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

Good morning. I'm Jason Goldberg, and welcome to Day 2 of Barclays 22nd Annual Global Financial Services Conference. Thank you for joining us. We have a full slate of large cap banks. We got 11 in a row, all in this room, with the exception of Bank of America Merrill Lynch, which will be next door. Very pleased to have kind of kicking off day 2 with Wells Fargo, a company that obviously plays in many aspects of the financial services industry. From the company, I'm very happy to welcome back Mike Santomassimo, the Chief Financial Officer. Mike, Good morning.

Thanks. Thanks for having me. I can't imagine you doing 11 in a row, but good luck. I appreciate it.

Maybe we could put up the first ARS question. We've been asking all the -- to all the companies this question. We'll tally them up at the end. So Mike, maybe we could start just big picture. Obviously, well served. This is a broad way of consumers, high net worth individuals, commercial, institutional investors. Maybe just tell me kind of what you're hearing and seeing across segments as you kind of grapple with a slowing economy, elevated inflation, economic uncertainty, declining rates potentially next week and the like?

Yes. I mean there's a lot in there, but I think the short answer is, I think most people are still doing pretty well, whether it's on consumer side or the commercial side. And when you unpick that on the consumer side, I think you're continuing to see the trend now that we've talked about for a while, which is folks on the lower side of the income or wealth spectrum are struggling more. You've seen the cumulative impact of inflation, largely get offset by wage growth, but spending is up, and you're starting to see higher delinquencies in that market -- in that cohort, not a huge piece of our business, but nonetheless you're seeing some stress there. And that's been pretty existent now for a while. And as you go up the income and wealth spectrum, people are doing quite well. They still have more liquidity than they did pre-COVID. They have -- they get the benefit of their investments doing quite well despite volatility that happens from time to time. And so on the consumer side, pretty good. And when you look through our credit portfolios, lending is fine, our auto business, we tightened credit a couple of years ago. So you're seeing loss rates come down there. And I think on the card business, you're seeing the confluence of really 2 things. One is that slow deterioration coming off the lows of COVID, which is what we expected to happen, and then the maturation of the new vintages of product that we put on now for the last few years, and that's really behaving exactly as we thought. On the commercial side, same thing. Most customers are still doing pretty well. They're being prudent about borrowing, that's helping. But you've definitely seen margin compression. You've seen the impact of higher wages impact companies. But overall, I think people are doing quite well. From an activity level, what we're seeing, it's still pretty good in terms of the debit, the credit card spend. You're definitely seeing slowing growth rates year-over-year as you go through the year, but that's kind of expected, right? You've seen such a big increase in spend over the last few years. You're still seeing an increase year-on-year, but those growth rates move around a little bit. I wouldn't read too much into sort of the categories of spend underneath that because those things move around quite a bit. But I do think, overall, it still feels pretty constructive, I think, when you look at the overall activity levels and how credit is performing.

Helpful. Well, I'd love running through the financials with you, but maybe we could start in kind of some of the kind of bigger picture strategic areas and questions we get on wealths. Maybe just start with kind of Retail Banking since the asset cap branch counts down by more than 25%, Bank of America and JPMorgan are obviously now expanding more aggressively into new markets, somewhere you're kind of the leader in. Maybe just talk to your Retail Banking strategy currently in the current landscape? And how does this change when the asset cap gets moved?

Yes. Well, look, it's -- first of all, it's a great business. And I think we're very lucky to have the mix of businesses that we have there. And I think from a branch perspective, we're still #2 in terms of the number of branches across the country. And I think if you were to widen your time horizon there just a little bit and you look at what happened over the last 10 years, us and some of our peers are down about the same. One of them, as you mentioned, has been adding some de novo, so they're a little bit less. But I think you've seen trends that are a little bit more comparable. We were probably just a little bit later, enclosing or reducing some of those branches. But I think it's probably a little bit more comparable than you might think over that time horizon. We're in 24, 25 of the top 30 MSAs. We're investing in those -- in that footprint that we have across those branches. And I think we should continue to see -- start to see some more growth come out of that as we go. And I think that's one of the businesses that, to some degree, was impacted by some of the sales practices work that we had to do. And now that that's behind us, I think we've been investing in the footprint. We've been investing in the people. We've been -- and we're starting to see some of the benefits of that come through the results.

And then I guess in the last 3 years or so, Wells has completely revamped its credit card business, I think, 9 new cards. Just where are you kind of in that product build-out? And how should we think about its contribution as in a profitability as the portfolio matures?

Yes. We're really excited about the opportunity that's in that business. And if you, again, rewind back to the end of 2019, we brought in new team in to run that business. And we've basically changed everything in that business, how we operate at the line assignment process, the operations of service, and we've systematically refreshed the whole portfolio. As you said, we've got about 9 products. We started launching them 3 years ago. So we're very much still in that maturation phase of those new vintages coming on. A new account takes 2 to 3 years to really mature and see the profitability. And so you've started to see those come on over the last 2.5, 3 years. So we're still in the early phases of kind of the revamp of that business, and it really hasn't contributed much yet given the upfront costs, the accounting around the loan loss allowance. And so I think as we start to see that mature, I think you'll see it more meaningfully contribute to the bottom line, and I think we're pretty excited about that. From a product lineup point of view, we've got a couple more -- at least a couple more products in the hopper at some point, we'll look to launch. But I think we're mostly focused on making sure the things we have launched are operating well and continuing to improve the underlying service that's there. And I think we've got a long runway to continue to grow that business.

And then I guess on the Corporate and Investment Bank, we had a lot of new talent over the last several years, new co-CEO. Trading has clearly kind of become a bigger portion of the revenue stream. Just where are you in that journey? And kind of what are your aspirations there?

Yes. I mean, look, we've had a Corporate and Investment Bank for a long time. We started talking about it more clearly back in early 2021 when we kind of changed the report -- segment reporting that we have, and that was both for people outside the company and people inside the company to show the importance of that business. And so when you look at historically, we've had the exposure. We've had the lending. We've had the relationships with clients. We just never really monetized it through -- in the way that we should have through kind of the fee generation there. And so when you look at each of the components of the Corporate and Investment bank, you've got Investment Banking, we hired Tim O'Hara, who runs that business for our co-CEOs. And we've added dozens of new senior bankers over the last 2.5, 3 years in that business. I think it takes time for people to come up to kind of full productivity. And so -- but we're starting to see some green shoots there. We've seen a little bit of market share growth over the last year or so. So I'd say it's still pretty early in terms of seeing that come through. The market's got to cooperate a little bit as well. We got to see more transaction activity, more equity capital markets activity. But nonetheless, I think we're positioning ourselves quite well. We're very pleased with like the type of people we're getting and the ability to attract talent to the platform. I think clients have been very receptive to doing more with us as we get the right people in the right seats. So I'd say it's a little bit more of the same in terms of our ability to continue to just systematically invest in that business. And I think you'll start to see some of those results over time. On the market side of the business, that was the business -- that was one of the businesses that was most constrained by the asset cap. During COVID, we had to reduce our capital markets balance sheet by quite a bit during that to kind of manage through that time period. But along the way, since then, we've just been very much under the radar sort of investing in people, upgrading talent, investing in some of the technology and some of our e-trading capabilities and focused first on some of the kind of balance sheet-friendly products, like FX, I think you're starting to see that come through in the results there. We've talked about that in other forums quite a bit. And I think we're pleased with what we've seen in that business now over the last probably 6 quarters, where we've seen pretty good solid performance there. And I think we've got to do that over a much longer time period for it to be sustainable, but I think we're happy with what we're seeing there. We'll continue to focus on our U.S.-based clients. We're not trying to be everything to everybody in that business. But I think as we go over a long period of time, I think we'll be able to do more as we have more balance sheet flexibility, we'll be able to do more financing trades, but it also brings other activity with it. But I think that team has done quite a bit to kind of grow the fees there. And what I'm most happy and most pleased about in that business, as we've done that over the last couple of years, we haven't really grown our market risk RWA as much. And so we're not adding a ton of risk. We're leveraging the balance sheet that we've got out across those client base. And I think we're starting to see really good sustained performance now over the last 6 quarters. And then we've got our commercial real estate business, where we've been a leader in that business for a long time. It's still a very important business to us. And I'm sure we'll talk about some of the office portfolio at some point. But I think that's -- it's an important business, and we'll -- it's important to our clients, and we're very committed to it.

And then the wealth management business, probably most adversely impacted by the asset cap, although it appears like adviser retention has improved of late and your ability to serve the independent advisory channel. Just how you're thinking about that business?

Yes, I would just say it wasn't directly impacted by the asset cap. It was impacted by the reputational questions that were out there in business. And across the adviser, and what that did, as you mentioned, is it sort of contributed to advisers leaving the platform over a multiyear period. And I think one of the most important things that the team is focused on over the last 4 or 5 years now is 4 years is to stem that attrition, and we've done that. So we feel really good. The tide has turned. We're seeing good recruiting. We're not -- we went from industry-leading attrition to what we think is sort of industry-leading retention in terms of the overall platform. We've got to look at all the big adviser teams that move across the industry at this point. We've got a great investment platform. We've got the banking and lending capabilities that continue to get better. And so I think we feel good about sort of the momentum that has sort of shifted in that business. But I'd say there's really 3 parts to it. One is the core adviser platform, which is kind of what I've talked about there, which is the 12,000-ish advisers that contribute there. We also have the ability to serve independent advisers. So I think we're unique in that sense. And when you look at the big wealth management players, that's the fastest-growing part of the wealth management business in terms of number of advisers, and we're starting to see a little -- it's early, but we're starting to see some momentum in bringing people on to that platform from other firms. And the last piece is really going after the opportunity for the affluent client base in our retail branch system, which I'd say is almost an untapped kind of market for us. We have a couple of thousand advisers that sit across the branch system. We've added to that quite a bit over the last couple of years. We've launched some products under the umbrella of what we call Wells Fargo Premier, and we're continuing to build out that offering. So I think across those 3 channels, I think we feel like the opportunity in the wealth business is as good as anybody's in terms of our ability to go after it.

Helpful. I guess, now turning to the financials. So I guess the NII guide at the start of the year was down 7% to 9%, kind of pointed to the worst of that range in July going to increase more [ gradual sweep ] deposits, and we could then expect loan growth. We're going to kind of maybe unpack that. But maybe first, just on an interest income or [indiscernible], any update to the 2024 guidance of down 8% to 9%?

No update. No change to it. And I think as we looked at the guidance we gave in the beginning of the year, we gave what we thought was a realistic range, and we're still in that range, right? And so obviously, as you go through the year, things move around quite a bit as we've seen over the last few years. Obviously, your expectations are rates have changed. Loan growth has changed. Deposit levels are sort of moving around. And so I think things change throughout the year, but we're still -- no change to the guidance.

Got it. And then maybe a couple of questions on deposits. You talked about the sweep deposit increase. It looks like you went to 5%, BofA went to 5%, Morgan Stanley UBS closer to 2%. I guess, why go over the 5%? Has it impacted balances at all? I know it's only one segment of these deposits, but is there concern that you may have to spread across additional deposits?

Yes. Well, let me talk about that specifically, and then I'll give you some comments on the rest of the deposit base. On -- this was a very targeted change for sweep deposits. So this is effectively mostly frictional cash that sits in advisory accounts. And we align those rates with money fund rates. So it's very specific to this product, not other products. I can't speak to what others are doing. But I think as we went through the process, we decided to move it more aligned to money fund rates and that's -- we think that was the right thing to do. When you look more broadly though and look at what's happening around deposits, overall, deposits are performing quite well relative to where we would have expected potentially in the beginning of the year. We saw growth across each of the lines of business in the second quarter. We've seen pretty good performance stable-ish as we come into the third quarter, so not moving much. We've seen that cash sorting or the migration from noninterest-bearing to interest-bearing deposits slow quite materially as we've gone through the year. That's continuing. We're not seeing pricing pressure on the consumer side. Deposits on the commercial side are quite competitive as you go for the bigger operational deposits, but that's been the case now for years. And I think as we look to what happens next week, I think we'll see deposit pricing start to adjust as rates come down. And I think we're still very confident that the most interest rate or highest priced deposits, we'll see quite high betas on the way down across the commercial deposit base. And so that's still the plan, and we expect that to happen as rates -- whatever happens next week.

Got it. And then maybe shifting gears to loan growth. Card has kind of been strong, but kind of seeing weakness elsewhere, I think consistent with others. Any signs of improvement or some signs of optimism? And do you think the Fed cut next week could maybe potentially be a catalyst?

Yes. And I should have said in the last question, on the sweep deposits, we made that change in June, the $350 million impact for the second half of the year. So you'll see the full impact of that coming into the third quarter. I know lots of people like to have something to put in their models. And so that's the only thing I'm going to give you. When you look at loan growth, it's not changing much, right? And we didn't expect much coming into the year, and we're definitely not seeing much, right, across the board. You've definitely seen some card growth come through, but that's off that in other places. And so as we said in July, we're not expecting much to happen in the second half of the year, and that's still the case. I think whether rates move or assuming rates move next week, I don't think that's a big catalyst by itself, right? I think you have to look at -- people are looking at uncertainty in the economy. They need to see some more confidence that the soft landing path is what's going to play out. I think you got election coming up in a few months or a couple of months. And so I think there's a bunch of other factors that play into this confidence level that people are going to need to have in order to kind of be more of a catalyst to see loan growth. It will come, but I don't think whatever happens next week will be the single thing that sort of changes the dynamic substantially.

If we could put up the next ARS question. I guess, like putting all it together, you gave us a little bit of a nugget in terms of $50 million full quarter impact in -- the full impact of the [ sweep ] deposits in Q3. Obviously, interest rates are moving as well. We talked about loan growth. I guess, if we kind of put all that together, how should we think about the net interest income trajectory into next year?

Yes. Well, as always, I'm not going to really give you much about next year. We'll do that as we get into -- towards the end of the year. But I think the dynamics to think about are all the same, right? Like what's going to happen with overall deposits? How does that mix shift play out across noninterest-bearing and interest-bearing. Now we've seen those trends be positive, right? We've seen growth for the first time across all lines of business in the second quarter. We've seen that migration trend slow. So those are all net positives. I think on the -- and then we're going to get the benefit of asset repricing as we continue to see that come through in the securities portfolio as well. And so as we've said the last couple of quarters, we expect that NII will trough at some point towards the end of the year. We've got some headwinds and some tailwinds as we sort of look at rates coming down, and I think we'll give you more guidance on how that plays out for next year.

Very, very even distribution around change...

Yes. That's like quite a normal distribution. That might be the first time ever.

I'll ask John where he voted later.

John's got a lot of those...

I guess on the fee income side, it's certainly been a sort of strength on the last 6 quarters of year-over-year growth. I think from some of the investments you talked earlier, obviously, more conditions that helps. Maybe just walk through kind of some of the larger categories and what you're hearing and thinking?

Yes. So when you look at the fees, the biggest item is the investment advisory fee line in our wealth business, so very much in the short -- in the near term driven by what happens in the markets. So if you look at what's happening in the S&P, I think it's a little bit off of where the -- where it ended at the end of June, 1st of July. And as a reminder, most of our assets are priced in advance for the quarter. So for the fourth quarter, wherever October 1 ends up is sort of where that drives a big part of the fees. Now one difference that you're seeing now, too, is as rates come down, you see the benefit of fixed income prices coming up, that does matter as well. So that will give you a sense of how to manage -- how to model that fee line. And then when you start looking at Investment Banking, trading, again, we'll see how the market sort of cooperates and how volatility persists through the year, but we've been quite pleased with what we've seen so far in our performance. Obviously, it's a different mix of businesses than some other people, but we're quite pleased with what we've seen there so far, and then the deposit fee line and some of the other fee lines don't move too much. And we're starting to see a little bit of benefit from the venture portfolio that changed. So we -- over the last couple of years, we're seeing a lot of impairments. That seems to have petered out and sort of the momentum shifting a little bit there as well. So we'll see how that plays out.

I guess on the expense front, you kind of guided up to $54 billion. Some of that was FDIC special assessment will give you a pass, some of that revenue related. That's a good thing. Some of it with operating losses being, I guess, higher than expected. And I guess, first, you still feel good about the $54 billion. And then secondly, how do we think about operating losses looking out? I would have thought most of your issues would have been behind you right now?

Yes. No change to that guide either. So still the $54 billion. Like I think on the operating losses, what we saw in the first half of the year was us working really hard to put some of the historical issues behind us as we were talking earlier today, like sometimes these things take much longer than you would expect. Some of them are very quite complicated, take a while to work through. But as you sort of crystallize these expenses, generally, that means you're a little bit further along in the process. So that's a positive as well in some of this client remediation work that we were doing. And you can see the breakdown of the operating losses in our queue for anyone that wants to dig into it a little bit more. And I think we're going to continue to work hard to put that stuff behind us, but that's all included in sort of the guide that we gave there. And I think more broadly on just expenses, we feel really good about the work that's been done over the last few years. We've driven a lot of efficiency across the place. We've reduced our head count quite substantially. And we've been able to invest back into many of these businesses, which should help us over a much longer time period. So we come in every day, trying to make that number better, get more efficient, improve service and make sure that we're making the investments we need to make across the place.

And I guess, maybe sticking with expenses, head count is, I think, down 16 straight quarters as you kind of embark on continued efficiency initiatives yet, including green efficiency ratio probably higher than you'd want. Maybe what else could be done sort of to kind of get expenses or get efficiency ratio better? And just how you're kind of thinking about the 2025 budget?

Yes. We go into the end of -- we're working on our budget now, and we go into this process with the same mindset that we've come to it over the last 3 or 4, 5 years. And I think when you look across the company and you ask the operating committee members sort of how things are going and whether we're as efficient as we should be, nobody says, yes. And so there's still opportunity across just about every part of the company to continue to get more efficient. Some of that's head count, some of that's automation. Some of that's real estate. Some of that's third-party expense. You can go on. So there's is no one silver bullet that drives it across the place. But I think there's still a lot to do to continue to drive it. And that's the place we start the conversation every time, okay, what are we doing to drive more efficiency? The more you do, the more you see, the more you kind of see the opportunity that's there. And so our mindset is still the same that it's been over the last number of years. And it's something we work really hard to kind of build this like into the way we operate the place every day, business reviews, budget process, sort of the way people are sort of evaluate it. So how are we doing in terms of really driving down unit costs across much of the company. And I think we would continue to expect to see a lot of efficiency, and we would see -- hopefully see that represent itself in the efficiency ratio over time. And so there's a lot still to do.

And then touch on credit quality earlier, but charge-offs were up last quarter. Office and credit card peers are playing a role in you and others. I think you were talking about lower credit card charge-offs for Q3 at one point. Is that still true? And just maybe talk about just credit quality more broadly.

Yes. No, as I mentioned earlier, overall credit is doing quite well. I'll come back to office in a second. But across the rest of the portfolio, it's working -- it's playing out quite well overall. And again, going through the portfolios, the home lending space is fine. You'd have to see a really big correction in home prices and some big dynamics to change that. I mentioned the auto business earlier, continuing to see really good performance there from a loss perspective as we sort of tightened things a couple of years ago. In the card portfolio, you're seeing the two -- the maturation of the new vintages and the deterioration come together. The new vintages are performing exactly on top of like right on top of the models that we had. So we're not seeing any kind of distortions of any note there at all across the different products. We spend a lot of time looking at the different role buckets and product by product. And I think that's performing where we thought. So overall, consumer is feeling fine. We do expect the card charge-off rates slowly come down in the third quarter, as we mentioned. And then you'll get into some more normal seasonal patterns likely, right, in terms of seeing some ups and downs throughout the year in that portfolio. On the commercial side, it really is a story about office when you talk about losses. The portfolio is big enough that you might have some idiosyncratic issues somewhere at any given point, but we're not seeing a lot of systematic stress come through in the other parts of the portfolio. And so office is really that place. And as I've said for the last year or 2 now, this is a long story that takes a while to play out. So we would expect to have some losses as we look forward there, and all within the confines of what we've been talking about and what we've modeled. But I think it's going to take some time to work through that portfolio. And I think you can see that in most of the cities we all sort of travel to and live in, and older office buildings are doing much worse than newer office buildings. Newer office buildings are actually -- you look at New York City and you look at different parts of the city, they're fully leased or quite -- almost fully leased and older office buildings are the ones that are having the trouble. I think you see that stress pretty consistently across the country. It's not very -- it's not specific to certain cities. We feel good about the allowance that we have for that portfolio, roughly 11% for the institutional office portfolio, and we'll continue to work through with customers.

I guess just sticking with the credit thing you touched on the allowance, but you've kind of built allowances over the last couple of years. We see more releases in the first part of this year. Maybe just talk to kind of what's driving that and just how do we think about allowance going forward in the face of kind of rising unemployment, continued office trust and the like?

Yes. I mean the releases are quite small in the scheme of the allowance over the last couple of quarters. But when you look at the way we've thought about it, obviously, we've got multiple scenarios that we use to look at sort of the potential outcomes from an allowance perspective. We've had a pretty significant weighting on the downside scenarios for a while. It's been -- I can't remember now when we didn't have that. And that's still very consistent. So we're prepared for what could be more challenging environment. Now we're all hopeful that the base case of the soft landing plays out, but we need to be prepared for other scenarios. And that's embedded in the way we've thought about the allowance. And so -- so we'll see as things go. We haven't finished that process for this quarter, and we'll work through it each quarter. But I'd say our overall expectations that are underpinned sort of the allowance haven't moved that materially over the last couple of quarters.

Got it. And then maybe on capital, 14% dividend increase, $12 billion buyback in the first half of the year, definitely well received, 11% CET1, maybe a little bit closer now to your kind of, I think, 9.8% revised target for new target -- or not new target, requirement. I guess, first of all, I guess, the SCB came in higher than we expected, probably higher than you expected. Does that kind of change anything? I think I have the biggest increase [indiscernible] bank.

No, it doesn't change anything. Well, first, we came into the year with a lot of excess capital, right? So we feel good about our capital position. I think we, like the rest of the industry, look at sort of the process of CCAR and the volatility that's embedded in there and think there's probably opportunity to make that a little bit better of a process, right? And I think for us, when you look at the underlying drivers of the change in the SCB, a good chunk of it is related to the way fees were modeled or the way pre-provision net revenue was modeled. And so it's still a bit of a black box. And so unclear exactly what drove a lot of that. But it doesn't change our approach to managing capital. And as we said at earnings, around 11% is sort of where we'll manage. We'll all get some more clarity in a couple of hours maybe, I don't know, on where capital requirements are going is probably Basel III. We'll see. We'll see how that is. I'm as interested as anybody to see what is said. And -- but we're happy with the buybacks we did in the first half. And as we said, we would expect to do more in the second half, but albeit at a slower pace than what we saw in the first half.

I guess you mentioned it, but Fed [indiscernible] speaks at 10 a.m. allegedly next Thursday, get a 450-page proposal...

[indiscernible] the original.

So I guess, it goes with the expectation that capital inflation will be half of originally expected...

I didn't put that together, but that's actually I will say, good.

I guess just any thoughts in terms of how that plays out? And how would the industry perceive? Initially, this was expected to be really no increase to capital. They got to like a 20% increase, now maybe a 10% increase to capital requirements. Just any thoughts around that?

Look, we're all speculating until we actually hear what's going to be in there. But based on what you hear in the press, we would expect some changes around operational risk. We would expect some changes around credit risk RWAs, all positive in terms of coming down, unclear what to expect from a market risk point of view. And how that sort of comes together, the details matter. So I'd be a little reticent to say how people are going to react to it until you actually see some of the details behind it. But I think nonetheless, like for somebody in our position, lower operational risk, lower credit RWAs sort of have a meaningful impact on sort of the increase that we expected to see as part of the proposal. So that will be a positive. Exactly though, how it will all play out. I think we're all going to all find out. The -- I know some of you, particularly in the first row here, we'll be reading every 450 pages of it. So the -- so it will be -- I think we've got to wait until we see that.

Fair enough. We'll come back to you on that. Asset cap. I guess it's been 5 years since Charlie started as CEO, and since they want to -- talked about operational compliance risk, although it does like the tone around, kind of around it sounded a bit maybe more upbeat this year, although obviously, the asset cap remains in place. I know it's a regulatory decision, but just any update you can provide? And we can put up the next ARS question while Mike answers that.

Yes. Look, I think -- look, I understand why people want more information. Unfortunately, it's one of those things we can't provide too much clarity on. But what I would point to is just some language that we've sort of evolved over time during our -- mostly our earnings calls in other forums. But look, we started with 4 or 5 years ago, really having good clarity on what we needed to do. We were seeing good significant progress over that time period. Now you fast forward to what Charlie has been saying more recently is we're seeing the operating -- we're seeing the benefit of the changes we've made in sort of the way the place is operating and in the operating metrics. And so we've made a lot of progress throughout that time period. Ultimately, it's going to be up to the Fed to sort of decide when the asset caps lifted. But our focus is really just across all of the regulatory work is to get the work done in a really high-quality way. And that's what we do, and that's what we've done every week that we've all been here has come in and figure out like how to make sure that we're making the progress we need to make. And we feel really good about it. We're confident we'll get it all done. Ultimately, the timing will be up to the Fed.

I think this is the seventh year in a row we asked the audience this question, and they've yet to get it right or I shouldn't say that. Number 5 always seems to be an answer. But I want to ask you the time. But I guess this is probably the most optimistic we've seen it. I'll leave it at that. I guess if we can go to the next ARS question and maybe, Mike, maybe tying together a lot that we talked about today -- just maybe talk about -- if you think about like the July earnings -- I guess the July earnings call, NII maybe a bit worse than expected, expenses a bit worse than expected, SCB higher than expected. Does that kind of impact at all kind of your timing or how you think about kind of the ultimate kind of ROTCE 15% and maybe talk about the biggest opportunities and strengths for that objective?

Yes. Well, just keep in mind, NII was actually what we expected. So -- you may have had a different expectation, but it was sort of what we expected. And so I think it was right in that range of expectations. But look, I think when we started this conversation back in the -- I guess, as of result of the fourth quarter of 2020, we were in single digits ROTCE. We've made a significant amount of progress since then through the combination of things we've been doing in terms of capital efficiency, you're seeing revenue come through. Obviously, NII has helped as well. And as we look forward from here, as we said in January, we still very much are confident in our ability to get to 15%. I think as you look at the work that we're doing in the credit card business and the returns that should generate, the work we're doing in our home lending business to kind of rightsize that business. Those 2 things alone will be a significant contributor to the returns of the overall company. You start to see the benefits of the investments we're making across all the fee-generating businesses, the continued efficiency work, capital. So I think we -- there's no -- again, one thing that's going to drive us to sort of this sustainable 15% ROTCE, but I do -- we feel very confident in our ability to get there and then we'll decide what the right target is from there.

I guess that -- we can put up the next ARS question. I guess that was kind of my next follow through is like 15% -- the audience seems to think 2026, 2027 type time frame, we'll see. But ultimately...

I think you're misreading them. I don't know -- but I don't know. Unfortunately, people on the phone can't see the slide, I don't think.

What was your interpret...

Slide, I mean, I was just reading what...

To go back...

Could be the answer, but it looks like half the people think next year and half the people think after that, I guess, right? Also maybe we'll do -- returns.

Yes. We can go forward. But just ultimately, what -- I mean do you think this company is capable of?

Well, look, I think as we've said over the last a number of years, like there's no reason why any of our businesses shouldn't have best-in-class returns across each of the operating segments. And so everybody -- reasonable people can have differences in what that -- exactly where that -- what that means, but that's likely higher than 15% over time. But we have to get to a place where we've got sustainable returns at that level, and then we'll just -- we'll figure out how to get to the -- we'll figure out the right target is over a longer period of time, but there's no reason why our businesses shouldn't have best-in-class returns by segment. And so you can normalize across the peer set and come up with your own estimate for that. But that's the way we thought about it.

A lot of opportunity. With that, please join me in thanking Mike for his time today.