Q4 2024 Wells Fargo & Co Earnings Call
Welcome, and thank you for joining the Wells Fargo 4th Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
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.
Speaker Change: If you would like to withdraw your question, press star 2. 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.
Speaker Change: Good morning. Thank you for joining our call today where our CEO Charlie Scharf and our CFO Mike Santomassimo will discuss fourth quarter results and answer your questions.
This call is being recorded.
Speaker Change: Before we get started I would like to remind you that our fourth quarter earnings materials including the release, financial supplement, and presentation deck are available on our website at WellsFargo.com
Speaker Change: I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risk and uncertainties.
Speaker Change: Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8K file today containing our earnings materials.
Information about any non-GAAP financial measures referenced.
Speaker Change: 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.
I will now turn the call over to Charlie.
Charlie Scharf: Thanks, John. Let me start by acknowledging the unbelievable devastation from the Los Angeles wildfires. Our hearts go out to everyone who's been affected and we're committed to helping rebuild their lives, businesses, and communities.
Charlie Scharf: I also want to thank our employees who are working hard to support our customers, many of whom have been impacted themselves.
Charlie Scharf: Turning to Wells Fargo's performance, I'll make some brief comments about our results and update you on our priorities. I'll then turn the call over to Mike to review fourth quarter results as well as our net interest income and expense expectations for 2025 before we take your questions.
Let me start with some general comments.
Charlie Scharf: Our solid performance this quarter caps a year of significant progress for Wells Fargo across multiple areas.
Charlie Scharf: Our earnings profile continues to improve. We are seeing the benefit from investments we're making to increase growth and improve how we serve our customers and communities.
Charlie Scharf: We maintained a strong balance sheet. We returned $25 billion capital to shareholders.
Charlie Scharf: and we made significant progress on our risk and control work.
Charlie Scharf: We grew net income and our diluted earnings per share was up 11% from a year ago.
Charlie Scharf: After I arrived, we reviewed our businesses and sold or scaled back several which reduced revenues in the shorter term and increased investments in others. We also made a conscious effort to diversify revenues and reduce our reliance on net interest income.
Charlie Scharf: In 2024, a strong fee-based revenue growth of 15% from a year ago largely offset the expected decline in net interest income reflecting these efforts.
Charlie Scharf: Our disciplined approach to managing expense levels has been consistent and an important part of our success.
Charlie Scharf: We increased investments in areas that are important for our future and generated efficiencies to help fund those opportunities.
Charlie Scharf: Overall, expenses declined from a year ago, benefiting from lower FDIC and severance expenses.
Charlie Scharf: as well as the impact of our efficiency initiatives which have helped drive headcount reductions every quarter since the third quarter of 2020.
Charlie Scharf: We maintained our strong credit discipline and credit performance was relatively stable throughout the year and consistent with our expectations.
Charlie Scharf: Average loans declined throughout the year as growth in credit card balances was offset by declines in most other asset classes reflecting weak loan demand as well as credit tightening actions.
Charlie Scharf: Average deposits grew from fourth quarter 2023 with growth in our deposit gathering businesses enabling us to reduce higher cost CDs issued by corporate treasury.
Charlie Scharf: We've been actively returning excess capital over the past five years, and that has resulted in average common shares outstanding decreasing by 21% since fourth quarter 2019.
Charlie Scharf: This year, we've increased our common stock dividend per share by 15% and repurchased approximately $20 billion of common stock, up 64% from a year ago.
Charlie Scharf: Regarding our strategic priorities, I'm very proud of the progress we've made on our risk and control work, and it remains our top priority, and closing consent orders is an important sign of progress.
Charlie Scharf: Early last year, the OCC terminated a consent order it issued in 2016 regarding cell practices.
Charlie Scharf: The closure of disorder was an important milestone and it's confirmation that we operate much differently today.
Charlie Scharf: This was the sixth consent order terminated by our regulators since I joined Wells Fargo in 2019.
Charlie Scharf: Our operational risk and compliance infrastructure is greatly changed from when I arrived, and while we are not done, I'm confident that we will successfully complete the work required in our consent orders and embed an operational risk and compliance mindset into our culture.
Charlie Scharf: Improving our credit card platform is an important strategic objective and our progress here is clear.
Charlie Scharf: Since 2021, we have rolled out a total of 11 new cards, including four new consumer cards and a new small business card in 2024.
Charlie Scharf: Our new product offerings continue to be well-received by both existing customers and customers new to Wells Fargo With over 2.4 million new credit card accounts opened in 2024
We've done this while maintaining our credit standards.
Charlie Scharf: The momentum in this business is also demonstrated by strong credit card spend, up over $17 billion from a year ago.
Charlie Scharf: In our auto business, we announced a multi-year co-branded agreement where we will be the preferred purchase finance provider for Volkswagen and Audi brands in the United States starting in the first half of this year.
We continue to reposition our home lending business.
Charlie Scharf: as we execute on the strategic direction we announced in early 2023. We've reduced headcount by 47% and the amount of third-party mortgage loan service by 28% since the announcement as we continue to streamline this business.
Charlie Scharf: The business is more profitable today and opportunities remain to improve.
Charlie Scharf: After several years of little to no growth, as we focused on satisfying the requirements of our consent orders, we are starting to generate growth and increase customer engagement in our consumer, small, and business banking segment.
Charlie Scharf: We had a more meaningful growth in net checking accounts in 2024, and importantly, most of that growth came in the form of more valuable primary checking accounts.
Charlie Scharf: We had over 10 billion debit card transactions last year, up 2% from a year ago, the highest annual volume in our history.
Charlie Scharf: He accelerated our efforts to refurbish our branches, completing 730 in 2024.
Charlie Scharf: We continued to make enhancements to our mobile app, including making it significantly easier to open accounts, and in the fourth quarter, over 40% of consumer checking accounts were opened digitally.
Charlie Scharf: We grew mobile active customers by 1.5 million in 2024, up 5% from a year ago. Our customers are also increasingly using Zelle, and we had over 1 billion Zelle transactions in 2024, up 22% from a year ago.
Charlie Scharf: We introduced Wells Fargo Premier to better serve our affluent clients, and we're starting to see some early benefits from the enhancements we've made. We've increased the number of Premier bankers by 8% and branch-based financial advisors by 5% from a year ago.
Charlie Scharf: We focus on increasing the number of bankers and advisors in top locations.
Charlie Scharf: We have enhanced our customer relationship management capabilities for our bankers and advisors. This is increased collaboration, driving $23 billion in net asset flows into wealth and investment management premier channel last year.
Charlie Scharf: Deposit and investment balances for Premier clients grew steadily throughout the year and increased approximately 10% from a year ago.
This remains a significant area of opportunity for us.
Charlie Scharf: Turning to our commercial business. In the commercial bank, we're focused on adding relationship managers and business development officers in underpenetrated and growth markets to drive new client acquisition, future revenue growth, and we expect to hire even more in 2025.
Charlie Scharf: We created a strategic partnership with Centerbridge Partners and introduced Overland Advisors to better service our commercial bank customers with a direct lending product.
Charlie Scharf: We have targeted our investment banking capabilities towards our commercial banking clients.
Charlie Scharf: We're still early in these efforts, but we're starting to see results, including our investment banking market share with our commercial banking clients increasing by approximately 150 basis points in 2024, which includes helping some clients access capital markets for the first time.
Charlie Scharf: Additionally, we've been working closely with our clients to support their M&A activity, driving higher M&A related revenue. The opportunity remains significant.
Charlie Scharf: We continue to make investments in talent and technology to strengthen corporate investment banking.
Charlie Scharf: More than 75 new hires joined CIV since 2019, with many of these in key coverage and product groups within trading and banking, and our revenue and share in many important areas is increasing.
including in our markets business.
Charlie Scharf: where we've grown our U.S. market share, including in credit trading, commodities, and our equity cash and derivatives business.
Charlie Scharf: We also continue to make steady progress in growing our FX business with strong growth in both our institutional client base and volumes in 2024.
Charlie Scharf: We also grew our U.S. market share in investment banking, with share gains in debt and equity capital markets, and increased revenue in our advisory business in 2024.
Charlie Scharf: We enter 2025 with a solid pipeline in both capital markets and advisory, although market conditions can always change.
Charlie Scharf: I feel great about our progress and continue to believe we're just beginning to see the benefits of our investments.
Charlie Scharf: We've also continued to exit or sell businesses that are not in sync with our strategic priorities and last year we entered into a definitive agreement to sell the non-agency third-party servicing segment of our commercial mortgage servicing business.
Charlie Scharf: More broadly, the U.S. economy has performed very well and remains strong, and lower inflation and unemployment position the economy well into 2025.
Charlie Scharf: We are predominantly a U.S. bank. We succeed when the country succeeds.
Charlie Scharf: So the incoming administration's support of U.S. businesses and consumers gives us optimism as we look forward. Additionally, the incoming administration has signaled a more business-friendly approach to policies and regulation which should benefit the economy and our clients.
Charlie Scharf: Mike will talk more about our expectations for 2025, but as we start the new year, I'm enthusiastic about the opportunities we have to drive higher returns across our businesses by growing revenue and managing expenses.
Charlie Scharf: I'm proud of the progress we made in 2024. I want to conclude by thanking everyone who works at Wells Fargo, their hard work for what they do, every single day, to support our customers, clients and communities.
Charlie Scharf: I'm excited about the momentum we're building and all that we can accomplish together in 2025. I will now turn the call over to Mike.
Mike Santomassimo: Thank you, Charlie. Good morning, everyone. We had solid results in the fourth quarter, including net income of $5.1 billion, or $1.43 per diluted common share.
Mike Santomassimo: Underlying business performance was strong compared to a year ago. We grew fee income across most categories, maintained our expense and credit discipline, and grew customer accounts and activity levels as we benefited from the investments that Charlie highlighted. We also grew net interest income from the third quarter.
Mike Santomassimo: Our fourth quarter results included $863 million, or $0.26 per share, of discrete tax benefits related to resolution of prior period matters.
Mike Santomassimo: This benefit was largely offset by $647 million, or $0.15 per share, of severance expense.
Mike Santomassimo: and $448 million, or $0.10 per share, of net losses on the sale of debt securities as we took the opportunity to further reposition a portion of the investment portfolio.
Mike Santomassimo: This included the sale of approximately $80 billion of securities, which we reinvested into higher yielding securities. The estimated payback period for this repositioning is approximately two and a half years.
Turning to slide four.
Mike Santomassimo: Net interest income grew 146 million, or 1%, from the third quarter, the first linked quarter increase since the fourth quarter of 2022. The increase was driven by higher customer deposit balances, which enabled us to continue to reduce higher-cost market funding.
Moving to slide five.
Mike Santomassimo: Average loans were down from both the third quarter and a year ago. Period end balances grew $3 billion from the third quarter with growth in commercial and industrial loans and credit card loans more than offsetting declines in most other categories.
Mike Santomassimo: Average deposits increased both from the third quarter and a year ago with growth in our customer deposits enabling us to reduce higher cost corporate treasury deposits.
Mike Santomassimo: Average deposit cost declined 18 basis points from the third quarter as deposit costs stabilized or declined across all of our deposit gathering businesses.
Mike Santomassimo: In response to the Federal Reserve rate cuts, we have reduced standard pricing for commercial clients as well as pricing for promotional deposit offers and CDs in our consumer businesses.
Mike Santomassimo: Lower deposit costs also reflected the slowdown of customer migration to higher yielding deposits.
Mike Santomassimo: Additionally, lower cost consumer deposit balances and checking and saving accounts have continued to stabilize.
Turning to slide six.
Mike Santomassimo: We had strong growth in non-interest income, up 11% from a year ago, benefiting from the investments we've been making in our businesses as well as market conditions.
Mike Santomassimo: This growth was diversified with each of our operating segments generating growth from a year ago.
I'll highlight the specific drivers.
of Non-Interesting Home Discussing or Operating Segment Results.
Turning to expenses on slide 7.
Mike Santomassimo: Non-interest expense declined 12% from a year ago driven by the lower FDIT special assessment.
Mike Santomassimo: Excluding this assessment, expenses were relatively stable as lower severance expense and the impact of our efficiency initiatives was largely offset by higher revenue-related compensation, predominantly in wealth and investment management, as well as higher technology and equipment expense.
Turning to credit quality on slide E.
Mike Santomassimo: Credit performance has been relatively stable with our net loan charge-off ratio the same as a year ago and up four basis points from the third quarter.
Mike Santomassimo: Commercial net loan charge-offs increased 80 million from the third quarter to 30 basis points of average loans driven by the commercial real estate office portfolio.
Mike Santomassimo: Commercial real estate office fundamentals have not changed and remain weak. We still expect commercial real estate office losses to be lumpy as we continue to actively work with our clients.
Mike Santomassimo: Consumer Net Loan Charge Ops increased 20 million from the third quarter to 85 basis points of average loans, driven by higher losses in the credit card portfolio, which was consistent with our expectations.
Mike Santomassimo: Non-performing assets declined 5% from the third quarter, driven by a $390 million decline in commercial real estate office not-or-poor loans, which includes paydowns and net loan charge-offs.
Moving to slide 9.
Mike Santomassimo: Our allowance for credit losses from loans was down $103 million from the third quarter, with modest declines across most asset classes, partially offset by an increase in allowance for credit card loans driven by higher loan balances.
Mike Santomassimo: Our allowance coverage for total loans has been relatively stable over the past five quarters as credit trends have remained fairly consistent.
Mike Santomassimo: Our allowance coverage for our corporate and investment banking commercial real estate office portfolio increased 12% as loan balances continued to decline and allowance levels were relatively stable.
Turning to capital liquidity, that's slide 10.
Mike Santomassimo: Our capital position remains strong and our CET1 ratio of 11.1% continues to be well above our CET1 regulatory minimum plus buffers of 9.8%.
Mike Santomassimo: We repurchased $4 billion of common stock in the fourth quarter and approximately $20 million for the year.
Reducing common shares outstanding by 9% from a year ago.
Mike Santomassimo: Turning to our operating segment, starting with consumer banking and lending on slide 11.
Mike Santomassimo: Consumer small and business banking revenue declined 7% from a year ago, driven by lower net interest income, reflecting the impact of customers migrating to higher yielding deposit products. However, the pace of the migration continues to slow.
Mike Santomassimo: My lending revenue grew 2% from a year ago due to my higher mortgage banking fees.
Speaker Change: Credit card revenue grew 3% from a year ago as loan balances increased and card fees grew from a higher point of sale volume. We continue to be pleased with performance of new products that we launched over the last three and a half years with credit performing as expected and strong growth in new accounts and usage.
Speaker Change: Auto revenue decreased 21% from a year ago driven by lower loan balances reflecting previous credit tightening actions and continued loan spread compression.
Speaker Change: The decline in personal lending revenue from a year ago is also driven by lower loan balances and loan spread compression.
Speaker Change: Turning to some key business drivers on slide 12, retail mortgage originations increased 31% from a year ago with higher purchase volume as well as stronger refinance volume early in the quarter when interest rates were lower.
Speaker Change: Debit card spending was strong in the fourth quarter and increased $4.9 billion or 4% from a year ago.
Turning to commercial banking results in slide 13.
Speaker Change: Middle market banking revenue was down 2% from a year ago driven by lower net interest income reflecting higher deposit costs, partially offset by growth in treasury management fees.
Speaker Change: Asset-based lending and leasing revenue decreased 12% from a year ago driven by lower net interest income and lease income, partially offset by improved results from our equity investments.
Speaker Change: Average loan balances in the fourth quarter were down 1% compared with a year ago as growth in middle market banking was more than offset by lower balances in asset-based lending. While our commercial clients are generally more optimistic, we did not see a meaningful change in loan demand in the fourth quarter as many clients remain cautious.
Turning to corporate and investment banking in slide 14.
Speaker Change: Banking revenue was down 4% from a year ago driven by higher deposit costs and lower loan balances. This decline was partially offset by higher investment banking revenue from increased activity in equity and debt capital markets as well as higher advisory fees.
Speaker Change: Commercial real estate revenue decreased 1% from a year ago reflecting the impact of lower loan balances, partially offset by higher capital markets revenue from higher volumes in commercial mortgage-backed securities, real estate loan syndications, and multifamily capital as market sentiment improved.
Speaker Change: Markets revenue is down 5% from a year ago, driven by lower revenues in equities and municipals, partially offset by stronger performance than most other FIC products, fixed income products.
Speaker Change: Our fourth quarter results reflected the implementation of a change to incorporate funding valuation adjustments for our derivatives, which resulted in a loss of $85 million. The decline from the third quarter was also driven by seasonally lower trading activity across most asset classes.
Speaker Change: Average loans declined 6% from a year ago driven by continued reductions in our commercial real estate portfolio, driven by office, as well as lower loan balances in banking as clients continue to access capital markets for funding.
Speaker Change: On slide 15, wealth and investment management revenue increased 8% compared with a year ago due to higher asset-based fees to provide increased market valuations.
Speaker Change: As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, so first quarter results will reflect market valuations as of January 1st, which were up from both a year ago and from October 1st.
Speaker Change: Average deposits increased by 16% and average loans grew by 2% from a year ago, which have both benefited from product enhancements and pricing improvements that provide value to our clients.
Speaker Change: The growth in deposits also reflected the slowdown in migration to cash alternatives with balances in those products lower than a year ago.
Slide 16 highlights our corporate results.
Speaker Change: Revenue increased from a year ago driven by improved results from our venture capital investments. After having impairments on these investments for the past two years, we had net gains every quarter in 2024 with improved performance in the second half of the year.
Now turning to our Outlook in slide 17.
Speaker Change: I'll go into more detail on our 2025 expectations for net interest income and non-interest expense in the next few slides, but first I want to highlight the progress we've made on improving our returns.
Speaker Change: When we first started discussing the outlet for our return in the fourth quarter of 2020, we had an 8% ROTCE.
Speaker Change: Over the past four years, we have been successfully executing on our efficiency initiatives, diversifying our sources of revenue by investing in our businesses to better serve our customers and drive growth, and returning excess capital to shareholders.
Speaker Change: These actions helped to improve our ROTCE to 13.4% in 2024.
Speaker Change: We still believe we have an achievable path to a sustainable ROTC of 15% as we continue to make progress on transforming the company including the priorities highlighted earlier on the call.
Speaker Change: On slide 18, we provide our expectations for net interest income for 2025.
Speaker Change: We had $47.7 billion of net interest income in 2024, which was within the expected range we provided at the start of last year.
Speaker Change: Net interest income declined sequentially for the first three quarters of the year before growing modestly in the fourth quarter.
Speaker Change: Our fourth quarter annualized interest income is $47 billion, or approximately $700 million lower than full year 2024.
Speaker Change: Our current expectations is that full year 2025 net interest income will be approximately 1-3% higher than full year 2024, or approximately 3-5% higher than the annualized fourth quarter 2024 net interest income.
Speaker Change: We expect that interest income will be relatively stable in the first half of 2025, which includes the impact from two fewer days in the first quarter, with more growth in the second half of the year.
Underpinning our expectations are a series of key assumptions, including
Speaker Change: Using the recent forward rate curve, which includes between one and two Federal Reserve rate cuts, given our modestly asset-sensitive position, this would be a slight headwind to net interest income.
Speaker Change: Average loans are expected to grow modestly from fourth quarter 2024 to fourth quarter 2025 driven by anticipated growth in the corporate investment bank markets group and CIP banking.
Speaker Change: as well as anticipated growth in our auto and credit card portfolios.
Speaker Change: Deposits in all our deposit-gathering businesses are expected to grow modestly, which would allow us to further reduce higher cost market funding.
Speaker Change: Reinvestment of lower-yielding securities into higher-yielding assets. Our expectation also reflects the benefit from the actions we took in the second half of 2024 to reposition the investment portfolio.
Speaker Change: And trading-related net interest income is expected to be higher due to lower interest rates, which would largely be offset by lower trading-related non-interest income.
Speaker Change: As we've done in prior years, for the purposes of estimating the interest income, we are also assuming the asset cap will remain in place throughout the year.
Speaker Change: Ultimately the amount of net interest income we earn in 2025 will depend on a variety of factors, many of which are uncertain, including the absolute level of interest rates, the shape of the curve, deposit balances, mix in pricing, and loan demand.
Now turning to our 2025 expense expectations on slide 19.
Speaker Change: Following the waterfall on the slide from left to right, we reported $54.6 billion of non-interest expense in 2024, which included $647 million of severance expense in the fourth quarter that was not contemplated in our guidance.
Speaker Change: Our 2025 expense expectation includes operating losses of approximately $1.1 billion, which is approximately $700 million lower than operating losses in 2024.
Speaker Change: Looking at the next bar, we expect Severance expense to be approximately $500 million lower in 2025, given the expense report we took in the fourth quarter.
Speaker Change: of 2024. We expect wealth and investment management revenue-related expenses to increase by approximately $600 million in 2025. As a reminder, this is a good thing, as these higher expenses are more than offset by higher non-interest income.
Speaker Change: Actual revenue-related expenses will be a function of market levels, with the biggest driver being the equity markets. Our outlook assumes the S&P 500 will be up modestly from current levels, but clearly the ultimate performance of the markets is uncertain.
Speaker Change: We expect all other expenses to be above approximately $200 million, with the impact of efficiency initiatives more than offset by higher investments and other expenses.
Speaker Change: Keep in mind, however, the resources needed to address our risk and control work are separate from our efficiency initiatives.
There are three primary areas we're expecting to invest.
Speaker Change: First, we expect approximately $900 million of incremental technology expense, including investments in infrastructure or business capabilities.
Speaker Change: Second, we expect approximately $900 million of incremental other investments, including the specific areas we highlight on the next slide.
Speaker Change: Finally, we expect other expenses to increase by approximately $800 million, including expected merit increases and performance-based discretionary compensation. As a reminder, the first quarter has seasonally higher personnel expenses, which are expected to be $650 to $700 million.
Speaker Change: Putting this all together, we expect 2025 non-interest expense to be approximately $54.2 billion.
Speaker Change: On slide 20 we provide some examples of our areas of focus for the investments which are critical to better serving our customers and generating growth. Let me highlight a few.
Speaker Change: Building the right risk and control infrastructure remains our top priority and we will continue to invest in this important work.
Speaker Change: We continue to invest in technology and digital platforms to transform how we serve both our consumer and commercial customers. This includes continuing the transition of our applications to the cloud, migrating into new data centers, and investing in data platforms to drive more insights.
Speaker Change: We are continuing to upgrade our core lending capabilities, including improvements to our fulfillment and servicing systems, enhancing credit decisioning, and strengthening fraud capabilities.
Speaker Change: To drive customer growth in the consumer businesses, we plan to continue scaling our marketing efforts, modernizing our branch footprint, and increasing the number of premier bankers and financial advisors.
Speaker Change: We are also focused on onboarding more independent advisors as we continue building out our independent brokerage channel.
Speaker Change: In addition, we continue to improve our digital capabilities for our customers, specifically our mobile account opening and onboarding, as well as Dell.
Speaker Change: We plan to continue hiring in priority sectors to help drive growth in investment banking capital markets. We also plan to continue hiring relationship bankers within commercial banking to build out coverage in underpenetrated markets and key industries.
Speaker Change: In summary, our results in 2024 demonstrated the continued progress we've been making to improve our financial performance.
Speaker Change: We generated strong fee-based revenue growth, reduced our expenses, maintained strong credit discipline, increased capital returns to shareholders, and retained our strong capital position. I'm very pleased with the progress we've made so far, and I'm excited about the additional opportunities we have to continue to drive improved performance.
We will now take your questions.
Speaker Change: At this time, we will now begin the question and answer session. If you would like to ask a question, please first unmute your phone and then press star 1. Please record your name at the prompt.
Speaker Change: If you would like to withdraw your question, you may press star 2 to remove yourself from the question queue.
Speaker Change: Once again, please press star 1 and record your name if you would like to ask a question at this time. Please stand by for our first question.
Speaker Change: Our first question comes from John McDonald of Truist Securities. Your line is open.
Alright, good morning guys.
Um, John?
Speaker Change: Mike, I was hoping you could unpack the deposit expectations embedded in slide 18 in the NII Outlook. You talked about stabilization of retail volumes and mix. I just kind of wanted to get a little more detail about what you're assuming.
Speaker Change: or Retail Deposit Growth Mix and how that plays into the pay down of higher cost borrowings throughout the year in your plan.
Speaker Change: Yeah, sure. Thanks, John, and welcome back to, and welcome to your new seat. You know, like, I think as we've sort of talked about now, I guess, for the last, you know, three or four quarters, we've been seeing
Speaker Change: Less and less, you know, migration out of non-interest-bearing to interest-bearing.
Speaker Change: You got to look through some of the product Consolidations we did you know in the third quarter, so there's some noise though that we talked about last quarter, but So we've seen continued sort of you know Stabilization of the mix between non-interest bearing and interest bearing and so that's sort of helpful as you go into
Speaker Change: this year, and we expect that to continue as we look forward and then start to see absolute growth.
across the consumer franchise.
Speaker Change: promotional savings and CD rates continue to come down over the last, you know, 90, 120 days as rates have started to move. And so we would expect that.
Speaker Change: that mix, stabilize, we expect some absolute growth, and we don't expect pricing pressure to come through on the consumer side.
Speaker Change: I got it. And then just wanted to shift gears and ask about credit card profitability. You know, when you're in growth mode, credit card experience is a drag, you know, from accounting on the upfront acquisition costs and provision. Where are you on card profitability now? Is that an upside driver to ROE as more of the balances roll off teasers and some of that upfront expense wanes?
Speaker Change: Yes, it certainly is. I think as you look backwards a little bit, we started launching the new products three and a half years ago, so the first of the vintages came on starting in July-August a few years ago. And so we're just starting to kind of see those.
Speaker Change: those earliest vintages mature and become more profitable. So we're still early days in terms of seeing that profitability really come through in the P&L.
Speaker Change: You know, I'd say, you know, obviously the factors you've got to think about as you sort of look through that is, you know, the credit, you know, the credit box and the credit performance. That's all behaving, you know, right on top of what we would have modeled.
Speaker Change: So, we're not seeing any concerns, you know, flow through from what we modeled across all of the different new products.
Charlie Scharf: And we're seeing, as Charlie highlighted in his script, we're seeing good new account growth continue.
Charlie Scharf: across the different products there. And so it's just a matter of time for that to really more meaningfully come into the P&L. It really hasn't contributed much at all yet.
Charlie Scharf: As you sort of look at it, but it'll it'll start to come through over the next you know year or two
Speaker Change: The only thing I would add, and I mentioned this in my prepared remarks,
Mike Santomassimo: where we've already taken actions and it's just execution now which will improve profitability. One is CARD as you point out.
Mike Santomassimo: And the second I referenced is we're still not at the level of profitability where we should be in home lending.
Mike Santomassimo: just, you know, given, you know, as we continue to, you know, wind down that servicing book. And so, you know, we think those two things will be helpful for us as we look forward.
Got it. Thank you.
Speaker Change: The next question will come from Ibrahim Poonawalla of Bank of America. Your line is open.
Say good morning.
Ibrahim Poonawalla: I guess I just wanted to go back maybe Charlie to something you talked about back in December on the back of the lifting of the OCC consent order. As we think about just the ROE2J actually for the bank, it'll be useful if you can maybe give some tangible examples of things that you've been able to do post the lifting of that consent order in terms of incenting branch employees and where in the balance sheet or in the P&L we should expect that to show up maybe as early as 2025.
Mike Santomassimo: Yeah, Ibrahim, it's Mike. Maybe I'll start and Charlie can chime in if he wants to add. I think what you're referencing, just to make sure everyone's clear, is
Mike Santomassimo: is the sales practices consent order that got lifted last February.
Mike Santomassimo: As part of the work we had to do when that came on, we dialed back much of what you would expect to see in the branch system around incentive plans.
Mike Santomassimo: and sales goals and the like, and to make sure that we rebuilt the control framework and all of the things that we would do there in a way that would make sure that the problems of the past don't reoccur.
Mike Santomassimo: And so as we saw that concentrator go away, we've been able to more fully roll out a standard sort of incentive framework across the branches.
in those pilot branches, and that's across.
new checking growth, credit card accounts, and the like.
Speaker Change: And so we're still in the early days to see the benefits of that system be put in place because it got rolled out as, you know, throughout 2024. And so, you know, we would expect to kind of see the results start to come through more meaningfully over the near-term, medium-term. Maybe just a little more color to what Mike said. You know, I think, again, if you think back, that was...
Speaker Change: It was hugely important that we satisfied the obligations that existed in that consent order and that we were comfortable with the control environment that existed.
goals, just the whole way we manage the system.
and Michael Santomassimo.
Speaker Change: And so no one individual thing is, you know, earth-shattering. But when you take compensation, when you take reporting, when you take management routines, when you take all those things and put them together, at the same time, you know, you're monitoring all the controls that you've built. You know, that's what gives us the confidence.
Speaker Change: to go forward with the system that we think can attract more customers and do more with our existing customers, but within a very tightly controlled framework that we feel comfortable relative to how we manage the risk that's there.
Speaker Change: I would say Charlie and a lot of other folks here have seen this before and we're confident we're going to get the results we think out of it.
Speaker Change: Thanks for that, and I guess just maybe following up, so thanks Mike for running through the expense investment priorities. As we think about the severance charge in the fourth quarter and runway to extract additional efficiencies relative to your $54 billion point two expense guide.
Speaker Change: How should we think about like are we getting to a point where?
Some of the low-hanging fruit is done, and expenses generally...
Speaker Change: May higher given the investments and we should at least anticipate positive operating leverage On the way forward or you still see opportunities to meaningfully cut costs make things more efficient, especially in the consumer bank
Speaker Change: Yeah, I think, you know, Ibrahim, as we sort of look at, you know, what you see there and what we're doing in 2025, it's no different than, the thinking is no different than it's been now for the last, you know, four or five years that we've both been here.
Speaker Change: And so we, you know, as we come in every day, we still think about it the same way that we've been thinking about it for a while, and that's what you see in the expectations for this year.
Thank you.
Speaker Change: The next question comes from John Pancari of Evercore. Your line is open.
Good morning.
Speaker Change: On the 2020, on the NII outlook, I know you said it includes modest loan growth expectation for 2025. I just want to see if you can elaborate a little bit on how we could think about that in terms of level and trajectory. Should it be near GDP or how should we think about that? And then can you, in addition to the
Speaker Change: and the most likely drivers. Can you also give us a little bit of color on the taste of expected incremental runoff of balances as we look at the growth outlook? Thanks.
Speaker Change: So we may see a little bit in the first half, but it will be more meaningful as we go later in the year.
Speaker Change: I would think of it as low to mid-single digits, depending on the category of loan. But obviously, some of that will be dependent upon the overall backdrop that we're in.
Speaker Change: As you look at the consumer side of the picture, you know, mortgages, you know, will likely continue to decline a little bit given sort of the rate environment we're in. We did see a little bit of incremental refinance activity in the fourth quarter, but now with rates back up, that seems to be back down again.
Speaker Change: We should see some card growth as we go through the year.
Speaker Change: and we should start to see some growth in the auto portfolio as well.
Speaker Change: On the commercial side, some of it will be new client growth as we go through the year. We've been adding bankers across different categories. We do expect to see some growth in the markets business as well that drives loan growth.
Speaker Change: And so it should come from a lot of, you know, a little bit from a lot of different areas across the population But I would expect to see that a little bit more as we go into middle and second half of the year
Ibrahim Poonawalla: Great, thanks Mike. And then separately on capital, 11.1% CET1, pretty solid and still bought back about $4 billion this quarter. How should we think about buy back appetite as you look at 2025? Assuming that you do see some improvement in organic growth opportunities, how could that influence your pace of buy back? Thanks.
Ibrahim Poonawalla: Yeah, I mean, look, it's the standard sort of waterfall of decision-making that goes into it, right? If we've got good organic growth opportunities across loans and other categories to serve customers, that's always first.
Ibrahim Poonawalla: We still have the AFSA cap in place, so there's some limits to that.
Ibrahim Poonawalla: We'll look at all the different risks that are out there across the different categories of items that we've got to be concerned about. And then buybacks will kind of be the rest. And given we've got the asset cap and given we've got...
Ibrahim Poonawalla: limited organic growth, depending on the quarter you're in, I think you'll see us continue to return capital back to shareholders like we've done now for the last number of years.
Ibrahim Poonawalla: At this point, we don't believe we need to be higher than where we are from a CET1 percentage, and so we'll manage that based on those opportunities and those decisions that we talked about.
Great, thanks Mike.
Yep.
Speaker Change: The next question comes from Erica Nigerian of UBS. Your line is open.
Hi, good morning.
Speaker Change: Clearly the way the stock has reacted, you know, the message from your shareholders has been, you know, an embrace of Wells Fargo is more than a remediation story. And, you know, thinking about the, you know, return improvement even beyond, you know, the asset cap resolution and the consent order.
Speaker Change: And I guess to that end, Charlie and Mike, you know, you have a medium-term ROTC target of 15 percent.
Speaker Change: And, you know, by your own commentary, you still have places like card and home lending where your profitability should improve from here, you're carrying excess capital, you're under the asset cap.
Speaker Change: You know, obviously, you know, you're making, you know, great efforts in CIB.
Speaker Change: And as we think about that 15%, especially in the context of you have one money center that has to hold more capital than you that has a 17% target, and another money center that has to hold more capital than you and has a 15% target, I guess I'm wondering if
Speaker Change: You know, your shareholders are thinking about fully realized wells, beyond the remediation story. What is the true natural return of this business?
Yeah, let me, Eric, thanks for that.
Speaker Change: Well, let me just repeat what we've said in the past, right, which is when we look at our businesses, we look at each one individually and we compare ourselves to the best people out there.
Speaker Change: in terms of performance. And it's both returns and growth that we look at because again, other than our home lending business and I would say the auto business generally, we do expect
Speaker Change: that our businesses, given the quality, should be growing at rates commensurate with some of the best out there, in addition to...
having some of the strongest returns.
Speaker Change: But when we think about where we ultimately what our aspirations are
Speaker Change: It is based upon where the others are, by business, and what our business mix looks like. Relative to how we think about our own targets and what the timing is, I guess we would just say, we've got to think about it one step at a time.
Speaker Change: And we don't want to get ahead of ourselves. We've said we want to get to 15%. We're close, but we're not there. And so we want to achieve that for sure. We have to get out of these orders that we still have that do constrain us.
Speaker Change: And so, you know, there's a point at which we've said that, you know, not just yourself, but, you know, we too will address where we think we go from the 15 percent but in due time.
The next question comes from Betsy Grasick of Morgan Stanley.
Your line is open.
Thank you. Bye.
Thank you.
That's you there.
Speaker Change: Sorry, hi, good morning. Thank you. So, two questions, one, just to follow up on the last question, the direct asked on the drivers, you know, we're in the last mile, so congratulations, you're in the last mile to the 15%. And are you thinking about that last mile as being driven by revenue growth happening faster in the businesses that have the higher returns?
Speaker Change: Or, are there still expenses to be cut out such that the expense ratio and the expense focus is what's going to drive that?
Mike Santomassimo: Hey Betsy, it's Mike. I'll start. I'll go back to what we said at some point last year as a reference point, but obviously there's multiple paths to get there depending on the environment and what happens. But if you look at where we were talking about earlier in the call, you have the credit card business, you have the home lending business.
Mike Santomassimo: You know, as those two things, you know, you know, get to sort of more mature, a more mature return profile in the card business, and we get to sort of the profitability.
Mike Santomassimo: You can make your own assumptions, but those two things alone probably get you pretty darn close. You can then look at growth we're getting in the investment bank, in capital markets, in wealth. And so there's lots of different combinations that get you there. And that's why we feel, you know, very confident that we'll get to that 15%.
Mike Santomassimo: And then, you know, reasonable people can have different opinions on exactly, you know, what gets you there first, but I think there's multiple paths to get there.
Mike Santomassimo: Betsy, for a second, if I can, if you just look at, you know, what we've said for next year, right, we've, you know, we've given you an expense number in terms of what our expectations are, which are pretty close to what they are this year.
Mike Santomassimo: And so we've given you our NII guidance, which is also, you know, up from the prior year. So make your own assumptions on credit and fee income, and you'll get a sense for, you know, what we, you know, to your question of if it's expenses or revenues, how we think we're going to get there. I mean, we, you know, in terms of, you know, what those dynamics look like.
Mike Santomassimo: The one thing I just do want to say, though, when we think about returns is, you know, we feel really great about the prospects here, but as I said, we don't want to get ahead of ourselves. We've been very, very careful.
Mike Santomassimo: to make sure that we've got the latitude to spend whatever it is we need on all of the risk and operational things. And so that's still the case.
Mike Santomassimo: And so even though we feel great about the progress, and I've tried to give an indication of how we feel about that, we have to maintain that flexibility because that is a gating factor and the top priority. The second thing is, we've been very careful not to provide multi-year guidance.
Mike Santomassimo: continue to peel this onion back, we find opportunities. We tried to also lay out in the presentation the point that we're not just reducing expenses and funding inflationary increases across the place, we're increasing the level of investment in technology and other things.
and as we look towards
Mike Santomassimo: The success that we have in different parts of the company as we invest, so as we see the positive results, we want the ability to make those decisions at each point in time as to how much more we want to invest.
So
Mike Santomassimo: Yeah, if we didn't increase the level of investment or if we kind of capped that out, you could sit here and say, yes, lots of things, you know, margins would continue to expand, returns would expand. You could get to some pretty significant numbers. But you know, we're building the company for the future. And as long as we see the payoffs there, we want the latitude to do that. So we're very conscious of what our investors expect from us.
Mike Santomassimo: We're very conscious of what we think the franchise can produce, but we do intend to build both a higher returning and a higher growth franchise, and you're just starting to see that. And how that plays out from a timing perspective, that's what we're trying hard not to get boxed in on.
Speaker Change: Totally get it and it does feel like there's a bit of a shift at the margin to rev-led profitability growth my opinion Which is great a lot of low-hanging fruit is already out on the expense side and then just lastly on credit card I understand get it more mature There was the announcement during the quarter. I believe that Ray Fisher is stepping down. Could you help us understand? What drove that?
Speaker Change: Decisioning and new, yeah, and new management and what, I assume it's going to be the same goals and everything. But if we could just have a few thoughts on that whole situation, thank you.
Speaker Change: Yeah, yeah, yeah. So, you know, listen, when I, you know, Ray, I've known Ray a long time, we've worked together for many, many years. When I came to, well, literally the
Speaker Change: I think it was the first or second day I was at Wells, the person who was running the card business told me that they had already accepted another job outside the company, so that had nothing...
Speaker Change: You know, I wasn't a part of that change. That was a decision that was made and so ask Ray to join us
Speaker Change: And he's done a fabulous job. Ray, I think, I don't know his exact age. I'm gonna say We can give away his exact age, but he's old enough to deserve to retire. Yes, very well. Thank you, Mike. Very well put. He's done a great job. And so this is a very natural progression and something that we've talked about relative to his timing and what his expectations are. So
Speaker Change: We've got a great team in place, you know, that he's built out. We've recruited a great leader from outside the company, Ed Olip, who joins us.
Speaker Change: I believe sometime in February, and the strategy is the same.
Speaker Change: Nothing's going to change. We've had, you know, lots of conversations about, you know, what we're doing and what the opportunities are, and, you know, I think Ed's super excited about, you know, both what we've done, but, you know, continuing to execute along the lines that we've laid out for
Speaker Change: Okay, and you'll announce the new head when the time is appropriate, right?
Speaker Change: Thank you. We have Betsy Johnson. We have Betsy Johnson. She is a press release. Thank you. Thank you. Sorry about that. Sorry. We sent it out. To be fair, we sent it out internally and there was an article this past week.
Speaker Change: pointing it out. That picked it up. Okay. All right. Thank you.
Speaker Change: The next question comes from Matt O'Connor of Deutsche Bank. Your line is open.
Speaker Change: Good morning. Obviously rate volatility is quite high here, so how do we think about, you know, the rate sensitivity to your net interest income, you know, if rates end up being a little bit higher, obviously it seems like it's directionally good, but help frame some of the sensitivity to the guidance that you put out there from changes in rates. Thanks.
Speaker Change: Yeah, and obviously we'll update the sensitivity in the Q or the K, I guess, when you get it. But, you know, we're still marginally asset sensitive, as I said in my script.
Speaker Change: But the balance sheet has sort of naturally gotten less sensitive, you know, over the last number of quarters. So rates coming down, as I said in the guidance, is a slight headwind to sort of our estimates. And if they hold a little bit higher than...
Speaker Change: than what was in the forwards, then I think that'll be a slight positive. So, you know, obviously we've become less rate sensitive over the last number of quarters, but it's still a little bit asset sensitive.
Speaker Change: Okay, that's helpful. And then just on trading, obviously you guys have been executing really well.
Speaker Change: for a few years now, and I don't want to make too much of just one quarter, but even if we strip out the fair value adjustment, the trading was still down year over year. Obviously, the peers are kind of implying up, I don't know, 15, 20 percent.
Speaker Change: Plus, just maybe talk a bit about was there anything unusual this quarter that, you know, while we go trading and again, I appreciate last year was a strong quarter, but it did jump out.
Speaker Change: Yeah, it was really about last year being a strong quarter than this year being a weak quarter. Nothing's changed. There's no, there's nothing abnormal underneath the surface. Nothing's changed in sort of our approach there, and obviously the businesses are quite different when you look at peers, so I do think you have to look through the results a little bit given the global nature and maybe the risk that some of the others take.
Speaker Change: Okay actually just from the last point obviously we know you're more domestic but your comment that others might take more risk, but how do you think you're being more conservative in trading? [inaudible]
Speaker Change: Well, I just said you have to look at the risks they're taking. I'm not suggesting, I'm not trying to say anybody's taking more risk or not, but when you look at our business, we've been very, very disciplined about sort of the risk appetite that we have across the trading businesses. And much of the focus has been in places that are, you know, balance sheet friendly, like FX, given the asset cap and other areas.
Speaker Change: What we're seeing is just that the size of our business is materially smaller than the biggest folks out there. The complexity of the products is very, very different, both because of the global nature but also some of the things we do. So it's just that. We just have a smaller, less complex business.
Okay, that's helpful. Thank you.
Speaker Change: The next question comes from David Long of Raymond James. Your line is open.
David Long: Good morning everyone. As it relates to auto, you know, this seems like a bit of a strategic shift after three years of seeing that portfolio decline. What are you seeing in that business that is increasing your appetite to grow it here forward?
David Long: Yeah, I wouldn't position it as a strategic shift, but, you know, a couple years ago now, we took some tightening actions based on credit tightening act. There were two things going on. We took some credit tightening actions based on what we were seeing as
David Long: what was happening in the market and that had an impact on originations.
David Long: We also saw some pretty significant spread compression, different points over the last couple of years.
David Long: continuing to, you know, build out, you know, better capabilities to be a little bit more of a full-spectrum lender across different pockets.
David Long: That's a very small piece of what you're seeing in there. And then, obviously, the deal we signed with Volkswagen and Audi hasn't had any impact at this point. That'll start to have a small impact as we get later in the year.
David Long: And so it's still relatively, you know, it's still relatively small growth in the originations. We're only talking a couple billion, you know, year on year. And so we'll see how it progresses throughout the year.
Speaker Change: Thanks for that color. And then the second question I had relates to the investment securities portfolio repositioning and
Do you have...
Michael Santomassimo
Again, elsewhere in the bank before you look to...
you know, take a loss in making some adjustments.
Speaker Change: What is the thought process that you go through to get you to the decision to actually act?
Speaker Change: Yeah, look, I think we've acted twice. We're in the third and the fourth quarter as we've sort of looked at different opportunities. You know, we've been pretty disciplined about payback periods. You know, so far in total, it's, you know, roughly two, two and a half year payback period across both of the repositionings we've done. Could we do something, you know, have a longer payback period? Maybe. But it's something we'll continue to evaluate based on what we're seeing in the market. But so far, we've been pretty disciplined about when we do it.
Got it. Thank you. Appreciate it.
The next question comes from Vivek Juneja of J.P. Morgan.
Your line is open.
Vivek Juneja: Thanks. Thanks for taking my question. Mike, a follow-up for you on your guide for NII of a plus 1 to plus 3 percent for 2025 full year.
Speaker Change: Can you give us the guide for NIIX markets for 2025?
Mike Santomassimo: Yeah, in fact, that's not something we've historically provided, you know, again, given the size of our markets business and the contribution, and obviously it's very sensitive to where short rates will end up going.
Mike Santomassimo: There is an improvement embedded in the guide for trading-related NII. That is very sensitive to where rates end up going, so it's not something we're going to disaggregate at this point.
Okay.
Speaker Change: The next question will come from Gerard Cassidy of RBC Capital Markets. Your line is open.
Charlie.
Gerard Cassidy: Can you guys share with us, obviously there's geopolitical risks all around and I think many investors obviously are aware of those. Can you list for us the risks that you guys talk about outside of the geopolitical risks when you're running your business? What are the things, because the Outlook I think we all share the optimism for you and your peers for the upcoming year for banking. And what are the risks though that could maybe throw a curveball at us?
Gerard Cassidy: Well, listen, the biggest risk that we have that we spend the most time talking about is cyber at this point, just away from the normal kicking around, you know, credit, interest rate, operational risk, all the types of things you would talk about. And so, which is why we spend, you know, so much time on that and have the level of investment that we have and put the resources into it.
Gerard Cassidy: You know, listen, as I said, you know, I think in my remarks, we feel, you know, optimistic about, you know, where we are, you know, going into 2025, both because of where the economy is and the strength that has existed, as well as, you know, the business friendly approach from the incoming administration.
Gerard Cassidy: You know what can I mean, you know, you know bad things can happen It could be you know, it could be related to conflict could be related to a surprise and the mark I mean those things are out there
Gerard Cassidy: You know, we're prepared for them as we think about just, you know, the way we run the company.
Uhhhh
But there's no one risk.
Gerard Cassidy: that sticks out relative to just the things that you would do relative to how you run the business. And the most important thing for us relative to, you know, just risk management, the performance of the company away from these big tail risks, is the strength of the U.S. economy.
Gerard Cassidy: The strength of the U.S. economy will drive the levels of success for our customers, both on the consumer and the wholesale side. And then we follow from their success. So anything that risks that is a risk for us.
Gerard Cassidy: Very good. No, very clear. As a follow-up, and I apologize if this is put in the cart before the horse, you guys have obviously made great progress in resolving your regulatory issues. You talked on the call today about the OCC lifting obviously the cease and desist order earlier last year, and so when we get beyond these issues for you folks, obviously everybody talks about the ASICAP, and
the Federal Reserve's cease and desist order.
Gerard Cassidy: planning going forward in terms of how you might, because you have plenty of excess capital, how you might consider acquisitions. And in particular, what I'm interested in is pre-pandemic and pre-Eurasic cap
Gerard Cassidy: Welles deposit market share was over 10% which is we all know you're not no bank is permitted to buy a depository with the market shares over 10% but now with the growth in the industry's deposits and you guys have been flat you're below 10% so would there and again I apologize if this is the carpet for the horse but is there any consideration once this is all behind you as you guys look to grow through maybe acquisitions
and Michael Santomassimo.
Mike Santomassimo: Hey Gerard, it's Mike. You know, look, we're 100% focused on all of the organic growth opportunities we have across each of the businesses, and the plan that we have been executing that Charlie started when he got here five years ago is the same plan we're going to be executing.
co-staff at CAP, and I think it just involves
Mike Santomassimo: basic execution across all the priorities, whether it's in card, wealth, IB, capital markets, you know, et cetera, et cetera, and so that's our focus, and because we think there's a tremendous amount of opportunity to, you know, build off of the positions we have in each of these businesses, you know, across the country.
Very good. Thank you
Speaker Change: And the last question for today's call will come from Saul Martinez of HSBC.
Your line is open, sir.
Hey, good morning. Thanks for taking my question.
Speaker Change: You addressed in response to an earlier question, you know, changes in the incentive framework across the branches and, you know, there is this debate about the extent and how quickly an asset cap removal would kick-start and allow for balance sheet growth, but I'm curious to hear if you think there are...
still operational slash, you know, cultural constraints that
Speaker Change: you need to address to really, you know, capitalize on the growth opportunities across.
Speaker Change: your businesses, you know, in response to the sales scandal, you changed the compensation structure at the branches. As you mentioned, you've built in safeguards to prevent abuses. And, you know, maybe there's a more of a cultural predilection to be more risk averse. But do you feel like these are factors you still need to address to sort of remove the shackles, create incentives that
Michael Santomassimo
Yeah, let me take a shot at it, Saul.
Speaker Change: And we've been this way since I got here, which is very deliberate about how we go about business expansion.
Speaker Change: and you know whether it's you know an area like the card business where we started you know five years ago or the CIB whether it's in trading or banking or in the private credit space that we're offering you know something the direct lending world for our commercial you know we do you know we're very focused on doing all these in a very controlled way with the right risk framework and with all the right processes in place behind it.
Speaker Change: And so, I said in my remarks, we're not done yet in terms of all the things we have to deliver.
Speaker Change: But we were a very, very different company relative to the types of controls that exist today versus then.
And so it's having those controls in place.
is what gives us the confidence to grow.
Speaker Change: And so when we talk about the opportunities that we have and the things that we're doing...
It's...
Speaker Change: We are very disciplined in our approach in a very linear way.
Speaker Change: towards where we are today versus where we want to go.
Speaker Change: When we have the ability to grow the balance sheet from this point of view, we would expect to see the same. It's not, you know, we're not going to sit here and say the shackles are off, so therefore, you know, the following ten things are going to change materially. It's going to be disciplined, thoughtful, piece by piece, in a very controlled way, and only in places that are supported by the controls that we have in place.
Okay, that's very helpful. Thank you.
All righty.
Speaker Change: Well, listen everyone, thank you very much. We appreciate it and we'll talk to you next quarter. Take care.