Wells Fargo & Co Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Siefers - Piper Sandler - Analyst : Good morning everybody. Thank you for taking the question. Mike, I was hoping to start with NII. So your fourth quarter number should be flattish with the third quarter level. And I believe you mentioned towards the end of your prepared remarks that you believe Wells is close to the trough. I was hoping you could just unpack please a bit more, what you see as the main swing factors either way as well as kind of what it might take from here for it to begin to inflect back up -- pardon me, back upward more visibly?

Question: Scott Siefers - Piper Sandler - Analyst : Okay. Perfect. I appreciate that. And then you touched on loan demand is a factor as well. You all have been pretty reserved regarding that backdrop throughout the year, which has been borne out to be correct. I guess, hopefully, we're beginning to get some clarity on some of the unresolved issues like cost to borrow, and I guess we're getting closer to the election. Maybe just some additional thoughts on the overall outlook there, if possible, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 2:00PM, WFC.N - Q3 2024 Wells Fargo & Co Earnings Call

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Hi, good morning. I guess first question, I think Charlie addressed this a little bit in his opening remarks around expenses. And I appreciate you're not talking about 2025 today. But big picture, looking at your slide 7, personnel expenses flat 8.6% year-over-year, non-comp flat 4.2% year-over-year. From a shareholder perspective, and given what you've said, is it fair to assume we continue to see some of this flat lining trend where there are enough savings to reinvest in the platform, grow fee revenues and do all the stuff that you're doing, but without seeing a meaningful change in these two categories as we look forward?

Question: Ebrahim Poonawala - BofA Global Research - Analyst : That's helpful. And just maybe one quick Mike, I'm sorry if I missed it on NII. It's an asset-sensitive balance sheet, because of September 50 basis points cut. I would have assumed fourth quarter NII would have declined and maybe there's about $50 million of bond book restructuring help. Just why [NII] not going down despite the 50 basis points cut? And is there more room for additional restructuring as we look forward? Thank you.

Question: Ebrahim Poonawala - BofA Global Research - Analyst : Got it. And the steeper the better, I assume.

Question: Erika Najarian - UBS Equities - Analyst : Hi. Good morning. My first question is could you remind us based on your understanding, what happens next after you submit your third-party review to the Fed, as it relates to the asset cap work stream? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 2:00PM, WFC.N - Q3 2024 Wells Fargo & Co Earnings Call

Question: Erika Najarian - UBS Equities - Analyst : Got it. Okay. And as a follow-up, you bought back $3.5 billion of shares in the third quarter. Mike, is this about the -- is the pace that we should expect until we get your next SCB in June? I'm just trying to think about framing the buyback opportunity over the next few quarters?

Question: Betsy Graseck - Morgan Stanley - Analyst : So first question, just want to understand if the asset cap were to be removed -- well, I should say when the asset cap is removed, right? Are there opportunities for you to lean in anywhere in terms of asset growth? Because I've heard you in the past several times, and I would assume it's the same today that the asset cap is not keeping you from doing anything that you want to do. And maybe that's wrong. But I just want to understand where you would lean in when it does get removed.

Question: Betsy Graseck - Morgan Stanley - Analyst : And on the expense side, you've talked in the past about the $2.2 billion that has been invested to address the issues in the consent order and to deal with them. When the consent order goes away, is there an opportunity to pull back on that at all?

Question: Matt O'Connor - Deutsche Bank - Analyst : Good morning. I was hoping you guys could talk about the anti-money laundering KYC, the disclosure in the 10-Q value investigation and then there was some regulatory outcome on that and given that it was in your 10-Q went so public. Wondering if you could just add some color around it? And then also just what it might mean to expenses and anything else we should be mindful of going forward? Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. And then are you able to comment is this is a Wells specific thing or an industry wide area focus because you know the banks are responsible not just for kind of policing their customers, but really keeping track of all the money that is moving around. It seems like it could be --

Question: David Long - Raymond James - Analyst : Good morning, everyone. I just wanted to follow up with the regulatory side. And can you remind us of the mechanics of the asset cap without providing any insight as to when you think it may come off. But can the asset cap be removed in your opinion without the consent order being removed completely?

Question: David Long - Raymond James - Analyst : Got it. Thank you, Charlie, appreciate it. And then the other question I had was related to the trading gains line, and you've been putting up over $1 billion there per quarter in trading gains. What are some of the puts and takes in that line that can create some volatility on a quarter-to-quarter basis?

Question: John Pancari - Evercore ISI - Analyst : Good morning. Just around the -- a little bit more around the securities repositioning, how much of a benefit to net interest income did the securities repositioning have this quarter? And how much of it would be a full quarter impact that you would expect for the fourth quarter?

Question: John Pancari - Evercore ISI - Analyst : Okay. And then have you sized up that impact and what it would mean for NII for the fourth quarter?

Question: John Pancari - Evercore ISI - Analyst : All right. Thanks. And then separately, just around the fee income commentary, I appreciate the color you provided around the trading outlook. Can you perhaps unpack the rest of your expectations there just on the fee side, how we should think about the trajectory of wealth management and possibly on the card side and IB as well. Just what you're seeing there in terms of underlying drivers?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Hi, Mike. Hi, Charlie. Can you guys share with us maybe a little color on the commercial real estate office portfolio. It looks like the stabilization may be sitting in on the credit quality. Any indicators of is it getting less worse? Or when you go into market property down the markets maybe aren't as severe as they were six months ago or 12 months ago. Any further details here?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Very good. And then I know -- gosh, it's only been less than a month since the Fed cut the Fed funds rate and obviously, the forward curve is calling for more. And you guys -- as you addressed in your prepared remarks, Mike, about deposit costs. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 11, 2024 / 2:00PM, WFC.N - Q3 2024 Wells Fargo & Co Earnings Call The behavior, I know again, it is early, but any comments on -- are you seeing the consumers and the corporate customers behaving as expected in terms of what they are doing with their deposits with lower rates? And as the second part of that question, with your loan-to-deposit ratio not being very high, of course, is there more room for you to lower deposit costs and not have to be as concerned being over levered?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Great. Appreciate the color and candor. Thank you