Q1 2026 Wells Fargo & Co Earnings Call

April 14, 2026

Speaker #1: 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 2: Welcome, thank you for joining the Wells Fargo Q1 2026 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 one. If you would like to withdraw your question, press star two. 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.

Operator: Welcome, thank you for joining the Wells Fargo Q1 2026 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 one. If you would like to withdraw your question, press star two. 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 #1: 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 .

Speaker #1: If you would like to withdraw your question , press star two . 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 .

Speaker #1: Sir , you may begin

Speaker #2: Good morning . Thank you for joining our call today where our CEO , Charlie Scharf , and our CFO , Mike Santomassimo , will discuss first quarter results and answer your questions .

John Campbell: Good morning. Thank you for joining our call today, where our CEO, Charlie Scharf, and our CFO, Mike Santomassimo, will discuss Q1 results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our Q1 earnings materials, including the release, financial supplement, and presentation deck, are available on our website at wellsfargo.com. 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. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings and the earnings materials available on our website.

Speaker #2: This call is being recorded Before we get started , I would like to remind you that our first quarter earnings materials , including the release , financial supplement and presentation deck , are available on our website at wellsfargo.com 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 .

Speaker #2: Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings and the earnings materials available on our website.

Speaker #2: I will now turn the call over to Charlie . Thanks , John . I'm going to provide some brief comments about our results and update you on our priorities .

John Campbell: I will now turn the call over to Charlie.

Charlie Scharf: Thanks, John. I'm going to provide some brief comments about our results and update you on our priorities. I'll then turn the call over to Mike to review Q1 results in more detail before we take your questions. Let me start with our Q1 financial highlights. We saw continued positive impacts from the investments we've been making, with diluted earnings per share increasing 15%, revenue increasing 6%, loans growing 11%, and deposits up 7% compared to a year ago. Revenue growth was driven by a 5% increase in net interest income and an 8% increase in non-interest income. Our consistent focus on investing across all of our businesses helped contribute to broad-based revenue growth, with each of our operating segments increasing revenue from a year ago. Consumer Banking and Lending revenue grew 7%, and Commercial Banking revenue grew 7% as well.

Speaker #2: I'll then turn the call over to Mike to review first quarter results in more detail . Before we take your questions , let me start with our first quarter financial highlights .

Speaker #2: We saw continued positive impacts from the investments we've been making with diluted earnings per share increasing 15% , revenue , increasing 6% , loans growing 11% , and deposits up 7% compared to a year ago Revenue growth was driven by a 5% increase in net interest income and an 8% increase in non-interest income .

Speaker #2: Our consistent focus on investing across all of our businesses helped contribute to broad based revenue growth , with each of our operating segments increasing revenue from a year ago Consumer banking and lending revenue grew 7% , and commercial banking revenue grew 7% , as well Within our corporate and investment bank , we saw an 11% increase in bank revenue and a 19% increase in market revenue , wealth and investment management grew 14% .

Charlie Scharf: Within our Corporate & Investment Bank, we saw an 11% increase in banking revenue and a 19% increase in market revenue. Wealth & Investment Management grew 14%. While expenses increased, driven by higher revenue-related expenses, we remain focused on expense discipline. At the same time, we're increasing our investments in areas like technology, including AI, as well as in advertising, while continuing to execute on our efficiency initiatives, which has resulted in 23 consecutive quarters of headcount reductions. With revenue growing faster than expenses, pre-tax pre-provision profit grew 14% from a year ago. Credit performance remained strong, and our net charge-off ratio was stable from a year ago at 45 basis points.

Speaker #2: While expenses increased , driven by higher revenue related expenses . We remain focused on expense , discipline . At the same time , we're increasing our investments in areas like technology , including AI , as well as an advertising .

Speaker #2: While continuing to execute on our efficiency initiatives , which has resulted in 23 consecutive quarters of headcount reductions . With revenue growing faster than expenses Pre-tax Pre-provision profit grew 14% from a year ago Credit performance remains strong , and our net charge off ratio was stable from a year ago at 45 basis points Given that non-bank financial lending is generated , a lot of interest lately , Mike will do a deep dive into that portfolio later in the call .

Charlie Scharf: Given that non-bank financial lending has generated a lot of interest lately, Mike will do a deep dive into that portfolio later in the call. I will say, we like the risk-return profile of the portfolio given our deep understanding of the collateral, the diversification across both clients and asset types, and structural protections in place. Finally, we returned $5.4 billion to shareholders in Q1, including $4 billion in common stock repurchases while continuing to operate with significant excess capital. Turning to the progress we made during the quarter on our strategic priorities, last month, we closed our final outstanding consent order, bringing the total to 14 terminated since 2019. We are incredibly proud of the hard work and unwavering commitment that was required to reach this milestone and understand the importance of sustaining our risk and control culture.

Speaker #2: But I will say we'd like the risk return profile of the portfolio , given our deep understanding of the collateral , the diversification across both clients and asset types , and structural protections in place .

Speaker #2: And finally , we returned $5.4 billion to shareholders in the first quarter , including $4 billion in common stock repurchases . While continuing to operate with significant excess capital Turning to the progress we made during the quarter on our strategic priorities Last month , we closed our final outstanding consent order , bringing the total to 14 terminated since 2019 .

Speaker #2: We are incredibly proud of the hard work and unwavering commitment that was required to reach this milestone and understand the importance of sustaining our risk and control culture .

Speaker #2: With this work behind us . We are now focusing more fully on accelerating growth and improving returns . We are seeing momentum across many business drivers , which we highlight on slide two of our presentation deck Let me share some of them , starting with our consumer franchise .

Charlie Scharf: With this work behind us, we are now focusing more fully on accelerating growth and improving returns. We are seeing momentum across many business drivers, which we highlight on slide two of our presentation deck. Let me share some of them, starting with our consumer franchise. In Q1, we launched two new travel-focused reward credit cards available exclusively to new and existing Premier and Private Wealth clients. Over the past five years, continued enhancements to our credit card offerings have driven higher purchase volume and loan balances, which were both up from a year ago. New account growth remained strong, increasing nearly 60% from a year ago, driven by higher digital and branch-based openings. We also had continued strong growth in our auto business.

Speaker #2: In the first quarter , we launched two new travel focused rewards credit cards available exclusively to new and existing Premier and private wealth clients Over the past five years , continued enhancements to our credit card offerings have driven higher purchase volume and loan balances , which were both up from a year ago New account growth remains strong , increasing nearly 60% from a year ago , driven by higher digital and branch based openings We also had continued strong growth in our auto business .

Speaker #2: Originations more than doubled from a year ago , benefiting from being the preferred financing provider for Volkswagen and Audi vehicles in the United States .

Charlie Scharf: Originations more than doubled from a year ago, benefiting from being the preferred financing provider for Volkswagen and Audi vehicles in the United States, as well as our methodical return to broad-spectrum lending. Importantly, credit performance has remained strong and in line with our expectations. We have continued to invest in marketing to help drive new primary checking accounts, and consumer checking account openings increased over 15% from a year ago. While this momentum is encouraging, we are not yet growing accounts at the pace we expect to over time. As customer expectations evolve, we continue to modernize our digital offering, complementing our in-person service with seamless mobile experiences. The momentum continued in Q1 as mobile active users surpassed 33 million.

Speaker #2: As well as our methodical return to broad spectrum lending Importantly , credit performance has remained strong and in line with our expectations . We have continued to invest in marketing to help drive new primary checking accounts and consumer checking account openings increased over 15% from a year ago .

Speaker #2: While this momentum is encouraging , we are not yet growing accounts at the pace we expect to over time as customer expectations evolve .

Speaker #2: We continue to modernize our digital offering , complementing our in-person service with seamless mobile experiences . The momentum continued in the first quarter as mobile active users surpassed 33 million .

Speaker #2: Zelle transactions increased 14% from a year ago , and Fargo , our AI powered virtual assistant , reached over 1 billion customer interactions , less than three years since its launch We had continued momentum in our wealth and investment management business with client assets growing 11% from a year ago to $2.2 trillion .

Charlie Scharf: Zelle transactions increased 14% from a year ago, and Fargo, our AI-powered virtual assistant, reached over 1 billion customer interactions less than three years since its launch. We had continued momentum in our Wealth & Investment Management business, with client assets growing 11% from a year ago to $2.2 trillion. Company-wide net asset flows accelerated in the quarter, reaching their highest level in over 10 years. Turning to our commercial businesses. In Commercial Banking, we continued to hire coverage bankers to drive growth, and we are seeing the early signs of success with higher new client acquisition as well as loan and deposit growth. Average loans and deposits both grew by approximately $5 billion in Q1, demonstrating accelerating momentum. We are also continuing to grow our banking and markets capabilities while not significantly changing the risk profile of the company.

Speaker #2: Company wide net asset flows accelerated in the quarter , reaching their highest level in over ten years . Turning to our commercial businesses in commercial banking , we continued to hire coverage bankers to drive growth , and we are seeing the early signs of success with higher new client acquisition as well as loan and deposit growth .

Speaker #2: Average loans and deposits both grew by approximately $5 billion in the first quarter , demonstrating accelerating momentum . We are also continuing to grow our banking and markets capabilities .

Speaker #2: While not significantly changing the risk profile of the company . We continue to invest in senior talent to improve client coverage and broaden our product capabilities in investment banking .

Charlie Scharf: We continue to invest in senior talent to improve client coverage and broaden our product capabilities in investment banking. These investments helped drive 13% revenue growth from a year ago. While market conditions can change, the outlook for investment banking remains strong, and we entered Q2 with a strong pipeline driven by M&A and equity capital markets. We continued to grow our markets business amid a mixed and volatile trading environment, with revenue up 19% from a year ago. Client sentiment is cautious but engaged as macro and geopolitical uncertainty has increased, and clients have largely shifted to a more selective and defensive posture. Finally, we completed the sale of our railcar leasing business at the beginning of the quarter. We have now substantially completed our efforts to refocus and simplify the company by exiting or selling 12 businesses since 2019. Let me now turn to the future.

Speaker #2: These investments help drive 13% revenue growth from a year ago , while market conditions can change the outlook for investment banking remains strong and we entered the second quarter with a strong pipeline driven by M&A and equity capital markets .

Speaker #2: We continued to grow our markets business amid a mixed and volatile trading environment , with revenue up 19% from a year ago . Client sentiment is cautious , but engaged as macro and geopolitical uncertainty has increased and clients have largely shifted to a more selective and defensive posture Finally , we completed the sale of our railcar leasing business at the beginning of the quarter .

Speaker #2: We have now substantially completed our efforts to refocus and simplify the company by exiting or selling 12 businesses . Since 2019 . Let me now turn to the future .

Speaker #2: I want to start by highlighting what we are watching in the economic data . The US labor market continues to cool in an orderly but uneven fashion , with few signs of systemic stress .

Charlie Scharf: I want to start by highlighting what we are watching in the economic data. US labor market continues to cool in an orderly but uneven fashion, with few signs of systemic stress. Layoff activity remains contained. Weekly jobless claims reinforce this picture and are not signaling labor stress. The unemployment rate dipped to 4.3% in March, but this continues to reflect slower rehiring and longer job searches, not renewed labor market strength. Despite slowing employment momentum, US economic growth has held up. The US consumer remains resilient in the aggregate, but increasingly bifurcated beneath the surface. Spending has held up into early 2026 despite slower job growth, supported by higher-income households, steady wage growth for incumbent workers, and continued access to credit. However, confidence indicators and underlying balance sheet trends point to rising stress for less affluent consumers. Upper-income consumers continue to benefit from elevated equity prices.

Speaker #2: Lay activity remains contained . Weekly jobless claims reinforce this picture and are not signaling labor stress . The unemployment rate dipped to 4.3% in March , but this continues to reflect slower rehiring and longer job searches not renewed .

Speaker #2: Labor market strength . Despite slowing employment momentum , US economic growth has held up . The US consumer remains resilient in the aggregate , but increasingly bifurcated beneath the surface Spending has held up into early 2026 despite slower job growth , supported by higher income households Steady wage growth for incumbent workers and continued access to credit .

Speaker #2: However , confidence indicators and underlying balance sheet trends point to rising stress for less affluent consumers . Upper income consumers continue to benefit from elevated equity prices .

Speaker #2: Home equity and cash buffers accumulated earlier in the cycle , allowing discretionary spending to remain firm . By contrast , lower income households are more exposed to higher interest rates and energy prices Financial markets have absorbed these crosscurrents with resilience , but we expect continued volatility driven by geopolitical headlines and outcomes , as well as the unfolding impact of higher commodity prices .

Charlie Scharf: Home equity and cash buffers accumulated earlier in the cycle, allowing discretionary spending to remain firm. By contrast, lower-income households are more exposed to higher interest rates and energy prices. Financial markets have absorbed these crosscurrents with resilience, but we expect continued volatility driven by geopolitical headlines and outcomes, as well as the unfolding impact of higher commodities prices. Turning to what we are seeing from our customers, the financial health of consumers and businesses remains strong. Consumers are spending more than a year ago, which includes spending more on gas, but they haven't slowed spending on everything else. Gas represented 6% of our total debit card spend and 4% of our total credit card spend before the rise in oil prices. They now represent 7% and 5% of debit and credit card spend. Note that these numbers are higher for low-income households.

Speaker #2: Turning to what we are seeing from our customers , the financial health of consumers and businesses remains strong Consumers are spending more than a year ago , which includes spending more on gas .

Speaker #2: But they haven't slowed spending on everything else Gas represented 6% of our total debit card spend and 4% of our total credit card spend before the rise in oil prices .

Speaker #2: They now represent 7% and 5% of debit and credit card spend Note that these numbers are higher for low income households . We have seen historically that it often takes consumers several months to reduce their spend levels on other categories to adjust for higher oil prices And while we don't know the exact timing , we expect to see the same in the second half of the year .

Charlie Scharf: We have seen historically that it often takes consumers several months to reduce their spend levels on other categories to adjust for higher oil prices. While we don't know the exact timing, we'd expect to see the same in H2 of the year. We also expect that higher energy prices will impact other goods and services. The duration and severity will be driven by the level and duration of higher oil prices. The ultimate impact on credit performance is not yet clear given the uncertainties I just mentioned, but the strength across our consumer portfolios, including lower charge-offs and improved early-stage delinquencies in our auto and credit card portfolios from a year ago, provide time for consumers to adjust their behaviors.

Speaker #2: We also expect that higher energy prices will impact other goods and services . The duration and severity will be driven by the level and duration of higher oil prices .

Speaker #2: The ultimate impact on credit performance is not yet clear . Given the uncertainties I just mentioned , but the strength across our consumer portfolios , including lower charge offs and improved early stage delinquencies in our auto and credit card portfolios from a year ago provide time for consumers to adjust their behaviors .

Charlie Scharf: Having said that, at this point, it's likely there will be some economic impact based on what's already occurred, but there are both risks and potential mitigants, so it's hard to predict the ultimate impact. Middle market and large corporate clients are in a similar position. They have been resilient, and balance sheets are strong, but they tell us they're approaching the remainder of the year cautiously. As we grow our balance sheet, we are cognizant there are risks that we do not yet see in our data and will respond accordingly. Putting all of this together, it's likely energy prices will have some impact on the economy, but we feel good about where our customers and our company stand today. We've managed credit well over many cycles and are well-positioned to support our customers and navigate a variety of economic scenarios.

Speaker #2: Having said that , at this point , it's likely there will be some economic impact based on what's already occurred , but there are both risks and potential mitigants , so it's hard to predict the ultimate impact Middle market and large corporate clients are in a similar position .

Speaker #2: They have been resilient and balance sheets are strong , but they tell us they're approaching the remainder of the year cautiously As we grow our balance sheet , we are cognizant there are risks that we do not yet see in our data and will respond accordingly Putting all of this together , it's likely energy prices will have some impact on the economy .

Speaker #2: But we feel good about where our customers and our company stand today We've managed credit well over many cycles and are well positioned to support our customers and navigate a variety of economic scenarios Turning to the recently proposed capital rules , we appreciate that the work our regulators have been doing is based on analysis , interagency coordination , public comment , and a focus on reforms that unlock economic potential Importantly , the proposals are designed to maintain a strong and resilient banking system that allow the industry to support the flow of credit and help grow the broader economy .

Charlie Scharf: Turning to the recently proposed capital rules, we appreciate that the work our regulators have been doing is based on analysis, interagency coordination, public comment, and a focus on reforms that unlock economic potential. Importantly, the proposals are designed to maintain a strong and resilient banking system that allow the industry to support the flow of credit and help grow the broader economy. We continue to work through the details but view the proposals as a constructive step in supporting our role in serving households and businesses. If the proposals do not change, and based on our current balance sheet composition, we estimate that under the new rules, our risk-weighted assets could decrease by approximately 7%. Regarding the GSIB surcharge, under the current proposal, we expect to remain around 1.5% for the foreseeable future, even as we continue to grow.

Speaker #2: We continue to work through the details, but view the proposals as a constructive step in supporting our role in serving households and businesses.

Speaker #2: If the proposals do not change, and based on our current balance sheet composition, we estimate that under the new rules our risk-weighted assets could decrease by approximately 7%.

Speaker #2: Regarding the surcharge under the current proposal , we expect to remain around 1.5% for the foreseeable future . Even as we continue to grow .

Charlie Scharf: In closing, we delivered solid financial results in Q1 that were consistent with our expectations. We have clear plans in place and are focused on driving continued organic growth and increasing returns across the franchise using our broad set of capabilities. We're executing on our plans, and I'm encouraged by the momentum we have built and continue to have confidence that we can continue to deliver stronger results in all of our businesses. I'll now turn the call over to Mike.

Speaker #2: In closing, we delivered solid financial results in the first quarter that were consistent with our expectations. We have clear plans in place and are focused on driving continued organic growth and increasing returns across the franchise.

Speaker #2: Using our broad set of capabilities, we're executing on our plans, and I'm encouraged by the momentum we have built and continue to have confidence that we can continue to deliver stronger results in all of our businesses. I'll now turn the call over to Mike.

Mike Santomassimo: Thank you, Charlie, and good morning, everyone. Since Charlie covered the key drivers of our improved financial results and the momentum we are seeing across our businesses on slide 2, I will start my comments on slide 3. Our Q1 results included $135 million or $0.04 per share of discrete tax benefits related to the resolution of prior period matters. Income taxes also benefited from the annual vesting of stock-based compensation, and the amount of the benefit in Q1 was similar to the amount in Q1 of last year. Turning to slide 5, net interest income increased $601 million or 5% from a year ago and decreased $235 million or 2% from Q4. Most of the decline from Q4 was driven by 2 fewer days in Q1.

Michael Santomassimo: Thank you, Charlie, and good morning, everyone. Since Charlie covered the key drivers of our improved financial results and the momentum we are seeing across our businesses on slide 2, I will start my comments on slide 3. Our Q1 results included $135 million or $0.04 per share of discrete tax benefits related to the resolution of prior period matters. Income taxes also benefited from the annual vesting of stock-based compensation, and the amount of the benefit in Q1 was similar to the amount in Q1 of last year. Turning to slide 5, net interest income increased $601 million or 5% from a year ago and decreased $235 million or 2% from Q4. Most of the decline from Q4 was driven by 2 fewer days in Q1.

Speaker #2: Thank you , Charlie , and good morning , everyone Since Charlie covered the key drivers of our improved financial results and the momentum we are seeing across our businesses , on slide two , I will start my comments on slide three .

Speaker #2: Our first quarter results included $135 million, or $0.04 per share, of discrete tax benefits related to the resolution of prior period matters. Income taxes also benefited from the annual vesting of stock-based compensation, and the amount of the benefit in the first quarter was similar to the amount in the first quarter of last year.

Speaker #2: Turning to slide five . Net interest income increased 601 million , or 5% , from a year ago , and decreased $235 million , or 2% from the fourth quarter .

Speaker #2: Most of the decline from the fourth quarter was driven by two fewer days in the first quarter. The reduction also reflected the full-quarter impact of the rate cuts in the fourth quarter of last year.

Mike Santomassimo: The reduction also reflected the full quarter impact of the rate cuts in Q4 of last year on our floating rate loans and securities. This decline was partially offset by higher markets net interest income, higher loan and deposit balances, as well as continued fixed asset repricing. I also wanted to explain the 13 basis point decline in net interest margin from Q4. As expected, the largest driver of the decline was the growth in the balance sheet in the markets business. As we have highlighted in the past, while the majority of these assets are lower margin, they also have lower risk and are less capital intensive, and our ability to support this client activity should lead to more business. Second is the growth in interest-bearing deposits and other short-term borrowings, and lastly, the impact of lower interest rates.

Michael Santomassimo: The reduction also reflected the full quarter impact of the rate cuts in Q4 of last year on our floating rate loans and securities. This decline was partially offset by higher markets net interest income, higher loan and deposit balances, as well as continued fixed asset repricing. I also wanted to explain the 13 basis point decline in net interest margin from Q4. As expected, the largest driver of the decline was the growth in the balance sheet in the markets business. As we have highlighted in the past, while the majority of these assets are lower margin, they also have lower risk and are less capital intensive, and our ability to support this client activity should lead to more business. Second is the growth in interest-bearing deposits and other short-term borrowings, and lastly, the impact of lower interest rates.

Speaker #2: On our floating rate loans and securities . This decline was partially offset by higher markets and interest income , higher loan and deposit balances , as well as continued fixed asset repricing .

Speaker #2: I also want to explain the 13 basis point decline in net interest margin from the fourth quarter . As expected , the largest driver of the decline was the growth in the balance sheet in the markets business .

Speaker #2: As we have highlighted in the past , while the majority of these assets are lower margin , they also have lower risk and are less capital intensive .

Speaker #2: And our ability to support this client activity should lead to more business Second is the growth in interest bearing deposits and other short term borrowings .

Speaker #2: And lastly , the impact of lower interest rates . When we provided our full year guidance last quarter , we anticipated some margin contraction .

Mike Santomassimo: When we provided our full-year guidance last quarter, we anticipated some margin contraction for these reasons, and I would expect additional margin compression next quarter. I will update you on our full-year net interest income expectations later on the call. Moving to slide 6. We had strong loan growth with both average and period-end loans increasing from Q4 and from a year ago. Period-end loan balances grew 11% from a year ago and exceeded $1 trillion for the first time since Q1 2020. Average loans increased by $87.8 billion, or 10% from a year ago, driven by growth in commercial and industrial loans, as well as growth across our consumer portfolios, except for residential mortgage. Turning to slide 7. Last quarter, we provided more detail on our non-bank financial institution loan portfolio.

Michael Santomassimo: When we provided our full-year guidance last quarter, we anticipated some margin contraction for these reasons, and I would expect additional margin compression next quarter. I will update you on our full-year net interest income expectations later on the call. Moving to slide 6. We had strong loan growth with both average and period-end loans increasing from Q4 and from a year ago. Period-end loan balances grew 11% from a year ago and exceeded $1 trillion for the first time since Q1 2020. Average loans increased by $87.8 billion, or 10% from a year ago, driven by growth in commercial and industrial loans, as well as growth across our consumer portfolios, except for residential mortgage. Turning to slide 7. Last quarter, we provided more detail on our non-bank financial institution loan portfolio.

Speaker #2: For these reasons , and I would expect additional margin compression next quarter . I will update you on our full year net interest income expectations later on the call Moving to slide six , we had strong loan growth with both average and period end loans increasing from the fourth quarter and from a year ago , period end loan balances grew 11% from a year ago and exceeded 1 trillion for the first time since the first quarter of 2020 .

Speaker #2: Average loans increased 87.8 billion , or 10% , from a year ago , driven by growth in commercial and industrial loans , as well as growth across our consumer portfolios .

Speaker #2: Except for residential mortgage . Turning to slide seven . Last quarter , we provided more detail on our financials , except bank's loan portfolio Today I want to build on that by giving you an even deeper look into the portfolios composition and risk profile .

Mike Santomassimo: Today, I want to build on that by giving you an even deeper look into the portfolio's composition and risk profile. I will be anchoring my comments on how these loans are reported in our 10-Qs and 10-K, which we think is a better way to understand our portfolio. We also report loans to non-depository financial institutions in our call reports. Since we often get questions on how these disclosures differ, we have included a reconciliation in our appendix to illustrate the differences. At the end of Q1, Financials except banks loans totaled approximately $210 billion, or 21% of our total loan portfolio. While our Financials except banks category is large and has been growing, it is comprised of many different types of lending and collateral. We've been making these types of loans for many years, and we typically have broader relationships with these institutional clients.

Michael Santomassimo: Today, I want to build on that by giving you an even deeper look into the portfolio's composition and risk profile. I will be anchoring my comments on how these loans are reported in our 10-Qs and 10-K, which we think is a better way to understand our portfolio. We also report loans to non-depository financial institutions in our call reports. Since we often get questions on how these disclosures differ, we have included a reconciliation in our appendix to illustrate the differences. At the end of Q1, Financials except banks loans totaled approximately $210 billion, or 21% of our total loan portfolio. While our Financials except banks category is large and has been growing, it is comprised of many different types of lending and collateral. We've been making these types of loans for many years, and we typically have broader relationships with these institutional clients.

Speaker #2: I will be anchoring my comments on how these loans are reported in our 10-Qs and 10-K, which we think is a better way to understand our portfolio.

Speaker #2: We also report loans to non-depository financial institutions in our call reports, since we often get questions on how these disclosures differ. We have included a reconciliation in our appendix to illustrate the differences.

Speaker #2: At the end of the first quarter, financials except banks' loans totaled approximately $210 billion, or 21% of our total loan portfolio, while our financials except banks' category is large and has been growing.

Speaker #2: It is comprised of many different types of lending and collateral. We've been making these types of loans for many years, and we typically have broader relationships with these institutional clients as well.

Mike Santomassimo: As with any loan portfolio, there are inherent risks, but we are comfortable with our exposure based on the profile of borrowers, the diversity of collateral, our historical loss experience, and our underwriting practices and lending structures. The lending structures and overall risk management are executed by specialist groups with expertise in assessing and structurally mitigating the risks associated with these types of customers' products and collateral. Our underwriting reflects the specific risk profiles of counterparty, as well as our assessment of the collateral. These loans are generally secured with advance rates that provide significant margins of protection against expected losses during periods of stress, and the lending structures often include structural protections if collateral performance deteriorates. This portfolio has delivered strong credit performance over time. In Q1, this portfolio had $237 million of non-accrual loans or 11 basis points of total loans.

Michael Santomassimo: As with any loan portfolio, there are inherent risks, but we are comfortable with our exposure based on the profile of borrowers, the diversity of collateral, our historical loss experience, and our underwriting practices and lending structures. The lending structures and overall risk management are executed by specialist groups with expertise in assessing and structurally mitigating the risks associated with these types of customers' products and collateral. Our underwriting reflects the specific risk profiles of counterparty, as well as our assessment of the collateral. These loans are generally secured with advance rates that provide significant margins of protection against expected losses during periods of stress, and the lending structures often include structural protections if collateral performance deteriorates. This portfolio has delivered strong credit performance over time. In Q1, this portfolio had $237 million of non-accrual loans or 11 basis points of total loans.

Speaker #2: As with any loan portfolio, there are inherent risks, but we are comfortable with our exposure based on the profile of borrowers.

Speaker #2: The diversity of collateral , our historical loss experience and our underwriting practices , and lending structures , the lending structures and overall risk management are executed by specialist groups with expertise in assessing and structurally mitigating the risks associated with these types of customers , products and collateral Our underwriting reflects the specific risk profiles of counterparty , as well as our assessment of the collateral .

Speaker #2: These loans are generally secured with advanced rates that provide significant margins of protection against expected losses during periods of stress, and the lending structures often include structural protections.

Speaker #2: If collateral performance deteriorates . This portfolio has delivered strong credit performance over time in the first quarter . This portfolio had 237 million of Non-accrual loans , or 11 basis points of total loans Before I walk you through the two largest categories of this portfolio to give you a better understanding of what types of loans are included and how we might how we mitigate the risk .

Mike Santomassimo: Before I walk you through the two largest categories of this portfolio to give you a better understanding of what types of loans are included and how we mitigate the risk, let me briefly highlight the two smallest categories. The names of these categories track with the types of underlying collateral, real estate finance, which is commercial real estate mortgage loans and residential mortgage warehouse lending, and consumer finance, which includes auto, credit card, and other consumer lending. In real estate finance, the portfolio is diversified by collateral type and has structural protections, which may include collateral approval rights. In consumer finance, we have diversified collateral and structural protections, including concentration limits. Turning to slide eight, in our largest category, asset managers and funds.

Michael Santomassimo: Before I walk you through the two largest categories of this portfolio to give you a better understanding of what types of loans are included and how we mitigate the risk, let me briefly highlight the two smallest categories. The names of these categories track with the types of underlying collateral, real estate finance, which is commercial real estate mortgage loans and residential mortgage warehouse lending, and consumer finance, which includes auto, credit card, and other consumer lending. In real estate finance, the portfolio is diversified by collateral type and has structural protections, which may include collateral approval rights. In consumer finance, we have diversified collateral and structural protections, including concentration limits. Turning to slide eight, in our largest category, asset managers and funds.

Speaker #2: Let me briefly highlight the two smallest categories . The names of these categories track with the types of underlying collateral real estate finance , which is commercial real estate , mortgage loans , and residential mortgage warehouse lending , and consumer finance , which includes auto , credit card and other consumer lending in real estate finance , the portfolio is diversified by collateral type and has structural protections , which may include collateral approval rights and consumer finance .

Speaker #2: We have diversified collateral and structural protections , including concentration limits Turning to slide eight . In our largest category , asset managers and funds , 85% of these loans are originated in our fund finance groups and are predominantly subscription facilities , also known as capital facilities provided to large private equity and private credit funds with established track records .

Mike Santomassimo: 85% of these loans are originated in our fund finance groups and are predominantly subscription facilities, also known as capital call facilities, provided to large private equity and private credit funds with established track records where we have long-standing relationships. The funds use these facilities for flexibility and liquidity when making investments, with repayments supported by the investors' committed uncalled capital. This is secured lending backed by a diversified pool of limited partner commitments, with no individual fund making up more than 1.5% of total commitments. We lend at advance rates that provide significant margin protection against investors failing to fund, and the lending agreements include a security interest over investor capital call commitments and the fund's right to issue capital calls, including the ability to directly make them ourselves. From a risk perspective, these structural protections have resulted in a portfolio that has demonstrated very strong credit performance.

Michael Santomassimo: 85% of these loans are originated in our fund finance groups and are predominantly subscription facilities, also known as capital call facilities, provided to large private equity and private credit funds with established track records where we have long-standing relationships. The funds use these facilities for flexibility and liquidity when making investments, with repayments supported by the investors' committed uncalled capital. This is secured lending backed by a diversified pool of limited partner commitments, with no individual fund making up more than 1.5% of total commitments. We lend at advance rates that provide significant margin protection against investors failing to fund, and the lending agreements include a security interest over investor capital call commitments and the fund's right to issue capital calls, including the ability to directly make them ourselves. From a risk perspective, these structural protections have resulted in a portfolio that has demonstrated very strong credit performance.

Speaker #2: Where we have long-standing relationships. The funds use these facilities for flexibility and liquidity when making investments, with repayment supported by the investors committed on capital.

Speaker #2: This is secured lending backed by a diversified pool of limited partner commitments with no individual fund making up more than 1.5% of total commitments .

Speaker #2: We lend at advanced rates to provide significant margin protection against investors , failing to fund and the lending agreements include a security interest over investor capital commitments and the fund's right to issue capital calls , including the ability to directly make them ourselves .

Speaker #2: From a risk perspective, these structural protections have resulted in a portfolio that demonstrated very strong credit performance. The next category is commercial finance, which is the category where we tend to get the most questions.

Mike Santomassimo: The next category is commercial finance, which is the category where we tend to get the most questions. As you can see on slide nine, we have broken up this category into five different loan types that are originated across both our Corporate & Investment Banking and Commercial Banking businesses. I'll cover corporate debt finance on the next slide. Let me start with the next largest component, which includes supply chain and other specialized industries, which are originated in Commercial Banking and are loans to large and established clients with diversified pools of receivables. These loans are secured by accounts receivable and are margined against a borrowing base. The next component is commercial asset-backed securities, which are originated in Corporate & Investment Banking. These loans are primarily to clients that lease aircraft, containers, rail cars, and equipment, and are managed by experienced teams who understand these industries.

Michael Santomassimo: The next category is commercial finance, which is the category where we tend to get the most questions. As you can see on slide nine, we have broken up this category into five different loan types that are originated across both our Corporate & Investment Banking and Commercial Banking businesses. I'll cover corporate debt finance on the next slide. Let me start with the next largest component, which includes supply chain and other specialized industries, which are originated in Commercial Banking and are loans to large and established clients with diversified pools of receivables. These loans are secured by accounts receivable and are margined against a borrowing base. The next component is commercial asset-backed securities, which are originated in Corporate & Investment Banking. These loans are primarily to clients that lease aircraft, containers, rail cars, and equipment, and are managed by experienced teams who understand these industries.

Speaker #2: As you can see on slide nine , we have broken up this category into five different loan types that are originated across both our corporate and investment banking and commercial banking businesses .

Speaker #2: I'll cover corporate debt finance on the next slide. Let me start with the next largest component, which includes supply chain and other specialized industries. These are originated in commercial banking and are loans to large and established clients with diversified pools of receivables.

Speaker #2: These loans are secured by accounts receivable and are margins against a borrowing base. The next component is commercial asset-backed securities, which are originated in Corporate Investment Banking.

Speaker #2: These loans are primarily to clients that lease aircraft, containers, railcars, and equipment, and are managed by experienced teams who understand these industries.

Mike Santomassimo: We typically maintain control over what assets qualify as collateral, regularly monitor the collateral values, and have the ability to require additional collateral or debt paydown if asset values decline. Next is the component we labeled as other. This includes broadly syndicated loan warehouses originated in Corporate & Investment Banking, where we are providing secured lending against portfolios of corporate loans, typically in advance of selling the liabilities and a collateralized loan obligation takeout. Finally, asset-based lending, which is the smallest component. These loans are originated in Commercial Banking and primarily include secured lending to asset-based lenders. The collateral supporting these loans is diversified and is in areas where we have direct lending experience. We have eligibility criteria with concentration limits as well as ongoing collateral monitoring.

Michael Santomassimo: We typically maintain control over what assets qualify as collateral, regularly monitor the collateral values, and have the ability to require additional collateral or debt paydown if asset values decline. Next is the component we labeled as other. This includes broadly syndicated loan warehouses originated in Corporate & Investment Banking, where we are providing secured lending against portfolios of corporate loans, typically in advance of selling the liabilities and a collateralized loan obligation takeout. Finally, asset-based lending, which is the smallest component. These loans are originated in Commercial Banking and primarily include secured lending to asset-based lenders. The collateral supporting these loans is diversified and is in areas where we have direct lending experience. We have eligibility criteria with concentration limits as well as ongoing collateral monitoring.

Speaker #2: We typically maintain control over what assets qualify as collateral. Regulators monitor the collateral values and have the ability to require additional collateral or debt.

Speaker #2: Paydown. If asset values decline, next is the component we labeled as 'other.' This includes broadly syndicated loan warehouses originated in Corporate and Investment Banking, where we are providing secured lending against portfolios of corporate loans.

Speaker #2: Typically in advance of selling the liabilities . And collateralized loan obligation takeout . Finally , asset based lending , which is the smallest component .

Speaker #2: These loans are originated in commercial banking and are primarily include secured lending to asset based lenders . The collateral supporting these loans is diversified and is in areas where we have direct lending experience .

Speaker #2: We have eligibility criteria with concentration limits as well as ongoing collateral monitoring Slide ten provides more detail on corporate debt finance loans made in the corporate investment banking , which includes the majority of our private credit lending .

Mike Santomassimo: Slide 10 provides more detail on corporate debt finance loans made into Corporate & Investment Banking, which includes the majority of our private credit lending. While the demand for these types of loans has grown over the past few years, the structural features of these deals have largely remained the same. We are underwriting both the counterparty and the underlying collateral with over 98% secured by first lien loans across diverse industries. We have over 3,100 unique obligors, and the average obligor concentration in an individual facility is less than 2%. These loans are structured to an AA equivalent credit rating. In addition, nearly all the structures include the ability to approve which assets are included in the facility and revalue assets to drive deleveraging if credit performance weakens.

Michael Santomassimo: Slide 10 provides more detail on corporate debt finance loans made into Corporate & Investment Banking, which includes the majority of our private credit lending. While the demand for these types of loans has grown over the past few years, the structural features of these deals have largely remained the same. We are underwriting both the counterparty and the underlying collateral with over 98% secured by first lien loans across diverse industries. We have over 3,100 unique obligors, and the average obligor concentration in an individual facility is less than 2%. These loans are structured to an AA equivalent credit rating. In addition, nearly all the structures include the ability to approve which assets are included in the facility and revalue assets to drive deleveraging if credit performance weakens.

Speaker #2: While the demand for these types of loans has grown over the past few years , the structural features of these deals have largely remained the same .

Speaker #2: We are underwriting both the counterparty and the underlying collateral , with over 98% secured by first loans across diverse industries . We have over 3100 unique obligors , and the average obligor concentration in an individual facility is less than 2% .

Speaker #2: These loans are structured to an A double a equivalent credit rating . In addition , nearly all the structures include the ability to approve which assets are in the facility and revalue assets to drive deleveraging .

Speaker #2: If credit performance weakens the weighted average . Effective advance rate is less than 60% , which means that on average , the portfolio of loans in the facility , not individual loans , would absorb approximately 40% loss before we would recognize a loss .

Mike Santomassimo: The weighted average effective advance rates are less than 60%, which means that on average, the portfolio of loans in the facility, not individual loans, would absorb approximately 40% loss before we would recognize a loss. These structures provide significant protection, and as a result, this portfolio has demonstrated strong credit performance. However, we continue to monitor this portfolio closely as the markets evolve. I've provided a lot of details, but the main points I want to leave you with regarding our financials except banks portfolio are, while this portfolio has provided an attractive risk return through many economic environments, there are risks associated with any lending we do. However, we feel comfortable with this portfolio for many reasons, including we have decades of lending experience, a deep understanding of the collateral, and experienced underwriters.

Michael Santomassimo: The weighted average effective advance rates are less than 60%, which means that on average, the portfolio of loans in the facility, not individual loans, would absorb approximately 40% loss before we would recognize a loss. These structures provide significant protection, and as a result, this portfolio has demonstrated strong credit performance. However, we continue to monitor this portfolio closely as the markets evolve. I've provided a lot of details, but the main points I want to leave you with regarding our financials except banks portfolio are, while this portfolio has provided an attractive risk return through many economic environments, there are risks associated with any lending we do. However, we feel comfortable with this portfolio for many reasons, including we have decades of lending experience, a deep understanding of the collateral, and experienced underwriters.

Speaker #2: These structures provide a significant protection , and as a result , this portfolio is demonstrated strong credit performance . However , we continue to monitor this portfolio closely as the markets evolve .

Speaker #2: I provided a lot of details , but the main points I want to leave you with regarding our financials , except bank's portfolio are while this portfolio is provided , an attractive risk return to many economic environments , there are risks associated with any lending we do .

Speaker #2: However , we feel comfortable with this portfolio for many reasons , including . We have decades of lending experience , a deep understanding of the collateral and experience underwriters we maintain diversification across both clients and asset types , and we structure the loans with protections designed to limit downside risk Turning to deposits on slide 11 .

Mike Santomassimo: We maintain diversification across both clients and asset types, and we structure the loans with protections designed to limit downside risk. Turning to deposits on slide 11, average deposits increased $75.7 billion or 6% from a year ago, with growth across our consumer and commercial businesses and in corporate treasury. We achieved this growth while reducing average deposit cost by 15 basis points from a year ago as rates declined, and with lower interest-bearing deposit yields across all of our businesses. Turning to slide 10, non-interest income increased $696 million or 8% from a year ago. We had growth across most of our business-related categories, particularly in areas where we have been investing, including higher investment advisory fees and brokerage commissions, as well as card and investment banking fees. Turning to expenses on slide 13, non-interest expense increased $439 million or 3% from a year ago.

Michael Santomassimo: We maintain diversification across both clients and asset types, and we structure the loans with protections designed to limit downside risk. Turning to deposits on slide 11, average deposits increased $75.7 billion or 6% from a year ago, with growth across our consumer and commercial businesses and in corporate treasury. We achieved this growth while reducing average deposit cost by 15 basis points from a year ago as rates declined, and with lower interest-bearing deposit yields across all of our businesses. Turning to slide 10, non-interest income increased $696 million or 8% from a year ago. We had growth across most of our business-related categories, particularly in areas where we have been investing, including higher investment advisory fees and brokerage commissions, as well as card and investment banking fees. Turning to expenses on slide 13, non-interest expense increased $439 million or 3% from a year ago.

Speaker #2: Average deposits increase 75.7 billion , or 6% , from a year ago , with growth across our consumer and commercial businesses and in corporate treasury , we achieved this growth while reducing average deposit costs by 15 basis points from a year ago .

Speaker #2: As rates declined and with lower interest bearing deposit yields across all of our businesses Turning to slide ten . Noninterest income increased 696 million , or 8% , from a year ago .

Speaker #2: We had growth across most of our business related categories , particularly in areas where we have been investing , including higher investment advisory fees and brokerage commissions , as well as card and banking fees .

Speaker #2: Turning to expenses on slide 13 . Non-interest expense increased 439 million , or 3% , from a year ago . The majority of the increase was driven by higher revenue related compensation expense , primarily in wealth and investment management , which , as I'd like to remind you , is a good thing as these higher expenses are more than offset by higher non-interest income .

Mike Santomassimo: The majority of the increase was driven by higher revenue-related compensation expense, primarily in Wealth & Investment Management, which as I like to remind you, is a good thing as these higher expenses are more than offset by higher non-interest income. We also had higher advertising and technology expense driven by the investments we are making in our businesses to generate growth. These higher expenses were partially offset by the impact of efficiency initiatives. Non-interest expense increased $604 million compared to Q4, which included higher severance expense and an FDIC special assessment credit of approximately $200 million. Our expenses in Q1 included approximately $700 million of seasonally higher expenses, including payroll taxes, restricted stock expense for retirement eligible employees, and 401 matching contributions. Turning to credit quality on slide 14.

Michael Santomassimo: The majority of the increase was driven by higher revenue-related compensation expense, primarily in Wealth & Investment Management, which as I like to remind you, is a good thing as these higher expenses are more than offset by higher non-interest income. We also had higher advertising and technology expense driven by the investments we are making in our businesses to generate growth. These higher expenses were partially offset by the impact of efficiency initiatives. Non-interest expense increased $604 million compared to Q4, which included higher severance expense and an FDIC special assessment credit of approximately $200 million. Our expenses in Q1 included approximately $700 million of seasonally higher expenses, including payroll taxes, restricted stock expense for retirement eligible employees, and 401 matching contributions. Turning to credit quality on slide 14.

Speaker #2: We also had higher advertising and technology expense driven by the investments we were making in our businesses to generate growth . These higher expenses were partially offset by the impact of efficiency initiatives .

Speaker #2: Non-interest expense increased 604 million compared to the fourth quarter , which included higher severance expense and an ICI special Assessment credit of approximately 200 million .

Speaker #2: Our expenses in the first quarter included approximately $700 million of seasonally higher expenses , including payroll taxes , restricted stock expense for retirement eligible employees and for matching contributions Turning to credit quality in slide 14 .

Mike Santomassimo: While the markets have reacted to macroeconomic uncertainty, our actual credit performance in Q1 remains strong. Our net loan charge-off ratio was stable from a year ago and increased 2 basis points from Q4. Commercial credit continues to perform well, and we are not seeing signs of systemic weakness. Commercial net loan charge-offs increased modestly from Q4 to 24 basis points of average loans. Lower commercial real estate losses were offset by higher losses in our commercial and industrial portfolio, driven by a single fraud-related loss in the real estate finance category in the financials except banks portfolio. After this issue emerged, we reviewed the portfolio and believe this was an isolated incident. Consumer net loan charge-offs increased modestly from Q4 to 78 basis points of average loans, reflecting seasonally higher credit card losses.

Michael Santomassimo: While the markets have reacted to macroeconomic uncertainty, our actual credit performance in Q1 remains strong. Our net loan charge-off ratio was stable from a year ago and increased 2 basis points from Q4. Commercial credit continues to perform well, and we are not seeing signs of systemic weakness. Commercial net loan charge-offs increased modestly from Q4 to 24 basis points of average loans. Lower commercial real estate losses were offset by higher losses in our commercial and industrial portfolio, driven by a single fraud-related loss in the real estate finance category in the financials except banks portfolio. After this issue emerged, we reviewed the portfolio and believe this was an isolated incident. Consumer net loan charge-offs increased modestly from Q4 to 78 basis points of average loans, reflecting seasonally higher credit card losses.

Speaker #2: While the markets have reacted to macroeconomic uncertainty , our actual credit performance in the first quarter remains strong . Our net loan charge off ratio was stable from a year ago , and increased two basis points from the fourth quarter .

Speaker #2: Commercial credit continues to perform well and we are not seeing signs of systemic weakness Commercial net loan charge offs increased modestly from the fourth quarter to 24 basis points of average loans .

Speaker #2: Lower commercial real estate losses were offset by higher losses in our commercial and industrial portfolio, driven by a single fraud-related loss in the real estate finance category.

Speaker #2: In the financials , except bank's portfolio after the issue emerged , we reviewed the portfolio and believe this was an isolated incident . Consumer net loan charge offs increased modestly from the fourth quarter to 78 basis points of average loans , reflecting seasonally higher credit card losses compared to a year ago .

Mike Santomassimo: Compared to a year ago, consumer net loan charge-offs declined 8 basis points, with improvements across our consumer portfolios, as well as continued net recoveries in our residential mortgage portfolio. As Charlie highlighted, consumers remain resilient. We continue to closely monitor our portfolios for signs of weakness, but have not observed recent deterioration or meaningful shifts in trends. Non-performing assets as a percentage of total loans were stable with Q4 and declined modestly from a year ago. A modest increase in our allowance for credit losses for loans was driven by higher commercial and industrial and auto loan balances, largely offset by lower allowance for commercial real estate, office, and credit card loans. As we highlighted last quarter, if loan growth remains strong, all else equal, we have to continue to add to the allowance to support higher loan balances. Turning to capital and liquidity on slide 15.

Michael Santomassimo: Compared to a year ago, consumer net loan charge-offs declined 8 basis points, with improvements across our consumer portfolios, as well as continued net recoveries in our residential mortgage portfolio. As Charlie highlighted, consumers remain resilient. We continue to closely monitor our portfolios for signs of weakness, but have not observed recent deterioration or meaningful shifts in trends. Non-performing assets as a percentage of total loans were stable with Q4 and declined modestly from a year ago. A modest increase in our allowance for credit losses for loans was driven by higher commercial and industrial and auto loan balances, largely offset by lower allowance for commercial real estate, office, and credit card loans. As we highlighted last quarter, if loan growth remains strong, all else equal, we have to continue to add to the allowance to support higher loan balances. Turning to capital and liquidity on slide 15.

Speaker #2: Consumer net loan charge-offs declined eight basis points, with improvements across our consumer portfolios, as well as continued net recoveries in our residential mortgage portfolio.

Speaker #2: As Charlie highlighted , consumers remain resilient . We continue to closely monitor our portfolios for signs of weakness but have not observed recent deterioration or meaningful shifts in trends .

Speaker #2: Non-Performing assets as a percentage of total loans were stable , with the fourth quarter and declined modestly from a year ago . A modest increase in our allowance for credit losses for loans was driven by higher commercial and industrial and auto loan balances , largely offset by lower allowance for commercial real estate , office and credit card loans .

Speaker #2: As we as we highlighted last quarter , if loan growth remains strong , all else equal , we have to continue to add to the allowance to support higher loan balances .

Speaker #2: Turning to capital and liquidity on slide 15 , our capital levels remain strong with our Cet1 ratio of 10.3% within our stated 10 to 10 and a half target range , and well above our Cet1 regulatory minimum plus buffers of 8.5% .

Mike Santomassimo: Our capital levels remain strong with our CET1 ratio of 10.3%, within our stated ten to ten and a half target range, and well above our CET1 regulatory minimum plus buffers of 8.5%. We repurchased four billion of common stock in the fourth quarter, and common shares outstanding were down 6% from a year ago. We continue to have excess capital to support clients and to repurchase shares. Moving to our operating segments, starting with consumer banking and lending on slide 16. Of note, to better align branch-based activities, the financials associated with Wells Fargo Premier clients that primarily receive wealth management and financial planning services in our consumer bank branches are now included in consumer, small, and business banking results instead of wealth and investment management. Prior period results have been revised to reflect this change.

Michael Santomassimo: Our capital levels remain strong with our CET1 ratio of 10.3%, within our stated ten to ten and a half target range, and well above our CET1 regulatory minimum plus buffers of 8.5%. We repurchased four billion of common stock in the fourth quarter, and common shares outstanding were down 6% from a year ago. We continue to have excess capital to support clients and to repurchase shares. Moving to our operating segments, starting with consumer banking and lending on slide 16. Of note, to better align branch-based activities, the financials associated with Wells Fargo Premier clients that primarily receive wealth management and financial planning services in our consumer bank branches are now included in consumer, small, and business banking results instead of wealth and investment management. Prior period results have been revised to reflect this change.

Speaker #2: We repurchased 4 billion of common stock in the fourth quarter and common shares outstanding were down 6% from a year ago . We continue to have excess capital support clients and to repurchase shares Moving to our operating segments , starting with consumer banking and lending on slide 16 of note , to better align branch based activities , the financials associated with Wells Fargo Premier clients that primarily receive wealth management and financial planning services in our consumer bank branches are now included in consumer , small and business banking results .

Speaker #2: Instead of wealth and investment management . Prior period results have been revised to reflect this change . Consumer small and business banking revenue increased 9% from year ago , driven by lower deposit pricing , higher deposit loan balances , as well as growth in non-interest income .

Mike Santomassimo: Consumer, Small, and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing, higher deposit, loan balances, as well as growth in non-interest income. Credit Card revenue grew 5% from a year ago due to the higher loan balances driven by higher purchase volume and new account growth. Home Lending revenue declined 9% from a year ago. Third-party mortgage loans serviced for others was down 18% from a year ago as we continue to reduce the size of our servicing business. While originations increased from a year ago, loan balances have continued to decline. The rate of reduction has slowed and should continue to moderate throughout the rest of the year. Auto revenue increased 24% from a year ago due to higher loan balances, and auto originations more than doubled from a year ago. Turning to Commercial Banking results on slide 17.

Michael Santomassimo: Consumer, Small, and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing, higher deposit, loan balances, as well as growth in non-interest income. Credit Card revenue grew 5% from a year ago due to the higher loan balances driven by higher purchase volume and new account growth. Home Lending revenue declined 9% from a year ago. Third-party mortgage loans serviced for others was down 18% from a year ago as we continue to reduce the size of our servicing business. While originations increased from a year ago, loan balances have continued to decline. The rate of reduction has slowed and should continue to moderate throughout the rest of the year. Auto revenue increased 24% from a year ago due to higher loan balances, and auto originations more than doubled from a year ago. Turning to Commercial Banking results on slide 17.

Speaker #2: Credit card revenue grew 5% from a year ago due to higher loan balances, driven by higher purchase volume and new account growth.

Speaker #2: Home lending revenue declined 9% from a year ago. Third-party mortgage loans serviced for others was down 18% from a year ago.

Speaker #2: As we continue to reduce the size of our servicing business , while originations increased from a year ago , loan balances have continued to decline , the rate of reduction has slowed and should continue to moderate throughout the rest of the year .

Speaker #2: Auto revenue increased 24% from a year ago due to higher loan balances and auto originations more than doubled from a year ago Turning to commercial banking results on slide 17 .

Mike Santomassimo: Revenue increased 7% from a year ago, driven by higher revenue from tax credit investments and equity investments. Loans grew 4% from a year ago, with broad-based growth from new and existing customers. As a reminder, the growth rate was impacted by the business customers that were transferred to Consumer Banking and Lending in Q3 of last year. Absent this impact, the growth rate would have been 7%. Turning to Corporate & Investment Banking on slide 18. Banking revenue increased 11% from a year ago, driven by higher loan and deposit balances and growth in investment banking revenue. Commercial real estate revenue declined 21% from a year ago, reflecting the gain from the sale of our commercial mortgage servicing business included in our results last year.

Michael Santomassimo: Revenue increased 7% from a year ago, driven by higher revenue from tax credit investments and equity investments. Loans grew 4% from a year ago, with broad-based growth from new and existing customers. As a reminder, the growth rate was impacted by the business customers that were transferred to Consumer Banking and Lending in Q3 of last year. Absent this impact, the growth rate would have been 7%. Turning to Corporate & Investment Banking on slide 18. Banking revenue increased 11% from a year ago, driven by higher loan and deposit balances and growth in investment banking revenue. Commercial real estate revenue declined 21% from a year ago, reflecting the gain from the sale of our commercial mortgage servicing business included in our results last year.

Speaker #2: Revenue increased 7% from a year ago , driven by higher revenue from tax credit investments and equity investments . Loans grew 4% from a year ago , with broad based growth from new and existing customers .

Speaker #2: As a reminder, the growth rate was impacted by the business customers that were transferred to Consumer Banking and Lending in the third quarter of last year.

Speaker #2: Absent this impact , the growth rate would have been 7% . Turning to corporate and investment banking on slide 18 . Banking revenue increased 11% from a year ago , driven by higher loan and deposit balances and growth in investment banking revenue .

Speaker #2: Commercial real estate revenue declined 21% from a year ago , reflecting the gain from the sale of our commercial mortgage servicing business . Included in our results last year , markets revenue grew 19% from a year ago , driven by the higher revenue across most asset classes , reflecting disciplined balance sheet usage , supportive market conditions , and higher customer activity .

Mike Santomassimo: Markets revenue grew 19% from a year ago, driven by the higher revenue across most asset classes, reflecting disciplined balance sheet usage, supportive market conditions, and higher customer activity. Average loans grew 23% from a year ago, with strong growth in Markets and Banking. On slide 19, Wealth & Investment Management revenue increased 14% from a year ago, driven by growth in asset-based fees from increased market valuations as well as higher net interest income due to lower deposit pricing and growth in deposit and loan balances. As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, so Q2 results will reflect market valuations as of 01 April 2024, which were down from 01 January 2024 but up from a year ago. Turning to our 2026 outlook on slide 21.

Michael Santomassimo: Markets revenue grew 19% from a year ago, driven by the higher revenue across most asset classes, reflecting disciplined balance sheet usage, supportive market conditions, and higher customer activity. Average loans grew 23% from a year ago, with strong growth in Markets and Banking. On slide 19, Wealth & Investment Management revenue increased 14% from a year ago, driven by growth in asset-based fees from increased market valuations as well as higher net interest income due to lower deposit pricing and growth in deposit and loan balances. As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, so Q2 results will reflect market valuations as of 01 April 2024, which were down from 01 January 2024 but up from a year ago. Turning to our 2026 outlook on slide 21.

Speaker #2: Average loans grew 23% from a year ago , with strong growth in markets and banking . On slide 19 , wealth and Investment management revenue increased 14% from a year ago , driven by growth in asset based fees from increased market valuations , as well as higher net interest income due to lower deposit pricing and growth in deposit and loan balances .

Speaker #2: As a reminder , the majority of Wim Advisory assets are priced at the beginning of the quarter . So second quarter results will reflect market valuations as of April 1st , which were down from January 1st , but up from a year ago Turning to our 2026 outlook and slide 21 .

Mike Santomassimo: So far, our net interest income for 2026 is largely playing out as expected, and we are maintaining our guidance of $50 billion ± of net interest income this year. As I pointed out earlier, we had strong customer engagement in Q1 with growth in both loans and deposits as we continue to transition back to growth, which we have supported with investments in marketing and bankers. In addition, similar to last year, we expect net interest income to grow over the course of the year. Looking at the key drivers of NII, excluding markets, starting with loans, our outlook was based on average loan growth of mid-single digits from Q4 2025 to Q4 2026.

Michael Santomassimo: So far, our net interest income for 2026 is largely playing out as expected, and we are maintaining our guidance of $50 billion ± of net interest income this year. As I pointed out earlier, we had strong customer engagement in Q1 with growth in both loans and deposits as we continue to transition back to growth, which we have supported with investments in marketing and bankers. In addition, similar to last year, we expect net interest income to grow over the course of the year. Looking at the key drivers of NII, excluding markets, starting with loans, our outlook was based on average loan growth of mid-single digits from Q4 2025 to Q4 2026.

Speaker #2: So far , our net interest income for 2026 is largely playing out as expected , and we are maintaining our guidance of $50 billion plus or minus of net interest income this year .

Speaker #2: As I pointed out earlier, we had strong customer engagement in the first quarter, with growth in both loans and deposits. As we continue to transition back to growth, which we have supported with investments in marketing and bankers.

Speaker #2: In addition , similar to last year , we expect net interest income to grow over the course of the year . Looking at the key drivers of NII , including markets starting with loans , our outlook was based on average loan growth of mid-single digits from fourth quarter 2025 to fourth quarter of 2026 .

Mike Santomassimo: Average loans grew 4% in Q1 from the beginning of the year, and if demand remains strong, average loan growth could be higher than the mid-single-digit increase we had previously assumed. We have also grown deposits, and as we said when we provided our outlook last quarter, much of the growth was from interest-bearing deposits, particularly in our commercial businesses. As a reminder, when the asset cap was in place, these deposits were limited, and now that it's been lifted, we are successfully growing these deposits. While they are higher cost, they are important to our strategy of deepening relationships with our clients. We expect this trend to continue throughout the year.

Michael Santomassimo: Average loans grew 4% in Q1 from the beginning of the year, and if demand remains strong, average loan growth could be higher than the mid-single-digit increase we had previously assumed. We have also grown deposits, and as we said when we provided our outlook last quarter, much of the growth was from interest-bearing deposits, particularly in our commercial businesses. As a reminder, when the asset cap was in place, these deposits were limited, and now that it's been lifted, we are successfully growing these deposits. While they are higher cost, they are important to our strategy of deepening relationships with our clients. We expect this trend to continue throughout the year.

Speaker #2: Average loans grew 4% in the first quarter from the beginning of the year. And if demand remains strong, average loan growth could be higher than mid-single digits.

Speaker #2: The mid-single digits increase . previously assumed . We have also grown deposits and as we said , when we provided our outlook last quarter , much of the growth was from interest bearing deposits , particularly in our commercial businesses .

Speaker #2: As a reminder , when the asset cap is in place , these deposits were limited . And now that it's been lifted , we are successfully growing these deposits .

Speaker #2: While there are while they are higher costs , they are important to our strategy of deepening relationships with our clients . We expect this trend to continue throughout the year .

Mike Santomassimo: We have also successfully grown interest-bearing deposits in our consumer businesses. While we are enhancing marketing and increasing activity in the branches to drive stronger low-cost checking account growth, balances in the accounts are smaller than commercial balances and take longer to grow. If interest rates stay higher for longer, we will have to monitor deposit mix trends to see if there's any impact on non-interest-bearing deposits, which could put some pressure on net interest income excluding markets. In terms of interest rates, our outlook assumed 2 to 3 cuts by the Federal Reserve. The market currently expects fewer cuts, which all else being equal, is positive for NII excluding markets. However, interest rate expectations are constantly changing.

Michael Santomassimo: We have also successfully grown interest-bearing deposits in our consumer businesses. While we are enhancing marketing and increasing activity in the branches to drive stronger low-cost checking account growth, balances in the accounts are smaller than commercial balances and take longer to grow. If interest rates stay higher for longer, we will have to monitor deposit mix trends to see if there's any impact on non-interest-bearing deposits, which could put some pressure on net interest income excluding markets. In terms of interest rates, our outlook assumed 2 to 3 cuts by the Federal Reserve. The market currently expects fewer cuts, which all else being equal, is positive for NII excluding markets. However, interest rate expectations are constantly changing.

Speaker #2: We have also successfully grown interest bearing deposits in our consumer businesses , and while we are enhancing marketing and increasing activity in the branches to drive stronger , low cost checking account growth balances in the accounts are smaller than commercial balances and can take longer to grow .

Speaker #2: If interest rates stay higher for longer, we will have to monitor deposit mix trends to see if there's any impact on non-interest bearing deposits, which could put some pressure on net interest income, excluding markups.

Speaker #2: In terms of interest rates , our outlook assumed 2 or 3 cuts by the Federal Reserve . The market currently expects fewer cuts , which , all else being equal , is positive for NII , excluding markets .

Speaker #2: However , interest rate expectations are constantly changing . The rate cuts we assumed were expected to occur later in the year . So if we get fewer cuts , it would be beneficial , but would only have a modest impact on this year's net interest expectations .

Mike Santomassimo: The rate cuts we assumed were expected to occur later in the year. If we get fewer cuts, it would be beneficial but would only have a modest impact on this year's net interest expectations. Also, longer-term rates are currently a little above the expectations beginning of the year but have been volatile year to date. That could be a small positive if rates remain elevated. In terms of markets NII, as we all know, it is always hard to forecast, but even harder in a dynamic macroeconomic environment like the one we are in now. Higher rates could result in lower markets NII from what we expected at the beginning of the year. As of now, our expectation of approximately $2 billion in 2026 seems appropriate.

Michael Santomassimo: The rate cuts we assumed were expected to occur later in the year. If we get fewer cuts, it would be beneficial but would only have a modest impact on this year's net interest expectations. Also, longer-term rates are currently a little above the expectations beginning of the year but have been volatile year to date. That could be a small positive if rates remain elevated. In terms of markets NII, as we all know, it is always hard to forecast, but even harder in a dynamic macroeconomic environment like the one we are in now. Higher rates could result in lower markets NII from what we expected at the beginning of the year. As of now, our expectation of approximately $2 billion in 2026 seems appropriate.

Speaker #2: Also, longer-term rates are currently a little above the expectations at the beginning of the year, but have been volatile year to date.

Speaker #2: So that could be a small positive if rates remain elevated in terms of markets and AI. As we all know, it is always hard to forecast.

Speaker #2: But even harder in a dynamic macroeconomic environment like the one we are in now . Higher rates could result in lower markets . NII from what we expected at the beginning of the year .

Speaker #2: But as of now, our expectation of approximately $2 billion in 2026 seems appropriate regarding our expense outlook. First quarter expenses were in line with our expectations, and therefore our guidance is unchanged, and we still expect 2026 non-interest expense to be approximately $55.7 billion.

Mike Santomassimo: Regarding our expense outlook, first quarter expenses were in line with our expectations and therefore our guidance has not changed, and we still expect 2026 non-interest expense to be approximately $55.7 billion. In summary, our improved first quarter financial results reflect a continued momentum across the company. We delivered broad-based revenue growth with increases in both net interest income and non-interest income from a year ago. We've maintained strong credit discipline, grew loans and deposits, returned capital to shareholders, and maintained our strong capital position. I'm encouraged by the growth we are seeing across key business drivers in both our commercial and consumer businesses and excited to continue building on this momentum to deliver even better results going forward. We will now take your questions.

Michael Santomassimo: Regarding our expense outlook, first quarter expenses were in line with our expectations and therefore our guidance has not changed, and we still expect 2026 non-interest expense to be approximately $55.7 billion. In summary, our improved first quarter financial results reflect a continued momentum across the company. We delivered broad-based revenue growth with increases in both net interest income and non-interest income from a year ago. We've maintained strong credit discipline, grew loans and deposits, returned capital to shareholders, and maintained our strong capital position. I'm encouraged by the growth we are seeing across key business drivers in both our commercial and consumer businesses and excited to continue building on this momentum to deliver even better results going forward. We will now take your questions.

Speaker #2: In summary , our improved first quarter financial results reflect the continued momentum across the company . We delivered broad based revenue growth with increases in both net interest income and non-interest income from a year ago .

Speaker #2: We maintained strong credit discipline through loans and deposits , return capital to shareholders , and maintained our strong capital position . I'm encouraged by the growth we are seeing across key business drivers in both our commercial and consumer businesses , and excited to continue building on this momentum to deliver even better results .

Speaker #2: Going forward . We will now take your questions

Operator 2: At this time, we will now begin the question and answer session. Our first question will come from John McDonald of Truist Securities. Your line is open.

Operator: At this time, we will now begin the question and answer session. Our first question will come from John McDonald of Truist Securities. Your line is open.

Speaker #1: 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 one .

Speaker #1: Please record your name at the prompt. If you would like to withdraw your question, you may press *2 to remove yourself from the question queue.

Speaker #1: Once again, please press star one and record your name if you would like to ask a question at this time. Please stand by for our first question. And our first question will come from John McDonald of Truist Securities.

Speaker #1: Your line is open .

John McDonald: Hi. Thanks. Good morning. Mike, I was hoping you could give a little more color on the estimated impact of the new regulatory proposals. I think you said your initial estimate is a 7% decline in RWA. Could you give us a sense of the breakdown there between credit risk RWAs and what's driving any potential improvement there, as well as your initial take on op risk and market risk?

Speaker #3: Hi . Thanks . Good morning . Mike . I was hoping you could give a little more color on the estimated impact of the new regulatory proposals .

Speaker #3: I think you said your initial estimate is a 7% decline in RWA. Could you give us a sense of the breakdown there between credit risk RWAs, and what's driving any potential improvement?

Speaker #3: There, as well as your initial take on risk and market risk?

Mike Santomassimo: Sure, John. Thanks for the question. If you just take the big broad categories, market risk isn't a big driver. It's not moving much for us in the proposal. It's kind of flattish. Op risk is going to go up for sure, much less than we thought from the original proposal. Really the big decline is on credit risk, and that's given the nature of our portfolio. You see the biggest driver in the credit risk portfolio is getting the benefit for investment-grade credits, both public and non-public investment-grade credits. That's going to be the biggest driver in the commercial loan space. You do get a significant benefit on the mortgage portfolio, and to a lesser degree on auto and a couple other portfolios. That's how you get to about 7% decline overall.

Michael Santomassimo: Sure, John. Thanks for the question. If you just take the big broad categories, market risk isn't a big driver. It's not moving much for us in the proposal. It's kind of flattish. Op risk is going to go up for sure, much less than we thought from the original proposal. Really the big decline is on credit risk, and that's given the nature of our portfolio. You see the biggest driver in the credit risk portfolio is getting the benefit for investment-grade credits, both public and non-public investment-grade credits. That's going to be the biggest driver in the commercial loan space. You do get a significant benefit on the mortgage portfolio, and to a lesser degree on auto and a couple other portfolios. That's how you get to about 7% decline overall.

Speaker #4: Sure . John , thanks for the question . You know , you know , if you just take the big broad categories , you know , market risk isn't a big driver .

Speaker #4: It's not moving much . You know , for us in this in the proposal . So it's kind of flattish on OP risk is going to go up and you know , for sure much less than we thought from the original proposal .

Speaker #4: And really the big , big decline is on credit risk . And that's given the nature of of our portfolio . So you see , you know , the biggest driver in the credit risk portfolio is getting the the benefit for investment grade credits .

Speaker #4: Both , you know , public and non-public investment grade credits . That's , that's going to be the biggest driver in the commercial loan space .

Speaker #4: And then you do get a significant benefit on the mortgage portfolio, and to a lesser degree on auto and a couple of other portfolios.

Speaker #4: And that's how you get to about about 7% decline overall . And obviously , you didn't ask about it , but also on Gsib , you know , it feels like we'll be , you know , around where we are .

Mike Santomassimo: Obviously you didn't ask about it, but also on GSIB, it feels like we'll be around where we are, ± a little bit, depending on how the proposal plays out for a period of time, given sort of the recalibration that was done there. Net-net overall, very constructive for us, and seems like it's heading in the right direction, and allows us to continue to do really smart things to support clients across all of the portfolios.

Michael Santomassimo: Obviously you didn't ask about it, but also on GSIB, it feels like we'll be around where we are, ± a little bit, depending on how the proposal plays out for a period of time, given sort of the recalibration that was done there. Net-net overall, very constructive for us, and seems like it's heading in the right direction, and allows us to continue to do really smart things to support clients across all of the portfolios.

Speaker #4: Plus or minus a little bit , depending on how the proposal plays out for , you know , for a period of time You know , given sort of the recalibration that was done there .

Speaker #4: So net , net overall , very constructive for us and , and seems like it's heading in the right direction and allows us to continue to do really smart things to support clients across , you know , all of the portfolios .

John McDonald: Okay. Thanks. On a related note, the outlook for ongoing NIM compression presumably continues to weigh a bit on ROA, return on assets. Just kind of wondering, how does that interact with your goal of improving the ROTCE towards your medium-term goal? Do you expect to be able to lower the TCE because of these Basel changes and the mix in your balance sheet?

Speaker #3: Okay , thanks . And then on a related note , the outlook for ongoing Nim compression presumably continues to weigh a bit on ROA return on assets .

Speaker #3: So just kind of wondering, how does that interact with your goal of improving the ROTC towards your medium-term goal? Do you expect to be able to lower the TCE because of these?

Speaker #3: Basel changes and the mix in your balance sheet.

Mike Santomassimo: Yeah. There's a lot in there, so let me try to unpick some of it. As we came out of the period when the asset cap was in place, we knew that the place that we were going to see the growth first is in repo. For the vast majority of it's Treasury repo, and then there's other aspects to it, low ROA, low risk, good returns. It then allows us to do much more with those clients as we provide them what they think of as this valuable financing capacity. I think as we go through this period, you're going to see ROA come down.

Michael Santomassimo: Yeah. There's a lot in there, so let me try to unpick some of it. As we came out of the period when the asset cap was in place, we knew that the place that we were going to see the growth first is in repo. For the vast majority of it's Treasury repo, and then there's other aspects to it, low ROA, low risk, good returns. It then allows us to do much more with those clients as we provide them what they think of as this valuable financing capacity. I think as we go through this period, you're going to see ROA come down.

Speaker #4: Yeah . So there's a there's a lot in there . So let me let me try to unpick , you know , some of it .

Speaker #4: So , so as , as we came out of the , you know , the period when the asset cap was in place , you know , we knew that the place that we were going to see the growth first is in , in repo , you know , all , you know , for the for the vast majority of it's treasury repo .

Speaker #4: And then there's other aspects to it . But so low ROA low risk , high , you know , good returns and it then allows us to , you know , do a much more with those clients as we provide them , you know , you know , what they think of as , as valuable financing , you know , capacity .

Speaker #4: And so I think as we go through this period, you're going to see ROA come down as that sort of stabilizes, matures.

Mike Santomassimo: As that sort of stabilizes, matures, we get a little further in this growth period, that'll start to moderate, and you'll start to see it either stabilize or start to grow as we start to add in that other business activity that we expect to see.

Michael Santomassimo: As that sort of stabilizes, matures, we get a little further in this growth period, that'll start to moderate, and you'll start to see it either stabilize or start to grow as we start to add in that other business activity that we expect to see.

Speaker #4: We get a little further in this growth . You know , you know , period . That'll that'll start to moderate and you'll start to see it .

Speaker #4: You know, either stabilize or start to grow as we start to add in that other business activity that we expect to see.

Speaker #4: And on the, the other stuff that it—.

Charlie Scharf: It shouldn't be dilutive to ROTCE.

Speaker #2: Should be, and it shouldn't be dilutive to our TCE.

Mike Santomassimo: Yeah. No, I was going to get there. I think we're starting to see some of the onboardings come to conclusion. Some of them are in process. Some of the clients that are going to do more with us as a result of the financing takes time to ramp up. They do testing with you. We're starting to see that come through, whether it's prime, other trading that they do with us, and across a number of the asset classes. You'll start to see that incrementally get added into the mix overall. I will point out, so we are seeing some of it, right? Markets revenues are up 19% from last year. We are starting to see some of that come through.

Michael Santomassimo: Yeah. No, I was going to get there. I think we're starting to see some of the onboardings come to conclusion. Some of them are in process. Some of the clients that are going to do more with us as a result of the financing takes time to ramp up. They do testing with you. We're starting to see that come through, whether it's prime, other trading that they do with us, and across a number of the asset classes. You'll start to see that incrementally get added into the mix overall. I will point out, so we are seeing some of it, right? Markets revenues are up 19% from last year. We are starting to see some of that come through.

Speaker #4: Yeah . No , I was going to get there . And I think , you know , we're starting to , you know , see some of the onboardings , you know , come to conclusion , some of them are in process , you know , some of the clients that are going to do more with us as a result of the financing takes time to ramp up .

Speaker #4: They do testing with you. And so we're starting to see that come through, whether it's prime or other trading that they do with us.

Speaker #4: And , you know , across a number of number of the asset classes . And so you'll start to see that incrementally get added into the mix overall .

Speaker #4: And I will point out , so we are seeing some of it , right . Market's revenues are up 14% . 19% . Sorry .

Speaker #4: You know , you know , from last year . So we are starting to see some of that come through . And as Charlie noted , you know we expect you know grow the market's business in the context of also improving overall returns for the company and , and don't , don't believe it will be dilutive or get in the way of us getting to that .

Mike Santomassimo: As Charlie noted, we expect to grow the markets business in the context of also improving overall returns for the company, and don't believe it will be dilutive or get in the way of us getting to that 17%, 18% return.

Michael Santomassimo: As Charlie noted, we expect to grow the markets business in the context of also improving overall returns for the company, and don't believe it will be dilutive or get in the way of us getting to that 17%, 18% return.

Speaker #4: 17 to 18% return .

Charlie Scharf: We're either going to get the increased flows at a strong ROTCE, or we're not going to use the balance sheet for it. We're very confident at this point that we will get the returns for it.

Speaker #2: We're we're either going to get the increased flows at a strong ROI or we're not going to use the balance sheet for it .

Speaker #2: And we're very confident at this point that we will get the returns for it based on the conversations and the things we've seen with our clients so far.

Mike Santomassimo: Yeah

Michael Santomassimo: Yeah

Charlie Scharf: Based on the conversations and the things we've seen with our clients so far.

John McDonald: You're just saying there's a lag in terms of adding the customers and then them building up the business, whether it comes in NII or fees?

Speaker #3: You’re just saying there’s a lag in terms of adding the customers and then building up the business, whether it comes in NII or fees.

Mike Santomassimo: Yeah, it takes a while to sort of do the onboarding with a lot of the brand-name clients that you'd all recognize. It generally comes in kind of chunks along the way once you're onboarded. All of it's going pretty smoothly right now, and we're expecting to start to see more and more of that come through over the coming quarters. You'll see that incrementally come in each quarter.

Michael Santomassimo: Yeah, it takes a while to sort of do the onboarding with a lot of the brand-name clients that you'd all recognize. It generally comes in kind of chunks along the way once you're onboarded. All of it's going pretty smoothly right now, and we're expecting to start to see more and more of that come through over the coming quarters. You'll see that incrementally come in each quarter.

Speaker #4: Yeah , it takes a it takes a while to it takes a while to sort of do the onboarding with a lot of the , the brand name clients that you'd all recognize .

Speaker #4: It generally comes in and in kind of chunks along the way . Once you're onboard , it , but , but the all of it's going pretty smoothly right now .

Speaker #4: And we're expecting to start to see more and more of that come through over the coming quarters. So you'll see that incrementally come in each quarter.

John McDonald: Okay. Thank you.

Speaker #3: Okay .

Speaker #5: Thank you

Operator 2: The next question will come from Ken Usdin of Autonomous Research. Your line is open.

Operator: The next question will come from Ken Usdin of Autonomous Research. Your line is open.

Speaker #1: The next question will come from Ken Usdin of Autonomous Research. Your line is open.

Ken Usdin: Thanks. Mike, I was just wondering if you could follow that point that you talked about, and John mentioned about the NIM going forward. Is it just a mix of assets that you're seeing in terms of on the commercial side related to markets business versus commercial? Can you just kind of talk us through what you're seeing in terms of earning asset mix going forward, and the types of loans, and if that's what's weighing on the NIM? Thanks.

Kenneth Usdin: Thanks. Mike, I was just wondering if you could follow that point that you talked about, and John mentioned about the NIM going forward. Is it just a mix of assets that you're seeing in terms of on the commercial side related to markets business versus commercial? Can you just kind of talk us through what you're seeing in terms of earning asset mix going forward, and the types of loans, and if that's what's weighing on the NIM? Thanks.

Speaker #6: Thanks . Mike . I was wondering if you could follow that , that point that that you talked about . And John mentioned about the the Nim going forward , is it just the mix of of assets that you're seeing in terms of on the commercial side related to your markets , business versus commercial ?

Speaker #6: Can you just kind of talk us through what you're seeing in terms of earning asset mix , going forward and the types of loans ?

Speaker #6: And if that's what's weighing on the NIM, thanks.

Mike Santomassimo: Yeah. Sure, Ken. On the NIM, what you really saw are three things in the quarter, and I'll go back to a little bit of what I said, but maybe try to add a little bit more color on top of it. First is you saw the impact of this growth in the markets balance sheet impacting sort of the NIM. Again, that's not going to grow at the same pace forever. You'll see that moderate. We're getting some netting benefits now as it gets bigger. You'll start to see some of that come through in a little bit of a different trajectory, potentially, as you look at the coming quarters. You see interest-bearing deposits grow, so they become a bigger percentage of the overall deposit mix. That's exactly what we expect to be seeing right now.

Michael Santomassimo: Yeah. Sure, Ken. On the NIM, what you really saw are three things in the quarter, and I'll go back to a little bit of what I said, but maybe try to add a little bit more color on top of it. First is you saw the impact of this growth in the markets balance sheet impacting sort of the NIM. Again, that's not going to grow at the same pace forever. You'll see that moderate. We're getting some netting benefits now as it gets bigger. You'll start to see some of that come through in a little bit of a different trajectory, potentially, as you look at the coming quarters. You see interest-bearing deposits grow, so they become a bigger percentage of the overall deposit mix. That's exactly what we expect to be seeing right now.

Speaker #4: Yeah , yeah , sure , sure . Ken , you know , on the Nim what you really saw are , are three things , you know , in the quarter .

Speaker #4: And I'll go back to a little bit of what I said , but maybe try to add a little bit more color on top of it , you know , first is you saw the impact of , you know , these , this , this growth in , in the market's balance sheet impacting sort of the , the Nim .

Speaker #4: And again , that's not going to , you know , grow at the same pace . You know , forever . And so you'll see that moderate we're getting some netting benefits now as it gets bigger .

Speaker #4: And so you'll start to see , you know , some of that , you know , come through in a little bit of a different , you know , trajectory potentially as you look at the coming quarters , you see you see interest bearing deposits grow .

Speaker #4: So they become a bigger percentage of the overall deposit mix . And that's exactly what we expect to be seeing right now . You know , as we came out of , you know , the asset cap , you know , those we we knew that that was the place that we were going to be able to grow first .

Mike Santomassimo: As we came out of the asset cap, we knew that was the place that we were going to be able to grow first. They become a bigger percentage of the overall mix of the pie. It's great to see that clients across the Commercial Bank and the Corporate & Investment Bank are moving business, in some cases, back to us that we had at some point pre-asset cap. The engagement's been really good. Those deposits are priced where the market is, which is competitive, but we're not leaning in on price to grow there. You got a little impact from rates coming off the back of Q4. While you'll see a little bit more compression from the first two drivers, it'll be less as we go into Q2.

Michael Santomassimo: As we came out of the asset cap, we knew that was the place that we were going to be able to grow first. They become a bigger percentage of the overall mix of the pie. It's great to see that clients across the Commercial Bank and the Corporate & Investment Bank are moving business, in some cases, back to us that we had at some point pre-asset cap. The engagement's been really good. Those deposits are priced where the market is, which is competitive, but we're not leaning in on price to grow there. You got a little impact from rates coming off the back of Q4. While you'll see a little bit more compression from the first two drivers, it'll be less as we go into Q2.

Speaker #4: So they become a bigger percentage of the overall mix of , of , of the pie . And , and it's great to see that commercial , you know , clients across the commercial bank and the corporate investment bank are , you know , moving business in some cases back to us that we had , you know , pre , you know , at some point pre asset cap and , and the engagement's been been really , really good .

Speaker #4: And those deposits are , you know , priced , you know , where the market is , which is , you know , competitive , but not , we're not , we're not leaning in on price to , you know , grow there and then you got a little impact from rates , you know , coming off the back of the fourth quarter .

Speaker #4: And so while you'll see a little bit more , you know , compression , you know , from the , from the first two drivers , it'll be less as we go into the second quarter .

Mike Santomassimo: Again, that'll start to moderate as we go, and we see other parts of the balance sheet grow, and we see repo growth be kind of the trajectory slow there a little bit. When you look at the loans side of things, while there's always a little compression happening across different pockets of the portfolio, that's not the place that's sort of driving sort of the NIM compression there. We are seeing it is a competitive environment for loans, but we're not seeing irrational things, and we're not chasing irrationally tight spreads across the loan portfolio just to see growth. I think that's really important to note.

Michael Santomassimo: Again, that'll start to moderate as we go, and we see other parts of the balance sheet grow, and we see repo growth be kind of the trajectory slow there a little bit. When you look at the loans side of things, while there's always a little compression happening across different pockets of the portfolio, that's not the place that's sort of driving sort of the NIM compression there. We are seeing it is a competitive environment for loans, but we're not seeing irrational things, and we're not chasing irrationally tight spreads across the loan portfolio just to see growth. I think that's really important to note.

Speaker #4: And again , that'll start to , to moderate as we go . And we see other parts of the balance sheet grow and we see repo growth be kind of , you know , the trajectory slow there a little bit .

Speaker #4: When you look at the loans side of things , you know , while there's , while there's always a little compression happening across different pockets of the portfolio , that's not the place that's sort of driving sort of the nim compression there .

Speaker #4: You know , we are seeing , you know , it , it is a competitive environment for loans . But but we're not seeing irrational things and we're not chasing irrationally tight spreads across , you know , the loan portfolio just to see growth .

Speaker #4: And so , you know , I think that's , that's , that's really important to note .

Ken Usdin: Okay, great. And follow up on your point you made about taking a deeper look through the finance portfolio and thinking that one-off item was a one-off. Can you just talk us about kind of like what you went through there, and thank you for all the color you gave on those extra slides. And so kind of in your relative confidence that one got caught, and that the rest of the book looks pretty good underneath it. And any kind of comment on just any migration you might be seeing, if at all. It sounds like it's pretty benign.

Kenneth Usdin: Okay, great. Follow up on your point you made about taking a deeper look through the finance portfolio and thinking that one-off item was a one-off. Can you just talk us about kind of like what you went through there, and thank you for all the color you gave on those extra slides. In your relative confidence that one got caught, and that the rest of the book looks pretty good underneath it. Any kind of comment on just any migration you might be seeing, if at all. It sounds like it's pretty benign.

Speaker #6: Okay , great . And follow up on your point you made about taking a deeper look through the finance portfolio and , and thinking that that one off item was a one off .

Speaker #6: Can you just talk to us about kind of like what you went through there? And thank you for all the color you gave on those extra slides.

Speaker #6: And so , you know , kind of , you know , your , your relative confidence that you kind of caught that , that one got caught and that the rest of the book , you know , looks pretty good underneath it .

Speaker #6: And any , any , any , any kind of comment on just , you know , any migration , you might be seeing at , if at all sounds like it's pretty benign .

Mike Santomassimo: Yeah. Look, I'll reiterate that was a fraud situation. What we did is we took all of the lessons we saw coming off the back of that individual circumstance, and sent teams in to all the clients, particularly in kind of the European portfolio, and did an in-depth review of all of the things that you would expect in terms of the procedures within the firm, the collateral perfection that we have across the different portfolios, and spent a lot of time and effort across the different teams. We brought in independent people. We brought in independent teams. We've done a lot of work to kind of revalidate the processes. As you do in these things, you sort of follow the money trail, and you trace back all the flows that you expect to see coming through the different bank accounts.

Michael Santomassimo: Yeah. Look, I'll reiterate that was a fraud situation. What we did is we took all of the lessons we saw coming off the back of that individual circumstance, and sent teams in to all the clients, particularly in kind of the European portfolio, and did an in-depth review of all of the things that you would expect in terms of the procedures within the firm, the collateral perfection that we have across the different portfolios, and spent a lot of time and effort across the different teams. We brought in independent people. We brought in independent teams. We've done a lot of work to kind of revalidate the processes. As you do in these things, you sort of follow the money trail, and you trace back all the flows that you expect to see coming through the different bank accounts.

Speaker #4: Yeah , yeah . Look , I'll , I'll , I'll reiterate like that was like a , a fraud situation . And so what we did is we took all of the lessons we saw , you know , coming off the back of that individual circumstance and sent teams in to all the clients , you know , particularly in , in kind of the European portfolio and did did an in-depth review of all of the things that you would expect in terms of , you know , the procedures within the firm , the collateral perfection , you know , that we have across the different , you know , portfolios and spent a lot of time and effort across the different teams .

Speaker #4: We brought in independent people . We brought in independent teams . We've . So we've done a lot of work to kind of revalidate , you know , the the processes , you know , and then , you know , as as you do in these things , you sort of follow the money trail and you trace back all the flows that you're expect to see coming through the different bank accounts and , you know , at this point , as I said , we feel we feel confident .

Mike Santomassimo: At this point, as I said, we feel confident that was an isolated event.

Michael Santomassimo: At this point, as I said, we feel confident that was an isolated event.

Speaker #4: That was an isolated event

Ken Usdin: Okay. Thanks a lot, Mike.

Kenneth Usdin: Okay. Thanks a lot, Mike.

Speaker #6: Okay. Thanks a lot, Mike.

Operator 2: The next question will come from Scott Siefers of Piper Sandler. Your line is open.

Operator: The next question will come from Scott Siefers of Piper Sandler. Your line is open.

Speaker #1: The next question will come from Scott Siefers, Piper Sandler. Your line is open.

Scott Siefers: Morning, guys. Thanks for taking the question. Really appreciate the expanded disclosures on the NBFI exposure. It looks like the credit performance, overall risk profile certainly seem to be holding up. I guess in a sense, NBFI reminds me a little of where we might've been with office CRE a few years ago, not necessarily in just like the actual quality, but in that, for most banks, just doesn't have the potential to do meaningful damage yet generates so much distraction that a few years ago just sort of decided it wasn't worth to participate in that CRE given the distraction and costs from other good things that were going on.

Speaker #7: Thanks for taking the question. So, really appreciate the expanded disclosures on the NFI exposure. And then it looks like the credit performance and overall risk profile certainly seem to be holding up.

Speaker #7: I guess, in a sense, NFI reminds me a little of where we might have been with office CRE a few years ago.

Speaker #7: Not necessarily in just the actual quality , but in that , you know , for most banks , just doesn't have the potential to do meaningful damage yet generates so much distraction that , you know , a lot , a lot a few years ago , just sort of it wasn't worth to participate in that CRE given the distraction it costs from other good things that were going on .

Scott Siefers: I wonder if you can maybe just add a thought or two about sort of with NBFI, how you balance sort of the good quantitative risk-reward against just the qualitative aspects of it, the amount of airtime it consumes, and how that discussion kind of goes, if at all?

Speaker #7: I wonder if you could maybe just add a thought or two about sort of with NFI , how you balance sort of the good quantitative risk reward against just the qualitative aspects of the amount of air time it consumes and how that discussion kind of goes , if at .

Mike Santomassimo: Yeah. This is Charlie. Thanks for the question. Listen, first of all, I think it's totally different than CRE exposure. When you look at the risk characteristics of a CRE loan, and what our protections are, what the attachment points are, all that other kind of stuff, when you go through a lot of the stuff Mike walked through in terms of the different pieces of lending we have here, really bad things need to happen for us to lose money in most of these portfolios. We can go deeper and talk about some of these things to the extent you want to do it. To the point that we feel really good about the way these things are structured, the client selection we have, that stands first and foremost.

Charlie Scharf: Yeah. This is Charlie. Thanks for the question. Listen, first of all, I think it's totally different than CRE exposure. When you look at the risk characteristics of a CRE loan, and what our protections are, what the attachment points are, all that other kind of stuff, when you go through a lot of the stuff Mike walked through in terms of the different pieces of lending we have here, really bad things need to happen for us to lose money in most of these portfolios. We can go deeper and talk about some of these things to the extent you want to do it. To the point that we feel really good about the way these things are structured, the client selection we have, that stands first and foremost.

Speaker #5: All .

Speaker #2: Yeah . I mean , this is Charlie . Thanks for the question . First of all , I would I think it's totally , totally different than CRE exposure .

Speaker #2: When you look at the risk characteristics of a CRE loan, and what our protections are, what the attachment points are, all that other kind of stuff.

Speaker #2: When you go through a lot of the stuff , Mike walked through in terms of the different pieces of lending we have here , really , really bad things need to happen for us to lose money in most of these portfolios , and we can go deeper and talk about some of these things .

Speaker #2: To the extent you want to do it . So , you know , to the point that we feel really , really good about the way these things are structured , the client selection we have that stands , you know , first and foremost , I would say at this point , I think that we have two , you know , kind of take your question and put it into two different categories .

Mike Santomassimo: I would say at this point, I would kind of take your question and put it into two different categories. Number one is we're not reacting today relative to where we're lending, to the amount of air time that's getting. Over time, we do have to be thoughtful about how large any one asset class should be, whether in terms of who the borrowing base is and things like that. Those are the types of conversations we're very much engaged in as we are in everything that we do, to make sure, as a company, we've got the right kind of diversification. Hopefully, by providing the kinds of disclosures we did here, and we'll continue to make sure that we're as transparent as we can so that investors will feel as good about what we're doing as we do.

Charlie Scharf: I would say at this point, I would kind of take your question and put it into two different categories. Number one is we're not reacting today relative to where we're lending, to the amount of air time that's getting. Over time, we do have to be thoughtful about how large any one asset class should be, whether in terms of who the borrowing base is and things like that. Those are the types of conversations we're very much engaged in as we are in everything that we do, to make sure, as a company, we've got the right kind of diversification. Hopefully, by providing the kinds of disclosures we did here, and we'll continue to make sure that we're as transparent as we can so that investors will feel as good about what we're doing as we do.

Speaker #2: Number one is we're not reacting today relative to where we're lending to the amount of airtime that's getting over time . We do have to be thoughtful about how large any one asset class should be , whether , you know , in terms of , you know , who the borrowing base is and things like that .

Speaker #2: So those are the types of conversations we're very much engaged in, as we are in everything that we do, to make sure as a company we've got the right kind of diversification.

Speaker #2: And so , you know , hopefully by providing the kinds of disclosures we did here , and we'll continue to make sure , you know that we're as transparent as we can so that , you know , investors will feel as good about what we're doing as we do

Scott Siefers: All right, perfect. Thank you very much for that. Separately, I guess, I think we've all been surprised at how well lending momentum has performed year to date for the industry, particularly on the commercial side. It certainly seems to be the case for you all as well, and if anything, Mike, from your comment, sounds like you're feeling better about how the full year could play out. Maybe just a thought or two about what it would take for customers to start to pull back on some of their borrowing plans, just given all the volatility, macro concerns, et cetera. It's just been kind of confounding to see how well trends have held up. Would be curious to hear your thoughts.

Speaker #7: All right . Perfect . Thank you . Thank you very much for that . And then secondly , so I guess I think we've all been surprised at how well lending momentum has performed year to date for the industry , particularly on the commercial side .

Speaker #7: It certainly seems to be the case for you all as well. And if anything, Mike, from your comments, it sounds like you're feeling better about how the full year could play out.

Speaker #7: Maybe just a thought or two about what it would take for customers to start to pull back on some of their borrowing plans, just given all the volatility, macro concerns, etc.

Speaker #7: It's just been kind of confounding to see how well trends have held up. So it would be curious to hear your—

Speaker #5: Thoughts .

Mike Santomassimo: Yeah, no, it's an interesting point, and maybe I'll come back to. I think I might've said this in the script, but we're not actually seeing utilization increase in people's revolvers yet. A lot of the growth that we've been seeing is coming either, we saw some growth in non-bank financial space, we saw some growth from new clients we've added, and some other drivers that sort of then spread across the commercial book. What we haven't really seen yet is that increase in the utilization yet of revolvers. It's not necessarily that we expect, given what's happening, that we'll see a pullback. It could be quite the opposite.

Michael Santomassimo: Yeah, no, it's an interesting point, and maybe I'll come back to. I think I might've said this in the script, but we're not actually seeing utilization increase in people's revolvers yet. A lot of the growth that we've been seeing is coming either, we saw some growth in non-bank financial space, we saw some growth from new clients we've added, and some other drivers that sort of then spread across the commercial book.

Speaker #4: Yeah , no , it's an interesting point and maybe I'll come back to I think I might have said this in the script , but like , you know , we're not actually seeing like utilization increase in people's revolvers yet .

Speaker #4: So a lot of the growth that we've been seeing , you know , is coming either , you know , we saw some growth in non-bank financial space .

Speaker #4: We saw some growth from new clients . We've added and some other drivers that sort of , you know , then spread across the , the , the commercial book .

Michael Santomassimo: What we haven't really seen yet is that increase in the utilization yet of revolvers. It's not necessarily that we expect, given what's happening, that we'll see a pullback. It could be quite the opposite. If people start to get more comfortable, then you could see some growth actually come from the core Commercial Banking middle-market type client who has been somewhat cautious now for the better part of a year+, waiting to kind of see how the environment develops. I think it's actually maybe probabilities are maybe more weighted that way than sort of a pullback, just given we haven't seen a lot of utilization increases so far.

Speaker #4: But what we haven't really seen yet is that increase in the utilization yet of revolvers . And so , so it's not necessarily that like we expect , you know , given what's happening , that we'll see a pullback .

Mike Santomassimo: If people start to get more comfortable, then you could see some growth actually come from the core Commercial Banking middle-market type client who has been somewhat cautious now for the better part of a year+, waiting to kind of see how the environment develops. I think it's actually maybe probabilities are maybe more weighted that way than sort of a pullback, just given we haven't seen a lot of utilization increases so far.

Speaker #4: It could be quite the opposite . If people start to get more comfortable then you could see some growth actually come from like the core commercial banking middle market type client who has been , you know , somewhat cautious now for the better part of a year plus waiting to kind of see how the environment develops .

Speaker #4: And so , so , so I think it's actually maybe , you know , probabilities are maybe more weighted that way than sort of a pullback just given we haven't seen a lot of utilization increases so far .

Scott Siefers: Yeah. Okay. All right, perfect. Thank you guys very much. Appreciate it.

Speaker #7: Yeah .

Speaker #5: Okay. All right. Perfect.

Speaker #7: Thank you, guys, very much.

Speaker #5: Appreciate it . Sure .

Mike Santomassimo: Sure.

Michael Santomassimo: Sure.

Operator 2: The next question will come from Ebrahim Poonawala of Bank of America. Your line is open.

Operator: The next question will come from Ebrahim Poonawala of Bank of America. Your line is open.

Speaker #1: The next question will come from Ibrahim Poonawala of Bank of America. Your line is open.

Ebrahim Poonawala: Hey, good morning.

Speaker #8: Hey . Good morning . I guess just wanted to follow up . Very big picture . I , Charlie and Mike , the path to the 17 to 18 ROTC is looking quite tough given what's happening with the margin .

Mike Santomassimo: Good morning.

Michael Santomassimo: Good morning.

Ebrahim Poonawala: I guess, just wanted to follow up. Very big picture, Charlie and Mike. The path to the 17% to 18% ROTCE is looking quite tough given what's happening with the margin. I totally get the repo book growing the deposit mix on interest-bearing. All of that makes sense. As we think about, and I think as investors think about the stock and think about how realistic it is that over the next, let's say, year or 2, Wells can be a 17% to 18% ROTCE company, like that feels a bit tough. I'm not sure if you agree and maybe that 2-year timeline was super aggressive and it's not your timeline. Those are my words. Would love some context around that in how you're thinking about this today.

Speaker #8: And I totally get the repo book growing the deposit mix on interest bearing all of that makes sense . But as we think about and I think as investors think about the stock and think about how realistic it is that over the next , let's say , year or two , wells can be a 17 to 18% Roth C company .

Speaker #8: Like, that feels a bit tough. I'm not sure if you agree, and maybe that two-year timeline was super aggressive, and it's not your timeline.

Speaker #8: Those are my words, but I would love some context around that in how you're thinking about this today.

Mike Santomassimo: Yeah, it's Mike. Maybe I'll take a shot at it. Thanks, Ebrahim. We're actually really confident in the path to get to, from where we are, roughly 15 to kind of 17, 18. I think if you go across some of the key drivers, and I won't necessarily probably be exhaustive, but I'll try to get to some of the key ones. If you think about where we are on the consumer side, we've got our credit card business that we've talked about now a lot for a while. We've seen really good growth across originations and balances, but it hasn't contributed a lot to profitability given the upfront cost of marketing and some of the allowance that you have to put up.

Michael Santomassimo: Yeah, it's Mike. Maybe I'll take a shot at it. Thanks, Ebrahim. We're actually really confident in the path to get to, from where we are, roughly 15 to kind of 17, 18. I think if you go across some of the key drivers, and I won't necessarily probably be exhaustive, but I'll try to get to some of the key ones. If you think about where we are on the consumer side, we've got our credit card business that we've talked about now a lot for a while. We've seen really good growth across originations and balances, but it hasn't contributed a lot to profitability given the upfront cost of marketing and some of the allowance that you have to put up.

Speaker #4: Yeah , it's Mike , maybe I'll take a shot and thanks , Ibrahim . The , you know , actually , we're actually really confident in the path to get to from where we are .

Speaker #4: You know , roughly 15 to 17 to 18 . And I think if you go across , you know , some of the key drivers and , you know , I won't necessarily probably be exhaustive , but I'll try to get through some of the key ones and you know , if you think about , you know , where we are on the consumer side , we've got our credit card business that we've talked about now a lot for a while .

Speaker #4: You know , we've seen really good growth across originations and , balances , but it hasn't contributed a lot to profitability given the upfront cost of marketing and and some of the allowance , you know , that you have to put up and , and as long as we get the credit , you know , box correct , which we believe we do , given sort of the performance we're seeing , you know , it's just a matter of time for that more meaningfully contributes to , you know , the profitability .

Mike Santomassimo: As long as we get the credit box correct, which we believe we do, given sort of the performance we're seeing, it's just a matter of time before that more meaningfully contributes to the profitability. You'll start to see a little bit of that this year as the earliest vintages mature. As more vintages mature, that'll start to incrementally come into the P&L. That's sort of a big driver. Two, on the consumer side, as we continue to grow sort of the wealth business, our Wells Fargo Premier offering that offers wealth management advice through the branch system, that's going to continue to have fees that come in that are very high returning, and we're seeing really good flows coming to that in business. We've got roughly 2,500 advisors across the branch system already, and that momentum is just really building.

Michael Santomassimo: As long as we get the credit box correct, which we believe we do, given sort of the performance we're seeing, it's just a matter of time before that more meaningfully contributes to the profitability. You'll start to see a little bit of that this year as the earliest vintages mature. As more vintages mature, that'll start to incrementally come into the P&L. That's sort of a big driver. Two, on the consumer side, as we continue to grow sort of the wealth business, our Wells Fargo Premier offering that offers wealth management advice through the branch system, that's going to continue to have fees that come in that are very high returning, and we're seeing really good flows coming to that in business. We've got roughly 2,500 advisors across the branch system already, and that momentum is just really building.

Speaker #4: And you'll start to see a little bit of that this year as the earliest vintages mature and as more vintages mature , that'll start to incrementally come in in the into the PNL .

Speaker #4: So that's sort of a big driver two . And the consumer side , you know , as we continue to grow sort of the wealth , wealth business , you know , Wells Fargo Premier offering that offers wealth management advice through the branch system , you know , that's going to continue to , you know , have fees that come in that are very , you know , very high returning .

Speaker #4: And we're seeing really good flows coming to that in business. We've got roughly 2,500 advisors across the branch system already. And that momentum has just built.

Speaker #4: You know , just really building . And then as we increase productivity in the branches and grow the core checking accounts , again , I think you've got a lot of growth drivers across the consumer side of the business .

Mike Santomassimo: As we increase productivity in the branches and grow core checking accounts, again, I think you've got a lot of growth drivers across the consumer side of the business. If you then look at the wealth business, we've talked a lot about the momentum that we're building there. As that business just grows through just naturally improving the net flows we're getting, the recruiting we're seeing, you're going to see contribution from that business as well. On the commercial side, in the commercial bank, we've been adding roughly a couple 100 commercial bankers over the last 18, 24 months. We're really starting to see some of that get some traction as we add new clients.

Michael Santomassimo: As we increase productivity in the branches and grow core checking accounts, again, I think you've got a lot of growth drivers across the consumer side of the business. If you then look at the wealth business, we've talked a lot about the momentum that we're building there. As that business just grows through just naturally improving the net flows we're getting, the recruiting we're seeing, you're going to see contribution from that business as well. On the commercial side, in the commercial bank, we've been adding roughly a couple 100 commercial bankers over the last 18, 24 months. We're really starting to see some of that get some traction as we add new clients.

Speaker #4: You know , if you then then look at , you know , the wealth business , we've talked a lot about the momentum that we're building there .

Speaker #4: You know , and as that business grows , you know , through , you know , improving , you know , just naturally improving the net flows .

Speaker #4: We're getting the recruiting , we're seeing . You're going to see contribution from that business as well . And then on the commercial side , in the commercial bank , you know , we've been adding , you know , a couple hundred , roughly a couple hundred , commercial bankers a lot over the last 18 , 24 months .

Speaker #4: We're really starting to see some of that , you know , get some traction as we as we add new clients and a bunch of the loan growth we're seeing in the commercial bank is actually driven by those new clients come in .

Mike Santomassimo: A bunch of the loan growth we're seeing in Commercial Banking is actually driven by those new clients come in, and as we add in payments and deposit work with them. On Corporate & Investment Banking, the investment banking stuff, they're doing a great job making incremental progress, but we got a long way to go still to continue to monetize the investments we're making, but we see really good progress quarter after quarter in terms of the deals we're involved in. As you look at the rest of the CIB, I think, as we talked about the markets business, that'll be a contributor. We're not overly reliant on any one thing to get us there, as we continue to have good expense control that we've talked about and Charlie mentioned earlier.

Michael Santomassimo: A bunch of the loan growth we're seeing in Commercial Banking is actually driven by those new clients come in, and as we add in payments and deposit work with them. On Corporate & Investment Banking, the investment banking stuff, they're doing a great job making incremental progress, but we got a long way to go still to continue to monetize the investments we're making, but we see really good progress quarter after quarter in terms of the deals we're involved in. As you look at the rest of the CIB, I think, as we talked about the markets business, that'll be a contributor. We're not overly reliant on any one thing to get us there, as we continue to have good expense control that we've talked about and Charlie mentioned earlier.

Speaker #4: And as we add in payments and , and deposit , you know , work with them . And then on the corporate investment bank , you know , the investment banking stuff , they're doing a great job making incremental progress .

Speaker #4: But we got a long way to go . Still , you know , to continue to monetize the investments we're making . And but we see really good progress .

Speaker #4: You know , quarter after quarter in terms of the deals we're involved in . And then as you sort of look at , you know , the rest of the CIB , I think , you know , as we talked about the markets business , that'll be contributor .

Speaker #4: And so we're not overly reliant on any one thing to get us there , you know , and as we continue to have , you know , better , you know , good expense control that we've talked about and sort of , Charlie mentioned , you know , earlier and then , and we continue to optimize capital .

Mike Santomassimo: We continue to optimize capital, and we talked about how that's playing out through Basel III. I think when you add it all up, actually, there's a bunch of different paths to get us to that 17% to 18%, which should give you a lot of confidence that it's achievable in a reasonable amount of time. As we've said, when we rolled it out, we think that's not the end. We think there's more to do once we hit that.

Michael Santomassimo: We continue to optimize capital, and we talked about how that's playing out through Basel III. I think when you add it all up, actually, there's a bunch of different paths to get us to that 17% to 18%, which should give you a lot of confidence that it's achievable in a reasonable amount of time. As we've said, when we rolled it out, we think that's not the end. We think there's more to do once we hit that.

Speaker #4: And we talked about sort of , you know , how that's how that's playing out through , Basel three . So I think , you know , when you add it all up actually there's a bunch of different paths to get us to that .

Speaker #4: 17 to 18% , which should give you a lot of confidence that , you know , it's , it's achievable in a reasonable amount of time .

Speaker #4: And then as we said , when we , when we rolled it out , like we think that's not the end , right ?

Speaker #4: We think there's more to do once we hit that.

Charlie Scharf: Yeah, this is Charlie. Let me just add a couple of things. Mike was very complete in what he said, and I agree with all of it. Just to be clear, we feel as confident as ever in that. There is absolutely nothing that has changed. I also want to point out that this is a good thing, which is we don't have a business model where points of view like that should change quarter-on-quarter. That's not the kind of business that we're building. The only thing that would have these dramatic changes is if we thought we got something very wrong or if there was some huge event out there that we missed. None of that is the case. The question for us is, are we building the underlying organic growth of the businesses, business by business?

Speaker #2: Yeah , this is true . Let me just add a couple of things . Mike was very complete in what he said . And I agree with all of it .

Speaker #2: Just to be clear, we feel as confident as ever in that there is absolutely nothing that has changed. And I also want to point out that this is a good thing, which is we don't have a business model where points of view like that should change quarter on quarter.

Speaker #2: Okay. That's not the kind of business that we're building. The only thing that would have these dramatic changes is if we thought we got something very wrong, or if there was some huge event out there we missed, and none of that is the case.

Speaker #2: So the question for us is, are we building the underlying organic growth of the business’s business by business? And the reason why we have the confidence that we have is because we’re seeing these KPIs across every one of our businesses growing in a reasonable way.

Charlie Scharf: The reason why we have the confidence that we have is because we're seeing these KPIs across every one of our businesses growing in a reasonable way. We don't want to grow too quickly, but we want to start making sure that we're seeing this consistently business by business. Listen, we understand, and we think this is good that we're transparent about this, that we have room to improve performance in every one of these businesses. The things that we're doing, we're very confident will ultimately lead to increased profit, faster growth, and higher returns. As we said, nothing has changed from last quarter or the quarter before that in terms of how we feel about that.

Speaker #2: We don't want to grow too quickly , but we want to start making sure that we're seeing this consistently business by business and that and listen , and we , we understand and we think this is good , that we're transparent about this , that we have room to improve performance in every one of these businesses .

Speaker #2: And the things that we're doing , we're very confident will ultimately lead to increased profit , faster growth , and higher returns . And as we've said , nothing has changed from last quarter or the quarter before that .

Speaker #2: In terms of how we feel about that.

Ebrahim Poonawala: That is very comprehensive. Thank you, just one quick follow-up. On and off, there is a lot of chatter on what Wells couldn't do on M&A and banking and wealth. I am not sure there are too many financially attractive deals available today given where the stock trades. Give us a mark-to-market on how you are thinking about deals. I appreciate the bar is high, but I think it will be helpful to hear your thoughts again on how you are thinking about inorganic growth.

Speaker #8: That is very comprehensive . Thank you . Just one quick follow up on and off . There's a lot of chatter on what Wells couldn't do on M&A in banking and wealth .

Speaker #8: I'm not sure there are too many financially attractive deals available today, given where the stock trades give us a mark to market. On how you're thinking about deals.

Speaker #8: I appreciate the bar is high, but I think it will be helpful to hear your thoughts again on how you're thinking about inorganic growth.

Charlie Scharf: It's funny, we spend more time answering questions, and this isn't just about your question. Obviously, we get this everywhere. We spend more time answering the questions about it than we do actually thinking about doing deals. We are focused on organic growth. We think we have a differentiated opportunity versus all the people that we compete with because of where we've come from, being so constrained. Match that with the quality of the business and the opportunities that we have. We are entirely focused on that. It doesn't mean that we won't look at smaller things. I always say, you can't say never is never, but we're not spending time on it. We're not focused on it. This is the opportunity that we're focused on, and we feel really great about it.

Speaker #8: Yeah .

Speaker #2: It's funny , we spend more time answering questions . And this isn't just about your question . Obviously , we get this everywhere .

Speaker #2: We spend more time answering the questions about it than we do actually thinking about doing deals. We are focused on organic growth.

Speaker #2: We think we have a differentiated opportunity versus all the people that we compete with because of where we've come from, being so constrained, and match that with the quality of the business and the opportunities that we have.

Speaker #2: We are entirely focused on that . It . And it doesn't mean that we won't look at smaller things . And I always say , you know , you can't say never is never , but we're not spending time on it .

Speaker #2: We're not focused on it. This is the opportunity that we're focused on, and we feel really great about it.

Ebrahim Poonawala: Super clear. Thank you.

Speaker #8: Super clear. Thank you.

Charlie Scharf: Okay.

Speaker #2: Okay

Operator 2: The next question will come from Erika Najarian of UBS. Your line is open.

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

Speaker #1: The next question will come from Erika Najarian of UBS. Your line is open.

Erika Najarian: Hi, good morning. On the Basel III Endgame estimate, the 7% RWA decline, I guess all else being equal, we're calculating that would give you about 80 basis points of net new excess capital. I guess a couple questions, Mike. Is that sort of the right way to think about it? If so, combined with the GSIB of 1.5%, and assuming you sustain the floor on SCB, Wells would be at a minimum of 8.5%. Contemplating all of that, would you run this company at lower than 10% CET1?

Speaker #9: Hi . Good morning . On the Basel three endgame . Estimate the 7% RWA decline . I guess all else being equal were , you know , calculating that would give you about 80 basis points of net new excess capital .

Speaker #9: I guess a couple of questions, Mike. Is that sort of the right way to think about it? And excuse me.

Speaker #9: And if so , combined with the gsib of 1.5% and assuming you sustain sort of the floor on SCB , you know , Wells would be at a minimum of 8.5% and contemplating all of that , you know , what is sort of the , you know , would you run this company at lower than 10% Cet1 ?

Mike Santomassimo: Yeah, Erika, we're not at the point where we're going to put a new target out. We got to see how this gets finalized. It's going to be a year plus probably before it gets implemented, and lots can change. We're still going to stick with the 10% and 10.5%.

Michael Santomassimo: Yeah, Erika, we're not at the point where we're going to put a new target out. We got to see how this gets finalized. It's going to be a year plus probably before it gets implemented, and lots can change. We're still going to stick with the 10% and 10.5%.

Speaker #4: Yeah . Erika , we're not we're not at the point where we're going to put a new target out . Like we got to see how the , how this gets finalized .

Speaker #4: We've got a, you know, it's going to be a year plus probably before it gets implemented. And lots can change.

Speaker #4: And so we're still going to stick with the ten, 10.5%.

Charlie Scharf: Yeah. Listen, I think there's no magic to 10% to 10.5% in the future if our capital requirements change, and there's no floor at 10%. As Mike said, we don't want to put the cart before the horse and start talking about something before it's finalized. Things can change. When these rules are finalized, we will look at what our requirements are. We'll have the conversation about how much excess do we want to run now that there's more certainty in some of these things, and then make a decision. The trajectory is very favorable for us. We just don't want to get ahead of ourselves and say we're going to change where we're running at this point before things are finalized. Directionally, there's a place to go here.

Speaker #2: Yeah . But let me just listen . I think there's no magic to 10 to 10.5% in the future . If our capital requirements change and there's no floor at 10% , as Mike said , there's , you know , we don't want to put the cart before the horse and start talking about something before it's finalized .

Speaker #2: Things can change , but when these rules are finalized , we will look at what our requirements are . We'll have the conversation about how much excess do we want to run now that there's more certainty in some of these things , and then make a decision .

Speaker #2: And so the trajectory is very favorable for us . We just don't want to get ahead of ourselves . And say we're going to , you know , change where we're running at this point before things are finalized .

Speaker #2: But, you know, directionally, there's a place to go here.

Erika Najarian: Got it. Just wanted to just add clarity to the ROTCE discussion, given the positive direction on the denominator. My follow-up question is just thinking about all the net interest income questions another way. You reported a year-over-year increase in net interest income of 5%, despite 20 basis points of year-over-year net interest margin compression. Mike, if we think about year-over-year net interest income growth of about, let's say, at the same pace, let's say 4% year-over-year, clearly some balance sheet-driven, maybe a little bit stability in the NIM in the H2 of the year, we get to that $50 billion ±. Is that the right different way to think about it rather than just thinking about the quarterly cadence?

Speaker #9: Got it . Just wanted to just add clarity to the the rocky discussion . Given the positive direction on , on the denominator and just my follow up question is , you know , just thinking about this , all the net interest income questions , another way .

Speaker #9: So you reported , you know , a year over year increase and net interest income of 5% despite 20 basis points of year over year , net interest margin compression .

Speaker #9: And Mike , if we think about , you know , year over year , net interest income growth of about , let's say , at the same pace , let's say 4% year over year , clearly some balance sheet driven , maybe , you know , a little bit stability in the in the second half of the year , we get to that 50 billion plus or minus .

Speaker #9: Is that the right, different way to think about it, rather than just thinking about the quarterly cadence?

Mike Santomassimo: Well, let me give you some of the drivers underneath it, and then maybe see if that sort of gets at what you're trying to get at, Erika. Obviously, all of what you sort of quoted in terms of what you saw this quarter is right. As you sort of look to how we get from where we are to sort of the $50 billion ±, what we're expecting to continue to see throughout the year is we continue to expect to see loan growth, each quarter. If you break that down a little bit and you go into the consumer side of the house, mortgages should stop declining. You'll see growth from Q1 in card. Q1's got some seasonality baked in, coming off the back of holiday season in Q4. You'll see growth there.

Michael Santomassimo: Well, let me give you some of the drivers underneath it, and then maybe see if that sort of gets at what you're trying to get at, Erika. Obviously, all of what you sort of quoted in terms of what you saw this quarter is right. As you sort of look to how we get from where we are to sort of the $50 billion ±, what we're expecting to continue to see throughout the year is we continue to expect to see loan growth, each quarter. If you break that down a little bit and you go into the consumer side of the house, mortgages should stop declining. You'll see growth from Q1 in card. Q1's got some seasonality baked in, coming off the back of holiday season in Q4. You'll see growth there.

Speaker #4: Well , let me let me give you some of the drivers underneath it . And then maybe see if that sort of gets at what you're trying to get at , you know , Eric , obviously , you know , all of what you've sort of quoted in terms of what you saw this quarter is , right .

Speaker #4: And as you sort of look to , you know , how we get from where we are to sort of the 50 , billion plus or minus , you know , what we're expecting to continue to see throughout the year is we can we continue to expect to see , you loan growth , you know , each quarter .

Speaker #4: And if you break that down a little bit and you go into the consumer side of the House , you know , mortgages should stop declining , you'll see , you know , growth from the first quarter in card .

Speaker #4: The first quarter has got some seasonality baked in , you know , coming off the back of , you know , holiday season in the fourth quarter .

Speaker #4: So you'll see growth there. And we expect to see continued growth in the auto portfolio. So overall, consumer loans continue to grow throughout the year.

Mike Santomassimo: We expect to see continued growth in the auto portfolio. Overall, consumer loans continue to grow throughout the year. You've got our growth in deposits that we expect to see, again, largely interest-bearing. We're not relying on any significant growth in non-interest-bearing as we go through the year. That'll build up over time as we're more and more successful growing sort of checking accounts or that growth in non-interest-bearing well. The other side of it is also we haven't assumed that we've got a big deployment in securities. If we see we've got good amount of excess cash, we could do more in securities as well to pick up some extra NII. You've got really the path of rates.

Michael Santomassimo: We expect to see continued growth in the auto portfolio. Overall, consumer loans continue to grow throughout the year. You've got our growth in deposits that we expect to see, again, largely interest-bearing. We're not relying on any significant growth in non-interest-bearing as we go through the year. That'll build up over time as we're more and more successful growing sort of checking accounts or that growth in non-interest-bearing well. The other side of it is also we haven't assumed that we've got a big deployment in securities. If we see we've got good amount of excess cash, we could do more in securities as well to pick up some extra NII. You've got really the path of rates.

Speaker #4: You've got you know , our growth in deposits that we expect to see . Again , largely interest bearing . We're not relying on , you know , any significant growth in non-interest bearing as we go through the year .

Speaker #4: And, you know, that'll build up over time as we're more and more successful growing, sort of, checking accounts or that growth in non-interest bearing will.

Speaker #4: And then , you know , we haven't , we , you know , the other , the other side of it is also , we haven't , we haven't assumed that we've got a big deployment in securities .

Speaker #4: If we see we've got a good amount of excess cash, we could do more in securities as well to pick up some extra NII.

Speaker #4: And then you've got like really the path of rates . And as I said in my script , you know , if rates do stay higher for longer than people expected , being in a year , that alone will be a net positive .

Mike Santomassimo: As I said in my script, if rates do stay higher for longer than people expect in the beginning of the year, that alone will be a net positive. We just got to see how that sort of plays out across all the other variables. Do we see a little bit more change in deposit mix or other drivers that are underneath it? Ultimately, I think we have a really achievable path to $50 billion. If all works out, it could be better than that depending on how it all plays out through the rest of the year. Obviously, the markets-related NII will swing around a little bit depending on sort of where the ultimate path of rates goes, but largely offset on the fee side. Does that help?

Michael Santomassimo: As I said in my script, if rates do stay higher for longer than people expect in the beginning of the year, that alone will be a net positive. We just got to see how that sort of plays out across all the other variables. Do we see a little bit more change in deposit mix or other drivers that are underneath it? Ultimately, I think we have a really achievable path to $50 billion. If all works out, it could be better than that depending on how it all plays out through the rest of the year. Obviously, the markets-related NII will swing around a little bit depending on sort of where the ultimate path of rates goes, but largely offset on the fee side. Does that help?

Speaker #4: And then we've just got to see how that plays out across , you know , all the other variables . Do we see a little bit more , you know , change in deposit mix or other other other , you know , other drivers that are , that are underneath it and ultimately , you know , I think we have a really , you know , achievable path to 50 billion .

Speaker #4: And if all works out, it could be better than that, depending on how it all, all, all plays out through the rest of the year.

Speaker #4: And then obviously , you know , the market's related to NII will swing around a little bit depending , you know , depending on sort of where , where the ultimate path of rates goes .

Speaker #4: But , but largely offset on the fee side . Does that help ?

Erika Najarian: thank you.

Speaker #10: Thank you .

Speaker #9: Yep. Very helpful. Thank you.

Operator 2: The next question will come from John Pancari with Evercore. Your line is open, sir.

Operator: The next question will come from John Pancari with Evercore. Your line is open, sir.

Speaker #1: The next question will come from John Pancari with Evercore . Your line is open , sir .

John Pancari: Morning. Just on the expense topic, I know you had saw about a 3% year-over-year increase. You cited the investments in technology and advertising, or we saw some ongoing business investments, including in technology and other areas. Would you say, and I know you're confident in the $55.7 guidance, can you talk to us about any pressures there that you're seeing that may move you off that target? Just if you can maybe give us more detail on your confidence in attaining that target despite running at somewhat pressured levels in the near term here.

Speaker #11: Morning Just on the expense topic , I know you saw about a 3% year over year increase . You cited the investments , you know , in technology and advertising and or we saw some ongoing business investments , including in technology and other areas , would you say , and I know you're confident in the 55.7 guidance .

Speaker #11: Can you talk to us about any pressures there that you're seeing that may move you off that target, or just if you can maybe give us some more detail on your confidence in attaining that target, despite running somewhat pressured levels in the near term here?

Mike Santomassimo: I think, I mean, the only real pressure that we see would be revenue-related expenses to the extent in our asset and wealth business, that we generate higher levels of revenues, and we've got commissions that are tied to that. Everything else, we're continuing to track relative to what we thought in the guidance. By the way, the revenue-related comp, we still think is tracking to that. We have re-looked at that. Nothing has changed relative to our views on where we think overall expense is looking at. Again, I just want to reiterate that it's a continuation of the story that we've been talking about for quite some time now, which is we're increasing the level of investment in the areas that we think are important to do for the franchise, and we're driving efficiencies in other parts of the organization.

Michael Santomassimo: I think, I mean, the only real pressure that we see would be revenue-related expenses to the extent in our asset and wealth business, that we generate higher levels of revenues, and we've got commissions that are tied to that. Everything else, we're continuing to track relative to what we thought in the guidance. By the way, the revenue-related comp, we still think is tracking to that. We have re-looked at that. Nothing has changed relative to our views on where we think overall expense is looking at. Again, I just want to reiterate that it's a continuation of the story that we've been talking about for quite some time now, which is we're increasing the level of investment in the areas that we think are important to do for the franchise, and we're driving efficiencies in other parts of the organization.

Speaker #2: I think the only real pressure that we see would be revenue related expenses to the extent in our to the extent in our asset and wealth business that we generate higher levels of revenues .

Speaker #2: And we've got commissions that are tied to that . Everything else we're continuing to track relative to what we thought in the guidance .

Speaker #2: And by the way , our , you know , the the revenue related comp we still think is tracking to that . So , so we've , you know , have relooked at that , but there's , but , but , but nothing has changed relative to our views on how , where we think overall expenses will come down .

Speaker #2: Again , I just want to reiterate that it's a continuation of the story that we've been talking about for quite some time now , which is we're increasing the level of investment in the areas that we think are important to do for the franchise .

Speaker #2: And we're driving efficiencies in other parts of the organization , and we still see the opportunities to do that . And contain the expense base .

Mike Santomassimo: We still see the opportunities to do that and contain the expense base while we're able to grow the revenues and increase pre-tax, pre-provision.

Michael Santomassimo: We still see the opportunities to do that and contain the expense base while we're able to grow the revenues and increase pre-tax, pre-provision.

Speaker #2: While we're able to grow the revenues and increase , you know , pre-tax pre-provision .

Mike Santomassimo: Yeah. John, your question might have implied that there's pressure relative to consensus, but in reality, we're actually exactly where we thought we'd be relative to the guidance we gave. We feel really, as Charlie said, confident about what we've given. The bulk of the increase that you saw year-on-year, the roughly $440 million of increase you brought, the bulk of that's really the revenue-related comp and WIM. The rest of it's very small on a net basis, across the rest of the whole company. We feel good about the guidance we have.

Michael Santomassimo: Yeah. John, your question might have implied that there's pressure relative to consensus, but in reality, we're actually exactly where we thought we'd be relative to the guidance we gave. We feel really, as Charlie said, confident about what we've given. The bulk of the increase that you saw year-on-year, the roughly $440 million of increase you brought, the bulk of that's really the revenue-related comp and WIM. The rest of it's very small on a net basis, across the rest of the whole company. We feel good about the guidance we have.

Speaker #4: Yeah , and John , your question might have implied that there's like pressure relative to consensus , but but in reality , we're actually exactly where we thought we'd be .

Speaker #4: You know , relative to the guidance we gave . And so we feel really , you know , as Charlie said , confident about like what we've given and , and the bulk of the increase that you saw year on year , you know , the roughly $440 million of increase , the bulk of that's really the the revenue related comp and Wim , the rest of it's very small on net on a net basis , you know , across the rest of the whole , you know , company .

Speaker #4: So, we feel good about the guidance we have.

John Pancari: Got it. All right. Thanks for that. Appreciate it. Separately on the additional NBFI disclosures, I appreciate the detail.

Speaker #11: Got it . All right . Thanks for that . I appreciate it . And then separately on the on the additional NFI disclosures , I appreciate the detail and appreciate the quantification of the BDC exposure .

John Pancari: Quantification of the BDC exposure looks like at about $8 billion. Can you maybe help us frame the broader private credit exposure, if you can help size that up, and any impact of regulatory input around this? I know clearly the regulators have stepped up their inquiries around the area as well. Any changes expected as a result of the ongoing discussions on that front?

Speaker #11: It looks like it's about $8 billion. Can you maybe help us frame the broader private credit exposure? If you can help size that up, and any impact of regulatory input around this.

Speaker #11: I know clearly the regulators have stepped up their inquiries around the area as well. So, any changes expected as a result of the ongoing discussions on that front?

Mike Santomassimo: Yeah. The short answer on the last piece is no. We're comfortable with our exposures, and that's where the conversation starts. I think and I mentioned, but I'll kind of re-go through it. The majority of our private credit exposure sits in that corporate debt finance bucket, which is on page 10 of the presentation, about $36.2 billion of it. That's the vast majority of the exposure.

Michael Santomassimo: Yeah. The short answer on the last piece is no. We're comfortable with our exposures, and that's where the conversation starts. I think and I mentioned, but I'll kind of re-go through it. The majority of our private credit exposure sits in that corporate debt finance bucket, which is on page 10 of the presentation, about $36.2 billion of it. That's the vast majority of the exposure.

Speaker #4: Yeah . I mean , the short answer on the last piece is no . You know , we're comfortable with our exposures . And that's that's where the conversation starts .

Speaker #4: I think , you know , as I , as I and I mentioned , but I'll kind of go through it like the , the majority of our private credit exposure sits in that corporate debt finance bucket , which is on page ten of the , of the presentation .

Speaker #4: So about 36.2 billion of , of it That's that's , that's the vast majority of the exposure .

John Pancari: Okay, great. Thanks, Mike.

Speaker #11: Okay, great. Thanks, Mike.

Operator 2: The next question will come from Manan Gosalia with Morgan Stanley. Your line is open.

Operator: The next question will come from Manan Gosalia with Morgan Stanley. Your line is open.

Speaker #1: The next question will come from Manon Gosalia with Morgan Stanley. Your line is open.

Manan Gosalia: Hey, good morning. One clarification on your response to Erika's question. Just given the clarity on the capital rules, you're suggesting that the bias would be to eventually take down the 10% to 10.5% CET1 target, right? In other words, as you get the benefit of the lower RWAs, the excess capital you free up would be something available to deploy quickly?

Speaker #12: Hey . Good morning . One clarification on your response to Erika's question . Just given the clarity on the capital rules , you're suggesting that the bias would be to eventually take down the 10 to 10.5% kt1 target , right .

Speaker #12: So, in other words, as you get the benefit of the lower RWA, the excess capital you free up would be something available to deploy quickly.

Charlie Scharf: What we said was that we are running our excess today based upon today's capital rules. When the capital rules get finalized, we will reevaluate what that is and evaluate how big a buffer we think we need at that point in time. Period, end of story. If our RWAs go down, then that's a positive, and we've got to think about what's going on in the environment at that point in time, what we're comfortable doing. Directionally, it's constructive for us relative to how much capital we ultimately need to hold.

Speaker #2: What we said was that we are running our excess today based upon today's capital rules. And when the capital rules get finalized, we will reevaluate what that is and evaluate how big a buffer we think we need at that point in time.

Speaker #2: End of story . And you know , if our rwas go down , then that's a positive . And we've got to think about , you know , what's going on in the environment at that point in time .

Speaker #2: What we're comfortable doing. But directionally, it's constructive for us relative to how much capital we ultimately need to hold.

Mike Santomassimo: Yeah. All else equal, if our CET1 percentage goes up as a result of lower RWA, that gives us X more capacity to deploy to support clients.

Michael Santomassimo: Yeah. All else equal, if our CET1 percentage goes up as a result of lower RWA, that gives us X more capacity to deploy to support clients.

Speaker #4: Yeah . And all else equal , if our if our set one percentage goes up as a result of lower RWA , that gives us more capacity to to deploy , to support clients or return to shareholders .

Charlie Scharf: Right

Mike Santomassimo: Return to shareholders.

Michael Santomassimo: Return to shareholders.

Charlie Scharf: Yeah. We're confusing RWAs, capital requirements, and dollars of excess capital. It's going to come down to how much of that dollar excess there is and how we expect to use it.

Speaker #2: Yeah . I mean , yeah , I mean , we're confusing Rwas us capital requirements and dollars of excess capital . And so , you know , it's going to come down to , you know , how much of that dollar excess there is and how we and how we expect to use it

Manan Gosalia: No, that's clear. I appreciate that. Maybe as a follow-up, as we get some of these changes that benefit the mortgage banking business, both on originations and on servicing, is there anything that Wells would do maybe to lean in, and is there more long-term opportunity for either of those businesses?

Speaker #12: No , that's clear . I appreciate that . And then maybe as a follow up , as we get some of these changes that that benefit the mortgage banking business , both on originations and on servicing , is there anything that Wells would do maybe to lean in and is there more long term opportunity for either of those businesses ?

Charlie Scharf: I think we're very comfortable with the plan we have in our home lending business today, which is focusing on people who are broader clients within the bank. I've said this in the past. It's not just the capital levels that drive our desires in this business. It's the operational risk that's embedded in there. It's the reputational risk. There's a note relative to making mistakes, foreclosing on behalf of others when you're following their rules and whatnot. There's just a certain level of sizing that we're comfortable, and we don't see that changing at this point.

Speaker #2: I think we're very comfortable with the plan . We have in our home lending business today , which is focusing on people who are broader clients within the bank .

Speaker #2: As I've you know , I've said this in the past , it's not just the capital levels that drive our desires in this business .

Speaker #2: It's the operational risk that's embedded in there . It's the reputational risk . It's there's a , you know , a relative to making mistakes , foreclosing on behalf of others .

Speaker #2: When you're following the rules and whatnot . And so there's just a , you know , a certain level of sizing that we're comfortable and we don't see that changing at this point .

Mike Santomassimo: On the servicing side, the capital rules aren't really changing much other than a removal of a penalty rate if you get too big. That doesn't change much there on the servicing side of the capital.

Michael Santomassimo: On the servicing side, the capital rules aren't really changing much other than a removal of a penalty rate if you get too big. That doesn't change much there on the servicing side of the capital.

Speaker #4: And on the servicing side, the capital rules aren't really changing much other than, you know, a removal of a penalty rate.

Speaker #4: If you get too big, so that doesn't change much there on the serving side, on the capital side.

Manan Gosalia: Got it. Thank you.

Speaker #12: Got it . Thank you

Operator 2: The next question will come from Gerard Cassidy of RBC Capital Markets. Your line is open.

Operator: The next question will come from Gerard Cassidy of RBC Capital Markets. Your line is open.

Speaker #1: The next question will come from Gerard Cassidy , RBC Capital Markets . Your line is open .

Gerard Cassidy: Thank you. Good morning, gentlemen. Mike, can you share with us, when you look at your loan loss reserves, what maybe the scenario weighting was this quarter with the evolving macro risks that are out there, of course, with the hostilities in the Middle East, and how that might have affected the way you guys addressed the reserves this quarter?

Speaker #13: Thank you . Good morning gentlemen . My can you share with us when you look at your loan loss reserves , what maybe the scenario waiting was this quarter with the involving macro risks that are out there .

Speaker #13: Of course, with the hostilities in the Middle East and how that might have affected the way you guys addressed the reserves this quarter.

Mike Santomassimo: Yeah, sure, Gerard. For a while, we've had a significant weighting on our downside scenarios, and that weighting hasn't changed. Every quarter, the scenarios change a little. In this quarter, if you look at unemployment rate, just as one example, the peak unemployment rate went up 4 basis points as a result of our scenarios. It went up to a little over six, so six and 1 basis point, to be exact, is sort of the peak unemployment rate. When we look at all the different scenarios as we know it today, based on what we think can happen as a result of what we're seeing, we think the scenarios cover anything that's sort of probable at this point. Across the other variables moved around a little bit, but not a lot.

Michael Santomassimo: Yeah, sure, Gerard. For a while, we've had a significant weighting on our downside scenarios, and that weighting hasn't changed. Every quarter, the scenarios change a little. In this quarter, if you look at unemployment rate, just as one example, the peak unemployment rate went up 4 basis points as a result of our scenarios. It went up to a little over six, so six and 1 basis point, to be exact, is sort of the peak unemployment rate. When we look at all the different scenarios as we know it today, based on what we think can happen as a result of what we're seeing, we think the scenarios cover anything that's sort of probable at this point. Across the other variables moved around a little bit, but not a lot.

Speaker #4: Yeah , sure . Gerard , you know , for a while we've had a significant waiting on our downside scenarios and that waiting hasn't changed .

Speaker #4: But every quarter , the scenario has changed a little . And in this quarter , you know , if you look at unemployment rate , just as one example , you know , the peak unemployment rate went up four basis points as a result of our scenarios .

Speaker #4: It went up to a little over six. So six, six and 6 in 1 basis point to be exact, is sort of the peak unemployment rate.

Speaker #4: And so , you know , when we look at all the different scenarios as we know it today , based on what we think can happen as a result of what we're seeing , you know , we think the scenarios , you know , cover , you know , anything that's sort of probable at this point .

Speaker #4: And so , you know , and then across the other other variables moved around a little bit , but not a lot . And so we've maintained that significant downsides waiting .

Mike Santomassimo: We've maintained that significant downside weighting. We'll keep it that way at this point for the quarter, and we think that's appropriate for where things stand.

Michael Santomassimo: We've maintained that significant downside weighting. We'll keep it that way at this point for the quarter, and we think that's appropriate for where things stand.

Speaker #4: And then we'll keep it that way at this point for the quarter . And we think that's appropriate for where for where things stand .

Gerard Cassidy: Very good. As a follow-up, possibly for you, Charlie, you talked about your organic growth. That's what you're focused on. I think you mentioned you finally closed on the railcar leasing deal, and obviously all the regulatory orders, with the exception of the one for BSA, are behind you. Putting that one regulatory order.

Speaker #13: Very good . And then as a follow up , possibly for you , Charlie , you talked about the organic growth . That's what you're focused on .

Speaker #13: I think you mentioned you finally closed on the rail leasing deal . And obviously all the regulatory orders , with the exception of the one for BSA , are behind you .

Speaker #13: So putting that one regulatory order off to the side , can you share with us just this organic growth . Everybody's obviously pulling the oars in the same direction .

Gerard Cassidy: Off to the side, can you share with us just this organic growth? Everybody's obviously pulling the oars in the same direction. Are we going to see it really start to materialize more on the consumer side, commercial side? What are you guys seeing when you focus on this organic growth over the next 12 to 24 months?

Speaker #13: Are we going to see it really start to materialize more in the consumer side ? Commercial side ? What are you guys seeing when you focus on this organic growth over the next 12 to 24 months ?

Mike Santomassimo: Hey, Gerard, it's Mike. I'll try to take that, and Charlie can chime in. I think we're starting to see it everywhere. If you go back to page two of the presentation that we put out today, we tried to just summarize some of the key things that we're seeing across each of the businesses. If you look on the Consumer Banking and Lending segment, new checking accounts openings up 15%, credit card accounts up 60%, auto originations up 2x what they were last year. In the CIB, we saw banking revenue up 11%, markets up 19%. Our share was stable, but good growth in equity capital markets in the investment banking side. In wealth, we continue to have really strong recruiting across the different channels, and client assets up 11%, revenue up 14%. We saw good loan growth in that business.

Michael Santomassimo: Hey, Gerard, it's Mike. I'll try to take that, and Charlie can chime in. I think we're starting to see it everywhere. If you go back to page two of the presentation that we put out today, we tried to just summarize some of the key things that we're seeing across each of the businesses. If you look on the Consumer Banking and Lending segment, new checking accounts openings up 15%, credit card accounts up 60%, auto originations up 2x what they were last year. In the CIB, we saw banking revenue up 11%, markets up 19%. Our share was stable, but good growth in equity capital markets in the investment banking side. In wealth, we continue to have really strong recruiting across the different channels, and client assets up 11%, revenue up 14%. We saw good loan growth in that business.

Speaker #4: Hey Gerard , it's Mike . I'll try to try to take that and Charlie can chime in . You know , I think we're starting to see it everywhere .

Speaker #4: And if you go back to page two of the presentation that we put out today , we tried to just summarize some of the key things that we're seeing across each of the businesses .

Speaker #4: If you look on the consumer banking and lending segment , checking accounts up 15 new checking accounts , openings up 15% , credit card accounts up 60% , auto originations up two x what they were last year .

Speaker #4: You know , in the CIB , we saw revenue . You know , banking revenue up 11% . Markets up 19% . You know , our share was stable but good growth in equity capital markets in the investment in the investment banking side , in wealth , we're we continue to have really strong recruiting across the different channels And client assets up 11% revenue up 14% .

Speaker #4: We saw good loan growth in that business . We saw good deposit growth in that business . And then lastly in commercial banking , you know we're seeing the we're seeing the benefit of the investments that we've been making now for the last couple of years , really come through with both , you know , loans and deposits up and even better , new client origination , new clients that we're adding to the platform up substantially from where they've been in prior years .

Mike Santomassimo: We saw good deposit growth in that business. Lastly, in Commercial Banking, we're seeing the benefit of the investments that we've been making now for the last couple of years really come through with both loans and deposits up, and even better, new clients that we're adding to the platform up substantially from where they've been in prior years. Look, these things take time. We're not claiming victory in any way. We've got a lot more to do to improve the performance across each of these businesses. A lot of that organic activity is coming through in the numbers, and you can see it in many of the metrics that we put out.

Michael Santomassimo: We saw good deposit growth in that business. Lastly, in Commercial Banking, we're seeing the benefit of the investments that we've been making now for the last couple of years really come through with both loans and deposits up, and even better, new clients that we're adding to the platform up substantially from where they've been in prior years. Look, these things take time. We're not claiming victory in any way. We've got a lot more to do to improve the performance across each of these businesses. A lot of that organic activity is coming through in the numbers, and you can see it in many of the metrics that we put out.

Speaker #4: And look , these things take time . Like we're not , we're not claiming victory in any way . We got a lot more to do to improve the performance across each of these businesses .

Speaker #4: But a lot of that organic activity is , is coming through in the numbers . And you can see it in many of the metrics that we put out

Gerard Cassidy: Very good. Thank you.

Speaker #13: Very good . Thank you

Operator 2: The next question comes from Christopher McGratty of KBW. Your line is open.

Operator: The next question comes from Christopher McGratty of KBW. Your line is open.

Speaker #1: The next question comes from Chris Mcgratty of KBW . Your line is open .

Christopher McGratty: Good morning. Thank you. Mike, on the NII, I just wanted to split hairs for a moment, if you don't mind. When you talk about the fluidity of the cuts in the forward curve and two to three cuts last quarter and maybe nothing now, how much of an impact does it have on the Q4 exit run rate? I guess it's more of a jumping-off question for 2027.

Speaker #14: Good morning . Thank you . Mike , on the NII , I just wanted to split hairs for a moment , if you don't mind .

Speaker #14: When you talk about the fluidity of the cuts and the forward curve, and two to three cuts last quarter and maybe nothing—now, how much of an impact does it have on the fourth quarter exit run rate?

Speaker #14: I guess it's more of a jumping off question for 27 .

Mike Santomassimo: Yeah. Look, obviously that's going to have a bigger impact for next year, as you point out, than this year. Where we end the year will matter a lot more as we go into 2027, and you can annualize it. I think when you look at our Q and you see sort of the sensitivities there, that's a good enough way to start to mention sort of what it means for a full year, particularly coming out of the Q4. I would start there with your modeling. Obviously, any changes in the forward curve are going to have a little bit of an impact this year, but not super big because they were all back-weighted.

Michael Santomassimo: Yeah. Look, obviously that's going to have a bigger impact for next year, as you point out, than this year. Where we end the year will matter a lot more as we go into 2027, and you can annualize it. I think when you look at our Q and you see sort of the sensitivities there, that's a good enough way to start to mention sort of what it means for a full year, particularly coming out of the Q4. I would start there with your modeling. Obviously, any changes in the forward curve are going to have a little bit of an impact this year, but not super big because they were all back-weighted.

Speaker #4: Yeah . I mean , look , obviously that's going to have a bigger impact for next year . As you point out , than this year .

Speaker #4: So where we end the year will matter a lot more as we go into 2027 . And you can analyze it . And I think look at our when you look at our queue and you see sort of the sensitivities there , that's like a , you know , good enough way to start to , to mention sort of what , what , what , what it means for a full year , you know , particularly coming out of like the fourth quarter .

Speaker #4: So I would start there with your , with your modeling , but , but obviously , you know , any , any changes in the forward curve are going to have a little bit of an impact this year , but not , not super , not super big because they were all back weighted .

Christopher McGratty: Okay. Thanks for that. My follow-up, the 7% reduction in risk-weighted assets, I'm interested, I know you didn't publicly comment before it was out there, but was that better or worse than you thought you might see from the proposals?

Speaker #14: Okay , thanks for that . And my follow up , the 7% reduction in risk weighted assets , I'm interested . I know you didn't publicly comment before it was out there , but was that better or worse than you thought you might see from the proposals ?

Mike Santomassimo: We don't know. We had a bunch of stuff we made up, anticipating what we might see, but as others have pointed out, it's like a 1,200-page proposal. Any of those estimates we had going into it were kind of meaningless. Listen, I think the areas that we benefit from are all the areas that we had commented on, and we believe they've got it right. Do we think the thing is perfect and they've gotten everything exactly right? No. It was directionally sort of where we thought.

Michael Santomassimo: We don't know. We had a bunch of stuff we made up, anticipating what we might see, but as others have pointed out, it's like a 1,200-page proposal. Any of those estimates we had going into it were kind of meaningless. Listen, I think the areas that we benefit from are all the areas that we had commented on, and we believe they've got it right. Do we think the thing is perfect and they've gotten everything exactly right? No. It was directionally sort of where we thought.

Speaker #4: You know , we don't know . It's hard . Like we we had a bunch of stuff we made up like anticipating what we might see .

Speaker #4: But but as others have pointed out , it's like a 1200 page proposal . So any of those estimates we had going into it were kind of meaningless .

Speaker #2: Listen , I think the areas that we benefit from are all , you know , the areas that , you know , we had commented on and we believe they've got it right .

Speaker #2: You know, do we think the thing is perfect and they've gotten everything exactly right? No. But you know, it's—

Speaker #4: Direction . It was in the it was directionally sort of where we thought .

Christopher McGratty: All right. Thank you very much.

Speaker #14: All right . Thank you very much

Operator 2: Thank you. The next question will come from Vivek Juneja of J.P. Morgan. Your line is open, sir.

Operator: Thank you. The next question will come from Vivek Juneja of J.P. Morgan. Your line is open, sir.

Speaker #1: Thank you . The next question will come from Vivek Juneja of JP Morgan . Your line is open , sir .

Vivek Juneja: Hi. Thanks for the question. Mike, just a quick clarification, given the overlapping calls going on, and the call's going on long, so I won't keep you up. The private credit exposure, the answer you give, majority of it is in the commercial debt finance of $36 billion?

Speaker #15: Hi . Thanks for the question . Mike . Just a quick clarification . Given the overlapping calls going on and the calls going on long , so I won't keep you , but the private credit exposure .

Speaker #15: The answer you gave—a majority of it is on the consumer side. The commercial debt finance is $36 billion, so is—

Mike Santomassimo: Vivek, that is all private credit exposure, and it is the vast majority of our private credit exposure. It is the $36 billion, and then the BDCs are a subset of that.

Michael Santomassimo: Vivek, that is all private credit exposure, and it is the vast majority of our private credit exposure. It is the $36 billion, and then the BDCs are a subset of that.

Speaker #4: That all , Vivek ? That is all private credit exposure . And it is the vast majority of our private credit exposure is the 36 billion .

Speaker #4: And then the BDCs are a subset of that.

Vivek Juneja: Got it. Okay. That's all I wanted to just check. Thanks.

Speaker #15: Got it ? Got it . Okay . That's all I wanted to just check . Thanks .

Mike Santomassimo: No worries. Thank you.

Michael Santomassimo: No worries. Thank you.

Speaker #4: No worries . Thank you

Operator 2: The next question will come from Saul Martinez of HSBC. Your line is open.

Operator: The next question will come from Saul Martinez of HSBC. Your line is open.

Speaker #1: And the next question will come from Saul Martinez of HSBC. Your line is open.

Saul Martinez: Hey, thanks for squeezing me in. I'm sorry to beat a dead horse with the net interest income, but NII ex markets was only up 2% year-on-year. If I look at loan growth, excluding markets lending, it was up 8%. Deposit growth has been good. It does seem like you are seeing some core margin pressure there. I just wanted to ask if you have a little bit more color on what is driving that. Is this competitive dynamics in deposits? I guess, are you competing in terms of pricing on lending and deposits, or is there a risk that you're pricing loans and deposits in a way that is sacrificing returns in order to foster growth?

Speaker #14: Hey .

Speaker #16: Thanks for squeezing me in . I'm sorry to beat a dead horse with the net interest income , but NAICs markets was only up 2% year on year .

Speaker #16: If I look at loan growth , excluding markets lending , it was up 8% . Deposit growth has been has been good . And you know , I guess so it does seem like you are seeing some core margin pressure there .

Speaker #16: And just wanted to ask if you have a little bit more color on what is driving that . Is this competitive dynamics and deposits and I guess , are you and are you competing on , on in terms of pricing , on lending and deposits , or is there a risk that you're pricing loans and deposits in a way that is sacrificing returns in order to , to foster growth

Mike Santomassimo: Thanks, Saul. Rates is driving it. Number one, interest rates coming down year-on-year is sort of driving it. We saw rate cuts last year. We're seeing growth in the interest-bearing deposit side. Non-interest-bearing are slower to sort of grow as we sort of build the checking account growth that we've talked about in the call. On the lending side of things, on the consumer side, we're not seeing compression there. Spreads are in a little bit on loans across some of the commercial side, but nothing super significant. We're not out there competing on price to try to grow the balance sheet. You're seeing all those things sort of come through in the underlying results, which is exactly kind of what we thought would be happening as we sort of rolled out the guidance in January.

Michael Santomassimo: Thanks, Saul. Rates is driving it. Number one, interest rates coming down year-on-year is sort of driving it. We saw rate cuts last year. We're seeing growth in the interest-bearing deposit side. Non-interest-bearing are slower to sort of grow as we sort of build the checking account growth that we've talked about in the call. On the lending side of things, on the consumer side, we're not seeing compression there. Spreads are in a little bit on loans across some of the commercial side, but nothing super significant. We're not out there competing on price to try to grow the balance sheet. You're seeing all those things sort of come through in the underlying results, which is exactly kind of what we thought would be happening as we sort of rolled out the guidance in January.

Speaker #4: Thanks . So rates is driving it . Number one , interest rates coming down year on year , sort of driving it . We saw rate cuts last year .

Speaker #4: We're seeing growth in the interest bearing deposit side non-interest bearing or slower to sort of you grow as we sort of build the checking account growth that we've talked about in the call and then on , on the , on the lending side of things , we're not , you know , in the consumer side , we're , we're not seeing , you know , compression there spreads are in a little bit on loans across like some of the commercial side , but nothing super significant .

Speaker #4: And we're not out there , you know , competing on price to try to grow the balance sheet . So you're seeing all those things sort of come through in the underlying results , which is exactly kind of what we thought would be happening as we sort of rolled out the guidance in , in January .

Mike Santomassimo: Largely nothing that's unexpected to sort of come through. Your point on competition on pricing and deposits, we're not seeing competition on pricing. That's not where it is. We're just growing some of the interest-bearing stuff faster than non-interest-bearing, but it's all at rates that are within where we thought they would be.

Michael Santomassimo: Largely nothing that's unexpected to sort of come through. Your point on competition on pricing and deposits, we're not seeing competition on pricing. That's not where it is. We're just growing some of the interest-bearing stuff faster than non-interest-bearing, but it's all at rates that are within where we thought they would be.

Speaker #4: So , so largely nothing that's unexpected to sort of come , come through and your point on like competition on pricing and deposits , we're not seeing like , you know , competition on pricing .

Speaker #4: That's not , that's not where it is . We're just growing some of the interest bearing stuff faster than noninterest bearing , but it's all at rates that are within what , where we thought they would be .

Charlie Scharf: If we do a good job, as Mike just alluded to a couple of times, we should be growing the non-interest-bearing further down the line as we bring on more of these relationships and have more balances here to work with customers, both on the consumer side and on the business side.

Speaker #2: And if we do and if we do a good job , as Mike alluded to , a couple of times , we should be growing the non-interest bearing further down the line as we bring on more of these relationships and have more balances here to work with customers , both on the consumer side and on the business side .

Saul Martinez: Got it. Okay. I guess on reserving, maybe a follow-up to the earlier question. Your reserve rate for C&I is about 1%. It's been about 1% for a while. NBFI is obviously a big part of that. I'm curious, it sounds like the NBFI portfolio generally has a lower loss content than the balance of the book. Maybe correct me if I'm wrong. Do reserves reflect that? I'm curious if there's been any change in your views of loss content in those portfolios and which would influence how you're reserving for those books.

Speaker #16: Got it. Okay. And I guess I'm reserving a follow-up to the earlier question. You said the reserve rate for she and I is about 1%.

Speaker #16: It's been about 1% for a while . And BFI is obviously a big part of that . I'm curious . It sounds like the BFI portfolio generally has a lower loss content than the balance of the book .

Speaker #16: Maybe , you know , correct me if I'm wrong , do reserves reflect that and I'm curious if there's been any change in in your views of lost content in that in those portfolios and which would influence how , how you're reserving for those .

Speaker #5: Books

Mike Santomassimo: No change in sort of our thinking as we look forward in terms of loss content. In most of those portfolios, it's been virtually nothing for a long period of time.

Michael Santomassimo: No change in sort of our thinking as we look forward in terms of loss content. In most of those portfolios, it's been virtually nothing for a long period of time. The allowance is lower and not changing materially at this point.

Speaker #4: There's no change in sort of our thinking as we look forward in terms of loss, content, and in most of those portfolios, it's been virtually nothing.

Speaker #4: And for for a long period of time , the allowance is a lower and not not changing materially at this point .

Saul Martinez: Yeah.

Saul Martinez: The allowance is lower and not changing materially at this point.

Saul Martinez: Okay. Got it. Thank you.

Speaker #16: Okay . Got it .

Mike Santomassimo: Yeah.

Michael Santomassimo: Yeah.

Speaker #5: Thank you .

Speaker #4: Yeah .

Operator 2: Our final question will come from David Chiaverini with Jefferies. Your line is open.

Operator: Our final question will come from David Chiaverini with Jefferies. Your line is open.

Speaker #1: And our final question will come from David Chiaverini with Jefferies. Your line is open.

David Chiaverini: Hi. Thanks for taking the question. Wanted to start on the capital markets outlook and the pipeline. Can you frame the outlook following a strong Q1 here?

Speaker #17: Hi. Thanks for taking the question. So, I wanted to start on the capital markets outlook and the pipeline. Can you frame the outlook following a strong first quarter here?

Mike Santomassimo: Yeah, look, I think we still expect that the financing markets are sort of wide open still. We still expect to see a lot of activity on the debt side, both investment grade and sort of leveraged finance. There's plenty of money on the sidelines to sort of be put to work there. That's certainly been the case for a while. I think on the equity capital market side, you've certainly seen some delay in IPO activity in the latter part of Q1. Assuming some of the volatility subsides or stabilizes, you may see some of that start to come back. There's certainly a pipeline of companies sort of waiting to go. In the meantime, you've definitely seen a lot of activity on the convert side and other parts of the ECM wallet.

Michael Santomassimo: Yeah, look, I think we still expect that the financing markets are sort of wide open still. We still expect to see a lot of activity on the debt side, both investment grade and sort of leveraged finance. There's plenty of money on the sidelines to sort of be put to work there. That's certainly been the case for a while. I think on the equity capital market side, you've certainly seen some delay in IPO activity in the latter part of Q1. Assuming some of the volatility subsides or stabilizes, you may see some of that start to come back. There's certainly a pipeline of companies sort of waiting to go. In the meantime, you've definitely seen a lot of activity on the convert side and other parts of the ECM wallet. Overall, I'd say the pipeline and the expectation is still to see a pretty active rest of the year.

Speaker #4: Yeah . Look , I think I think we still expect that , you know , the financing markets are sort of wide open still .

Speaker #4: So we still expect to see a lot of activity on the debt side, both investment grade and sort of leveraged finance.

Speaker #4: And so there's plenty of money on the sidelines to sort of be put to work there . And , and that's , that's certainly been the case for a while , I think on the , on the equity capital markets side , you've certainly seen some delay in IPO activity in the latter part of the first quarter , assuming some of the volatility subsides or stabilizes , you may see some of that start to come back .

Speaker #4: There's certainly a pipeline of of companies sort of waiting to go . And then in the meantime , you've definitely seen a lot of activity on the convert side and and other parts of the of the ECM wallet .

Mike Santomassimo: Overall, I'd say the pipeline and the expectation is still to see a pretty active rest of the year.

Speaker #4: But so , so overall , I'd say the pipeline and the expectation is still to see a pretty active , you know , rest of the year .

David Chiaverini: Great, thanks for that. Shifting over to your credit card account growth, which is very nice to see, good growth, very strong. What is the drivers behind that? Is it more rewards, more marketing, better rate? What are some of the drivers there?

Speaker #17: Great . Thanks for that . And then shifting over to your credit card account growth , which is , you know , very nice to see good growth , very strong .

Speaker #17: What is the drivers behind that ? Is it is it more rewards , more marketing , better rate ? What are some of the drivers there ?

Mike Santomassimo: It starts with really good, compelling, simple products. I think, since in the last five years, the team has re-platformed every product that we had in the market, starting with our Active Cash Card, which is a very simple 2% cash back value proposition, and then added a series of products since then. I think what we've seen is that we've had really good reception from both existing and sort of new clients to the bank for what are very easy to understand, compelling products. Over the last three quarters, we've seen an uptick in originations as our branches become more productive in terms of helping customers get the right card. We've also seen an increase in customers come to us directly looking for the cards as the awareness and the size of the portfolio continue to grow.

Michael Santomassimo: It starts with really good, compelling, simple products. I think, since in the last five years, the team has re-platformed every product that we had in the market, starting with our Active Cash Card, which is a very simple 2% cash back value proposition, and then added a series of products since then. I think what we've seen is that we've had really good reception from both existing and sort of new clients to the bank for what are very easy to understand, compelling products. Over the last three quarters, we've seen an uptick in originations as our branches become more productive in terms of helping customers get the right card. We've also seen an increase in customers come to us directly looking for the cards as the awareness and the size of the portfolio continue to grow.

Speaker #4: It starts with really good , compelling , simple products . And I think you know , since in the last , you know , five years , the team has replatformed every product that we had in the market , starting with our active cash card , which is a very simple 2% cash back value proposition .

Speaker #4: And then added a series of products over , you know , since then . And I think what we've seen is that we've , we've had really good , you know , reception from both existing and new clients to the bank for what are very easy to understand , compelling products .

Speaker #4: And then over the last three quarters , we've seen an uptick in originations as our branches have become more productive , you know , in terms of helping customers , you know , get the right card .

Speaker #4: And we've also seen an increase in customers come to us directly looking for the cards as the awareness and the size of the portfolio grows.

Charlie Scharf: It's awareness. It's advertising, both targeted and more general. We're increasing the amount of advertising we're doing both in the card business and the broader consumer business. That plus more of the targeted things we're doing in the digital space is driving increases there. It's a combination, as Mike said, of just the products we have, but us getting better and better at targeting originations. Our credit quality is still really strong.

Speaker #2: Awareness , it's spending on its advertising , both targeted and more . And we're general , you know , when we're increasing the amount of advertising , we're doing , both in the card business and the broader consumer business .

Speaker #2: And so , you know , that plus more of the targeted things we're doing in the digital space is driving increases there . So it's a combination , you know , as Mike said , of just the products we have , but us getting better and better at targeting originations and our credit quality is still really strong .

David Chiaverini: Very helpful. Thank you.

Speaker #17: Very helpful. Thank you.

Mike Santomassimo: All righty. All right. Thanks, everyone, for the questions. We'll see you next time.

Michael Santomassimo: All righty. All right. Thanks, everyone, for the questions. We'll see you next time.

Speaker #2: All righty .

Speaker #4: All right. Thanks, everyone, for the questions. We'll see you next time.

Operator 2: Thank you all for your participation in today's conference call. At this time, all parties may disconnect.

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

Q1 2026 Wells Fargo & Co Earnings Call

Request DemoDemo

Wells Fargo & Co

Earnings