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

Next up, very pleased to have Wells Fargo with us. Welcome back Mike Santomassimo, Chief Financial Officer. Mike, thanks for joining us again.

While I ask my first question, we can put up the first ARS question. And Mike, I always like to start big picture with you just given Wells covers so much of the country, both consumer, commercial, institutional. And just maybe just talk about kind of what you're seeing and hearing across each segment as they grapple with the evolving landscape.

Yes. Well, thanks again for having us. As always, a great event. And look, I think it's -- what we're seeing is kind of more of the same of what we've been now seeing very consistently quarter after quarter, which is a strong consumer. Spending continues to be up year-over-year. I think delinquency rates continue to go down. Payment rates on credit cards continue to be a little bit higher than what we would have expected. And so all that leads to a pretty strong consumer. And we're just not seeing that change much. And I think the categories of spend move around every week, every month, every quarter a little bit. Gas might be down year-on-year, but that's getting filled in different categories. And so very consistent performance across the consumer space. And it just keeps happening that way week after week and month after month. And so I think despite what you may read in terms of softening, we're seeing activity levels still be quite strong and credit performance still be quite good. On the commercial side, pretty similar to, again, what we've seen over the past. I think credit performance continues to be quite strong. The kind of middle market commercial bank type customer is still not borrowing against the revolver in any significant way. I think there's still some prudence, some caution about what could come within the overall sort of backdrop. But we're seeing quite good performance. We are seeing some loan growth in the large corporate space and sort of the C&I space overall. But I think what we're seeing again is just very consistent now for a while. We're not seeing big layoffs. We're not seeing big inventory builds. We're not seeing big changes really sort of in any significant way. So I'd say, quite solid overall, and I think that has continued sort of into the quarter. And that all is in this backdrop of still some uncertainty in terms of where the overall economic picture might be going. But I think people come into this in pretty good position overall. And I think hopefully, that will continue. And I think so far, we're not seeing any signs of it changing in any significant way.

Put up the next ARS question. Against this backdrop in June, after 7 years, we finally got the asset cap removed. I think while we all kind of understand the impact may not be immediate, I was just hoping we can kind of run through expectation on when and where we could see this impact over time. And just maybe first off, for several years, it feels like Wells has kind of been obviously outwardly focused, but also spending a lot of time inwardly focused and pretty large regulatory agenda. I think every time you guys speak, that was kind of #1 on your list, asset caps lifted. Maybe just talk to how it gives you the ability to pivot to more of a kind of a growth mindset, redirect your resources and just how is this progressing? Have you started to see any results of this?

Yes. I mean, look, the short answer is it's going really well, right? And I think that -- and so we're really happy to kind of see the company sort of move past this. And before I go there, I'd be remiss to say, look, this has been the culmination of years' worth of work across many thousands of people across the company. And so we're thankful for that persistence and sort of that execution across it. And I think -- so -- and then the asset cap was one piece of it, but 13 consent orders going away and sort of all the risk management infrastructure that's been built. And so we're a better company for it now than we were prior to all the work that's there. Now when you start thinking about that, the growth, it's not something that we're starting from today, right? This is something as we were working on the risk management and regulatory work over the years, we started to change the company and really pivoted towards sort of the businesses that we think have the best opportunity over the long run. And so we've simplified the company. We've sold or closed or exited 13 different businesses along the way. We've saved $12 billion of expenses and reinvested that back in the businesses. We've taken headcount down significantly from the peak. We've reinvested in people, technology, products across really every single one of the businesses. And remember, we've also been changing the people that are there, too. So 80% of the top 200 people are new to their jobs, new to the company. The management team is mostly new as well. And so a lot of that change is something that's been happening now for the last 3, 4, 5 years, in some cases, depending on each of the businesses. And now that the asset cap is gone, I think we can more proactively go after the opportunity that was there. And it's everything from increasing sort of marketing spend in the consumer side, reintroducing incentive plans in our consumer bank, kind of, very competitively going after or proactively going after deposits across the commercial space, lending opportunities across the commercial space, the wealth management opportunity. So I know we'll dig into all these a little bit more. But I think that mindset is very much embedded in sort of the company today. And I think now we just got to continue to execute it. Now keep in mind, it doesn't happen in a week or a month, right? So this does take some time to sort of really see that growth come through, but we're very excited about it. And I think we're seeing some really good green shoots come through even so far in the quarter.

I guess like, how do we like sit here and like, I guess, kind of measure that? Because look since the asset cap went into effect, industry assets, deposits up 40%, and by definition, Wells is basically flat. Maybe just kind of delve into just how should we maybe dimensionalize some of the biggest -- can you touch on some loan deposit, fee opportunities around that?

Yes. During the COVID and the asset -- when the asset cap was in place, we had to push off a lot of business. We had to not proactively go after a lot of opportunities that we had in front of us. And so -- and the industry grew and we were sort of held roughly flat, as you mentioned. And I think when you start thinking about deposits, in the consumer side of the business, we weren't proactively marketing in any significant way. We had to reengineer a lot of the way in which we sold products and sold our checking accounts and opportunities through the consumer bank. We reintroduced incentive plans last year. We've increased our marketing. We've kind of rebuilt that sort of space in a pretty significant way. You've seen our marketing spend increase now for the last couple of years as we sort of continue to lean more into that. And I think you'll start to see more and more activation through the branch system to grow sort of that core checking accounts across the consumer space. And I think you can see it in our branches today. We've got new advertising, new marketing, new plans, new people to sort of go after that overall opportunity. Adjacent to the consumer side is the opportunity we have in the Wealth Management business, not only in sort of the core adviser franchise that we've had for a long time, but we've been investing in, what we call, Wells Fargo Premier, which allows us to go after sort of that higher-end consumer customer that already is in our branch system. And if we can do a good job bringing Wealth Management services to that customer base, they'll bring 50% more banking on average to us as well, both in deposits and loans. And so I think on the consumer side and the wealth side, I think there's a lot of opportunity for us to continue to lean into there more and grow that opportunity. We've started to see some checking account growth last year for the first time in a while. We'll see 2x of that or more this year. And I think you'll continue to see that build over time. And then on the commercial side, on the deposit side, that's just an area that we had to back away from with the asset cap in place, particularly given our experience during COVID. And so the teams are very excited to go after the opportunity that's there. And I think we're starting to see some good traction on the pipeline just in the last couple of months as we've come out of the asset cap already across both the corporate investment bank and the commercial bank. And so I think there'll be a lot of opportunity based on what we're seeing and that engagement with clients. On the lending side, if you start in the consumer businesses, we've been retooling our auto business to be more of a full spectrum lender. We just signed up and went operational this past -- earlier this year with Volkswagen and Audi here in the U.S. You started to see a little bit of growth in the second quarter, and I think you'll continue to see that grow. And we're seeing that continue to grow as we go into the third quarter so far. I think the credit card business is a huge opportunity for us to continue to grow. You've seen some of that already in sort of the balances come through. But I think that's just getting started in terms of the opportunity that we have over a much longer time period to grow sort of that business. And I think we're finding the products out there very -- they have a compelling value proposition. And I think we're seeing good uptake from the types of clients that we want to build into that business. The one exception could be -- is home lending, where I think we've repositioned our portfolio. But I think you'll start to see that has declined a little bit as we've gone over the last couple of years. And I think you'll see that decline a bit less as we go into the next number of quarters. And then really on the commercial side, we've expected to see some growth in the commercial and industrial loan space. We saw some of that in the quarter. I think we've got a few quarters now in a row where I think you're starting to see that grow. Most of it's coming from the Corporate Investment Bank so far. I think you're still not quite seeing sort of the lending opportunity manifest yet in the commercial bank. People just aren't borrowing a lot against the revolvers yet still. I think that's still -- utilization is still relatively low. I think you'll start to see that pick up as people continue to have more confidence that the tail events from an economic perspective are off the table, which I think people are getting more and more comfortable with as time goes by. And then I think you'll continue to see us grow and you'll start to see us grow again in the real estate business and the other categories on the commercial side. And so I think you're going to -- you'll start to see us more -- you'll start to see some of that growth come through, I think, over the next couple of quarters. And then when you look at the place that's been most impacted by the asset cap, it's our markets business, where we just haven't been able to do a lot of the financing activity that others have done. You've seen our trading assets increase now for the last 18 months, 24 months as a start, as we've had capacity to grow that. And we're seeing really good reception from clients, and we've been onboarding a significant number of clients and opportunities over the last couple of quarters. And I think you'll start to see that continue to grow as we go, and we're very confident that, that opportunity is there.

That's a lot in there. And we'll maybe circle back on some of that. I guess maybe just shifting gears to the expenses related to the asset cap. Despite headcount of the company going down overall, I think you've added 10,000 people on kind of risk and control-related groups and spent $2.5 billion more in 2024 than 2018 in those areas. Is there, I guess, rationalization to be done and so, I guess, how long does that take? And what does that process look like?

Yes. Well, I would start with the overall opportunity -- efficiency opportunity first, and I'll come back to that. I think we come into this budgeting cycle for next year with the same mindset we've had for the last 4 or 5 years. We still think there's a lot of opportunity across most parts of the company to get more efficient. Some of that's technology-driven, some of it's not. So I think you'll see us continue to drive that and continue to embed that continuous mindset, improvement mindset into the company, because that's what's really going to be most important over a period of time. Like this is not an expense program. This is really -- you got to build it into the way you operate every day, every quarter and really continue to consistently drive improvement. I think we're like 20 consecutive quarters now of lower headcount. So it takes time to sort of just do it in a methodical way where you sort of drive just over and over and over to sort of see that benefit. And I think there's still a ton of opportunity. We still have too much excess office space across the company. We still have third-party spend that we continue to work down, and we can -- in most functions across the company, I think there's at least a little and sometimes a lot of opportunity to get more efficient. On the risk and control work, for sure, there'll be opportunities to streamline it or make it more efficient. A lot of this work started 5-plus years ago, 6 years ago, and as you look at it today, there's always going to be opportunity to say, well, I can probably do that a little bit different. I can change it. I can add some technology, I can streamline it. We can continue to evolve it. But that will just take a little bit of time because what we want to do is continue to make sure that, that control work is operating the way we want it to. And I think we'll just systematically go after making a little bit more efficient as we go, but it will take a little time to get there.

Got it. And then I guess you were over 10% deposit market share in the U.S. at one point. Now you're a bit under. I guess how do you think about either whole bank acquisitions, more bank portfolio acquisitions or loan portfolio acquisitions just given you now have kind of asset capacity?

Yes. Well, firstly, as I mentioned just a couple of minutes ago, like the organic growth opportunity we have across every one of the businesses is huge, right? So the majority of our time is spent thinking about how to make sure that we're executing really, really well across each of the businesses. Could there be interesting opportunities to do something inorganic? For sure, if something comes up, we will certainly take a look at it. There'll be a high bar as we sort of think about the opportunities. But you can certainly think about adding capabilities from a payments or a product perspective. You could look at broader sets of things. But I think it will have a high bar, and we've got lot of opportunity to continue to execute really well on the organic side.

And I guess just related, before we get off the asset cap, you kind of mentioned trying to be more efficient, but you talked about branch builds, marketing, incentives. So I guess is there any either just direct costs on the expense side or just capital costs using more balance sheet for financing, RWAs for trading, higher G-SIB scores that we should kind of think about when we think about the asset cap benefit?

Yes. Well, there's a lot there. I'll try to pick it apart a little bit. I think from a capital perspective, we come into this environment with a ton of excess capital, right? So I think we've got plenty of capital to grow our businesses and continue to buy back shares. And so no constraints really to think about at this point there. I'm sure we'll talk about capital rules later, but I think all that is pretty manageable as well. I think when you start thinking about other opportunities to invest, I think as I said earlier, like I think there's a lot of opportunity for us to drive efficiency. That's where we start the conversation with all of our businesses. And I think as you've seen over the last 4 or 5 years, we'll make the investments we think are smart for the long run across each of the businesses. And like any business, we've got to keep making those investments to stay relevant and competitive and sort of go after the opportunity. But I do think there's plenty of opportunity to kind of do both across each side.

Got it. And maybe put up the next ARS question as we kind of delve into more of the financials. But I guess loan growth trailed peers last quarter. You actually talked about some green shoots, I think kind of when we're talking about the asset cap removal. Just how are you kind of thinking about loan growth over the balance of the year?

Yes. Look, as we came into the second half, as we talked about in July, we kind of expected to see some growth in some of the consumer portfolios and the commercial and industrial space. And so far, quarter-to-date, that's what we're seeing. I think on the consumer side, as I mentioned earlier, in the auto business, we're continuing to see that grow a little. We're seeing card growth as we expected to see coming into the quarter. And we're seeing growth across the C&I book, the commercial book, mostly again in the Corporate Investment Bank, a little bit in certain pockets within the commercial bank. But I'd say, so far it's progressing roughly as we thought it would as we came into the quarter.

And if we could just put up the next ARS question. And maybe just shifting gears to deposits. I guess, deposit growth trailed peers last quarter, but your costs kind of came down more than most, although I think Charlie on the call mentioned being more aggressive on both consumer and corporate deposits. Just maybe expand on that.

Yes. Look, I think our consumer deposits are behaving exactly in line or pretty close to like what other people are seeing. And I think we're not seeing any big change in trend there of any significance. I think we're not seeing pressure from a pricing point of view on the consumer side. We're not seeing any acceleration in mix shift. And so I'd say, overall, pretty consistent relative to what we thought it might look like on the consumer side. And then on the commercial side, I mean, as we talked about earlier, that's the opportunity for sure that we can be more aggressive, more competitive as we look at opportunities. And I think that's -- we're already seeing sort of that pipeline build across each of the businesses. And I think that will continue. And again, those deposits are priced competitively like they've always been, but we're not seeing that shift in any significant way at this point. So we're pretty optimistic about what the opportunity should be over a little bit of a longer time period.

And I guess tying that together, you kind of reduced NII expectations a couple of times this year. And I guess most recently, despite kind of finding out the asset cap was coming off, I guess, is kind of stable NII kind of still your forecast for this year? And just maybe kind of discuss the puts and takes. And obviously, the Fed cuts next week, how does that impact things?

Yes. Look, no change to that. We still expect it to be roughly sort of in line with what we saw last year, plus or minus. And so that's still the case. And as I said, loans are sort of behaving largely as we kind of expected. Deposit trends are pretty stable across each of the businesses. And I think we'll ultimately see what the Fed does. But as we get later into the year, like Fed cuts in the calendar year don't have that big of an impact anymore. And we still expect the pricing on commercial deposits to have a really high beta as the Fed comes down. So I think there's no change in our assumption around our ability to kind of reprice those deposits down as the Fed starts to move.

I guess maybe looking beyond the next couple of quarters, I mean what are some of the key considerations that you think can affect the trajectory of NII?

Well, I mean, it's all the basics, right? Like deposits and loans really are going to drive most of it, right, in terms of where we go from here. And I think when you think about NII for us over a longer time period, it's really all going to be about driving growth across the franchise. On the consumer side, it's growing that core operating checking account, it's executing in the wealth management business to continue to build out the banking business that we do across those wealth management clients. And then as I talked about in the commercial business, it's about just being very competitive for the opportunities that we want to go after. And I think over a long time period, I think we've got a lot of opportunity to continue to grow the underlying franchise, which will help us grow NII.

[indiscernible] what it's worth. They were right last year.

Okay.

I don't know if you have any comment?

We'll see. It seems like a mixed bag here. So I don't know, somewhere between flat and 6%. I think that's probably -- we'll see. Maybe that will be our range.

I guess, fee income has been a bright spot. And we've certainly in the past talked about investments in card, IB, trading, wealth management. Maybe discuss some of the major line items and what your expectations are?

Yes. Look, I think we've been very pleased with the fee growth that we've seen over the last couple of years. You certainly saw that when we looked at last year, right, where we saw NII come down as we thought and that be replaced with fees almost completely. And I think when you look at each of the key components, right, the biggest one is our investment advisory fee line. The market continues to perform pretty well. And so as long as the market, I think, stays up relatively where it is, I think we'll continue to see good momentum in that fee line. I think we're making -- we continue to make progress in the investment banking business. You can see our market share continue to increase as we sort of thought it would as we make the investments across that business. We've seen good consistent performance now for at least a couple of years. I've lost track on the number of quarters, but at least a couple of years in our markets business where we continue to see really good performance there. And so I think as you -- and then you start looking at the deposit fee line and the lending fee line, I think as the business continues to grow, I think we've seen good performance across the consumer businesses, I think you've seen really good overall solid performance there. So I think each of the line items have their own individual drivers, but I think the momentum that we've seen across each of the businesses is encouraging.

You mentioned kind of growth in the markets business. There's obviously a fee component and an NII component, which I think was kind of just played into some of the changes in NII. Just how do you kind of think about that balancing? That's something we kind of get questions on.

Yes. Look, I think ultimately, you're building like a business, right? And the accounting geography of it sometimes lands in places like NII or fees depending on what the underlying activity level looks like. But I think -- and so we're really focused on making sure we grow the right business over a long period of time. And then we'll continue to evolve how we sort of explain the drivers of it as the markets business becomes a little bit of a bigger driver of the overall company. But I think when you look at the markets business now for the last 3, 4, 5 years, I think the performance has been clear and consistent, right? The run rate of fee revenue that we've generated in that business has taken a step up over the last couple of years, and that continues to be very consistent and see growth there as well. And so I think we're overall really pleased with the underlying performance there. And I think as we sort of are engaging even a little bit differently since the asset cap has been gone with clients, I think the receptivity to do more with us is really there. And so we're really pleased with like what we're seeing with clients. And I think they see the capabilities that we've been building and the people we have, and I think they want to do more with us.

And I guess on the expense front, you've talked to kind of little change in expenses for this year. Is that still the case? And you talked a bit more about a lot more to rationalize the company. Kind of where are you in that?

Yes. No change this year. And as I said earlier, I think it's just a matter of continuing quarter after quarter, looking at the opportunity that we have to make the place more efficient, and doing that in a way that's sustainable and just building it into the culture of the company. And I think the opportunity is there. I mean if we could go faster on elements of it, we do, we will. Some of it just takes time to sort of get after. If anybody wants a couple of office buildings in certain cities, I have them, so call me. So it just takes some time to kind of work through that in a very methodical way. But I think we look at it and you go to a townhall setting in sort of the company and you ask a room like this and say, how many people think the company is as efficient as it should be? Nobody raises their hand still yet. And so that shows you the opportunity that's there. Despite how much progress we've made already, I think we still think there's a lot more to do there. And again, it's just one after the other. There's no silver bullet. It just takes time. It's hundreds of different projects that happen at any given point. And I think we're really excited that we're going to continue to see that opportunity come into the numbers.

I guess efficiency ratio has kind of been running 63%, 64% for the last several quarters. I guess where do you see the kind of longer-term opportunity?

Look, as the returns of the company get better and better, I think you'll see the efficiency ratio continue to come down. We'll talk at some point about what we think the right number is there. But I think you'll continue to see that progress as the overall performance of the company continues to get better and better. I think the efficiency ratio is a little bit of an output, right, relative to when the rest of the place is performing to the way you want. And as we've said about returns, we're getting closer and closer to that sustainable like 15% return. Arguably, we're not that far away. I think people may have a slightly different view of exactly where we are, but we're pretty close. And I think as we said, that's not the end goal. And so I think as we sort of continue to make the progress there, I think you'll see the efficiency ratio come down in line.

Got it. And maybe just on credit quality, it has been kind of relatively stable, actually lower CRE nonaccruals last quarter. Just how you think about NPAs, charge-offs, allowance in the current backdrop? There's still kind of some of these tariffs and other uncertainties out there and consumer nonperforming number last Friday caught some attention.

Yes. Look, so far, so good, right? I think when you look at performance, as I said on the credit side -- on the consumer side, delinquency rates are not going up. Payment rates on cards are still high. We're not seeing a trend change there really at all. And then same thing on the commercial side, where we're just not seeing that trend change. It's performing quite well. The place we continue to spend time on and kind of working through is the office space. And even there, I think it appears like valuations are stabilizing, it appears like that's kind of beginning to get a little bit better in some markets as well. And so I think overall, we feel really good about how the portfolio is performing, and we're not seeing signs that, that trend is going to change significantly at this point.

I guess maybe on capital, share buybacks have been running at $3 billion, $4 billion a quarter for the last several quarters now, SCB comes down next month, asset cap now lifted. Just kind of how do we think about that pace of capital return?

Yes. Look, as I said earlier, you come into this environment feeling really good, right? We've got a lot of excess capital. Our stress capital buffer comes down. So we're managing to a lower regulatory minimum, plus our regulatory buffers. And I think we've got a lot of capacity to fund growth as we look at the overall balance sheet. And so that's always going to be the first priority is making sure that we continue to support clients, support the overall economy, and grow in a sensible methodical way. We go through the same process we go through every quarter thinking about like that growth opportunity over a longer time period. We look at all the risks that are out there in the environment. And then I think we then have share buybacks. Hopefully, you've seen us not be shy about returning capital to shareholders. I think over the last 5 years, we've done something like $75 billion -- $77 billion of return back to shareholders over time. Our share count is down 22% or so through the end of the second quarter. So far this quarter, we bought back about $5.5 billion of stock. So a little bit higher than what you saw in the first half of the year. And we'll continue to go through that same process as we look each quarter.

I guess on the topic of capital, beyond the stress test, there's obviously other changes being talked about on your capital requirements. Just maybe your thoughts in terms of timing, when do you think we hear on that? How do you think that evolves?

Look, I think based on what you read and see in the conversations we have, there are really a few different levers that are out there that are being talked about. You have all of the enhancements they're making to CCAR and the stress testing process. We expect to see more information around model transparency, scenario transparency shortly, like in the fall at some point, hopefully in the next month or so. So that will help us get a better sense of sort of where that's going. And hopefully, what that does is, at a minimum, kind of reduces some of the volatility that we've seen in CCAR over the last number of years. And so I think that will be encouraging. And then when you start looking at the other pieces of capital, you have G-SIB score reform, you have leverage and capital requirements and then you have the finalization of Basel III ultimately. The leverage changes are kind of the furthest down the path. We'll see when they get finalized, but I think it's encouraging that there'll be some reform there that creates more leverage capacity in the system over a long time period. And then on G-SIB and Basel III, based on -- again, the conversations based on the public [ speeches ], it feels like that's going to get to a reasonable place. And hopefully, we'll learn more later this year or early next year. I would guess it's probably early next year before we have good clarity on sort of the next iteration of what the proposal is going to look like. But it all feels like it's moving in the right direction. And I think when you look at our situation, again, we come in with a lot of excess. I think our business mix sets us up well for whatever reform that's there -- that happens. And so we'll see where that goes. But it's all encouraging and moving in a direction where you get some really reasonable outcomes, which is what I think everyone is looking for.

And I guess you noted earlier, I think you're selling, I think you said 14 businesses to kind of further simplify the company -- 13 businesses. One of them was the rail equipment leasing announcement you made not that long ago. I mean, is there still stuff to get done to further simplify the company? How do you...

No. I mean, that's really the last one of any significance. And it's something we highlighted couple of years ago as we sort of went through the process. So we were happy to get that announced, and it's not closed yet, but we had -- it was nice to get that announced.

Got it. Maybe put up the next ARS question. You touched on this earlier, Mike, in terms of kind of mid-teens ROTCE is kind of the way point and you're almost there. But I guess maybe when do you come back and revisit us? Where is that target at? What informs you in kind of what that number could be? And maybe just kind of what are the bigger areas of upside to get to that higher number?

Well, I'm just going to take the answer to the question, like the last one. So we'll see. I'm waiting, it's like taking too long. Now look, I think when you look at the return, the journey we've been on, like we started back like at 8%, I think at the end of 2020, early 2021. We sort of methodically sort of built our way up to the target of 10%. We set a target of 15%. And we said when we got to 15%, and we thought it was sustainable, that we would set the next target from there. So arguably pretty close to sort of that target. And then when you look at each of the underlying businesses, we still very much believe that each of those should have a path to best-in-class returns by business. And then that would lead you to a number higher than 15% ultimately. And so as we sort of feel like we're there at the 15%, we'll sort of set a target from there. But there's still nothing in the underlying businesses that lead us to believe that, that's not still the case, right? And so I think we have scale in every one of the businesses we want to be in. We're in the best market in the world, and we're over concentrated sort of in the best market in the world as you look at sort of the financial services fee pool and revenue pool. And so I think we feel really good about our position, and we'll sort of build from what we've been doing -- build on what we've been doing.

And the audience answer is 17%, looks like the consensus followed by 18%. So new target 17% to 18%. We could roll it out early next year.

Feedback is a gift.

If you guys look last year, like every ARS question was exactly right, including the NII guide and the asset cap lift timing. We have a couple more minutes. I don't know if there's any questions from the audience? The question was on credit card profitability and the expected projection.

Yes. Look, I think when you look at the credit card business, we've seen good growth in outstandings. And it hasn't contributed much yet to overall profitability, as you've got the intro APRs and marketing costs, CECL accounting sort of mutes the profitability impact in the beginning as you're in this growth phase. And so I think over the next couple of years, I think you'll start to see that more meaningfully impact the bottom line. And I think everything is progressing as we thought it would as you look at the overall profile. I think we're very happy with the credit profile of the customers we're bringing on. We can see sort of the engagement that we're getting across those different products. And so I think you'll start to see that be a more meaningful contributor over the next couple of years.

Any other questions? I guess another topic throughout the conference has kind of just been the role of private credit. You guys formed an interesting venture, it was last year or maybe the year before around that. Maybe just talk to kind of how that works out, kind of trend flow in that space?

Yes. Look, I think, one, we do a lot with private credit providers. We provide financing out of our corporate investment bank. We also formed, as you sort of highlighted, an initiative with Centerbridge, where we provide financing to commercial bank customers or middle market customers that need it. And I'd say that that's been up and running now for a little over a year, maybe about 15 months where it's up and running. And we've seen really good pickup. And I think the momentum has been building very methodically and consistently now for the last number of quarters. And what we're finding is that it's complementing what we want to do with those customers already. And so we're able to go to our customers and offer them the -- it could be a revolver, it could be a first-out tranche, it could be some kind of an asset-based loan that we have on our balance sheet. We complement that with a term loan that's provided by the JV, which is called Overland Advisors, and it allows us to have a full suite of capabilities and products for the customer. And we're actually -- customers are very much finding that differentiated where we're able to provide the solutions across the capital stack. And so, so far, so good. And so I think there'll be a lot of opportunity for us to continue to execute well there and then work with private credit providers, compete where we think we want to compete. And I think we feel really good about our ability to do both, right, where it can be quite complementary to the overall set of capabilities that we have.

Great. With that, please join me in thanking Mike for his time today.