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Speaker 1: Three of the biggest banks already out with their earnings,

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Speaker 1: Wills Fargo among them. Those shares down about six percent.

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Speaker 1: Some concerns here about higher than expected costs, some concerns

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Speaker 1: right now here about a slowdown in cost cutting efforts.

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Speaker 1: Mike Sanamssimo joining us right now, the CFO over at

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Speaker 1: Wells Fargo, and Mike, let's start off with the cost

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Speaker 1: cutting here. Some commentary and the press release, some commentary

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Speaker 1: on that conference call about a slowdown in some of

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Speaker 1: those efforts characterize us as to what exactly that means.

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Speaker 2: Well, thanks, thanks again for having me Marina and Alex.

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Speaker 3: I appreciate it.

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Speaker 2: You know, look, I think you got to look through

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Speaker 2: into the quarter and you know, there was it was

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Speaker 2: actually quite a solid quarter. You know, we saw really

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Speaker 2: good momentum in our fees revenue generating businesses that more

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Speaker 2: than offset sort of what we saw as the expected

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Speaker 2: decline and an interest income. We saw, you know, headcount

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Speaker 2: continue to come down in the core efficiency agenda stole

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Speaker 2: in place. We saw good capital return to shareholders. We

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Speaker 2: saw our investments really start to pay off, you know,

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Speaker 2: in terms of that fee income I mentioned, And so

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Speaker 2: there's a lot and there's a lot of opportunity there

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Speaker 2: on the expense side. It was really three things that

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Speaker 2: sort of drove the increase in the full year guidance.

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Speaker 2: You know, first is revenue related expenses in our wealth

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Speaker 2: management business, which is a good thing because there's revenue

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Speaker 2: that more than offsets all of that and so as

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Speaker 2: the equity markets stay higher than what we predicted earlier

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Speaker 2: in the year, you know that that is a positive

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Speaker 2: contribution to earnings, but it increases the expense line. Second

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Speaker 2: is related to some remediation costs that we have to

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Speaker 2: put some of these client remediations that are related to

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Speaker 2: some historical matters behind us, and that was in the

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Speaker 2: first half of the year. And the third is the

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Speaker 2: special assessment for the FDIC related to the events of

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Speaker 2: last year. So when you look beyond those three things,

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Speaker 2: the core efficiency agenda is still very much the same

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Speaker 2: as it was last quarter last year, and we continued

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Speaker 2: excon and feel really good about the opportunity we have there.

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Speaker 1: With regards to the FDIC costs and the other customer

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Speaker 1: remediation costs in theory costs that should be temporary. Are

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Speaker 1: we sort of the end of this path? Is there

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Speaker 1: a light at the end of the tunnel when it

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Speaker 1: comes to those issues.

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Speaker 2: Yeah, well, I think the remediation stuff was related to

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Speaker 2: a couple of matters. You know, they're historical, and so

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Speaker 2: we're nearing, you know, the we're nearing. We're closer to

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Speaker 2: the end on those than we are otherwise. And then

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Speaker 2: the fd I see, you know, we get that'll be

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Speaker 2: driven by the losses that we see ultimately through the

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Speaker 2: FDIC fund there. But we've accrued for you know, everything

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Speaker 2: we know about there, and we'll see how that progresses,

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Speaker 2: and so it shouldn't you know, we don't know that

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Speaker 2: it'll be any higher than it's been, and so we'll

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Speaker 2: get more information each quarter from the FDICE.

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Speaker 3: Hey, Mike. The other part of the quarter that disappointed

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Speaker 3: the street though was net interest margin, net interest income,

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Speaker 3: and a big part of that is going to be

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Speaker 3: that loan demand. Why do you guys still see that

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Speaker 3: loan demand as tepid when a lot of your peers

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Speaker 3: don't see that. What is it specific to Wells Fargo?

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Speaker 2: Well, I think, you know, keep in mind that the

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Speaker 2: guidance we put out there for the years, the same

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Speaker 2: guidance we put out in January down seven to nine

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Speaker 2: percent we just set at this point in the year,

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Speaker 2: we think we'll be around eight to nine percent versus

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Speaker 2: you know, anywhere else in the range, and so the

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Speaker 2: guidance is still about the same. So most of what

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Speaker 2: was in there actually, you know, was very similar to

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Speaker 2: what we expected to happen. You know, Loan growth has

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Speaker 2: definitely been a little bit weaker than we thought as

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Speaker 2: we looked, you know, at the beginning of the year,

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Speaker 2: and I think that's generally the case in a lot

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Speaker 2: of other places as well. And I think we've been

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Speaker 2: very very consistent about our underwriting standards and the way

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Speaker 2: we're approaching it. So we're not out there chasing growth

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Speaker 2: by taking more risk. We're actually very much just being

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Speaker 2: very consistent over a long period of time. But underneath

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Speaker 2: the ni trends, you're actually seeing some positive trends. You know,

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Speaker 2: Deposits are up, you know, in all of our lines

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Speaker 2: of business versus the first quarter. That's the first time

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Speaker 2: in a couple of years that that's happened. And so

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Speaker 2: there's actually some positive trends that are happening underneath there

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Speaker 2: as well.

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Speaker 3: I mean, I hear you, but the stock is still

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Speaker 3: down six percent and it's even off its lows versus

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Speaker 3: your peers, Like, there's clearly something that is worrying investors

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Speaker 3: in those costasures as well as net interest income. Were

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Speaker 3: those two worries. What do you think happens to loan

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Speaker 3: growth and net interest income as the FED make cut rates?

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Speaker 2: Yeah, well, you know, as the Fed starts to cut rates,

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Speaker 2: our deposits will begin to reprice downward as well, particularly

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Speaker 2: on the wholesale side. So that'll be a positive as

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Speaker 2: you start to see you know that that happen. And

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Speaker 2: I think rates are one part of the equation for

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Speaker 2: what we hear from our clients.

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Speaker 3: Right.

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Speaker 2: So there's you have the election coming up, you have

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Speaker 2: rates still being high, you have some uncertainty still out

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Speaker 2: there in the economy to make sure this soft landing

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Speaker 2: is really going to materialize in the way people think.

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Speaker 2: And so I think as we get through the year,

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Speaker 2: you'll start to see, you know, clients do more from

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Speaker 2: a lending perspective as well as you know consumers. You know, well,

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Speaker 2: if you know, the stronger the consumer stays, I think

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Speaker 2: you'll start to see some more growth there as well.

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Speaker 1: Mike, I have to ask you about some of the

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Speaker 1: efforts that Charlie Sharf has made to kind of broaden

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Speaker 1: out this business obviously well as much more known for

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Speaker 1: the consumer side of that business, the mortgage side of

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Speaker 1: that business. But you've made some decent strides so far

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Speaker 1: in the trading space and of course another some of

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Speaker 1: the more traditional all Wall Street types of businesses here.

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Speaker 1: How do you accelerate that though in a way that

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Speaker 1: is going to satisfy investors.

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Speaker 2: Well, I think it's not about acceleration, it's about being

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Speaker 2: very consistent in our execution there. And I think you know,

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Speaker 2: we've been talking now for a number of years about

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Speaker 2: a few areas of investment versus the credit card business,

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Speaker 2: and I think you see that come through, you know,

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Speaker 2: the new accounts and the growth and balances there. Second

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Speaker 2: is the wealth business, where we've again seen growth in

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Speaker 2: the advisory fees. We've seen you know, our attrition and

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Speaker 2: advisors slow, and I think that, you know, we think

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Speaker 2: there's opportunity to continue.

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Speaker 3: To grow there.

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Speaker 2: And then it's then it's in the corporate investment bank

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Speaker 2: and the commercial bank, and I think you know we've

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Speaker 2: been we've been hiring and investing in people and capabilities

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Speaker 2: there for the last few years and I think you're

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Speaker 2: starting to see that really come through, both in the

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Speaker 2: trading line and the investment banking fee line, and I

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Speaker 2: think that'll that's something that will kind of build, uh,

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Speaker 2: you know, methodically over time. There is no this, you know,

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Speaker 2: trying to accelerate by taking risks. We have to be

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Speaker 2: very consistent about how we go about it, and I

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Speaker 2: think we're starting to see the benefits of that come through.

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Speaker 3: Mike, we really appreciate it. You know, it's a busy day.

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Speaker 3: Thank you for taking the time while Spargo CFO Mike

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Speaker 3: Senta me Asimo