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

Good morning, everyone. Thank you, Gerard, for that introduction. And thank you all for being here. My name is Dick Manuel. I'm an equity research analyst at Columbia Threadneedle Investments. I'm happy to be joined on the stage by Mike Santomassimo, CFO of Wells Fargo. Thank you, Mike, for being here.

Yes.

Great. So let's just jump in on the third quarter earnings call. You increased your ROTC target from 15% to 17% to 18%. As part of that discussion, you wanted each of the businesses to achieve best-in-class returns. So I was thinking we could walk through them, and let's start with the Consumer Bank, where the gap of the current returns is probably greatest relative to your ambitions. So on the consumer and small and business banking, can you update us on the progress you're making in developing more of a sales culture since the OCC lifted the consent order last year, and talk about, what else there is in terms of opportunities to improve the returns?

Sure. Yes. Let me give a little bit of backdrop on the targets, and then I'll come back to the business itself. And so if you rewind the clock a little bit and you go back to kind of where we started the journey in the beginning of -- end of '20, early 2021, we were at 8% as a company. We had sort of -- we had set our targets at 10%, 15% sort of along the way. And when you look at where we are year-to-date, third quarter, pick your time period, we're effectively there, right, at the 15%. And so it felt like the right time now that the asset cap has gone, and we're at that target we set that we needed to kind of reset expectations around where we think we should be able to get to over a reasonable time period. And really, the thinking hasn't changed at all over the last 3, 4, 5 years, and how we're going to get there. And we've said over and over that we know there's no reason that each of our segments can't get to best-in-class returns. And I think that's still the goal across each of them. And so that's kind of the path we've laid out here. And I think when you look at the consumer business, and it's really consumer banking and lending that drives sort of that segment. There are a few things that are the key things that sort of get there -- get us there to the improved return. First, we've got to continue to see the card business mature. So we've replatformed every product we have out in the market. We've invested a lot into that business over the last 5 or 6 years, and we're starting to see that mature. So it's just a matter of time now. We feel really good about the credit box. We feel really good about the originations. So it's just a matter of time for that to continue to mature. And it takes 2 or 3 years early -- for vintages to -- new vintages to mature in the card business. And so we're starting to see those come through the P&L, and you'll see that more and more over the next couple of years. We've got to finish the work we started on the mortgage business. And that really is rightsizing that business, reducing the complexity, improving the profitability and the returns as we go. And we've got a little bit more left to do there. Our servicing business is down roughly 1/3 from when we started this journey. We've reduced a lot of the expenses in that business, but we've got a little bit more to do. We just executed a sale of additional pieces of -- really complex pieces of the servicing side. So it will just take some more time to kind of work that out. And then we've got to get the scale out -- the scale benefits out of our branch system, improving the productivity of all the bankers, improving the profitability in some cases of some of the branches. And those 3 things sort of really, really drive it. So that comes back to like the sales culture piece of what you were talking about. And the business -- when we got the sales practice consent over many years ago, we had to kind of strip everything down to the studs in terms of how that business was run. And over the last couple of years, we've reinstituted incentive plans, reinstituted P&L branch profitability reporting that goes with it. And that's really been in the last 12 to 18 months that started to roll out across the branch system. And those things take a little bit of time to really get working in the way you want across such a big business, and we're starting to kind of see some of those results come through. It's only one quarter, but in the third quarter, we did see really good originations of credit cards, as an example. And a lot of that was driven by what we saw coming out of the branches. The other biggest piece was people coming directly to wellsfargo.com or our digital properties versus us having to go to third parties to originate new accounts. And so we're starting to see both people come back to us directly to sort of get those products. But we're also seeing the productivity of the branches start to really really pick up. And I think that will build on itself over time. So we're still in the early days of really seeing that come through, but we're starting to see it more consistently now across the country, but we've got like string together a number of quarters to kind of really be confident that it's where we want it to be, but we're starting to see that come through now. And that's a huge focus for all of us to really make sure that we get that culture right. And hopefully, you'll start to see it come more meaningfully through the P&L over the coming quarters.

That's super helpful. How about on the auto side within the consumer lending. You've seen some new momentum there. You've got the VW-Audi partnership. Could you maybe comment on how the -- where you play in terms of the credit box there, and how you feel about kind of growing into that area given sort of the slight tick up that we've been seeing in auto and other places and some niches?

Yes, sure. Over the last probably 3 to 5 years, we've been principally like a prime and super prime lender. And while we were -- over that time period, we were investing more into our -- the credit underwriting capabilities and other dealer servicing and a whole bunch of other aspects of it so that we can become slightly more of a full spectrum lender. I hesitate to sort of go because we're not going that far down in subprime, and it's not that big of a piece. But we've started to go a little bit towards down the credit spectrum there. And the returns are really good. If you do that well, the returns are great. You might see charge-offs tick up over time a little bit, but that's -- but the returns come with it. And so we're still in the early days of really doing all the testing and getting all the data that we need to be -- to kind of do that in bigger size, but you'll see that sort of gradually grow over time. And we've added the VW-Audi relationship and went operational in May -- roughly May, June time frame. And we're starting to see that like tick up. Obviously, there's issues in the environment with tariffs and other things that cause like different changes maybe in individual carmaker sales. But overall, the relationship is going really well. And we're seeing tick ups across both the volume we thought we'd get it from VW-Audi, plus the rest of the book is doing well. And you can see the credit performance there has been really good. And it's not -- and it's been very consistent now for a number of quarters. And so we feel really good about our ability to continue to expand slightly there on the credit spectrum and then continue to make the returns better and better in that business.

Just circling back to kind of the sales culture. Just -- could you give a sense of how receptive the the employee base is to it, like were they thirsty for the changes that you put. And like you mentioned that there's been an uptick in card. Is that like a proof point for you?

Yes. I mean most people want to win, right, and want to do more and want to -- and so I think -- yes, I mean I'd say there's always going to be some small population of people where change is harder. But yes, I think it's been very well received. And -- but it takes time to kind of get it, operating more consistently across the whole set of branches, but it's been received really well.

Great. So let's turn to the Commercial Bank, where you already kind of have best-in-class returns there, but are there still opportunities in your mind to increase the returns there? What's going on there?

Yes. I think the returns could get a little bit better in the Commercial Bank, but it's really about growth. The business should be bigger. And although we've got good national share in that business, there's tons of markets that we don't have the share we should have, where we've got real sizable presence. And so there's roughly 15 to 20 markets across the country that we've kind of focused on, where we've been adding bankers now for the last couple of years. We've added a couple of hundred commercial bankers over the last couple of years in a bunch of different markets, going across the different size clients, it could be, what we think of, as like emerging middle market customers, health care technology verticals. And so there's a number of areas that we've been adding, and we've been really happy with the quality of people that we've been able to attract into the platform. And so I think it's really about growing the overall size of that franchise, and you'll likely see a little bit of return improvement, too. But but it really is about growth there. And I think that's where the focus is.

Great. So then let's swing to the Commercial Investment Bank. You're actually already generating near best-in-class peer returns. Given your size, that's pretty impressive desires to grow there and to be bigger. Will that put pressure on the returns as you grow there? Like how does that sort of play out? Is there a dip and then it rises and I guess, I'm thinking the trading business is, but also you have aspirations in the investment bank. How do the returns play with your growth asset?

Yes. Yes. I mean, look, where we sit today, the mix of business is a little bit different depending on who you're comparing us to, right? And a little bit more lending maybe for us, a little less markets. And so there's lots of nuances to sort of where we sit today. But when you look across the growth opportunities that we have both in investment banking, commercial real estate and in the markets business, we should be able to grow that business and protect the returns. And if you think about the investment banking side is a good example, we have a lot of exposure out to people already. So it's not about like this massive increase in lending or deployment of balance sheet there. It's really about getting paid more for the things we're doing, and that comes with high-return fee business. And so you should see bigger improvement and bigger contribution from the investment banking business that is a positive from a return perspective. And then you might have like others that offset it a little bit, but we should be able to grow each of those businesses and protect the overall return of CIB because of the mix of what we've got and plus where we're coming from on a lot of the fee-based businesses, where we just haven't -- don't have the share that we should over a long period of time. And that's why we've been investing now. It's been 3-plus years now where we've been just methodically investing in places like investment banking where we're adding coverage product people that go after each of the sectors, and we're going to continue to do that. Now you look at places like technology, there are subsectors underneath there that are the focus as we go into next year, health care, biotech, some subsectors in the industrial space, a few people in places like M&A and some of the product areas, but it's just methodically sort of continue to invest there to broaden sort of the fee pool that we're covering. And that should really help improve the returns on the investment banking side and then you can grow the other side as well and protect the overall return of the business.

Got it. All right. So then that brings us to the Wealth business, where you have a unique position, I would say, in the way that you're structured. It seems like it's early days as far as capturing the potential in that business overall. What are you focused on there? How -- maybe you could just touch on a little bit of history of how the wealth business played during the difficult time of the consent orders and like how the -- how it's playing out now as we come out the other side?

Yes. Well, I mean, it's clear that the wealth business was very much impacted by some of the reputational issues the company had. The advisers can -- are pretty mobile, right? They can move their business from firm to firm at different points in time. And so you saw that -- you saw the increased attrition happened for a number of years -- a few years ago. But where you -- look -- where we are today is very different. We've spent a lot of time both investing in the capabilities that we give advisers. We've obviously fixed a lot of the issues around the regulatory space. And so now we're seeing attrition that's actually quite good and very low relative to what we saw in the past. We've been able to recruit really good teams onto the platform. And so I think we're largely past all of that stuff. Now it's really about making sure that we're executing in each of the channels. And if you look at where the opportunity is, it's really 3 buckets of Wealth business. One is the what we call, Wells Fargo Premier, this is the focus on going after the affluent customers. I think customers that have $250,000 and above out of our branch system. There's millions of those customers that probably have something like $6 trillion to $8 trillion held away from us that we think we can go after and help manage. That's -- we've got a couple of thousand advisers already sitting in the branches. It's somewhat concentrated in like something like half of the branches, so it's not completely in every far field place. But -- and so that's starting to really build some traction. We launched it maybe 2 years ago with different products. We've been adding people. We've been adding sort of management focus on it. And you're really starting to see the flow -- investment flows start to come through that business. And when you -- when we do a good job on the investment side for that customers, the data would say they bring something like 50% more deposits and lending business to us as well. So it does create this virtuous cycle that sort of helps us continue to grow that overall relationship. And I think we're just starting to see sort of that ramp, and I think that will go on for a long period of time. The second piece is the kind of the core adviser channel, like our private client channel, and there, that's where you saw most of the attrition in the past. And as I said, that's kind of stemmed. We're probably having one of our best quarters -- certainly the best quarter in a while and maybe the best year in a while of recruiting into that platform. And we can see -- we see every big team that moves now across like the industry where 5 years ago that wouldn't have been the case. So we're adding people that are not only big producers on the platform, they're also the type of producer that does more alternatives, does more banking, does more of the things that we think ultimately help us improve the margin of that business over over time, and you can see that in the underlying data. And there, it's not about returns. It's about the margin. And there what really drives margin improvement over time is continuing to do more lending. If you look at our loans per dollar of asset per adviser, whatever metric you want to use, it doesn't matter, we're under where others are -- significantly under where others are, in some cases. The rate environment doesn't help when you're trying to use securities base -- securities lending -- base lending, but so as rates sort of come down a little bit, that will be an enabler as well. But we're starting to see a little bit of growth there. I think you saw that in the third quarter, where we saw a little bit of growth coming out of the Wealth business. And so as we do a better job on the lending side and the banking side, that will improve the margin and sort of really create more holistic relationships. And the other piece there is alternatives, as I mentioned, continuing to do more and more there. And then the last piece, which is unique to us, which is the independent channel. Now the great part is, it leverages the full platform that we do for everything else. So the incremental investment is not big. And so it leverages the scale we've got. And I think that's the fastest-growing market in any way you want to measure it by advisers in the country. And so it gives us an ability to not only let our advisers that are going to transition to be independent, have a place to land. But we're starting to now recruit people from other platforms. And that was never really a focus of -- recruiting was never really a focus in that channel, and so we're starting to see people coming from other wire houses, other independent providers and so that will -- it's still like very early to see that really play out. But I think that's an area that you'll see the number of advisers grow hopefully much more significantly over the coming years.

How big is that, Mike, in terms of whatever metric might be in your head like either advisers or...

It's probably the smaller piece of three. It is the smaller piece of three.

Got it. Okay. So let's rotate into talking about expenses and efficiencies. You guys have been doing a great job maintaining expense discipline. Where do you still see opportunities to drive some expense savings across the business. And where do you see the efficiency ratio sort of trending if we were to look out a few years?

Lower.

Lower?

Lower.

Okay. Lower.

I'll come back, I'll come back to that. See -- hopefully, that's helpful. The -- look, the short answer on like where we think there's more efficiency is everywhere. It really is...

Everywhere?

Everywhere. I sort of -- our Head of IR is here, I sort of joke with him that may be the only place that can't get more efficient is Investor Relations because it's like 5 people. But everywhere else, like across the company, there's more we can do to get more efficient. Some of it is technology enabled, and some of it's just not, right? And we've gone through this period over the last 5 or 6 years where we've had to do a lot of things to fix the regulatory issues we've gotten. But we also have tried to make sure people know like we've got to walk and chew gum at the same time. Like we've got a -- we've got to continue to drive efficiency in everything we do. And by the way, it improves the client service that we give to clients every day, too. It makes us faster, makes it more efficient, it comes in the form of new tools for our branch people to open accounts that take fractions of the amount of time it took in the past. It comes in automation of operational processes. We've got our digital assistant and our consumer app, that helps. And so there's a whole series of things that you sort of look at and say everywhere should get a little bit more efficient. AI is going to help make that even move faster and deeper than maybe you thought in maybe 3, 4, 5 years ago. And if you then sort of just take a look at what we've done, like we've gone from 275,000 people to roughly 210,000 people in the last 5 years. We've taken that 15 -- through the end of this year, it will be roughly $15 billion of gross saves. And we've reinvested that back into -- most of that back into the businesses. So it really does sort of enable us to continue to get more efficient, reinvest it back to sort of improve the growth profile as we look forward. But it's like it's everywhere still. And I think if you -- although we've done a ton, it's like every day, every week, every month, we come in sort of looking for more of those opportunities. And there is no silver bullet. It's like hundreds and hundreds of projects at any given time, that sort of drive it. And it really just takes some time, right, to do it in a way that's sustainable, the way that does -- that improves sort of like the customer experience in a lot of cases, as I mentioned before. And so I think we still get a lot of opportunity. And it's not just people, it's real estate, it's third-party spend. We continue to work down sort of excess real estate we've had for a number of years. So we've got some buildings for sale. If anyone's interested, call me later. But so -- but we've got plenty of opportunity to continue to drive that.

Great. Yes, it sounds like there's a long way to go on that, and you've already...

I didn't answer your question on efficiency ratio. On the efficiency ratio, look, it will be a bit of an output, right? So -- and if you look at -- if we can get to a place where our returns are best in class, across each of the businesses. You can do the math and see what that equals from a -- everyone will have a slightly different view, but that will be a lower efficiency ratio, and it should get to kind of near best-in-class. At the same time, we improve returns.

Great. All right. Let's swing into the topic of capital. You've talked about targeting a 10% to 10.5% CET1 ratio. I think we're around 11. Now how fast do you think that we get to the target, but then how do we get there as well because we're talking about growing a little bit the balance sheet now that you're out of the asset cap and -- versus just returning it to shareholders? How might will you think about the mix between those, how fast in the mix?

Yes. Well, I mean the good news is we've got a lot of capital -- a lot of excess capital. And so that positions us very well as we sort of come into this environment where we can grow again. We can deal with whatever like macroeconomic risks are there, and then we can continue to return capital back to shareholders. And so as we're in this mode of beginning to grow again, obviously, that's going to be the first priority to support clients and support that growth. And then as we go through any -- every quarter, like we look at all the different kinds of risks that are out there that could impact us, whether it's rates or other kind of geopolitical or bigger macro risks. And then hopefully, what you've seen now over the last 5-plus years is that when we feel like we've got more than enough to deal with those things, we return back to shareholders. And you can see the share counts down in 20-something percent over the last number of years. And I think we've bought back something like $12 billion so far this year. We've said what we think we'll do this quarter. It will be similar to what we did in the third quarter. So how fast we'll get there? We'll see. But I think we've got a lot of flexibility to do all the things we need to do, which is a really good place to be.

If you look at the target, the 10% to 10.5% vis-a-vis the required minimum, which I think is 8.5%, that's a lot of capital there. What would it take for you to start moving the target down closer to what the required is? Like are there signposts along the way. Obviously, there's a lot of changes in the air with respect to some of the capital requirements coming out of D.C. But is there anything in particular that is a selling post for you?

Well, again, it comes back to what I -- what we just talked about, which is we want to make sure that we continue to support the growth ambitions and support clients that we have. And so we'll continue to make sure that we've got plenty for that. And I think depending on how fast we think we'll actually grow over the coming quarters, that will drive how much we keep. And obviously, you got to be thinking multiple quarters ahead to sort of think about what -- where you should be today. We do have all of the capital rules still in a bit of flux. So it would be helpful to have that be solidified or to kind of get finalized. We just got some clarity or some additional disclosure, I should say, and clarity may be the wrong word. We got additional disclosure on some of the stress testing changes that are going to happen over the next year or two. And then we expect that we'll start to see the outline of what capital rules should look like as we get into early next year. So those will be really good inputs into helping us decide exactly where we want to run over a little bit of a longer time period.

Are you optimistic about the potential changes materializing and making a material impact on the way you think about that buffer?

Yes. I think we're very optimistic that capital rules will get finalized. And I think the stress testing work, the leverage -- the supplemental leverage proposal, those are all good signposts that they're going to execute on the things they said they're going to execute on. And then when you start looking at the rest of the capital rules after those, you've got the GCIB score changes. And then you've got Basel III getting finalized. And I think based on what we've heard, the principals at the Fed and the other agencies say, it feels like it's moving in a reasonable direction, that should hopefully end up in a place that like everyone feels comfortable with. And I think when you look at our business model, it aligns pretty well to where you start looking at where -- how they're going to think about like where the real risk is, right? So whether it's investment-grade credits, public or private, it feels like things like the mortgage book get looked at in a more reasonable way. And there's a whole bunch of changes that feel like they'll start to manifest themselves. So we're very optimistic that it will end up in a reasonable place, and it will actually get done.

Great. Fingers crossed there. So in answering my question about capital and the timing of it coming from the 11% down into your target range. One of the things that you mentioned was the macro backdrop, and you read that and figure that into your thinking there. How do you feel about the macro environment, the health of the consumer? What you're hearing from the many businesses that you guys thought you have such a good perspective on what's going on with the lifeblood of the economy. What do you think?

Yes. We'll start on the consumer side. The trends are just consistent from what we've seen now, very stable, consistent. And when you look at what's happening underneath that, the lower-end wage earner has definitely been -- it's been struggling for a while, that's not changing. It's not getting worse, though. And as long as the employment picture stays still pretty constructive, that -- there's no reason to think that won't continue at this point. And if you look at over a longer period of time, last 3 to 5 years, you'd say wages have largely kept up with inflation, and that's why -- and so as long as people have jobs, then I think that's been -- people have been kind of moving along there. And as you go off the wealth spectrum and income spectrum, things look pretty good. People still have more liquidity. If they have investments, they're still doing much better. You look at credit card payment rates, they're still higher than what we would have modeled at this point. Delinquencies are better than what we would have modeled and not getting worse, maybe getting a little bit better. And then when you look at the activity levels that underpin that, it's super. It's very consistent. Growth year-on-year every week across debit and credit card spend. And categories move around. It's hard to draw individual. We have this debate a lot, trying to find like trends or themes and so individual company or merchants move around, individual categories move around a lot, week to week, but the overall trend has been very consistent now for a long period of time. And so that, I think, bodes well for -- as we look at the coming at least couple of quarters, and it's been very stable, and we're not seeing any sort of signs of any systemic stress coming out of the portfolios we've got, whether it's card, auto, and certainly, on the mortgage side, you've seen home prices have gone up so much over the last few years that it would be hard to imagine anything significant happening there from a credit perspective. And so it feels very, very good. On the commercial side, again, credit performance has been quite good. And we're not seeing a lot of systematic issues sort of pop out of that portfolio either. Again, the individual companies might have issues in individual places, you might see some stress at times, but nothing that's sort of consistent across the portfolio. I still think there's a lot of caution though in that client base where they're still not exactly sure how to deal with all of what's coming at them, right? So whether it's tariffs or the impact of like supply chain changes they have to make or -- on the other side, it's with the new tax changes around depreciation, do they make the investment, do they -- and so there's a lot of forces that sort of are causing them to say, okay, I've got to be really thoughtful here, right? I don't want to overextend myself. I don't want to add too much inventory. I don't want to make a big investment I'm going to regret later. And so that's why you're just not seeing utilization in the Commercial Banking type customer increase at all. And that's been still pretty consistent. Now as more time goes by, like people adapt and they change supply chain, they change -- they sort of figure out a way through it. But I think that just takes a long time -- much longer than I think people give -- think it should, but it just takes some time for the people to work through that. And I think as time goes by and as people have more confidence that the broader economy is still going to hang in there, and they're going to see a light at the end of the tunnel, I think you'll start to see more of that investment happen, but it just hasn't really happened yet. And I don't -- it's hard to know exactly like what the catalyst is going to be to change that. Now that's helpful from a credit perspective. It just -- it impacts like loan growth, but that's okay. And so I think it's probably pretty pretty reasonable if you're sitting in their seat to kind of operate that way at this point. And it's like across the board in terms of types of industries and types of clients that we hear pretty consistent feedback about.

Great. Thanks for that perspective. I'm going to bounce to a question on NBFI. There's been a lot of...

Yes, you're getting the hook by the way for some reason I'm not sure.

Oh, all right. George giving me that.

Yes, I don't know, he's giving you...

Are you giving me...

I don't know. No.

Are you giving me...

I'm not, I'm not. [indiscernible] we can talk about.

No, it'd just be great before we open it up to the questions from the audience. Just what is your perspective on some of the news that we've been reading about pressure in that part of the market. I mean, it's -- you guys are one of the bigger players overall in the broad categories. You've been in some of those for years and years. So it would be great to start to hear what your thoughts are on what's been in the news and any changes that you're making in response to some of the mishaps that others have been experiencing.

Yes. Look, I think it's hard to draw lots of conclusions from a few individual issues. So I would be really careful to do that. And I think when there are issues in the market, of course, you should look at it and say, okay, how does that impact our portfolio. And so we've done a lot of that to say, are there pockets of the portfolio we should sort of look at? And we haven't found anything that we're concerned about. And when you look at our portfolio, the biggest piece of that continues to be what we do for big private equity firms around capital call facilities and other lending there. And in that business, we really focus it on brand names, bigger players, not new entrants and sort of have been in that business for a very long period of time, and we feel really good about like the risk that's embedded in that portfolio and the return we get for it. And then you start looking at other parts of the portfolio. We do provide financing to private credit firms that lend against end to middle market customers. We've got a very disciplined approach there where we go loan by loan to understand sort of what the credit picture is. We've got something like 2,800 or 3,000 loans in that portfolio that we underwrite every one of them. We get kind of an investment-grade single A kind of attachment point when we do there. So again, we think the structure is sound and the underlying credit is quite good. And then the rest of it ends up being across a number of different asset classes. So overall, we feel really good about the risk. But when there's issues in the market, you -- everybody should sit back and go, okay, how do I think about what's happening? And how do -- how does that impact our portfolio. And we've certainly done that, but have not found anything that we're uncomfortable with or things that we should change.

Great. That was super helpful. So with that, I'm going to open it up to questions from the audience, if there are any. Betsy?

[indiscernible]

Yes.

Yes, we'll repeat it.

Repeat it, yes.

Yes, yes. So the question is around like how do we think about the credit spectrum that will lend into the auto business. Like -- as I said, like we're largely a prime lender, but there's a little bit -- as you go down the credit spectrum a little bit, you got to be really thoughtful about it, but the returns are quite good if you do it well. And so it's still going to be a pretty small piece of the overall picture for us. But it is something that we think is important to make sure that we're providing kind of a fuller set of capabilities to dealers that we deal with, because they really want somebody that's going to help them across a slightly wider spectrum of customers, but it's a pretty small piece of the overall picture.

And you're ramping it up with some gradual...

Yes, you do normal testing into that market. But even when we're fully ramped, it will end up being a pretty small piece of the overall portfolio.

We have a couple more minutes, [ Julie? ]

Maybe take that. All right.

Given that you're still hiring, what's the hiring environment like there? And what do you think your biggest strengths are? And what are you less focused on in the investment bank?

Yes. So we've actually been very pleased with what we've been able to do from a hiring perspective this year, and we've got some really high-quality people. And the good part is there, it's from everywhere, from boutiques, bigger players. And so we've been quite pleased with the quality of folks there. And we don't see that changing. It's a competitive market, but it's always a competitive market. And so you got to be thoughtful about how you go about it. And when you look at our -- what we can do there, when you look at the opportunity we have there, first, you got the commercial bank customers. Our commercial bank customers generate billions of dollars of fees, probably somewhere between $2 billion and $4 billion of investment banking fees over a long period of time, and we were capturing a really small percentage of that. And so that's opportunity number one, is to get a bigger percentage of that. These are customers we've known for decades in a lot of cases and continue to kind of cover those more proactively. Then when you look at the broader set of large corporates and other institutional players, it's just being very selective about like which sectors we're going after. And I think we've already got a strong corporate banking, strong lending franchise, strong capabilities in commercial real estate and other sectors. And so we're leveraging all the things we do across the rest of whether it's the corporate investment bank or the firm to really drive more activity there.

What are you less focused on?

What are we less focused? Well, I mean, we're focused in the U.S. We're not trying to be like everything to everybody globally, number one. And we're staying within a risk appetite that we're very comfortable with. So you won't see us sort of going super deep on the credit side.

Great. Yes. There's a mic right behind you there.

Mike, you talked about the commercial bank being more of a -- like a growth opportunity and sort of some pockets where you maybe didn't have the penetration you wanted. Could you just sort of expand upon some of the places where you do see the better growth opportunities, either geographically, or if it was a mix issue, et cetera?

Yes. I mean it's literally 20-or-so markets across -- including a couple of subsectors like health care, technology companies, so some pockets of the West Coast when you're going after there places like Boston and the health care side, New York City. And so there's a number of geographies across the country with then an overlay of health care and tech as two verticals that over pin it.

Great. I think that's it for us. Thank you very much, and join me in saying thank you.