Bloomberg Audio Studios, podcasts, radio news.

Bloomberg Audio Studios, podcasts, radio news.

So let's turn now to the banks and kick things off on the Big Show with Mike. Mike Santo Massimo.

So let's turn now to the banks and kick things off on the Big Show with Mike. Mike Santo Massimo.

He is the.

He is the.

CFO over at Wells Fargo and he joins us now from their trading floor. Mike is always good to speak with you. A pleasure to have you on on your earnings day. The big question here is not so much about what happened in the first quarter, but the path moving forward. And I want to start there with what you're hearing from your customers, whether they are individuals or companies.

CFO over at Wells Fargo and he joins us now from their trading floor. Mike is always good to speak with you. A pleasure to have you on on your earnings day. The big question here is not so much about what happened in the first quarter, but the path moving forward. And I want to start there with what you're hearing from your customers, whether they are individuals or companies.

Yeah, thanks, thanks Matt and Nascarl for having me again. You know, like I think, first, you got to you know that as we come into this environment, you know, the consumer is in good shape. You know, consumer can continues to spend. Most of our commercial customers are in good shape as well.

Yeah, thanks, thanks Matt and Nascarl for having me again. You know, like I think, first, you got to you know that as we come into this environment, you know, the consumer is in good shape. You know, consumer can continues to spend. Most of our commercial customers are in good shape as well.

We're not seeing any kind.

We're not seeing any kind.

Of big deterioration across the portfolio. So we come in with a pretty good strong foundation. And as you said, now look forward. What's happened is you've got some uncertainty, right, And what uncertainty does is cause people to take a step back and say, you know, how's it going to impact me, how's it going to impact the demand I might have for my products, or how's.

Of big deterioration across the portfolio. So we come in with a pretty good strong foundation. And as you said, now look forward. What's happened is you've got some uncertainty, right, And what uncertainty does is cause people to take a step back and say, you know, how's it going to impact me, how's it going to impact the demand I might have for my products, or how's.

It going to impact the cost of my goods?

It going to impact the cost of my goods?

Soul? And they're going to take a pause and see how that may change their their perspective looking forward.

Soul? And they're going to take a pause and see how that may change their their perspective looking forward.

And that's pretty you know, natural, I think for folks.

And that's pretty you know, natural, I think for folks.

And that's what we're hearing overwhelming for clients is they're taking a step back on the commercial side saying okay, I got to really understand this a little bit better.

And that's what we're hearing overwhelming for clients is they're taking a step back on the commercial side saying okay, I got to really understand this a little bit better.

But again, on the on.

But again, on the on.

The consumer side, what we're seeing is just good consistent performance.

The consumer side, what we're seeing is just good consistent performance.

Like you know, people are still spending.

Like you know, people are still spending.

People are still out there, you know, using their debit and credit cards and so still you know, quite robust in terms of the overall activity.

People are still out there, you know, using their debit and credit cards and so still you know, quite robust in terms of the overall activity.

But I think you know, most most commercial customers are taking a step back and trying to evaluate the situation.

But I think you know, most most commercial customers are taking a step back and trying to evaluate the situation.

Understood. So, Mike, you left or fool your guidance unchanged. What would it take to actually update that and provide more details to investors?

Understood. So, Mike, you left or fool your guidance unchanged. What would it take to actually update that and provide more details to investors?

Well, I think you know.

Well, I think you know.

The good news is we left it kind of you know, they guidance unchanged, as you said, and you know, as you look at you know, what's happening, right now there's a whole bunch of factors that go into where it's going to go for the rest of the year versus just overall deposit levels and mix that's stabilized and looking pretty good overall. You know, we've seen some deposit growth in our consumer business. We saw the stabilization you know in terms of people looking for higher rates continue, So.

The good news is we left it kind of you know, they guidance unchanged, as you said, and you know, as you look at you know, what's happening, right now there's a whole bunch of factors that go into where it's going to go for the rest of the year versus just overall deposit levels and mix that's stabilized and looking pretty good overall. You know, we've seen some deposit growth in our consumer business. We saw the stabilization you know in terms of people looking for higher rates continue, So.

All all positives as we sort of look forward.

All all positives as we sort of look forward.

We saw a little bit of loan growth in the first quarter, unclear sort of how that progresses throughout the year. We are expecting to see a little bit more as we go. That'll be a factor of sort of how how you know, how people feel about you know, the certainty of where things are going. And then I think it's just the macro view on rates, and I think the you know, you can see over the last just a couple of days or a couple you know, a week or two, you know, the expectations for rates, both long term and sort of short term rates have been changing, you know, quite a bit, and so we need to see that stabilize, and I think that'll all be a fund Then those those are all the key inputs into kind of what an interesting income will look.

We saw a little bit of loan growth in the first quarter, unclear sort of how that progresses throughout the year. We are expecting to see a little bit more as we go. That'll be a factor of sort of how how you know, how people feel about you know, the certainty of where things are going. And then I think it's just the macro view on rates, and I think the you know, you can see over the last just a couple of days or a couple you know, a week or two, you know, the expectations for rates, both long term and sort of short term rates have been changing, you know, quite a bit, and so we need to see that stabilize, and I think that'll all be a fund Then those those are all the key inputs into kind of what an interesting income will look.

Like for the rest of the year.

Like for the rest of the year.

But as of now, from where we sit today, we still think the range we gave in January still is reasonable.

But as of now, from where we sit today, we still think the range we gave in January still is reasonable.

You're not likely to see a lot of things stabilize in this administration, Mike, and I wonder how you hedge against that. You know, Charlie Sharp earlier or in the statement, I think, said that he applauds the administration's willingness to look at barriers to fair trade, But there are certain risks associated with such significant actions, and how do you hedge against those potential outcomes as broad as they are.

You're not likely to see a lot of things stabilize in this administration, Mike, and I wonder how you hedge against that. You know, Charlie Sharp earlier or in the statement, I think, said that he applauds the administration's willingness to look at barriers to fair trade, But there are certain risks associated with such significant actions, and how do you hedge against those potential outcomes as broad as they are.

Well, I think you have to look back, and I think we tried to cover.

Well, I think you have to look back, and I think we tried to cover.

A little bit of this on the call and look at the full universe of stuff happening.

A little bit of this on the call and look at the full universe of stuff happening.

There's a lot of good things happening on.

There's a lot of good things happening on.

The regulatory side, you know, both for banks and more broadly, and we're hopeful that some of those changes will get implemented and that'll be helpful for banks like us to sort of help support you know, the broader economy, the markets, our clients, and so we're hopeful of that will continue and unobated from sort of what's happening, you know, with with trade policy. And then I think it's it's a matter of just getting a little bit more certainty in terms of what the guardrails are and the timeline is on the trade policy.

The regulatory side, you know, both for banks and more broadly, and we're hopeful that some of those changes will get implemented and that'll be helpful for banks like us to sort of help support you know, the broader economy, the markets, our clients, and so we're hopeful of that will continue and unobated from sort of what's happening, you know, with with trade policy. And then I think it's it's a matter of just getting a little bit more certainty in terms of what the guardrails are and the timeline is on the trade policy.

It doesn't have to all be locked and loaded and done.

It doesn't have to all be locked and loaded and done.

It just needs to have a little bit of guardrails around it, and then I think people will very quickly sort of adapt from there. And you have to continue to kind of look beyond sort of what you read, you know, in the headlines every day and just look at see what you know fact first, you know, versus what may be presented to you and so.

It just needs to have a little bit of guardrails around it, and then I think people will very quickly sort of adapt from there. And you have to continue to kind of look beyond sort of what you read, you know, in the headlines every day and just look at see what you know fact first, you know, versus what may be presented to you and so.

And you know, like I'll you know, go back to where I started.

And you know, like I'll you know, go back to where I started.

Like the good news is, like the economy is still pretty active and pretty strong, and most customers come you know, into this environment in a pretty good place. So that's all sort of supportive for you know, things continuing to be you.

Like the good news is, like the economy is still pretty active and pretty strong, and most customers come you know, into this environment in a pretty good place. So that's all sort of supportive for you know, things continuing to be you.

Know, pretty pretty constructive for the rest of the year.

Know, pretty pretty constructive for the rest of the year.

But the risks have definitely gone up, you know, there's no doubt about it over the last couple of weeks, and so we have to we have to try to find ways to you know, continue to support clients and then make sure that we're thinking about all those risks appropriately.

But the risks have definitely gone up, you know, there's no doubt about it over the last couple of weeks, and so we have to we have to try to find ways to you know, continue to support clients and then make sure that we're thinking about all those risks appropriately.

I think, you know, going back to your earn this morning, Mike, a lot of people on the street were surprised by lower loss loan loss provisions than they expected. Saul Martinez from HSBC notes that that, as well as the positive tax expense, helped out. Gerard Cassid RBC also said that your performance relative to their estimate was driven by a lower than expected effective tax rate and lower than expected provision for credit losses. Why keep that so low when you're staring so much uncertainty in the face.

I think, you know, going back to your earn this morning, Mike, a lot of people on the street were surprised by lower loss loan loss provisions than they expected. Saul Martinez from HSBC notes that that, as well as the positive tax expense, helped out. Gerard Cassid RBC also said that your performance relative to their estimate was driven by a lower than expected effective tax rate and lower than expected provision for credit losses. Why keep that so low when you're staring so much uncertainty in the face.

Here, Well, you know it is. We talked about this on our call a little bit. You first start with just the performance of the portfolio, which has done very well. You know, we had we had a couple of years ago, now two or three years ago at this point, you know, had done a bunch of tightening actions, credit tightening actions on the consumer side, and that's serving us well as we come into this environment.

Here, Well, you know it is. We talked about this on our call a little bit. You first start with just the performance of the portfolio, which has done very well. You know, we had we had a couple of years ago, now two or three years ago at this point, you know, had done a bunch of tightening actions, credit tightening actions on the consumer side, and that's serving us well as we come into this environment.

And so you can see the performance.

And so you can see the performance.

Continue to get, you know, better and better across many of those portfolios. And then when you look at the commercial side again, same thing. It's been performing quite well. And I think as you look at the assumptions that go into the allowance.

Continue to get, you know, better and better across many of those portfolios. And then when you look at the commercial side again, same thing. It's been performing quite well. And I think as you look at the assumptions that go into the allowance.

We're already assuming that.

We're already assuming that.

You know, unemployment ticks up quite a bit, and we noted on the call that we did increase the allowance a bit more, you know, as it relates to some of the uncertainty that we've seen as we came into the end of the quarter. So if we hadn't done that, we would have seen a bigger release there, you know, given how well the portfolio is performing and slightly lower balances across some of the portfolio.

You know, unemployment ticks up quite a bit, and we noted on the call that we did increase the allowance a bit more, you know, as it relates to some of the uncertainty that we've seen as we came into the end of the quarter. So if we hadn't done that, we would have seen a bigger release there, you know, given how well the portfolio is performing and slightly lower balances across some of the portfolio.

Mike, can you give us an update on the acid cap that's now seven years old at well Is it limits your balance sheet to the size it was at the end of twenty seventeen. I know that the bank has made a lot of progress this year, resolving five consent orders in the first quarter alone. Is there anything more to resolve on Wells Fargo's end?

Mike, can you give us an update on the acid cap that's now seven years old at well Is it limits your balance sheet to the size it was at the end of twenty seventeen. I know that the bank has made a lot of progress this year, resolving five consent orders in the first quarter alone. Is there anything more to resolve on Wells Fargo's end?

Well, I think you know, in the in the release and in sort of this, you know, the call comments that we had, you can see, you know, as you pointed out that we've made a ton of progress not only closing the consent orders, but we also noted that we completed much of the work that's common across the orders that got closed and some of the other orders and so so you know, we're just going to keep continuing focusing our energy and the things we can control, which is making sure that the work's done at the highest quality. And you know, we'll let the FED ultimately determine sort of the timing and the asset cap. But we feel good about the progress we've made and that's thanks to the thousands of people across the company that have done that.

Well, I think you know, in the in the release and in sort of this, you know, the call comments that we had, you can see, you know, as you pointed out that we've made a ton of progress not only closing the consent orders, but we also noted that we completed much of the work that's common across the orders that got closed and some of the other orders and so so you know, we're just going to keep continuing focusing our energy and the things we can control, which is making sure that the work's done at the highest quality. And you know, we'll let the FED ultimately determine sort of the timing and the asset cap. But we feel good about the progress we've made and that's thanks to the thousands of people across the company that have done that.

So, if the FED removes the cap sometime this year, what are the initiatives, what are the things that Wells is going to start working on right away to look for new streams of revenue growth.

So, if the FED removes the cap sometime this year, what are the initiatives, what are the things that Wells is going to start working on right away to look for new streams of revenue growth.

Well, most of the strategies that we have in place are going to be the same ones. So we've been investing our wealth management business, our credit card business, our corporate investment bank, our commercial bank.

Well, most of the strategies that we have in place are going to be the same ones. So we've been investing our wealth management business, our credit card business, our corporate investment bank, our commercial bank.

None of that changes. You know.

None of that changes. You know.

What happens, you know in a time when we have more flexibility on the size of the balance sheet, is we'll be able to deploy more balance sheet to our market's business, you know, in terms of financing trades that we can sort of help our clients with, and then maybe more broadly in certain types of deposits that we can take, but a lot.

What happens, you know in a time when we have more flexibility on the size of the balance sheet, is we'll be able to deploy more balance sheet to our market's business, you know, in terms of financing trades that we can sort of help our clients with, and then maybe more broadly in certain types of deposits that we can take, but a lot.

Of the core ategies don't change.

Of the core ategies don't change.

We're going to continue to execute those and those will drive growth in the balance sheet and the revenue and the company over a long period of time. But we'll have a little bit more flexibility to do some do some more activity in our markets business.

We're going to continue to execute those and those will drive growth in the balance sheet and the revenue and the company over a long period of time. But we'll have a little bit more flexibility to do some do some more activity in our markets business.

Mike, I saw that's interest income was down due to the impact of lower rates, but partially offset by lower deposit pricing and higher deposit balances, and I wanted to ask about that specifically. You know, a lot of families, when when they're facing uncertainty, will make sure that the rainy day fund is stocked up.

Mike, I saw that's interest income was down due to the impact of lower rates, but partially offset by lower deposit pricing and higher deposit balances, and I wanted to ask about that specifically. You know, a lot of families, when when they're facing uncertainty, will make sure that the rainy day fund is stocked up.

Are you seeing that?

Are you seeing that?

No, A lot of what we've seen now is just consistent sort of activity and growth over the last you know, four quarters, you know, and what you're seeing in the first quarter is just you know, the cumulative impact of that. We're not seeing big shifts and behavior at this point, you know, across either the consumer or the or the corporate client base. And so maybe that'll happen in the future, but we're not seeing that.

No, A lot of what we've seen now is just consistent sort of activity and growth over the last you know, four quarters, you know, and what you're seeing in the first quarter is just you know, the cumulative impact of that. We're not seeing big shifts and behavior at this point, you know, across either the consumer or the or the corporate client base. And so maybe that'll happen in the future, but we're not seeing that.

At this point.

At this point.

It's just it's just normal activity plus some growth that we've seen as we've been able to grow a little bit more in all the businesses on the consumer side, but we're happy to see some of that growth come across the client base.

It's just it's just normal activity plus some growth that we've seen as we've been able to grow a little bit more in all the businesses on the consumer side, but we're happy to see some of that growth come across the client base.

Mike, great to get so much intel from you. Really appreciate you sticking with us here on the close. Mike Santamassimo there the CFO, chief financial officer over at Wells Fargo.

Mike, great to get so much intel from you. Really appreciate you sticking with us here on the close. Mike Santamassimo there the CFO, chief financial officer over at Wells Fargo.