Wells Fargo & Company (WFC) Earnings Call Transcript & Summary

Hi. This is Jason Goldberg. I cover the large-cap banks here at Barclays. And welcome to day 2 of our Global Financial Services Conference. We have 11 large cap banks -- U.S. large-cap banks in a row beginning now and ending later this afternoon. We couldn't be more pleased to have Wells Fargo kicking off the string. Wells Fargo plays in almost all aspects of the financial services complex. So it's great to have them here. From the company, very pleased to have Mike Santomassimo, the Chief Financial Officer. Good morning, Mike.

Hey, Jason, good to see you. Hopefully, we get to do this in person next year. It's been a couple of years of remote, but...

Yes. I hope so, too. I think last year I promised to be in person, but I think this year, I really mean it.

I guess maybe before we jump right in, just maybe get your thoughts on the overall economy, the pace for recovery. We've obviously seen some positive trends so far, but a lot up in the air. We've heard people talk about the Delta variant, supply chain constraints, labor shortages. Maybe just delve into in terms of kind of what you're seeing, what you're hearing, what the data tells you from your kind of customer bases?

Yes. I mean, look, it's probably very similar to what others are saying and seeing, right? The recovery continues to move forward. Now the second half growth in GDP is probably going to be a little bit less than people thought 6 weeks ago, 8 weeks ago, but it's still really strong. And so I think that continues. And despite the noise that, I think, is getting created by the Delta variant, I think you're still seeing that move forward. You look at debit card spend, you look at credit card spend, all up in the quarter, as you look at most of the third quarter. Now you've seen a little bit of dips in the last couple of weeks in some categories like travel, but nonetheless, I think people are out there spending. You're starting to spend, at least. I think liquidity levels though are still really high, both on the consumer side and the commercial side. So although people are out spending, there's still a lot of liquidity, and we see that in our consumer bank accounts where average balances are up substantially still as we sit here. Same thing on the commercial side. That's translating into high payment rates on credit cards. It's translating into less demand for credit in aggregate as you sort of look at where it probably should have been in a recovery like this. And you're still seeing a whole number of challenges that you mentioned. We hear it every day. I was talking to a client just yesterday and talking through the magnitude of some of the supply chain issues that people are dealing with on a daily, weekly, monthly basis. They're still -- are pretty big. In some cases, they're seeing a little bit of abatement of it, but in a lot of cases, they're still struggling with getting parts to complete the products and get it off the assembly lines across many of the areas. And you can see that just most clearly in places like automobiles, where inventory levels across dealers are at very low percentages where -- relative to where they would have been just a year ago. And that has an impact on all the financing people like us do for folks that are -- that need it as they build inventories in more normal times. So overall, I think things are sort of moving forward. But there's definitely some challenges that still remain that we're all dealing with.

And I guess on the second quarter earnings call, you talked about some green shoots with respect to loan growth in certain areas, I think auto, other consumer cards, CRE. Can you just maybe talk through, against the backdrop you just outlined. It sounds like, I guess, what was your kind of maybe updated expectations for loan growth be?

Yes. I think it's very similar to what we were talking about in the second quarter. Those green shoots are persisting, and we are seeing a little bit of growth. I'd sort of think about it as modest growth, but we're seeing some modest growth in some of those categories, whether it's card. Auto continues to be really strong. I think you're probably hearing that across a lot of folks. Part of that is demand for vehicles and part of that is the supply issues. They're driving up prices, but the demand there is super strong. I think as I said though in the card space, some of the increased spend is being offset by higher payment rates. But nonetheless, you're seeing a little bit of growth in the underlying balances that are staying. In the mortgage space, it continues to be a really robust market. You saw a pickup in refinance volumes in the quarter, maybe a little bit more than people expected pre the -- at the end of the second quarter. So you're seeing our overall mortgage loan balances should be down slightly versus the second quarter -- in the third quarter, but that's a big improvement over some of the declines we saw -- sequential declines we saw over the last few quarters. On the consumer side, still green shoots. There's some green shoots that are still relatively modest, I'd say. On the commercial side, we are seeing some demand on the -- in the commercial bank. Our biggest clients are -- we're seeing some demand there, even though utilization rates are still not moving much, right? So they're still really low and they're not moving much, but we are seeing some demand for additional credit and commitments there. On the lower end of the -- or the smaller clients that we have, the commercial bank, there's less demand, to be honest. And some of that's higher liquidity and other things driving it, but some of the issues we talked about, but we're not seeing as strong a demand there. And then we are seeing some demand in the corporate investment bank, whether it's in commercial real estate or other sectors in that thing. So -- but overall, still relatively modest, but good signs that hopefully we'll see more demand in the coming quarters.

And just a reminder for those listening in that weren't online yesterday, you will notice in the upper right-hand corner of your screen, there's a few buttons. One of them is ask a question. If you do have a question, hit it, send it in, we'll try and get to it. And there's also a button called Survey, please hit that. There should be 4 questions. We'll have 4 questions for each company throughout the day, and we either get to those later in the session or we'll certainly address them tonight. So please hit on those. I guess, Mike, I guess, against that backdrop, I think there's -- I get a lot of questions around your net interest income guidance down -- or flat to down 4% from 4Q '20 annualized levels. I think you've talked about being at the lower end with kind of stable rates and a slight pickup in loan growth. I think rates have probably a little bit underperformed the forward curve. Loan growth, I'm not sure how we define it within your guidance. But maybe just kind of update in terms of kind of what you're thinking with respect to the outlook there?

Yes. No, it's -- obviously, forecasting NII in an environment like we've seen over the last 9 months has been a fun exercise, right? But the -- but if you think about what we said back in January, we're very much in kind of the same place there. We still think that we'll be in the range of down 0% to 4%. And if you think about the pieces underneath that, rates are back to about where they were when we gave the guidance, although we did have some intra-period volatility between then and now. But they're basically back to where they were at the beginning of July. We are seeing that very modest loan growth that we've just talked about across some of the categories. And so that still translates to us being down -- in the bottom of that range. And so we'll see how it plays out for the rest of the year, but that's still -- that's still what we think. And as you can imagine, we try to be thoughtful about the guidance we give and make sure that we're thinking through a bunch of different scenarios that could play out, and that's still the case here. And so we still feel good. But at this -- feel good about the guidance. But at this point, we're still about where we were at the end of July, which is towards the bottom end of that.

Got it. And I guess when you think about -- you mentioned a bunch of times kind of lot of liquidity in the market. So obviously, some of that shows up in your balance sheet in the form of deposits. How are you thinking about investing in those deposits and just kind of durability, duration of them?

Yes. Well, first, we'd love to see some more loan growth, right? So that would be the best way for us to deploy it. Hopefully, we'll see that coming soon. And if you think about what's happening under our balance sheet, it's probably a bit unique relative to others. We are seeing -- we do have the asset cap to deal with. And so we are seeing big growth in the retail deposits -- in our retail deposits, which, as you know, are over time the most valuable because they have the longest duration least -- and the least rate sensitive. And we've been actively managing down the least rates -- the most rate-sensitive deposits on the wholesale side of the business to make sure we got the room on the retail side. And so you're seeing a little bit of a remixing of our balance sheet, which over the long run, should be a really good development for the balance sheet. As you think about redeploying in the securities portfolio today, we are still being pretty patient about it. We did grow the portfolio in the first half of the year by about $25 billion between the 2 quarters. And so we're getting the benefit of that growth that we had in the beginning of the year. But at this point, with the risks skewing more towards rates going higher, still pretty tight credit spreads across many of the -- many products as well as mortgages, the bases on mortgages. We're still being really patient and don't expect in the quarter to grow much from where we came into the quarter at the end of the second. And so we'll see how that goes. We're trying to take the long-term view here and make sure that we're balancing the short-term carrier with managing through all the OCI risks and capital risks that we've got to deal with, too.

Understood. And I guess, a lot of moving pieces when we think about the net interest margin. I think one someone asked about is just can you just kind of update us on premium amortization, which has obviously impacted the margin in the last few quarters?

Yes, for sure. And I think, look, the general direction for premium amort continues to be down. I think we had about $587 million of amortization related to MBS securities in the second quarter. We still expect that to continue to come down. I think that pace of decline will be somewhat gradual as we go through the next couple of quarters, just given where rates are. And again, we saw little volatility in the quarter so far on rates, but that hasn't had much of an impact to what we modeled so far. And so the general course is down, but it will be somewhat gradual as we go for the next couple of quarters.

Got it. In addition to net interest income, I think the other big area we get -- one of the other big areas we get questions on is expenses. And I think there's maybe some confusion in terms of you kind of gave that $53 billion run rate guidance for the year. Adding in some for incentive comp, which I think in the first half, it was higher than expected. There's also, I think, people confused in terms of how to think about some of the divestitures that are ongoing. Just maybe flesh out, I guess, first off, are expenses that you're tracking in line with kind of what you're thinking? And maybe just flesh out some of the components, so people have a better view in terms of what to expect on, I guess, an operating basis as well as a GAAP basis.

Yes. Yes, sure. So what we said is that expenses would be about $53 billion for the year at the beginning of the year. And included in that were about $1 billion of operating losses. And for the first half of the year, we're about $500 million. So that's sort of tracking to what -- to that. We included about $500 million of incremental revenue-related expenses in that forecast. And really think of that as mostly the compensation we pay our advisers and our wealth management business, right? So they're on a commission basis. And so as revenues go up, their commissions go up. And that -- and given the market -- the market has done much, much better than what we had modeled at the beginning of the year, we've seen higher revenue-related compensation. And that's really the bulk of what that piece is. And so that's running more like $1 billion versus $500 million incremental year-on-year. So that's where we're seeing the pressure on that $53 billion. And so if that played out, if that continued and played out for the whole year, we'd see us be somewhere between $53 billion and $53.5 billion for the year. As it relates to divestitures, we're assuming in the $53 billion that the -- that expenses related to wealth management and corporate trust are in there for the full year. So we didn't deduct anything out of there. And when those deals close, which we expect in the -- likely to be in the fourth quarter, we'll update you on how that impacts the expenses both for this year and as we look forward. And we gave a little bit of -- we gave some of the detail on that already in April, but we'll update you when those deals close on the expectations. So that's how I think about the year. I think as you look at what was embedded in the $53 billion, we've got a big efficiency plan that we -- that is on track, and we're executing. And all those initiatives are -- it's a living kind of breathing sort of program, right? So things are changing and moving all the time. And it continues to get more embedded in the DNA of how we operate the place. But we're on track on those things, and we feel good about the trajectory we have there on many of those initiatives.

I guess on the expense plan, I mean, you talked about, I think, $3.7 billion in gross savings this year with about $1.5 billion falling to the bottom line. You said that's on track. More broadly, I think you talked about an $8 billion potentially more gross saves looking out in all. I guess as now you're kind of further into this year's cost savings plan, any further thoughts on that updated -- on the $8 billion gross number? And also, how do we think about that $8 billion number maybe potentially on a net basis over the next year or 2?

Yes. No. And as you say, we had -- the gross saves is $3.7 billion, and those built throughout the year, right? So you got a bigger exit run rate as you come out of 2021. We are going to need to make investments, and you see that in what's offsetting the -- those gross saves this year. Some of that's the risk and control build-out. Some of that's investments in our products and platforms and systems and other things and our people. And so we're going to need to continue to do that. I think that $8 billion was really underpinned by a few hundred -- 200, 250 initiatives that are really bottoms up initiatives that we've been sort of tracking. And as I mentioned earlier in the year, that list continues to grow. And if you keep in mind, many of the management teams across the company are still relatively new. Think the last 12 to 18 months as being in place. And so as they continue to unpeel the onion, right, and look at the initiatives they've got and get better certainty around the things that they're executing, they find more and more opportunities to get more efficient. So we expect that list to continue to grow. And I think what we've said over time is that we think the trajectory of expenses should be down year-on-year for the next couple of years. And we'll continue to give more guidance on that as we get closer to the end of the year, and we finish our budget process for 2022.

Got it. So -- all right. So I guess with more savings, the full run rate next year, the divestitures, I guess, the expense is down, when you say next couple of years, you're thinking down in 2022 and down in 2023 from where they are running now?

Yes. Well, I think we'll give guidance on as we get past 2022 later, but I think we do expect that we've got a trajectory down on expenses and better efficiency ratio. So...

I guess, while we're on expenses maybe just shift gears because I've gotten this question a lot over the last -- particularly the last week or so. But obviously, saw the OCC come out with an enforcement action last week tied to the home lending business. Some restrictions around buying, transferring MSRs, monetary fine. Obviously, on the bright side, you had the CFPB consent order -- or one of the CFPB consent orders lifted. Could you maybe just update any kind of updated thoughts on -- from your perspective in terms of kind of time line or thoughts around remediating some of these regulatory actions? Are there kind of -- any new kind of expenses involved in kind of what we learned last week? And does any of this kind of help inform the Fed on its time line of lifting the asset cap?

Yes. So let me just quickly make sure -- run through what we announced last week. So as you mentioned, we've got a new consent order related to our loss mitigation practices in the home lending business. And what loss mitigation really means is all of the activities you go through to help people stay in their homes and not have to foreclose on their homes as they run into trouble. And so it's a really serious issue, an important issue to our clients and to us, and it's something we will fix and we're confident of that. You had the fine, as you said, that relates to those practices as well as not being done yet with the 2018 -- work from the 2018 consent order. And then you had the expiration of the consent order from the CFPB. And I think that really shows the significant progress we're making on these initiatives, right? And if you think about that consent order and the sales practices element of it, it's really at the heart of some of the issues that got created a number of years ago. And as we sort of work through that and see that expire, I think that's been -- it's a really good sign. And it's off the back of the BSA/AML consent order that got terminated earlier in the year. And so we continue to have a very disciplined process. It's something we all -- it's our top priority across the whole firm. It's the thing we spend individually and as a team, the most time on, and look at the facts every single week, every single month to see how we're doing. And we're confident based on what we're seeing in sort of the execution of all these initiatives that we'll continue to make significant progress and move forward. I will point out, and I continue to point out, there's a lot of work still to get done, right? These are -- we've got 10 public consent orders out there, and it's a complex set of activities. It's still a multiyear journey from here to get it all completed and it won't always be in a straight line. We'll have setbacks along the way, hopefully, less and less as we go over time. So we still feel really confident in our ability to get to it -- get through it all and are clear on what we have to get done across all of it.

I guess, any potential impact from restriction with buying, transferring MSRs? Does that concern you at all?

No, we haven't bought MSRs in years, and so that's not something that we were actively considering anyway. And I think as you look at the selling of mortgages, there's a path -- you guys have to have good controls around it and pass through that to make sure that we can operate the business in the way that we think we need to.

And I guess I'm going to ask it again, and I know you're limited to what you say. But obviously, the Fed asset cap comes up in, I think, every conversation I have with investors. The last week's events make you feel better or worse about the time line for that or kind of no impact? And just how are you -- any changes in the way you're approaching that?

Yes. Look, we're heads down, getting the work done on that consent order. And again, that's one of the multitude of things we've got to get done -- or bodies of work we've got to get done. And so we're confident in our ability to get through it, and we're just heads down executing. And it will really be up to the Fed when they're happy with the work that we've done.

Got it. Maybe shift gears and turn to fee income. I think we've heard kind of varying trends so far kind of the quarter versus last quarter. And I think trading in mortgage down, investment banking still strong, asset wealth management type B is higher. Can I just maybe -- talk through maybe some of the key drivers in terms of kind of what you're seeing?

Yes. Well, I think you summarized it quite well, right? But the -- I'll give you a little color underneath it. So as you look at our mortgage business, we expected volumes to be down a little bit from the second quarter. And that's playing out the way we thought, and even though there's been a little bit of a refinance -- kind of increase in refinance volumes over the last number of weeks. And so we'll be kind of -- we expect to be slightly down in kind of the origination volumes. The good thing is that gain on sale volumes continue to be hanging there pretty good. Those will continue to normalize as volumes sort of decline across the origination space and mortgage, but they're hanging in there for the third quarter. So that's a good thing. As you look across the other businesses, I think you're seeing the benefit of increased activity across the economy. On the consumer side, you're continuing to see activity levels. So you see that come through things like debit card fees and other -- some of the other line items there, which I think is a good thing. And again, you may see week-to-week volatility. But nonetheless, I think that you're seeing that trend and the recovery continue. The markets are holding in pretty well, and that's benefiting our wealth business as you look at advisory assets. And I think if you look at what we all thought in the beginning of the year, it's certainly doing better than we would have imagined at that point. And as you say, in the investment banking space, pipelines are good and activity is robust, and we'll benefit from some of that as well.

Got you. And then had to ask about credit quality. Obviously, the environment is really, really benign. As you kind of look through the portfolio, just maybe talk to any areas you're keeping a particularly close eye on and just how do you kind of think this whole kind of normalization process of loan losses plays out?

Yes. I mean, as you say, and I'm sure this is pretty consistent, the quality of what we're -- of the portfolio now is really good, right, and charge-offs are really low, and that's continued as we look at the third quarter. And it's really across the whole portfolio. We're not seeing any kind of widespread distress in any of even kind of subsegments within the portfolio. And so I think that's a really good thing. The places we continue to be very vigilant around are in the commercial real estate space and in retail, in particular, as well as office. And for office, I think that's going to take a much longer time period to play out. We're not seeing any distress in our portfolio, but I think that will take some time to really play out. And as you look at just normalized charge-offs, when you get back to more normalized charge-offs, I think that's a really hard thing to call at this point, just given the levels of liquidity that we're seeing across the whole client base. But we're not making any credit decisions that would lead to different outcomes historically, right? We're not expanding the credit appetite or the credit box in any significant way in any of our businesses that would drive different outcomes than maybe what you saw as more historical levels. But as you sort of think about when you get back to what is maybe a new normal or historical norms, I think that's a hard thing to call with any degree of certainty just given what we're seeing in -- with cash levels and consumer behavior at this point.

Right. So I guess, against that backdrop, I kind of expect to see reserve releases continue.

Yes, very consistent with what we said back in July, right? I think if the recovery continues, you would expect to see more allowance releases as we go. Exactly what that will look like. We're not done with that work yet, but I do think you'll see more as you look for this quarter.

I guess, unlike other banks, you guys had a benefit from CECL adoption. Is there -- but still, is there, I guess, a scenario which you can envision where kind of reserves kind of fall below that CECL day 1 level?

It's like an impossible like question to answer with any certainty at any point in time, right? Because as you know, CECL requires you to reserve across a whole different set of scenario -- a whole number of scenarios, and you got to really think through like what the environment like is at that point in time. And if you go back to the first quarter of 2020 pre pandemic sort of starting, you had, what, 3.5% unemployment, I think, at that point. So you had this bit of a somewhat utopian sort of environment, I think, in some respects, right, in terms of what the environment looks like. And so will you get back there at some point? Maybe. Like will elements of it take longer to play out, like the real estate space that I mentioned? Probably. And so I think answering that with any degree of certainty for any point in time is almost -- it's a hard thing to do right now. But could you be higher, could you be lower? Maybe. It might be -- and either of those, and it will depend on your outlook for the environment and what it looks like at that point.

Got it. And just remember, for those listening in, upper right-hand corner, click ask a question, we'll try and get to, we've actually been working some of them in. Mike, we did get one. Wells decided to exit personal lines of credit in July only to reenter in August. Can you just maybe talk to us what you're thinking there?

Yes. Look, we went through a very exhaustive exercise last year to think about all the products and capabilities and businesses and sub-businesses that we have across the firm. And the initial decisions around the personal line of credit really was an outgrowth of that. So this is not something that we really rushed into. And we think there are better or other alternatives for people to manage their credit needs here, whether it's cards or other personal loan products. So over the long run, we think that those are probably better solutions for folks. And keep in mind, this is a really, really small business for us. And so as we went through that, we got -- we went through the exit, we got some feedback from clients. And we decided to -- for folks that are -- have active accounts, or ask us to keep it open, that we would do that and not exit. So we won't be opening new ones. And there'll be a bunch of inactive accounts that will get closed, but we decided for the folks that really wanted to keep it, that we would do that. And again, it's a really small piece of the puzzle for us. But I think it was really based on the client feedback that we got as we went through the process.

Got it. Understood there. And then just maybe on capital. You seem to have a lot of it. You have a decent sized buyback, although it feels like there's more you could do. You've increased the dividend, although there too it seems like there's more you could do. Could you maybe just talk to maybe what's holding you back? Is it kind of hope the asset cap gets lifted and you can do more with the balance sheet? Is it just being conservative? Is it just kind of maybe wanting to wade into some of these distribution mechanisms?

Yes. Well, we really try to be thoughtful and prudent about the capital return plan and are really thinking through a whole range of possible scenarios that could play out. And we talked about some of the risks that are out there today in the economy. And so you sort of have to be thoughtful about how that could play into it as well. We do also hope to see some loan growth over the coming quarters, which brings RWAs and capital as well. And so we'll see how that all plays out. If you pick it apart and think about the components and first, the dividend, it's -- we focus the conversation on the dividend on the payout ratio as you probably would expect us to. And really think of it ex the allowance releases and ex some of the more nonsustainable or nonrecurring items and really think about it there. And I would sort of think of that -- the 30% to 40% payout ratio as a good way to think about where we're headed over time. And we really want to make sure that we've got a -- we're able to sustainably grow the dividend. And so we're just being thoughtful about timing and how you sort of get there. And that's a conversation we'll continue to have with the Board. And then on buybacks, we said as you sort of think about where we're managing to, we're -- we've got a 100 basis point buffer over our regulatory minimum plus an incremental buffer to manage volatility of somewhere between 25 and 50 basis points. And so when you get to the first quarter of 2022, our regulatory minimum will be about 9.1 -- will be 9.1. And so just take the high end of the range. And so you're managing to a 10.6 target. And we'll work our way down there as prudently and as quickly as we can, and that makes sense. And that's a conversation we're having every single quarter about the pace and the path to get to the target. But as you say, we've got plenty of excess capital. We're able to finally give it back. And so we've started doing that in the quarter, and we're happy we're able to do that.

Got it. Okay. And we have a couple of questions coming in, so let's try and get to those. Do you still feel comfortable with the -- hitting the 10% ROTCE run rate basis in 2022? And how should we think about the time frame for getting to a mid-teens ROTCE?

Yes. I mean based on what we can -- what we see today, we are -- we do think we'll get to the 10% run rate ROTCE next year. So that's not a full year number. That would be a run rate number at some point in the year. We've got to continue to execute on the efficiency program for sure. We've got to continue to be able to deliver some of this excess capital back to shareholders. So that's -- those are really important elements of getting there. And at this point, we feel like that's still attainable. And barring any kind of unforeseen substantial change in the underlying economic environment, or rate structure, or something that should be something that is doable on a run rate basis. As you think about beyond that, this is -- we're going to need to see the asset cap lifted. We're going to need to see some help in -- some modest help in underlying rates, and we're going to need to see the benefit of some of the investments we're making across the business to sort of get there. And I would think about that over a period of time, right? And that's not something in any given -- we're not going to wake up in 2022 and be at the run rate that I think we'd all like to see. That's going to take some time to get there.

Got it. And another question coming in. Charlie has talked about innovation coming in cards and payments this year. Any updates on that?

Yes. Well, you saw us launch a new card product in July. And so if you back up for 1 second and say, okay, we brought in a new team in the end of '19 in our card business, we've been pretty public to say our existing products weren't that compelling for clients and the service was okay. And so we've been working since the end of '19 to improve the service, improve all of the back-end systems, and then start to build products that are more compelling for customers. And you saw the first one get launched in July, which is our active cash card, which is a very simple market-leading 2% cashback product. And that simplicity was a really important piece of the product design. If you think about all the cards you probably have in your wallet today, they're really complicated, right? You just sort of think about some of the rewards. And so that simplicity was a really big piece of it. And I think that's -- think of that as step 1 in a multistep journey to continue to improve our offering across the card space. The other place we've been spending a lot of time in the digital -- in digital is on our core banking app or core consumer app. And so you're going to see us launch a new version of that, hopefully, at the end of the year or early next year, which I think will be a big step forward in getting those capabilities to where we'd want them to be. So -- and there's a whole series of other initiatives that the teams are working on across the businesses to help drive more innovation.

I guess on that front, you talked earlier about a lot of new management team in place and taking -- looking for kind of other expense opportunities. On the flip side, I guess, is there any kind of other kind of revenue opportunities that you're kind of excited about as you think out over the next few years, either new products or services, or just some businesses that maybe you've lagged in that you could kind of get the momentum going?

Yes, I think there's a lot of opportunity in really almost every business, but I'll give you a few examples of areas that we're really focused on. So if you look at our commercial bank, we've got leading market share in the middle market space. We've got great decades long relationships with our biggest mid-corporate clients. And we just haven't done a very good job of focusing on bringing them core investment banking capabilities. We have all the products. We have all -- most of the people. And so it's really an issue of focus and coverage. And so going after that investment banking opportunity for our mid-corporate and middle market clients is a big focus area for us, and we think -- to drive a lot of incremental value over time. And again, these are our own clients where we've had really deep decades-long relationships. So it should be something we can execute on. You look at our fluent client base and consumer, bringing them wealth management services and broadening the relationship we have with those clients is a big area of focus, both for Mary Mack and Barry Sommers in a partnership across those 2 businesses. Again, should be an opportunity that drives a lot of growth. You look at the penetration we have in card, which we just talked about across our consumer franchise, we've got a lot of room to grow that penetration of the card product. We have a significant opportunity to continue to get better penetration in our mortgage business with our clients. Although we've got a really big mortgage business, we have a lot of opportunity to capture more of our own clients' activity in that space across the business. And so a part of this is getting the businesses kind of to work together better and mend the seams across them, which just wasn't historically as much of the focus across the firm. And so there's a whole series of things that we're really excited about. Will take some time to play out, but we're really excited about that should drive really significant incremental value over time.

And I guess on the flip side, you obviously announced some business exits over the last year or 2 with kind of some new people continuing to come in. I guess any thoughts of kind of additional sales or kind of this is kind of the business that we should expect going forward?

Yes. No, look, as I mentioned before, we went through a long process last year to really look at the businesses. And so -- and the outgrowth of that was the divestitures that we announced earlier in the year. We also have our rail business that we've set as noncore to the Commercial Banking value proposition that we've got. But I think you never -- you're always evaluating the subsegments of your business as you look forward. But I think for now, those were the significant ones that were there. And so nothing else came out of that of any significance as we went through that exercise. And I probably should have mentioned the student loan business as well that we sold earlier in the year as well. So really those 3 businesses.

Great. Well, Mike, I can do this all day, but my clock is flashing red. So we're going to have to leave it there. But thanks for joining us this morning.

Yes, I appreciate the time. Talk soon.

Sounds good. Thank you.