hiring of Doug Braunstein. I would appreciate additional color in terms of areas where you see within corporate capital markets where there's market share to be had, and what's the level of investment slash infrastructure needed in order to compete in that space and win market

Mike: But I guess just separately I think there is a lot of focus on market share opportunity for Welles beat in capital markets <unk> corporate lending and I think Charlie that Vince the hiring of Doug Braunstein.

Mike: I appreciate additional color in terms of areas, where you see within corporate capital markets, where there's market share to be had and what's the level of investment slash infrastructure needed in order for competing in.

Charlie: In that space and winning market share.

Charles W. Scharf: Let me start out by saying that, you know, first of all, when we talk about the level of investment that's necessary, we're making the investment. And it's embedded in what we're spending. And so... You know, we are funding that through the normal course of business. Some of the folks that we're hiring are replacing other people, and others are additions, but that's part of what it is, and so we don't anticipate any kind of step-up in the expense base to fund what we're doing, which we feel great about.

Charlie: Yeah, Let me start out I think first of all when we talk about the level of investment that's necessary.

Charlie: Making the investment.

Charlie: And it's embedded in what we're spending and so.

Charlie: <unk>.

Charlie: We are funding that through normal course of business.

Charlie: Some of the.

Charlie: Our folks that we're hiring are replacing other people in.

Charlie: Others are additions but.

Charlie: Thats part of what it is and so we don't anticipate any kind of step up in the expense base to fund what we're doing.

Charlie: Which we feel great about we've got the ability to spend along the way and to actually see.

Charles W. Scharf: We've got, you know, the ability to, you know, spend along the way and to actually see it paying off for itself. Listen, I've said this, you know, very consistently, which is that we are extremely under-penetrated across almost all segments of the investment bank. We've been stronger on the debt side, but we have not been as strong on the equity side. And by the way, all for reasons that relate to our own willingness to invest over the last decade and a half, not because of the opportunity or because of our business model. It's just the opposite. It's just not something that the senior management team here is supportive of, and we feel very differently about that. And so when we look across coverage in the equity space by industry on the strategic side and how that relates to our existing high-quality debt platform that we have, again, we're prioritizing industries based upon where we already have strength in relationships and where there are significant wallets.

Charlie: Then paying offer itself.

Charlie: I listen I said this very consistently which is we are extremely underpenetrated across almost all segments of the investment banking space.

Charlie: But we've been stronger on the debt side.

Charlie: We have not been as strong on the equity side.

And by the way all for reasons that relate to our own willingness to invest over the last decade, and a half not because of the opportunity or because.

Charlie: Our business model, it's just the opposite it's just not something that the senior management team here with support above.

Charlie: And we feel very differently than that and so when we look across coverage in the equity space by industry.

Charlie: On the strategic side, and how that relates to our existing high quality that platform that we have.

Charlie: Again, we're prioritizing industries based upon where we already have strengthened relationship and where there are significant wallets.

Charles W. Scharf: But we feel really great about our ability to serve a broad set of customers and their needs. And then when we look at the trading side of our business, a big part of what we do there is to support our efforts within the investment bank, but it also is to leverage the broader institutional relationships that we have, where we do a lot with those institutions, but we haven't necessarily leveraged trading flow as part of that. And so to do that, we're making investments not just in people but in technology. We are, as I alluded to, not doing any of this by rethinking the way we think of our risk tolerances. It really is about getting the right products, the right services, the right people, and calling on our customer base with a different degree of credibility and desire than we've had in the past.

But we feel really great about.

Charlie: Our ability to serve a broad set of customers.

Charlie: And their desire to do business with us.

Charlie: Because of both the platform and the talent that we have here and then when we look at our the trading side of our business.

Charlie: A big part of what we do there is to support our efforts within the investment bank.

Charlie: But it also has to.

Leverage the broader.

Charlie: Institutional relationships that we have where we do a lot with those institutions, but we havent necessary leveraged trading float as part of that.

Charlie: And so to do that we're making investments not just in people button technology.

Charlie: We are as I alluded to we're not doing any of this by rethinking the.

Charlie: Way, we think of our risk tolerances.

It really is about getting the right products the right services the right people.

Charlie: And calling on our customer base with a different degree of credibility and desire that we've had in the past.

Ebrahim Huseini Poonawala: That's a great caller. Thank you.

Speaker Change: That's great color. Thank you.

Speaker Change: The next question comes from Ken Houston of Jefferies. Your line is open Sir.

Operator: Thank you. Good morning.

Ken Houston: Thank you. Good morning, I was wondering if we could talk a little bit about just.

Kenneth Michael Usdin: I'm wondering if we could talk a little bit about just that kind of last mile of deposit repricing. You talked about the mix shift and non-interest down and interest bearing up, but I was just wondering just what's happening on the pricing side, and are you still seeing both sides, consumer and wholesale? If you can maybe just kind of give us the dynamics that's happening underneath and how you expect that to continue as we get to this, you know, as we stay in this rates peak. Thanks.

Ken Houston: Kind of last mile of deposit repricing, you talked about the mix shift.

Ken Houston: Noninterest down in interest bearing but just wondering just what's happening on the pricing side and are you still seeing.

Ken Houston: Both sides consumer on wholesale if you can maybe just kind of give us the dynamics, that's happening underneath and how you expect that to continue as we get to this as we stay on this rates peak. Thanks.

Michael P. Santomassimo: Sure. I'll take that, Ken.

Speaker Change: Sure I'll take that Ken.

Michael P. Santomassimo: As you look at the commercial side, not much has changed. It's pretty competitive. We're not seeing it move one way or the other in a significant way as you sort of look over the last quarter. The good news is that we've been able to attract good operating deposits in the corporate investment bank. We've seen some growth in the commercial bank as well. And so all that's kind of performing as you'd expect.

Speaker Change: As you look at the commercial side not much has changed its pretty competitive we're not seeing it move one way or the other and.

Ken Houston: In a significant way as you as you sort of look over the last quarter. The good news is we've been able to attract good operating deposits in corporate investment bank, we've seen some.

Ken Houston: Growth in the commercial bank as well and so so all thats kind of performing as you would expect and you wouldn't really expect pricing to move there until the fed starts to move.

Michael P. Santomassimo: And you wouldn't really expect pricing to move there until the Fed starts to move, and it'll stay pretty competitive at that point. And we still expect betas to be pretty high on the way down as you start to see that eventually happen. On the consumer side, standard pricing is not moving. And really, what you're seeing is people continue to spend some of the money that's in their checking accounts and or move some of it into either CDs or higher yielding savings accounts. And so you still see some of that activity happening across the consumer space and the workplace space, where you still have some people moving into higher yielding alternatives. The pace of that migration has slowed, at least for now. And so we'll see how that progresses through the rest of the year. But it has slowed down a bit over the last number of months.

Ken Houston: It'll stay pretty competitive at that at that point, and we still expect betas to be pretty high on the way down as you start to see that eventually happen on the consumer side standard pricing is not moving.

Ken Houston: And really what Youre seeing is youre seeing.

Ken Houston: People continue to spend some of the money thats in their checking accounts.

Ken Houston: <unk> move some of it into either Cds or higher yielding savings accounts and so you still see some of that activity.

Ken Houston: Happening across the consumer space in the wealth space, we still have some people moving into higher yielding alternatives the pace of that migration has slowed.

Ken Houston: At least for now and so we'll see how that progresses through the rest of the year, but it has it has slowed a bit over the last number of months.

Kenneth Michael Usdin: And on the lending side, I think, you know, what you guys showed is not unexpected at all based on, you know, general softness to start the year. And so, you know, I think you and others had just kind of generically hoped that we'd get an improvement. But with rates where they are, is there any impediment to just seeing an improvement in loan growth as the year goes on, or is it baked into kind of the demand function that you're seeing underneath?

Speaker Change: Okay and on the lending side I think you guys show does not unexpected at all based on general softness to start the year and so I think you and others that just kind of generically hope that we get to an improvement but with rates where they are is there any impediment to just seeing an improvement in loan growth as the year goes on or is it baked.

To kind of the demand function that youre seeing underneath.

Michael P. Santomassimo: Yeah, you know, I think what we're seeing so far is exactly what we expected to see at the beginning of the year. And I know different people had different views back in January.

Speaker Change: Yes, I think what we're seeing so far is exactly what we expected to see at the beginning of the year and I know people different people have different views back in January but this is exactly what we expected which is pretty low demand.

Michael P. Santomassimo: But, you know, this is exactly what we expected, which is pretty low demand. Now, as I said in my commentary, it's a little bit lower than what we had modeled, but not substantially at this point. And it really is a demand function.

As I said in my commentary, it's a little bit lower than what we had modeled but not substantially at this point.

Speaker Change: And it really is a demand function when you look at what we're hearing from clients in the commercial bank or some of the clients in the corporate investment bank.

Michael P. Santomassimo: You know, when we look at what we're hearing from clients in the commercial bank or, you know, some of the clients in the corporate investment bank, you know, they're looking, they're being cautious still and saying, okay, I'm not going to build inventories as much as I might in a different environment. You know, they're being thoughtful about the cost of credit and how that impacts the investments they're making or the timing and the pacing of that. And so on the commercial side, it really is a demand issue at this point. You know, on the consumer side, we continue to see some growth in card balances. You know, given the size of the balance sheet, that's not going to move the whole balance sheet very materially, you know, given where we start from.

Speaker Change: They're looking at they're being cautious still and saying, okay, I'm not going to build inventories as much as I might in a different environment.

Being thoughtful about the cost of credit and how that impacts investments, they are making or the timing and the pacing of that.

Speaker Change: And so on the commercial side it really is a demand issue at this point.

Speaker Change: On the consumer side, you continue to see some growth in card balances.

Speaker Change: Given the size of the balance sheet.

Speaker Change: That's not going to move the whole balance sheet very materially give.

Speaker Change: Given where we start from.

Michael P. Santomassimo: And then, you know, the mortgage side just continues to decline a little bit, given the market that we've got there. And in auto, we're seeing a little bit more decline, given some of the changes we made about a year and a half ago, a year, and a half ago on some of the credit tightening, and eventually that'll start to turn. So I think those are the dynamics that we're seeing right now. Okay, Mike.

And then on the mortgage side just continues to decline a little bit given the given the market that we've got there in auto.

Speaker Change: We're seeing a little bit more decline given some of the changes we made about a year and a half ago year year and a half ago on some of the credit tightening and eventually that will start to turn.

Speaker Change: So I think those are the dynamics that we're seeing right now.

Speaker Change: Okay. Thanks, Mike.

Betsy Lynn Graseck: The next question will come from Betsy Graseck of Morgan Stanley. Your line is open.

Speaker Change: Yes.

Speaker Change: The next question will come from Betsy <unk> of Morgan Stanley. Your line is open hi.

Betsy Lynn Graseck: Hi, good morning.

Betsy: Hi, good morning.

Charles W. Scharf: Hey Betsy,

Betsy: Hey, Betsy okay. Okay.

Betsy Lynn Graseck: Okay, a couple of quickies here. One is, on the net interest income outlook that's unchanged, could you remind us what the interest rate environment is that's the base case for that analysis?

Betsy: Okay. A couple of just quick aides here one is on the net interest income outlook. That's unchanged could you remind us what the interest rate environment is the base case for that analysis.

Michael P. Santomassimo: Hey, it's Mike. Betsy, welcome back.

Sure.

Speaker Change: Youre welcome back.

Betsy Lynn Graseck: Please.

Michael P. Santomassimo: Sure. You know, when we look at the environment, we're not guessing at sort of what's going to happen, right? So I think as you sort of look at the different, you know, variables there, embedded in our, you know, baseline forecast is that, you know, we would expect somewhere around three rate cuts this year. And that's what's underlying our thinking, you know, at this point. And was that the same as...

Sure when you look at the environment.

Speaker Change: We're not we're not guessing that sort of what's going to happen right. So I think as you sort of look at the different.

Speaker Change: Variables there.

Speaker Change: Embedded in our baseline forecast is that we would expect somewhere around three rate cuts this year.

Speaker Change: Thats whats underlying sort of or our thinking.

Speaker Change: At this point and was that the same as last quarter same assumptions that or has that changed.

Betsy Lynn Graseck: The question is, last quarter, the same assumption set, or has that changed?

Michael P. Santomassimo: It's definitely less than what I think was being projected by the market, and that's what we put out on our slide in January. And when you look at the impact of that in isolation, you certainly would see a benefit from less rate cuts.

Speaker Change: Yeah, No look it's definitely it's definitely less than what I think was being projected by the market and Thats, what we bought.

Speaker Change: Would it put out in our slide in January and when you look at the impact of that in isolation you certainly.

Speaker Change: We would see a benefit from less rate cuts, but I do think you have to put that in the context of okay. Now now what's going to happen with <unk>.

Michael P. Santomassimo: But I do think you have to put that in the context of, okay, now what's going to happen with client behavior and mix shifts as we look for the rest of the year? I mean, it's certainly clear we feel better today than we did in January about our guidance and our forecast there, but I do think we have to let some more time play out to see how people react to what's happening. And I think even you've got to be really careful to take what happened over a day or two and extrapolate too far. We're seeing a lot of that being given back today, even. And what we've seen over the last couple years is that every time you have this strong reaction, either up or down in expectation for rates, that reaction tends to moderate a little bit over a pretty short period of time. And so we'll see how that plays out.

Speaker Change: Client behavior and mix shifts as we look for for the rest of the year I mean, it's certainly clear we feel better today than we did in January about our guidance and our forecast there, but I do think we have to let some more time play out to see how how people react to what's what's happening and I think even.

Speaker Change: You've got to be really careful to take what happen over a day or two and extrapolate too far right. We're seeing a bunch of that could be given back today then.

Speaker Change: And what we've seen over the last couple of years is that every time you have this strong reaction either up or down and expectation for rates that that reaction tends to moderate a little bit over over a pretty short period of time and so we'll see how that plays out okay and anything and obviously, we've had quite a bit.

Betsy Lynn Graseck: Okay, and anything else...

Betsy Lynn Graseck: And obviously, we've had quite a bit of activity and volatility on the long end of the curve. How do you think about that, and is there an opportunity set for, you know, maybe pulling in some more deposits and reinvesting in securities, given the...

Speaker Change: Activity volatility on the long end of the curve.

Speaker Change: How do you think about that and is there opportunity set for you or maybe pulling in some more deposits and reinvesting in securities.

Operator: Bye!

Speaker Change: The.

Michael P. Santomassimo: Slightly improved long-end rates here.

Speaker Change: Yes slightly.

Speaker Change: Slightly improved long end rates here.

Michael P. Santomassimo: Yeah, yeah, and we started to do that to some degree in the first quarter, where we were, you know, starting to buy some securities, mainly mortgages, given where rates and levels have been, and that's been a good trade, I think, for us so far, and so I think you'll certainly see us continue to deploy more cash in the securities, at least at some modest levels, as we look forward over the next quarter.

Speaker Change: Yes, yes.

Speaker Change: We've started to do that to some degree in the first quarter, where we have been.

Speaker Change: Starting to buy some some securities mainly.

Speaker Change: Mainly mortgages, given where rates and levels have been and.

And thats been a.

Speaker Change: A good trade I think four for us so far and so I think youll certainly see us continue to deploy more more cash into securities at least some modest levels as we look forward over the next quarter. Okay Super. Thanks, So much bye.

Betsy Lynn Graseck: Okay, super, thanks so much, Mike.

Operator: Yup. The next question will come from Erika Najarian of UBS. Your line is open.

Yes.

Speaker Change: The next question will come from Erika Najarian of UBS. Your line is open.

Erika Najarian: Hi, good morning. Just to follow up on Betsy's questions on the net interest income outlook, you know, you had a peer that had a more modest upgrade to that outlook than expected. You know, you held firm on your NII guide. I guess to that end, as we think through, you know, whether or not there are any free cuts or no cuts, you know, as a, you know, above and beyond just marking the market, the NII to the rate curve is the implication to volumes, right? Like you mentioned in response to Betsy's question, you know, client behavior, and so I guess I just wanted to, you know, understand in terms of the range of outcomes of, you know, zero, which was talked about a couple days ago to with three embedded in your estimates, how should we think about how you're thinking about volumes in terms of, you know, loans and deposit behavior? In other words, have you, you know, considered a wider range of volume outcomes as you think about the curve outlook?

Erika Najarian: Hi, good morning, just to follow up on.

Erika Najarian: Back to your question on.

Erika Najarian: On the net interest income outlook, you had a peer that.

Erika Najarian: Had a more modest upgrade to that outlook than expected.

Erika Najarian: You help from on your NII Guide.

Erika Najarian: I guess to that end.

Erika Najarian: We think through whether or not there.

Our no cuts.

Erika Najarian: Above and beyond just marking to market. The NII the rate curve is the implication to ball like you mentioned.

Erika Najarian: In response to Betsy's question the client behavior.

Erika Najarian: So I guess I just wanted to understand in terms of the range of outcomes of.

Erika Najarian: Zero, which is being talked about a couple of days ago.

Three embedded in your estimates how should we think about.

How youre thinking about volumes in terms of loans and deposit behavior.

Erika Najarian: Yes.

Erika Najarian: In other words have you considered a wider range of volume outcomes as you think about the curve outlook.

Michael P. Santomassimo: Yeah, no, I'll try to make an attempt at that, Eric. And you can tell me if I covered it all.

Erika Najarian: Yes.

Speaker Change: I'll try to take an attempt at that Eric and you can tell me if I covered it all but.

Michael P. Santomassimo: But the you know, it certainly we're at a point in time, you know, and I said this on a call with media earlier this morning, like, we're at a time where it's it's difficult to sort of, you know, model, you know, the different outcomes that you could expect to see, you know, with net interest income, just given all the dynamics that are happening there. And as you said, like, you know, I think You know, the fact that rates might be higher than what people expected, you know, a week ago, you know, that could change, first of all, but let's stipulate at this point people, you know, are thinking it's going to be higher for a little bit longer. You know, we do have to wait and see how clients are going to react, and I think we do our best to try to come up with a range of outcomes there, and given that, given what's happening in rates plus, you know, what's happening in quantitative tightening, you know, what's happening in sort of the, you know, the economy overall, it's going to all matter in terms of what happens with deposit levels, and, you know, let's see how that plays out, but I think as I come back to what I said earlier, you know, we feel better than we did today than we did in January about where we are, but there's a lot to play out for the rest of the year.

Speaker Change: It's certainly we're at a point in time and I said this on a call with media earlier. This morning, we're at a time, where it's difficult to sort of model. The different outcomes that you could expect to see with net interest income just given all the dynamics that are happening there.

And as you said like I think.

Speaker Change: The fact that rates might be higher than what people expected a week ago.

Speaker Change: That could change first of all but let's let's stipulate.

Speaker Change: At this point people are thinking it's going to be higher for a little bit longer.

Speaker Change: We do have to wait and see how clients are going to react.

Speaker Change: And I think we do our best to try to come up with a range of outcomes there.

Speaker Change: And given that given what's happening in rates plus what's happening quantitative tightening what's happening in sort of the you know.

Speaker Change: The economy overall is going to all matter in terms of what happens with deposit levels.

Speaker Change: And <unk>.

Speaker Change: Let's see how that plays out, but I think as I come back to what I said earlier, we feel we feel better than we did today than we did in January about where we are.

Speaker Change: But theres a lot to play out for the rest of the year.

Erika Najarian: Got it. And just a follow up, you know, kind of a two part question, but hopefully, very related to one another. You know, the lifting of the consent order was clearly huge for how the market was perceiving Wells. As we think about further remediation, you know, how should we think about, you know, the potential cost saves that you could extract from, you know, all the processes that may be in place that have been focused solely on the remediation? And I ask that not, you know, in light of the usual recycled question, but, you know, particularly had a massive outperformance, as Ebrahim mentioned in investment banking and trading. And, you know, as we think about those, you know, expenses, should we start expecting the reinvestment back to potentially accelerate?

Speaker Change: Got it and just a follow up.

Speaker Change: Kind of a two part question, but hopefully very related to one another.

Speaker Change: Now the lifting of the consent order.

Speaker Change: Clearly you tour the market with Christina Wells.

Speaker Change: As we think about further remediation now how should we think about.

Speaker Change: How you're thinking about the potential cost saves that you could extract from all.

Speaker Change: All the processes that may be in place and it has been focused solely on the marine aviation and I ask that not.

In light of the usual recycled question, but clearly had a massive outperformance like UV ebrahim.

Ebrahim mentioned on investment banking and <unk>.

Speaker Change: Trading and as we think about those expenses.

Speaker Change: Start expecting the.

Speaker Change: Reinvestment back to potentially accelerate.

Erika Najarian: And also on investment banking and trading, I know there's a lot of seasonality, but are these new run rates? I guess it's hard for us to tell what the basis is because, obviously, as you, you know, as Charlie mentioned, you're under penetrated across the board. So, you know, should we continue to see, you know, a, you know, moving up of this base despite the seasonality as we look forward?

Speaker Change: And also on investment banking and trading I know theres a lot of seasonality, but are these new run rates I guess, it's hard for us to tell what the basis, because obviously as you.

Speaker Change: As Charlie mentioned, you are underpenetrated across the board.

Speaker Change: Should we continue to see.

Speaker Change: Moving up of the space despite the seasonality.

Speaker Change: Yeah.

Charles W. Scharf: Um, okay, there's a lot in there. Let me start, if I can't, and chime in. So first of all, Mike, you can comment on investment banking and trading. But again, we're not going to answer the question of how you should think about what investment banking and trading will be in the future. What we're focused on is, are we building businesses? Are we taking shares in a way that is profitable? And we, that's exactly what we're starting to do. And there, there, there is volatility in the business, but we're focused on building it over a period of time. And that's what we're seeing. And so the way we would think about it, when we look at our own forecasting, is we would expect to see our market shares rise over a period of time, and quarter by quarter, we know that it'll be subject to the volatility that exists.

Speaker Change: Okay. There's a lot in there let me.

Speaker Change: Let me start Mike.

Speaker Change: In China. So first of all Mike you can comment on like.

Speaker Change: Investment banking and trading but again.

Speaker Change: We're not going to answer the question on how you should think about what investment banking and trading will be in the future.

Speaker Change: What we're focused on are we building businesses are we taking share in a way which is profitable.

Mike: That's exactly what we're starting to do and.

Mike: There is volatility of the business, but we're focused on building it over a period of time and Thats what were seeing and so the way we.

Mike: Think about it when we look at our own forecasting as we would expect to see our market shares rise over a period of time at quarter by quarter know that it'll be subject to volatility that exists.

Charles W. Scharf: And, you know, when you think about the first quarter in particular, there's always going to be seasonality on the trading side. That happens pretty much every year, so, you know, you can't just take that as a running rate. And on the investment banking side, you know, you've certainly seen some very high issuance volumes on the investment-grade debt side, so that's probably maybe pulling some issuance forward later in the year, but we'll see. And then, you know, some of the M&A revenue that's embedded in there can be somewhat episodic and volatile just given the timing of deals and closings and stuff, and so you do have to look at those two lines over a longer period of time.

Mike: And when you think about the first quarter in particular.

Theres always going to be seasonality on the trading side that happens pretty much every year. So you can't just take that as a run rate and on the investment banking side, you've certainly seen some very high issuance volumes on the investment grade debt side, So thats likely maybe pulling some issuance forward. It later in the year, but we'll see.

Mike: And then some of the M&A revenue thats embedded in there can be can be somewhat episodic and volatile just given the timing of deals in closings and stuff and so you do have to look at those two lines over over a longer period of time.

Michael P. Santomassimo: And then on your question on expenses, again, we're in the exact same place we were, which is that we're not thinking about them at all, we're not doing work, we're not thinking about whether there are efficiencies to be gotten out of all the risk and control work that we're doing. In fact, we're still on the other side of that, which is, we still have more open consent orders, and we're still committed to doing whatever's necessary, including spending whatever's necessary, to get that work done properly and build it into the infrastructure of the company. As I said, there will be a point at which, when it's built into what we do, and there's a high degree of confidence that it is part of the culture and our processes, we will have an opportunity to figure out how to do some of those things more efficiently.

Mike: And then on your question on expenses again.

We were in the exact same place that we have been which is we're not thinking about at all we're not doing work, we're not thinking about whether there are efficiencies to be gotten out of all the risk and control work that we're doing in fact, we're still on the other side of that which is.

Mike: We still have more open consent orders.

Mike: And we're still committed to do whatever is necessary, including spending whatever is necessary to get that work done properly and build it into the infrastructure of the company I've said there'll be a point at which when it's built into what we do and there's a high degree of confidence.

Mike: That is part of the culture in our processes that we will have an opportunity to figure out how to do some of those things more efficiently.

Michael P. Santomassimo: But that's not on our radar screen at all. What is on our radar screen is the fact that there's still a lot of inefficiency left within the company, completely away from the money that we're spending on it. And that's where we're focused. And that's why we have the ability to invest in cards and invest in investment banking and trading and accelerate branch refurbishments and hire more bankers for commercial banking and things like that. So I would just say

Mike: That's not on our radar screen at all what is on our radar screen is the fact that theres still a lot of inefficiency left within the company.

Mike: Completely away from the money that we're spending on this.

And that's where we're focused and that's why we have the ability to invest in card and invest in investment banking and trading and.

Mike: Accelerate the branch Refurbishments and hire more bankers in commercial banking and things like that so I would just still continue to separate the fact that we're committed to get the work done we're going to do whatever is necessary to spend there and thats not the area of focus for us when it comes to efficiency.

Charles W. Scharf: Just continue to separate the fact that we're committed to getting the work done, we're going to do whatever's necessary to spend time there, and that's not the area of focus for us when it comes to efficiency.

Erika Najarian: That was clear, Charlie. Thank you.

Speaker Change: Now it's clear Charlie Thank you.

Operator: The next question will come from Steven Chubak. Please search.

Speaker Change: Okay.

The next question will come from Steven Chu Bank.

Steven Joseph Chubak: Your line is open. Good morning, Charlie. Good morning, Mike.

Steven Chu: Research Your line is open Sir.

Steven Chu: Yes.

Steven Chu: Hi, Good morning, Charlie Good morning, Mike.

Speaker Change: So wanted to start off just on a question maybe unpacking the NII commentary a bit more.

Steven Joseph Chubak: So I wanted to start off just on a question, maybe unpacking the NII commentary a bit more. In your prepared remarks, Mike, you noted that you expect NII to be troughing towards the end of this year. So less concerned about the full year 24 outlook, I was hoping you could just speak to the inputs or assumptions that support that expectation around troughing or stabilization given further rate cuts that are reflected in the forward curve beyond 24.

Speaker Change: In the prepared remarks, Mike you noted that your expected NII to be trough aimed towards the end of this year. So less concerned about the full year 'twenty four outlook I was hoping you could just speak to the inputs are assumptions that that supporting that expectation around trough fingers stabilization given further rate cuts that are reflected in the forward curve.

Michael P. Santomassimo: Yeah, and you know, when you look at all the different, you know, factors, Steve, you know, there's obviously nothing that's sort of unique to sort of our balance sheet. But when you look at, you know, both the asset repricing that's happening and securities, you look at what's happening, and you sort of project forward on sort of the loans and the other parts of the balance sheet, that's obviously a key input as you sort of look forward. And then, at some point, you would expect that, you know, the migration and deposit mix starts to stabilize as you go forward. And, you know, I'm a little intentional, and I'm intentional in the words we use in terms of towards the end of the year, is it, is it, you know, right at this year?

Speaker Change: 24.

Speaker Change: Yes.

Speaker Change: When you look at all the different factors Steve.

Speaker Change: There's obviously nothing that sort of unique to sort of our balance sheet, but when you look at.

Speaker Change: Both the asset repricing thats happening in Securities you look at what's happening and just sort of project forward on sort of the loans and the other parts of the balance sheet. That's obviously a key input as you sort of look forward and then and then at some point you would expect that the migration in deposit mix starts to stabilize as you go forward and.

Speaker Change: Im a little intentional and unintentional in the words, we use in terms of towards the end of the year is it right. This year is it early next year like it is going to be we're getting closer to that point in terms of when it's going to trough, calling the exact date with with a high degree of certainty is difficult in this environment, but it's all it's all.

Michael P. Santomassimo: Is it early next year? Like, it's going to be, you know, we're getting closer to that point in terms of when it's going to peak, you know, calling the exact date with a high degree of certainty is, you know, difficult in this environment. But it's all the things that sort of we've talked about over the coming, the last few quarters are going to drive that. And it, you know, it starts with deposits and deposit mix and deposit pricing and then goes through the rest of where we think the assets sort of net out.

Speaker Change: All the things that we've talked about over the coming over the last few quarters are going to drive that and it starts with like deposits and deposit mix and deposit pricing and it goes through the rest of.

Speaker Change: Where we think the assets sort of net out.

Steven Joseph Chubak: That's helpful, Culler. And for my follow-up, I might be regretting this question, but Charlie, it relates to how you responded to Erika's last one relating to the asset cap specifically. I recognize that you're focused internally on just addressing or remediating all the various consent orders, but externally, investors are clearly spending much more time evaluating the different potential sources of earnings or return uplift once these regulatory restrictions are eliminated, whether it's deposit recapture, growth in the trading book, and reduction in that elevated risk and control spend. I don't expect you to quantify it. Don't expect you to speculate on timing for when the asset cap can get lifted. But just given that focus for investors, it might just be helpful if you could contextualize how you're thinking about some of those potential benefits.

No that's helpful color and for my follow up it might be we're writing this question, but Charlie it relates to how you responded to Erika as last line relating to the asset cap, specifically and I recognize that you're focused internally on just addressing are remediated.

During all of the various consent orders, but externally investors are clearly spending much more time evaluating the different potential sources of earnings or return uplift. Once these regulatory restrictions are eliminated whether its deposit recapture growth in trading book and <unk>.

The elevated risk and control spend don't expect you to quantify it don't expect you to speculate on timing for when the asset cap lifted, but just given that focus for investors. It might be just be helpful. If you can contextualize, how you're thinking about some of those potential benefits.

Charles W. Scharf: Sure, and I'm not sure you should feel like you have to ask the question, or you should ask whatever you want. I just try to be as clear as I can on what I think we'll be in a position to answer, and I don't want you guys to get frustrated with the level of consistency of the things that we want to be careful about. But to your question, which is, I think, entirely reasonable, I put it into a couple of categories. I think, first of all, probably the most important thing with the asset cap is, quite frankly, not the pure economics at this point that will come from the lifting of the asset cap. It is still a reputational overhang for us.

Speaker Change: Sure.

Speaker Change: I'm not sure you shouldn't feel free to ask a question you guys we should.

Speaker Change: That's what everyone I just tried to be as clear as I can on what I think we're at a it will be in a position to answer and I don't want you guys to get frustrated.

Speaker Change: By the level of consistency of the things that we want to be careful about but to your question, which is I think entirely entirely reasonable I put into a couple of categories I think.

First of all probably the most important thing with the asset cap quite frankly.

Is not the pure economics at this point that will come from the lifting of the asset cap. It is still a reputation of overhang for us.

Charles W. Scharf: And while the lifting of the sales practices consent order was extremely important, for those that have just read the newspapers, certainly those that follow the stock care a lot about the asset cap, and we understand that. That is, you know, just an initially, um... I think an important factor in terms of how we'll be viewed, as opposed to what we'll actually do. I think when we look at what we have done to proactively manage the company, to keep ourselves below the asset cap, there, too, you've got two categories. You've got places where we have gone and said, "please make your business smaller because, just because of normal deposit flows and consumer businesses and things like that, we'll have some asset pressure, and we need to offset that someplace." And then there's the opportunity cost of what we haven't been able to do because we've had the asset. And then what does that mean going forward?

Speaker Change: While the lifting of the sales practices consent order was extremely important for.

Speaker Change: Those that are just read the newspapers certainly those that follow the stock care a lot about the asset cap and we understand that and so.

Speaker Change: Okay.

Speaker Change: That is just initially.

Speaker Change: I think an important.

Speaker Change: Factor in terms of.

Speaker Change: Now we will be viewed as opposed to what we'll actually do I think when we look at.

Speaker Change: What we have done to proactively manage the company to keep ourselves below the asset cap.

Speaker Change: There are two you've got two categories <unk> got places, where we have gone and said please make your business smaller because just because of normal deposit flows and consumer businesses and things like that will have some asset pressure and we need to offset that someplace and then there is the opportunity cost of what we haven't been able to do because we've had the asset.

And then what does that mean going forward.

Charles W. Scharf: On the first piece, we have limited our ability, certainly within our trading businesses, to do some very low-risk things, such as financing our customers and things like that. So by not allowing them to provide a level of financing, which is very low risk, we have not captured as much trading flow. In our corporate businesses, we've been very, very careful to encourage our bankers to bring in sizable corporate deposits that weren't clearly operational deposits. And in some cases, been a little bit more aggressive about asking them not to have it here because we wanted to make room for other things that we thought were really important strategically, such as not being closed for business on the consumer side, which those folks would not understand, is hopefully just something that's temporary.

Speaker Change: On the first piece we have.

Speaker Change: Limited our ability certainly within our trading businesses for some very low risk things.

As financing our customers and things like that so by not allowing them to provide a level of financing, which is very low risk we have not captured as much trading flow as we otherwise.

Would have seen.

Speaker Change: In our corporate businesses, we've been very very careful.

Speaker Change: Two.

Speaker Change: To encourage our bankers to bring in sizable corporate deposits that were clearly operational deposits.

Speaker Change: And in some cases, but a little.

Speaker Change: More aggressive about asking them actually not to have it here because we wanted to make room for other things that we thought were really important strategically such as not being closed for business on the consumer side, which those folks would not understand.

Speaker Change: As hopefully just something thats as temporary so those are the places that in the short term would benefit from.

Charles W. Scharf: So those are the places that, in the short term, would benefit from the asset cap being lifted. I think when you get beyond that... You know, the reality is, when you look at what we've been able to do and the amount of excess capital that we have, we're trying to deploy that through, you know, the dividend and through our share buybacks because there's only so much that we should keep around and not return to shareholders. But we still, as I've talked about, think there are plenty of opportunities when you look around at our different businesses to retrieve higher returns by reinvesting them inside the business. It's not, you know, it's not anything that I would describe as dramatic, but in terms of, you know, the things that we can do when we don't have the constraints, you know, take our, you know, whether it's a consumer business or a wealth business to build out our banking product set, to be more aggressive about, you know, being full spectrum in terms of where we are on the lending side and the deposit side.

Speaker Change: The asset cap being lifted.

Speaker Change: I think when you get beyond that.

Speaker Change: The reality is when you look at what we've been able to do in the amount of excess capital that we have.

Speaker Change: We're trying to deploy that.

Speaker Change: Bye.

Speaker Change: The dividend and through our share buybacks.

Speaker Change: There's only so much.

Speaker Change: We should keep around and not returned to shareholders.

Speaker Change: We still as I talked about we think there are plenty of opportunities when you look around our different businesses to achieve higher returns by reinvesting it inside the business.

Speaker Change: It's not.

Speaker Change: It's not anything.

Speaker Change: Which is I would describe it as dramatic but in terms of the things that we can do when we don't have the constraints take or whether it's our consumer business or our wealth business to build out our banking product set to be more aggressive about.

Speaker Change: Being full spectrum in terms of where we are on the lending side and the deposit side.

Charles W. Scharf: Across all of our businesses, we've been very, very conservative in what we have asked people to do because we don't want to have an asset cap issue. So again, I would describe it as, you know, the ability to grow in the things that we're competent at, that we do well, that we have, you know, in some ways consciously and in some ways unconsciously restrained the company from doing. But all in all, certainly without an asset cap, it's not neutral; it's a positive because of the things that we proactively stopped, as well as because we're just limited in our ability to take advantage of the franchise that we have. And you've seen others that don't have those constraints but have a quality franchise as well, and you see how they've benefited, not just against us but against the broader banking set.

Speaker Change: Across all of our businesses, we have been very very conservative in what we have asked people to do because we don't want to have an asset cap issue. So again I would describe it as.

Speaker Change: Would be the ability to grow in the things that we are confident that we do well.

Speaker Change: That we have.

Speaker Change: In some ways consciously in some ways unconsciously restrained the company from doing.

Speaker Change: But all in all certainly without an asset cap.

Speaker Change: It's not it's not a neutral or.

Speaker Change: A positive because of the things that we proactively stops as well as we're just limited in our ability to take advantage of the franchise that we have.

Speaker Change: And you've seen others that don't have those.

Speaker Change: That don't have those constraints, but have the quality franchise as well and you see how they've benefited not just versus us but versus the broader banking set.

Operator: It's really helpful context, Charlie. Thanks so much for taking my question. The next question will come from John Pancari of Evercore ISI. Your line is open. Good morning.

No that's really helpful contacts Charlie thanks, so much for taking my question.

Yes.

The next question will come from John <unk> of Evercore ISI. Your line is open.

John: Good morning.

John G. Pancari: Regarding the 2024 NII guide, I understand that you feel better about the NII outlook here, but your

John: On the 2020 for NII Guide I.

John: I understand that you feel better about Vietnam.

John G. Pancari: by watching Customer Behavior. I know you did mention loan growth. Did you lower your loan growth outlook that's baked into that guidance this quarter versus what you had in there last quarter?

John: Look here, but you're watching customer behavior. I know you did mentioned loan growth did you lower your loan growth outlook, that's baked into that guidance this quarter versus what you had in the last quarter and either way are you able to help us with what that what that expectation is on the loan growth.

Michael P. Santomassimo: And either way, are you able to help us with what the expectation is on the loan growth front?

Michael P. Santomassimo: Yeah, you know, John, it's like, you know, what we said in January is that, you know, we expected loans to decline in the first half. And so that's about what we're seeing, right? So, again, it's slightly lower than what we modeled, but you know, it is, you know, it's pretty close to sort of our expectation. And then, and then we expected a little bit of growth in the second half of the year, and overall balances weren't going to do much, you know, for the full year.

John: Sure.

John: Yeah, Hey, John It's Mike what we said in January is that we expected loans the decline in the first half and so that's about that's about what we're seeing right. So again, it's slightly lower than what we modeled but.

Mike: It's pretty close to sort of our expectation and then and then we expect a little bit of growth in the in the second half of the year and overall balances werent going to do much.

Mike: For the full year and so at this point.

John G. Pancari: And so at this point, you know, could we be off on that a little bit, maybe? And could it be a little lower? Maybe? Could it be a little higher? Yeah, for sure. But I think the more meaningful drivers this year of where NII ends up are going to come back to deposits, right? And, you know, what's the level? What's the mix? What's the pricing look like, you know, given where the environment is, and I think that'll be a more meaningful place to focus on.

Speaker Change: Could we be off on that a little bit maybe.

Speaker Change: And could it be a little lower maybe it could be a little higher for sure and so but I think the more meaningful drivers this year of where NII ends up it's going to come back to deposits right in.

Speaker Change: What's the level, what's the mix, what's the pricing look like given where the environment is and I think that'll be the more meaningful place to focus.

Michael P. Santomassimo: Okay, and it relates to that and deposit growth expectations that you could share.

Speaker Change: Okay, and then related to that.

Speaker Change: Deposit growth expectation that you could share.

John G. Pancari: Yeah, I mean, again, our full-year guidance that we gave you, our assumptions that we gave you in January, we thought, you know, the commercial side would be pretty flat to where we are, to where we started the year. But that's coming in slightly better than what we had modeled. And on the consumer side, we would likely see a little bit of more decline, as well as mixed shifts. And, you know, again, that's what you're seeing so far.

Speaker Change: Yeah, I mean, I think again, it's our full year guide.

Speaker Change: The guidance that we gave you our assumptions we gave you in January where we thought the commercial side would be pretty flat to where we are to where we started the year that's coming in slightly better than what we what we had modeled.

Speaker Change: In the consumer side, we would likely see a little bit of more decline as well as mix shift in.

Speaker Change: Again, thats, what youre seeing so far.

Michael P. Santomassimo: Listen, we just, we want to be really careful in all this, right? We're not, we're not, we're trying to be as transparent as we can be about what we're seeing without getting over our skis and making predictions that none of us have the answers to. And so, you know, when you boil it all down, in terms of the customer activity that we're seeing, you know, a touch less here, a touch more there, there's not a big change from what we said three months ago in terms of flows on the deposit or the lending side. It really is relatively small relative to the big NII picture and what's going to drive NII. So, you know, if we saw big changes there, we might say, let's change guidance, but it's tweaking along the way, and we'll see how it continues to pan out.

Speaker Change: And so we wouldn't be really careful in all of this right. We're not we're not.

Speaker Change: We're trying to be as transparent as we can be about what we're seeing.

Without getting over our skus and making predictions that none of us have the interest to and so when you boil it all down in terms of the customer activity that we're seeing.

Speaker Change: A touch less here a touch more there there's not a big change from what we said three months ago.

Speaker Change: In terms of flows on the deposit or lending side. It really is relatively small relative to the big NII picture and what's going to drive NII at this point. So if we saw big changes there we might say, let's change guidance, but it's it's tweaking along the way and we will see how it continues to pan out and then what we've said is realm.

Michael P. Santomassimo: And then what we've said is, relative to the rate environment... It's just, again, you know, it's a full year number, and we've had a, you know, a couple of months gone by. It's just too early to mark the whole thing to market based upon that. But again, as Mike has said, and I said in my remarks, certainly what we've seen is helpful relative to just the pure overall rate and curve piece of it.

Speaker Change: To the rate environment, It's just again.

This is a full year number and we've had a couple of months go by it's just too early to.

Mark the whole thing to market based upon that.

Speaker Change: Again, we also wanted to just provide the context as Mike said and I said in my remarks, certainly what we've seen is helpful relative to just the pure.

Speaker Change: Overall rate and curve piece of it.

Charles W. Scharf: Okay, that's very helpful. I appreciate the color there. If I could just

Speaker Change: Okay. That's very helpful. I appreciate the color there if I could just ask one more along the credit side.

Website Placeholder: https://www.youtube.com

Michael P. Santomassimo: is encouraging there, and I know it can be volatile. Can you just maybe talk about MPA inflows? Did you see a pullback there? Did you see that on the CRE side, and is there anything to extract from that? Thank you.

Speaker Change: A decline.

Speaker Change: It was encouraging Darren I know it can be volatile can you just maybe talk about NPA inflows did you see a pullback there did you see that on the CRE side is there anything to obstruction that thank you.

Michael P. Santomassimo: Yeah, no, like I think what you're seeing on the, you know, when you talk about commercial real estate, you're really talking about offices. And what you saw in the office space is actually it didn't move at all and got worse, or not get worse in the quarter. And so you actually saw non-performing assets come down a little bit in the CRE space as we charged off some loans, and they weren't replaced by, you know, other things. And so that's positive in the sense that it's not deteriorating at this point. And then everything else is sort of moving around, like as you would expect, there are not substantial movements across the rest of the portfolio.

Darren: Yeah, No look I think what youre seeing on the.

When you're talking about commercial real estate, you're really talking about office.

Darren: What you saw in the office space is actually not move at all it get worse or not get worse in the quarter and so you actually saw non nonperforming assets.

Darren: Coming down a little bit in the CRE space as we've charged off some loans.

Darren: And they werent replaced by other other items and so that's a positive.

Darren: That said, it's not deteriorating at this point and then everything else is sort of moving around like as you as you would expect that does not substantial movements across the rest of the portfolio.

Gerard Sean Cassidy: Great. Thanks, Mike.

Speaker Change: Great. Thanks.

Matt O'connor: Your next question comes from Matt O'connor of Deutsche Bank. Your line is open.

Michael P. Santomassimo: Good morning. I wanted to follow up on the comment that costs this year could come in higher on higher revenues, investment advisory, and I would assume the same if banking and trading continue to be so strong. Obviously, that's a net positive to earnings overall, but how would you frame the operating leverage if You can pick which revenue buckets, but if those market-sensitive revenues are a billion higher, is there a 40% cost against that? 50? How would you frame that? Thank you.

Hi, Good morning wanted to follow up on the comment that cost this year could come in higher on higher revenues and investment advisory and I would assume the same banking and trading continued to be so strong.

Matt O'connor: That's a net positive to earnings overall, but how would you frame the operating leverage.

Matt O'connor: You can pick which revenue buckets, but if those market sensitive revenues are 1 billion higher.

Our kind of 40% cost to go up 50, how would you frame that thank you.

Michael P. Santomassimo: Yeah, and really what we're referring to when we mention that is primarily the wealth management business, which is where we're focused, given where market levels are. And that business, the cost to income ratio is pretty stable there in terms of revenue-related comp. And so it's a little less than 50% in terms of how to think about it. So the operating level is just good.

Matt O'connor: Yes.

Speaker Change: What we're referring to when we mentioned that is primarily in the wealth management business is where we're focused given where market market levels are.

And that business is the cost to income ratio is pretty stable. There in terms of the revenue related comp and so it's a little less than 50% in terms of the how to think about it.

Michael P. Santomassimo: Okay, that's helpful. And then just specifically on banking and trading, I mean, I know you guys invested in those businesses, so there's upfront costs when revenues come in, but it seems like the operating leverage in that segment has been very, very strong, and is that something that you think can continue if those revenues continue to surprise, or could we see some upward pressure on costs from that to, again, a positive to earnings overall, but, you know, next.

Speaker Change: So the operating leverage is good.

Speaker Change: Okay. That's helpful. And then just specifically on banking and trading I mean, I know you guys invested in those businesses. So there is upfront cost revenues come but it seems like the operating leverage in that segment has been very very strong.

Speaker Change: That you think can continue if that's right just continuous surprise or could we see some upward pressure to cost from that.

Speaker Change: Again, a positive to earnings overall, but yeah. Thanks.

Speaker Change: Thanks.

Michael P. Santomassimo: Yeah, no, look, I think the cost to invest there, as Charlie noted, is in our numbers, right? So that's already there. So we're already anticipating that, and at this point, you know, we don't see that being a big pressure point one way or the other. But obviously, as you note, if revenues, like, far exceed our expectations in a positive way, that would come with a little bit of comp, too. So that would be a good thing overall.

Speaker Change: Yeah, No look I think the cost to invest there as Charlie noted is in our numbers right. So that's already there so were already anticipating that.

Speaker Change: And at this point.

Speaker Change: We don't see that being a big pressure 0.1 way or the other but obviously as you note if revenues like far far exceed.

Speaker Change: Our expectations in a positive way that would come with a little bit of call too so that would be but that would be a good thing overall.

Operator: Yeah, I did. Okay, thank you. The next question will come from Gerard Cassidy of RBC Capital Markets. Your line is open. Thank you. Hi, Minecart Charlie.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: The next question will come from Gerard Cassidy of RBC capital markets. Your line is open.

Gerard Sean Cassidy: Thank you Hi, Martin Currie Charlie.

Gerard Sean Cassidy: Mike you touched on your noninterest bearing deposits declined to about 26% of deposits do you guys have a sense, what's the long term normalization level of core noninterest bearing deposits. So as you look out over the 12 month horizon, assuming rates do not go up we have stable rates.

Gerard Sean Cassidy: Mike, you touched on your non-interest-bearing deposits declining to about 26% of deposits. Do you guys have a sense of what the long-term normalization level for non-interest-bearing deposits is as you look out over the 12-month horizon? Assuming rates do not go up, you know, we have stable rates; maybe they will come down a little bit.

Gerard Sean Cassidy: Come down a little bit.

Michael P. Santomassimo: Yeah, look, I mean, it's a hard thing to say with a whole lot of certainty, Gerard, in terms of exactly where it's going to stabilize. It will stabilize, you know, at some point, particularly as you look at the underlying mix of the, you know, consumer deposit base, right? You know, a good chunk of our consumer deposits are in accounts less than 250. They're generally operating accounts for a lot of people. And so this thing will stabilize as we go. But as you've seen, we've had some pretty consistent, plus or minus, you know, a little bit each quarter, you know, as we've gone through the last number of quarters, but at some point soon, that'll start to, you know, we would expect that to stabilize, but we'll see exactly where it does.

Mike: Yes look I mean, it's a hard thing to say with a whole lot of certainty certainty Gerard in terms of exactly where it's where it's going to stabilize it will stabilize at some point, particularly as you look at the underlying mix of the.

Mike: Consumer deposit base rate a good chunk of our.

Mike: Consumer deposits are in accounts less than $2 50, there are generally operating accounts for a lot of people and so this thing will stabilize as we go but as you've seen we've had some pretty consistent plus or minus a little bit each quarter as we've gone through the last number of quarters, but at some point soon that will start to.

Mike: We would expect that to stabilize but we'll see exactly where it does.

Gerard Sean Cassidy: And is it fair to assume that the rate of change in the deposit betas is declining so that eventually those deposit betas flatten out as well?

Mike: Is it fair to assume that the rate of change in the deposit Baiters is declining where eventually those deposit betas flattened out as well.

Michael P. Santomassimo: Yeah, once you start seeing more stabilization in the mix, that's when you'll see deposit costs on the consumer side stabilize, right? Because what you're seeing now is people, as I mentioned earlier, are spending money in their checking account at low interest costs for us, and then you're seeing growth in CDs and some of the savings accounts, which are higher cost, and that mix shift will stabilize. It's very related to your first question around not interest-bearing, right? Once you get to that core operating balance in people's accounts, then that's when you'll see both of those stabilize.

Yes, once once you start seeing more stabilization in the mix, that's when you'll see deposit costs on the consumer side stabilized right.

Mike: Yes, because what youre seeing now is people as I mentioned earlier people are spending money in their checking account low low interest cost for us and then youre seeing growth in Cds and some of the savings accounts, which are higher cost and that mix shift will stabilize it's very related to your first question around noninterest bearing right. Once they are kind of really.

Mike: Together at once once you get to sort of that core operating balance in peoples.

Mike: People's accounts and Thats when Youll see both of those stabilize.

Gerard Sean Cassidy: Great, and then just as a follow-up on credit, obviously you guys put up overall...

Speaker Change: Great and then just as a follow up on credit obviously, you guys put up overall good numbers.

Operator: These are all good numbers.

Vivek Juneja: Especially in that commercial real estate area, as you highlighted. Coming back to the credit cards, you pointed out that the charge-offs were up, but they're in line with the expectations. Assuming the economy does not head into a recession later this year...

Speaker Change: Especially in that commercial real estate area as you highlighted coming back to the credit cards.

Speaker Change: But the charge offs were up but in line with expectations, assuming the economy does not heading into a recession later this year and unemployment goes up 6%, saying it stays around for what are you guys thinking for like a peak in net charge offs or credit card. So what do you think you can reach that.

Vivek Juneja: Unemployment went up to 6%.

Operator: [inaudible]

Michael P. Santomassimo: Yeah, look, I think you've got to really dig into the underlying dynamics of what's happening in the portfolio, right? We're in the middle of a refresh of our product set. You know, we're seeing faster growth in new accounts and new balances coming on than maybe other players, just given the investments we've been making now for the better part of three years. And with that comes some maturation of the new vintages. At some point, that should peak, and you'll start to see sort of the normal behavior. But I'd just come back to, you know, we spent a lot of time looking at each of the underlying vintages here. Everything's performing very much on top of what we would have expected, or in a couple cases, maybe slightly better.

Speaker Change: Yeah look I think.

Speaker Change: You got to really dig into the underlying dynamics of what's happening in the portfolio right. We're in the middle of a refresh of our product set.

Speaker Change: We're seeing faster growth in new accounts, and new balances coming on and maybe other players just given the investments we've been making now for the better part of three years.

Speaker Change: So with that comes some maturation of.

Speaker Change: The new vintages.

Speaker Change: At some point.

Speaker Change: That should that should peak and youll start to see sort of the normal behavior, but.

Speaker Change: But I'd just come back to you know we spent a lot of time looking at each of the underlying vintages here everything's performing very pretty much very much on top of what we would've expected or in a couple of cases may be slightly better.

Michael P. Santomassimo: And the quality of the new accounts we're putting on looks very good and continues to be the case. So I would just say, you know, that we're in that normal phase of maturation, and, you know, as it sort of peaks, we'll sort of let you know when we sort of feel like we're there. But it should be coming in the coming quarters.

Speaker Change: The quality of the new accounts, we're putting on or are the credit quality of them looks very good and continues to be the case.

Speaker Change: So I would just say that we're in that normal phase of maturation.

Speaker Change: Is it sort of as it sort of peaks will.

Speaker Change: We'll sort of let you know when we sort of feel like we're there, but it's but it should be coming over the over the coming quarters.

Vivek Juneja: Great. Thank you. Hey, good morning, guys. Appreciate all the color on the NII and loan trend outlook. I was just wondering, on the loan side, if you've noted any sensitivity at all and activity levels in general amongst your commercial customers to presidential elections in the past and how big of a headwind, if any, you think that could be this year.

Speaker Change: Great. Thank you.

Speaker Change: And the next question will come from Dave Rochester of Compass Point Research. Your line is open Sir.

David Patrick Rochester: Hey, good morning, guys. Appreciate all the color on the NII and loan trend outlook I was just wondering on the loan side. If you've noted any sensitivity at all on activity levels in general amongst your commercial customers two presidential elections in the past and how big of a headwind if any you think that could be this year.

Michael P. Santomassimo: Yeah, I mean, it's hard. I think, you know, certainly it'll be a factor that people incorporate into their thinking of, you know, how aggressive or not they want to be in the investments they're making. But, but at this point, that would be, that would be really hard to kind of prove out with any sort of empirical data. I think at this point, you know, what we're seeing most is related to the overall sort of macroeconomic environment we're in with such high rates and, you know, people having some uncertainty just generally around, you know, where things go from here. So, but, but I'm sure that'll factor in to a small degree at some point as we go through the year.

Speaker Change: Yeah, I mean, that's hard.

Speaker Change: I think certainly it it'll be a factor that people incorporate into their thinking of how aggressive or not they want to be at investments theyre, making but at this point that would be that would be really hard to kind of prove out with any sort of empirical data I think at this point, what we're seeing most is.

Speaker Change: Related to the overall sort of macro economic environment, we're in with such high rates and people, having some uncertainty just generally around where things go from here, so but I'm sure I'm sure that will factor in at least to a small degree at some point as we go through the year.

Vivek Juneja: Okay, I appreciate that. And then, just on the trading line, Matt mentioned the momentum you've seen earlier. You obviously had a great year in trading last year; you had your strongest quarter yet this year. And you've talked about making a lot of investments in the business in recent years; you're still making those now. It seems like you have a lot of momentum in this area where you could grow that this year as well, despite having a huge year last year. Just wanted to get your take on all that.

Speaker Change: Yeah, Okay, I appreciate that and then.

Speaker Change: All of the trading line, Matt had mentioned the momentum you've seen earlier, you obviously had a great year and trading last year, you had your strongest quarter, yet this year and you've talked about making a lot of investments in the business. In recent years are still making those now it seems like you have a lot of momentum in this area, where you could grow that this year as well despite having a huge year.

Speaker Change: Last year, just wanted to get your take on all that.

Michael P. Santomassimo: Well, the environment is going to matter a lot. And so, you know, we've certainly been helped by some of the volatility that we've seen over the last, you know, four or five quarters. And so, you know, that could change the outcome quite materially for all of us in the industry, in the trading line, so keep that in mind. But, as you said, we're continuing to, you know, make, you know, systematically make some investments there, and we feel good about that. And I think, you know, we continue to see some, you know, good performance from a market share point of view across those places we've been making the investments. But, as Charlie also noted, we're somewhat constrained in some of those businesses, but we feel good about the progress that the team has made over the last, you know, couple years.

Speaker Change: While the environment is going to matter a lot.

Speaker Change: So we've certainly been helped by some of the volatility that we've seen over the last four or five quarters, and so that could change the outcome quite quite materially for all of us.

Speaker Change: In the industry and the trading lines, so keep that in mind, but but as you said, we're continuing to make make systematically make some investments there and we feel good about that.

Speaker Change: We feel good about that and I think we continue to see some good performance from a market share point of view across those places we've been making the investments in but as Charlie also noted we are somewhat constrained in some of those some of those businesses.

Speaker Change: But we feel good about the progress that the team has made over the last couple of years.

Operator: All right, great, thanks. And our final question for today will come from Vivek Juneja of JP Morgan. Your line is open, sir.

Speaker Change: Alright, great. Thanks.

Speaker Change: And our final question for today will come from Vivek <unk> of Jpmorgan. Your line is open Sir.

Vivek Juneja: Hi. Thanks for taking my questions. A couple of questions. Firstly, financial advisors, can you give some color on what those numbers have been doing over the past year, the past quarter, since that's not disclosed anymore? Are you building? What types of advisors?

Vivek: Hi, Thanks for taking my questions a couple of questions. Firstly financial advisers can you give some color on.

Vivek: What those numbers have been doing over the past year past quarter.

Vivek: So that's not disclose anymore are you building.

What types of advisors.

Michael P. Santomassimo: and more

Vivek: Yes.

Speaker Change: Let me answer that.

Operator: The Roots from college, any color mic.

Speaker Change: Our new recruits from college any color Mike.

Michael P. Santomassimo: Yeah, sure, sure. You know, as you pointed out, you know, over the last couple of years, you definitely saw some declines that we were seeing in the advisor workforce, but Barry Summers and his team have been working really hard to sort of not only stem some of the attrition but also, you know, begin to really ramp up the recruiting again. And I think we're starting to see some of that come through. And so a lot of that, we're back to more normal, maybe slightly below normal attrition levels across the business. Which is good, And we're, we're, we're feeling very good about our ability to recruit high-quality advisors. And, and, and so I think that trend you saw a couple years ago is definitely different. And, you know, we'll continue to stay at it. We're mostly focused on experienced advisors, a little less on, you know, as you mentioned, college recruits and that type of thing.

Mike: Yes, sure. So as you as you pointed out over the last if you go back a couple of years ago.

Mike: You definitely saw some declines that we were seeing.

Mike: In the advisor workforce, but Barry summers and team had been working really hard to sort of not only stem some of the attrition, but also begin to really ramp up the recruiting again and I think we're starting to see some of that come through and so a lot of that we're back to like more normal maybe slightly below normal attrition levels across the business, which is good.

Mike: Good.

Mike: And we're feeling very good about our ability to recruit high quality advisors.

Mike: And so I think that trend you saw a couple of years ago was definitely different.

Mike: And we'll continue to stay at it were mostly focus on experienced advisors a little less on as you mentioned college recruits and that's the only thing is listen Vivek. This is I mean, we recruited and it's across Theres no. One prototype here. We are we've recruited some of the biggest teams.

Charles W. Scharf: We are, you know, we've recruited some of the biggest teams in the country that have traded over the last year and a half, and these are people that wouldn't have come to Wells Fargo before that because of the issues, and it was competitive, and they chose to come here because of our capabilities, not because of what we were willing to pay them. On the same side, we are... We're staffing up in our bank branches, and those are more entry-level people, people who come out of the banker workforce, and it's going to be across the board. But there's no doubt that the trajectory we have with our FA population is very different today than several years ago.

Mike: In the country that have traded over the last year and a half and these are people that wouldn't have come to wells Fargo before that because of it because of the issues.

Mike: And it was and it was competitive and they chose to come here because of our capabilities not because of what we're willing to pay them at the same side we are.

Mike: Yes.

Mike: We're staffing up in our on our in our.

Mike: And our bank branches and those are more entry level people people will come out of the banker workforce.

And it's going to be across the board.

Mike: But theres no doubt that the trajectory we have with our FAA.

Population is very different today than several years ago.

Charles W. Scharf: That's helpful. A completely different question. I want to go back to NII, not to beat a dead horse, but given that higher rates, I mean, sorry, less rate cuts are better for you if we, you know, so that should help NII now, but if we see rate cuts and eventually in 2025, does that mean that the troughing of NII could get pushed further back?

Mike: Okay.

That's helpful. A completely the final question I wanted to go back to NII.

Mike: Not to beat a dead horse, but.

Given that the higher rates.

Mike: Less rates catch up better for you.

Mike: So that should help the line now, but if we see rate cuts and eventually 25.

Mike: Does that mean that the crossing of NII could get pushed further back.

Vivek Juneja: Yeah, I mean, look, Vivek, where it exactly troughs. Obviously, the exact pace of rate cuts is part of the equation. But, we also have to look at sort of the broader, you know, trends that we've talked about throughout the call, right? And, you know, how does the depositor sort of react? Where does the mix shift, you know, stabilize? And, you know, how do we, what do we see from a competitive environment? So, so all of that matters as you sort of look at where exactly it's going to go. Thanks.

Speaker Change: Yeah, I mean look we'll see vivek.

Speaker Change: Exactly troughs, obviously sort of the exact pace of rate cuts as part of the equation, but but we also have to look at sort of the broader trends that we've talked about throughout the call right.

Speaker Change: <unk> has had a deposit or sort of react where it is the mix shift stabilize.

Speaker Change: What do we see from a competitive environment. So so all of that matters as you sort of look at where exactly it's going to trough.

Speaker Change: Okay.

Michael P. Santomassimo: Alright, thank you everyone, I appreciate it; we'll talk to you next quarter.

Speaker Change: Thanks.

Speaker Change: Alright. Thank you everyone. Appreciate it we'll talk to you next quarter.

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

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