Good morning. Thank you for joining our call today where our CEO, Charlie Scharf, and our CFO, Mike Santomassimo, will discuss first quarter results and answer your questions.

This call is being recorded. Before we get started, I would like to remind you that our first quarter earnings materials, including the release, financial supplement, and presentation deck, are available on our website at wellsfargo.com.

I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials.

Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings and the earnings materials available on our website. I will now turn the call over to Charlie.

Thanks, John. I'm going to provide some brief comments about our results and update you on our priorities.

I'll then turn the call over to Mike to review first quarter results in more detail before we take your questions. Let me start with our first quarter financial highlights.

We saw continued positive impacts from the investments we've been making, with diluted earnings per share increasing 15%, revenue increasing 6%, loans growing 11%, and deposits up 7% compared to a year ago. Revenue growth was driven by a 5% increase in net interest income and an 8% increase in noninterest income.

Our consistent focus on investing across all of our businesses helped contribute to broad-based revenue growth, with each of our operating segments increasing revenue from a year ago. Consumer Banking and Lending revenue grew 7%, and Commercial Banking revenue grew 7% as well.

Within our Corporate and Investment Bank, we saw an 11% increase in banking revenue and a 19% increase in markets revenue. Wealth and Investment Management grew 14%.

While expenses increased, driven by higher revenue-related expenses, we remained focused on expense discipline. At the same time, we're increasing our investments in areas like technology, including AI, as well as in advertising, while continuing to execute on efficiency initiatives, which has resulted in 23 consecutive quarters of headcount reductions.

With revenue growing faster than expenses, pretax pre-provision profit grew 14% from a year ago. Credit performance remained strong, and our net charge-off ratio was stable from a year ago at 45 basis points.

Given that nonbank financial lending has generated a lot of interest lately, Mike will do a deep dive into that portfolio later in the call, but I will say we like the risk-return profile of the portfolio given our deep understanding of the collateral, the diversification across both clients and asset types, and structural protections in place. Finally, we returned $5.4 billion to shareholders in the first quarter, including $4 billion in common stock repurchases, while continuing to operate with significant excess capital.

Turning to the progress we made during the quarter on our strategic priorities. Last month, we closed our final outstanding consent order, bringing the total to 14 terminated since 2019.

We are incredibly proud of the hard work and unwavering commitment that was required to reach this milestone, and understand the importance of sustaining our risk and control culture. With this work behind us, we are now focusing more fully on accelerating growth and improving returns.

We are seeing momentum across many business drivers, which we highlight on slide two of our presentation deck. Let me share some of them, starting with our consumer franchise.

In the first quarter, we launched two new travel-focused reward credit cards available exclusively to new and existing Premier and private wealth clients. Over the past five years, continued enhancements to our credit card offerings have driven higher purchase volume and loan balances, which were both up from a year ago.

New account growth remained strong, increasing nearly 60% from a year ago, driven by higher digital and branch-based openings. We also had continued strong growth in our auto business, originations more than doubled from a year ago, benefiting from being the preferred financing provider for Volkswagen and Audi vehicles in the United States, as well as our methodical return to broad spectrum lending.

Importantly, credit performance has remained strong and in line with our expectations. We have continued to invest in marketing to help drive new primary checking accounts, and consumer checking account openings increased over 15% from a year ago.

While this momentum is encouraging, we are not yet growing accounts at the pace we expect to over time. As customer expectations evolve, we continue to modernize our digital offering, complementing our in-person service with seamless mobile experiences.

The momentum continued in the first quarter as mobile active users surpassed 33 million, Zelle transactions increased 14% from a year ago, and Fargo, our AI-powered virtual assistant, reached over 1 billion customer interactions less than three years since its launch. We had continued momentum in our Wealth and Investment Management business, with client assets growing 11% from a year ago to $2.2 trillion.

Company-wide, net asset flows accelerated in the quarter, reaching their highest level in over 10 years. Turning to our commercial businesses.

In Commercial Banking, we continued to hire coverage bankers to drive growth, and we are seeing the early signs of success with higher new client acquisition as well as loan and deposit growth. Average loans and deposits both grew by approximately $5 billion in the first quarter, demonstrating accelerating momentum.

We were also continuing to grow our banking and markets capabilities, while not significantly changing the risk profile of the company. We continue to invest in senior talent to improve client coverage and broaden our product capabilities in investment banking.

These investments helped drive 13% revenue growth from a year ago. While market conditions can change, the outlook for investment banking remains strong, and we entered the second quarter with a strong pipeline driven by M&A and equity capital markets.

We continue to grow our markets business amid a mixed and volatile trading environment, with revenue up 19% from a year ago. Client sentiment is cautious but engaged as macro and geopolitical uncertainty has increased, and clients have largely shifted to a more selective and defensive posture.

Finally, we completed the sale of our railcar leasing business at the beginning of the quarter. We have now substantially completed our efforts to refocus and simplify the company by exiting or selling 12 businesses since 2019.

Let me now turn to the future. I want to start by highlighting what we are watching in the economic data.

The US labor market continues to cool in an orderly but uneven fashion, with few signs of systemic stress. Layoff activity remains contained.

Weekly jobless claims reinforce this picture and are not signaling labor stress. The unemployment rate dipped to 4.3% in March, but this continues to reflect slower rehiring and longer job searches, not renewed labor market strain.

Despite slowing employment momentum, US economic growth has held up. The US consumer remains resilient in the aggregate, but increasingly bifurcated beneath the surface.

Spending has held up into early 2026 despite slower job growth, supported by higher income households, steady wage growth for incumbent workers, and continued access to credit. However, confidence indicators and underlying balance sheet trends point to rising stress for less affluent consumers.

Upper income consumers continue to benefit from elevated equity prices, home equity, and cash buffers accumulated earlier in the cycle, allowing discretionary spending to remain firm. By contrast, lower income households are more exposed to higher interest rates and energy prices.

Financial markets have absorbed these crosscurrents with resilience, but we expect continued volatility driven by geopolitical headlines and outcomes, as well as the unfolding impact of higher commodities prices. Turning to what we are seeing from our customers.

The financial health of consumers and businesses remains strong. Consumers are spending more than a year ago, which includes spending more on gas, but they haven't slowed spending on everything else.

Gas represented 6% of our total debit card spend and 4% of our total credit card spend before the rise in oil prices. They now represent 7% and 5% of debit and credit card spend.

Note that these numbers are higher for low-income households. We have seen historically that it often takes consumers several months to reduce their spend levels on other categories to adjust for higher oil prices, and while we don't know the exact timing, we would expect to see the same in the second half of the year.

We also expect that higher energy prices will impact other goods and services. The duration and severity will be driven by the level and duration of higher oil prices.

The ultimate impact on credit performance is not yet clear given the uncertainties I just mentioned, but the strength across our consumer portfolios, including lower charge-offs and improved early-stage delinquencies in our auto and credit card portfolios from a year ago, provide time for consumers to adjust their behaviors. Having said that, at this point, it's likely there will be some economic impact based on what's already occurred, but there are both risks and potential mitigants, it's hard to predict the ultimate impact.

Middle market and large corporate clients are in a similar position. They have been resilient and balance sheets are strong, but they tell us they're approaching the remainder of the year cautiously.

As we grow our balance sheet, we are cognizant there are risks that we do not yet see in our data and will respond accordingly. Putting all of this together, it's likely energy prices will have some impact on the economy, but we feel good about where our customers and our company stand today.

We've managed credit well over many cycles and are well-positioned to support our customers and navigate a variety of economic scenarios. Turning to the recently proposed capital rules.

We appreciate that the work our regulators have been doing is based on analysis, interagency coordination, public comment, and a focus on reforms that unlock economic potential. Importantly, the proposals are designed to maintain a strong and resilient banking system that allow the industry to support the flow of credit and help grow the broader economy.

We continue to work through the details, but view the proposals as a constructive step in supporting our role in serving households and businesses. If the proposals do not change, and based on our current balance sheet composition, we estimate that under the new rules, our risk-weighted assets could decrease by approximately 7%.

Regarding the G-SIB surcharge, under the current proposal, we expect to remain around 1.5% for the foreseeable future, even as we continue to grow. In closing, we delivered solid financial results in the first quarter that were consistent with our expectations.

We have clear plans in place and are focused on driving continued organic growth and increasing returns across the franchise using our broad set of capabilities. We're executing on our plans, and I'm encouraged by the momentum we have built and continue to have confidence that we can continue to deliver stronger results in all of our businesses.

I'll now turn the call over to Mike.

Thank you, Charlie, and good morning, everyone. Since Charlie covered the key drivers of our improved financial results and the momentum we are seeing across our businesses on slide two, I will start my comments on slide three.

Our first quarter results included $135 million, or 4 cents per share, discrete tax benefits related to the resolution of prior period matters. Income tax has also benefited from the annual vesting of stock-based compensation, and the amount of the benefit in the first quarter was similar to the amount in the first quarter of last year.

Turning to slide five. Net interest income increased $601 million, or 5%, from a year ago, and decreased $235 million, or 2%, from the fourth quarter.

Most of the decline from the fourth quarter was driven by two fewer days in the first quarter. The reduction also reflected the full-quarter impact of the rate cuts in the fourth quarter of last year on our floating-rate loans and securities.

This decline was partially offset by higher markets net interest income, higher loan and deposit balances, as well as continued fixed-asset repricing. I also wanted to explain the 13 basis point decline in net interest margin from the fourth quarter.

As expected, the largest driver of the decline was the growth in the balance sheet in the markets business. As we have highlighted in the past, while the majority of these assets are lower margin, they also have lower risk and are less capital-intensive, and our abilities to support this client activity should lead to more business.

Second is the growth in interest-bearing deposits and other short-term borrowings, and lastly, the impact of lower interest rates. When we provided our full-year guidance last quarter, we anticipated some margin contraction for these reasons, and I would expect additional margin compression next quarter.

I will update you on our full-year net interest income expectations later on the call. Moving to slide six.

We had strong loan growth, with both average and period-end loans increasing from the fourth quarter and from a year ago. Period-end loan balances grew 11% from a year ago and exceeded $1 trillion for the first time since the first quarter of 2020.

Average loans increased $87.8 billion, or 10%, from a year ago, driven by growth in commercial and industrial loans, as well as growth across our consumer portfolios, except for residential mortgage. Turning to slide seven.

Last quarter, we provided more detail on our financials except banks loan portfolio. Today, I want to build on that by giving you an even deeper look into the portfolio's composition and risk profile.

I will be anchoring my comments on how these loans are reported in our 10-Qs and 10-K, which we think is a better way to understand our portfolio. We also report loans to non-depository financial institutions on our call reports.

Since we often get questions on how these disclosures differ, we have included a reconciliation in our appendix to illustrate the differences. At the end of the first quarter, financials except banks loans totaled approximately $210 billion, or 21% of our total loan portfolio.

While our financials except banks category is large and has been growing, it is comprised of many different types of lending and collateral. We've been making these types of loans for many years, and we typically have broader relationships with these institutional clients.

As well as with any loan portfolio, there are inherent risks, but we are comfortable with our exposure based on the profile of borrowers, the diversity of collateral, our historical loss experience, and our underwriting practices and lending structures. The lending structures and overall risk management are executed by specialist groups with expertise in assessing and structurally mitigating the risks associated with these types of customers, products, and collateral.

Our underwriting reflects the specific risk profiles of counterparty as well as our assessment of the collateral. These loans are generally secured with advanced rates that provide significant margins of protection against expected losses during periods of stress, and the lending structures often include structural protections if collateral performance deteriorates.

This portfolio has delivered strong credit performance over time. In the first quarter, this portfolio had $237 million of nonaccrual loans, or 11 basis points of total loans.

Before I walk you through the two largest categories of this portfolio to give you a better understanding of what types of loans are included and how we mitigate the risk, let me briefly highlight the two smallest categories. The names of these categories track with the types of underlying collateral: real estate finance, which is commercial real estate mortgage loans and residential mortgage warehouse lending, and consumer finance, which includes auto, credit card, and other consumer lending.

In real estate finance, the portfolio is diversified by collateral type and has structural protections, which may include collateral approval rights. In consumer finance, we have diversified collateral, structural protections including concentration limits.

Turning to slide eight. In our largest category, asset managers and funds, 85% of these loans are originated in our fund finance groups and are predominantly subscription facilities, also known as capital call facilities, provided to large private equity and private credit funds with established track records where we have longstanding relationships.

The funds use these facilities for flexibility and liquidity when making investments, with repayment supported by the investor's committed uncalled capital. This is secured lending backed by a diversified pool of limited partner commitments, with no individual fund making up more than 1.5% of total commitments.

We lend at advanced rates to provide significant margins of protection against investors failing to fund, and the lending agreements include a security interest over investor capital call commitments and the fund's right to issue capital calls, including the ability to directly make them ourselves. From a risk perspective, these structural protections have resulted in a portfolio that has demonstrated very strong credit performance.

The next category is commercial finance, which is the category where we tend to get the most questions. As you can see on slide nine, we have broken up this category into five different loan types that are originated across both our Corporate & Investment Banking and Commercial Banking businesses.

I'll cover corporate debt finance on the next slide. Let me start with the next largest component, which includes supply chain and other specialized industries, which are originated in Commercial Banking and are loans to large and established clients with diversified pools of receivables.

These loans are secured by accounts receivable and are margined against the borrowing base. The next component is commercial asset-backed securities, which are originated in Corporate & Investment Banking.

These loans are primarily to clients that lease aircraft, containers, railcars, and equipment, and are managed by experienced teams who understand these industries. We typically maintain control over what assets qualify as collateral, regularly monitor the collateral values, and have the ability to require additional collateral or debt paydown if asset values decline.

Next is the component we labeled as other. This includes broadly syndicated loan warehouses originated in Corporate & Investment Banking where we are providing secured lending against portfolios of corporate loans, typically in advance of selling the liabilities in a collateralized loan obligation takeout.

Finally, asset-based lending, which is the smallest component, these loans are originated in Commercial Banking and are primarily include secured lending to asset-based lenders. The collateral supporting these loans is diversified and is in areas where we have direct lending experience.

We have eligibility criteria with concentration limits as well as ongoing collateral monitoring. Slide 10 provides more detail on corporate debt finance loans made in Corporate & Investment Banking, which includes the majority of our private credit lending.

While the demand for these types of loans has grown over the past few years, the structural features of these deals have largely remained the same. We are underwriting both the counterparty and the underlying collateral, with over 98% secured by first lien loans across diverse industries.

We have over 3,100 unique obligors, and the average obligor concentration in an individual facility is less than 2%. These loans are structured to an A/AA equivalent credit rating.

In addition, nearly all structures include the ability to approve which assets are included in the facility and revalue assets to drive deleveraging if credit performance weakens. The weighted average effective advance rate is less than 60%, which means that, on average, the portfolio of loans in the facility, not individual loans, would absorb approximately 40% loss before we would recognize a loss.

These structures provide significant protection, and as a result, this portfolio has demonstrated strong credit performance. However, we continue to monitor this portfolio closely as the markets evolve.

I've provided a lot of details, but the main points I want to leave you with regarding our financials except banks portfolio are: while this portfolio has provided an attractive risk-return through many economic environments, there are risks associated with any lending we do. However, we feel comfortable with this portfolio for many reasons, including: we have decades of lending experience, a deep understanding of the collateral, and experienced underwriters; we maintain diversification across both clients and asset types; and we use structural loans with protections designed to limit downside risk.

Turning to deposits on slide 11. Average deposits increased $75.7 billion, or 6%, from a year ago, with growth across our consumer, commercial businesses, and in corporate treasury.

We achieved this growth while reducing average deposit costs by 15 basis points from a year ago as rates declined, and with lower interest-bearing deposit yields across all of our businesses. Turning to slide 12.

Noninterest income increased $696 million, or 8%, from a year ago. We had growth across most of our business-related categories, particularly in areas where we have been investing, including higher investment advisory fees and brokerage commissions, as well as card and investment banking fees.

Turning to expenses on slide 13. Noninterest expense increased $439 million, or 3%, from a year ago.

The majority of the increase was driven by higher revenue-related compensation expense primarily in Wealth and Investment Management, which, as I like to remind you, is a good thing as these higher expenses are more than offset by higher noninterest income. We also had higher advertising and technology expense driven by the investments we are making in our businesses to generate growth.

These higher expenses were partially offset by the impact of efficiency initiatives. Noninterest expense increased $604 million compared to the fourth quarter, which included higher severance expense and an FDIC special assessment credit of approximately $200 million.

Our expenses in the first quarter included approximately $700 million of seasonally higher expenses, including payroll taxes, restricted stock expense for retirement-eligible employees, and 401(k) matching contributions. Turning to credit quality on slide 14.

While the markets have reacted to macroeconomic uncertainty, our actual credit performance in the first quarter remains strong. Our net loan charge-off ratio was stable from a year ago and increased 2 basis points from the fourth quarter.

Commercial credit continues to perform well, and we are not seeing signs of systemic weakness. Commercial net loan charge-offs increased modestly from the fourth quarter to 24 basis points of average loans.

Lower commercial real estate losses were offset by higher losses in our commercial and industrial portfolio, driven by a single fraud-related loss in the real estate finance category in the financials except banks portfolio. After this issue emerged, we reviewed the portfolio and believe this was an isolated incident.

Consumer net loan charge-offs increased modestly from the fourth quarter to 78 basis points of average loans, reflecting seasonally higher credit card losses. Compared to a year ago, consumer net loan charge-offs declined 8 basis points, with improvements across our consumer portfolios, as well as continued net recoveries in our residential mortgage portfolio.

As Charlie highlighted, consumers remained resilient. We continue to closely monitor our portfolios for signs of weakness, but have not observed recent deterioration or meaningful shifts in trends.

Nonperforming assets as a percentage of total loans were stable with the fourth quarter and declined modestly from a year ago. The modest increase in our allowance for credit losses for loans was driven by higher commercial and industrial and auto loan balances, largely offset by lower allowance for commercial real estate office and credit card loans.

As we highlighted last quarter, if loan growth remains strong, all else equal, we will have to continue to add to the allowance to support higher loan balances. Turning to capital and liquidity on slide 15.

Our capital levels remain strong, with our CET1 ratio of 10.3%, within our stated 10% to 10.5% target range, and well above our CET1 regulatory minimum plus buffers of 8.5%. We repurchased $4 billion of common stock in the fourth quarter, and common shares outstanding were down 6% from a year ago.

We continue to have excess capital to support clients and to repurchase shares. Moving to our operating segments, starting with Consumer Banking and Lending on slide 16.

Of note, to better align branch-based activities, the financials associated with Wells Fargo Premier clients that primarily receive wealth management and financial planning services in our consumer bank branches are now included in Consumer, Small and Business Banking results instead of Wealth and Investment Management. Prior period results have been revised to reflect this change.

Consumer, Small and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing, higher deposit and loan balances, as well as growth in noninterest income. Credit card revenue grew 5% from a year ago due to the higher loan balances driven by higher purchase volume and new account growth.

Home lending revenue declined 9% from a year ago. Third-party mortgage loans serviced for others was down 18% from a year ago as we continue to reduce the size of our servicing business.

While originations increased from a year ago, loan balances have continued to decline. The rate of reduction has slowed and should continue to moderate throughout the rest of the year.

Auto revenue increased 24% from a year ago due to higher loan balances, and auto originations more than doubled from a year ago. Turning to Commercial Banking results on slide 17.

Revenue increased 7% from a year ago, driven by higher revenue from tax credit investments and equity investments. Loans grew 4% from a year ago, with broad-based growth from new and existing customers.

As a reminder, the growth rate was impacted by the business customers that were transferred to Consumer Banking and Lending in the third quarter of last year. Absent this impact, the growth rate would have been 7%.

Turning to Corporate and Investment Banking on slide 18. Banking revenue increased 11% from a year ago, driven by higher loan and deposit balances, and growth in investment banking revenue.

Commercial real estate revenue declined 21% from a year ago, reflecting the gain from the sale of our commercial mortgage servicing business included in our results last year. Markets revenue grew 19% from a year ago, driven by the higher revenue across most asset classes, reflecting disciplined balance sheet usage, supportive market conditions, and higher customer activity.

Average loans grew 23% from a year ago, with strong growth in markets and banking. On slide 19, Wealth and Investment Management revenue increased 14% from a year ago, driven by growth in asset-based fees from increased market valuations, as well as higher net interest income due to lower deposit pricing and growth in deposit and loan balances.

As a reminder, the majority of WIM advisory assets are priced at the beginning of the quarter, second quarter results will reflect market valuations as of April 1st, which were down from January 1st, but up from a year ago. Turning to our 2026 outlook on slide 21.

Far, our net interest income for 2026 is largely playing out as expected, and we are maintaining our guidance of $50 billion, plus or minus, of net interest income this year. As I pointed out earlier, we had strong customer engagement in the first quarter, with growth in both loans and deposits as we continue to transition back to growth, which we have supported with investments in marketing and bankers.

In addition, similar to last year, we expect net interest income to grow over the course of the year. Looking at the key drivers of NII, excluding markets, starting with loans.

Our outlook was based on average loan growth of mid-single digits from fourth quarter 2025 to fourth quarter 2026. Average loans grew 4% in the first quarter from the beginning of the year, and if demand remains strong, average loan growth could be higher than the mid-single digits increase we had previously assumed.

We have also grown deposits, and as we said when we provided our outlook last quarter, much of the growth was from interest-bearing deposits, particularly in our commercial businesses. As a reminder, when the asset cap was in place, these deposits were limited, and now that it's been lifted, we are successfully growing these deposits.

While they are higher cost, they are important to our strategy of deepening relationships with our clients. We expect this trend to continue throughout the year.

We have also successfully grown interest-bearing deposits in our consumer businesses, and while we're enhancing marketing and increasing activity in the branches to drive stronger low-cost checking account growth, balances in these accounts are smaller than commercial balances and can take longer to grow. If interest rates stay higher for longer, we will have to monitor deposit mix trends to see if there's any impact on noninterest-bearing deposits, which could put some pressure on net interest income excluding markets.

In terms of interest rates, our outlook assumed two, three cuts by the Federal Reserve. The market currently expects fewer cuts, which, all else being equal, is positive for NII excluding markets.

However, interest rate expectations are constantly changing. The rate cuts we assumed were expected to occur later in the year, if we get fewer cuts, it would be beneficial, but would only have a modest impact on this year's net interest expectations.

Also, longer-term rates are currently a little above the expectations beginning of the year, but have been volatile year-to-date, so that could be a small positive if rates remain elevated. In terms of markets NII, as we all know, it is always hard to forecast, but even harder in a dynamic macroeconomic environment like the one we are in now.

Higher rates could result in lower markets NII from what we expected at the beginning of the year, but as of now, our expectation of approximately $2 billion in 2026 seems appropriate. Regarding our expense outlook, first quarter expenses were in line with our expectations, and therefore, our guidance is unchanged and we still expect 2026 noninterest expense to be approximately $55.7 billion.

In summary, our improved first quarter financial results reflect the continued momentum across the company. We delivered broad-based revenue growth with increases in both net interest income and noninterest income from a year ago.

We maintained strong credit discipline, grew loans and deposits, returned capital to shareholders, and maintained our strong capital position. I'm encouraged by the growth we are seeing across key business drivers in both our commercial and consumer businesses, and excited to continue building on this momentum to deliver even better results going forward.

We will now take your questions.

Hi, thanks. Good morning.

Mike, I was hoping you could give a little more color on the estimated impact of the new regulatory proposals. I think you said your initial estimate is a 7% decline in RWA.

Could you give us a sense of the breakdown there between credit risk RWAs and what's driving any potential improvement there, as well as your initial take on op risk and market risk?

Sure, John. Thanks for the question.

If you just take the big broad categories, market risk isn't a big driver. It's not moving much for us in the proposal, it's kind of flattish.

Op risk is going to go up, and for sure much less than we thought from the original proposal. Really the big decline is on credit risk, and that's given the nature of our portfolio.

You see, the biggest driver in the credit risk portfolio is getting the benefit for investment grade credits, both public and non-public investment grade credits. That's going to be the biggest driver in the commercial loan space.

Then you do get a significant benefit on the mortgage portfolio, and to a lesser degree on auto and a couple of other portfolios. That's how you get to about 7% decline overall.

Then obviously, you didn't ask about it, but also on G-SIB, it feels like we'll be around where we are, plus or minus a little bit depending on how the proposal plays out for a period of time, given sort of the recalibration that was done there. Net-net, overall very constructive for us and seems like it's heading in the right direction, and allows us to continue to do really smart things to support clients across all the portfolios.

Thanks. Then on a related note, the outlook for ongoing NIM compression presumably continues to weigh a bit on ROA, return on assets.

Just kind of wondering, how does that interact with your goal of improving the ROTCE towards your medium-term goal? Do you expect to be able to lower the TCE because of these Basel changes and the mix in your balance sheet?

There's a lot in there, let me try to unpick some of it. As we came out of the period when the asset cap was in place, we knew that the place that we were going to see the growth first is in repo, for the vast majority of it it's Treasury repo, and then there's other aspects to it.

Low ROA, low risk, good returns. It then allows us to do much more with those clients as we provide them what they think of as valuable financing capacity.

I think as we go through this period, you're going to see ROA come down. As that sort of stabilizes, matures, we get a little further in this growth period, that'll start to moderate and you'll start to see it either stabilize or start to grow as we start to add in that other business activity that we expect to see.

On the other stuff that

It shouldn't be dilutive to ROTCE.

No, I was going to get there. I think we're starting to see some of the onboardings come to conclusion, some of them are in process, some of the clients that are going to do more with us as a result of the financing, takes time to ramp up, they do testing with you.

We're starting to see that come through, whether it's prime, other trading that they do with us, and across a number of the asset classes. You'll start to see that incrementally get added into the mix overall.

I will point out, we are seeing some of it, right? Markets revenues are up 14% 19% from last year.

We are starting to see some of that come through. As Charlie noted, we expect to grow the markets business in the context of also improving overall returns of the company, and don't believe it will be dilutive or get in the way of us getting to that 17% to 18% return.

Listen, we're either going to get the increased flows at a strong ROTCE, or we're not going to use the balance sheet for it. We're very confident at this point that we will get the returns for it, based on the conversations and the things we've seen with our clients so far.

You're just saying there's a lag in terms of adding the customers and then them building up the business, whether it comes in NII or fees.

It takes a while to sort of do the onboarding with a lot of the brand-name clients that you'd all recognize. It generally comes in in kind of chunks along the way once you're onboarded.

All of it's going pretty smoothly right now, and we're expecting to start to see more and more of that come through over the coming quarters. You'll see that incrementally come in each quarter.

Thank you.

Thanks. Mike, I was just wondering if you could follow that point that you talked about and John mentioned about the NIM going forward.

Is it just the mix of assets that you're seeing in terms of on the commercial side related to markets business versus commercial? Can you just kind of talk us through what you're seeing in terms of earning asset mix going forward and the types of loans and if that's what's weighing on the NIM?

Thanks.

Sure, Ken. On the NIM, what you really saw are three things in the quarter, and I'll go back to a little bit of what I said, but maybe try to add a little bit more color on top of it.

First is you saw the impact of this growth in the markets balance sheet impacting sort of the NIM. Again, that's not going to grow at the same pace forever, and so you'll see that moderate.

We're getting some netting benefits now as it gets bigger, and so you'll start to see some of that come through in a little bit of a different trajectory potentially as you look at the coming quarters. You see interest-bearing deposits grow, they become a bigger percentage of the overall deposit mix, and that's exactly what we expect to be seeing right now.

As we came out of the asset cap, we knew that that was the place that we were going to be able to grow first, they become a bigger percentage of the overall mix of the pie. It's great to see that commercial clients across the Commercial Bank and the Corporate & Investment Bank are moving business in some cases back to us that we had at some point pre-asset cap, and the engagement's been really, really good.

Those deposits are priced where the market is, which is competitive, but we're not leaning in on price to grow there. Then you get a little impact from rates coming off the back of the fourth quarter.

While you'll see a little bit more compression from the first two drivers, it'll be less as we go into the second quarter, and again, that'll start to moderate as we go and we see other parts of the balance sheet grow, and we see repo growth be kind of the trajectory slow there a little bit. When you look at the loans side of things, while there's always a little compression happening across different pockets of the portfolio, that's not the place that's sort of driving sort of the NIM compression there.

We are seeing it is a competitive environment for loans, but we're not seeing irrational things, and we're not chasing irrationally tight spreads across the loan portfolio just to see growth. I think that's really important to note.

All right, great. Follow up on your point you made about taking a deeper look through the finance portfolio and thinking that that one-off item was a one-off.

Can you just talk us about kind of what you went through there and I thank you for all the color you gave on those extra slides. Kind of in your relative confidence that that one got caught and that the rest of the book looks pretty good underneath it, and any kind of comment on just any migration you might be seeing at all if at all?

Sounds like it's pretty benign.

Look, I'll reiterate that was a fraud situation, and so what we did is we took all of the lessons we saw coming off the back of that individual circumstance, and sent teams in to all the clients, particularly in kind of the European portfolio, and did an in-depth review of all of the things that you would expect in terms of the procedures within the firm, the collateral perfection that we have across the different portfolios, and spent a lot of time and effort across the different teams. We brought in independent people.

We brought in independent teams. We've done a lot of work to kind of revalidate the processes, and then, as you do in these things, you sort of follow the money trail and you trace back all the flows that you expect to see coming through the different bank accounts, and at this point, as I said, we feel confident that was an isolated event.

Thanks a lot, Mike.

Morning, guys. Thanks for taking the question.

Really appreciate the extended disclosures on the NBFI exposure, and then looks like that credit performance overall risk profile certainly seem to be holding up. I guess in a sense NBFI reminds me a little of where we might have been with office CRE a few years ago.

Not necessarily just like the actual quality, but in that for most banks just doesn't have the potential to do meaningful damage, yet generates so much distraction that a few years ago just sort of decided it wasn't worth to participate in that CRE, given the distraction it caused from other good things that were going on. I wonder if you can maybe just add a thought or two about sort of with NBFI, how you balance sort of the good quantitative risk reward against just the qualitative aspects of the amount of airtime it consumes and how that discussion kind of goes, if at all?

This is Charlie. Thanks for the question.

Listen, first of all, I think it's totally, totally different than CRE exposure. When you look at the risk characteristics of a CRE loan, and what our protections are, what the attachment points are, all that other kind of stuff, when you go through a lot of the stuff Mike walked through in terms of the different pieces of lending we have here, really, really bad things need to happen for us to lose money in most of these portfolios.

We can go deeper and talk about some of these things to the extent you want to do it. To the point that we feel really, really good about the way these things are structured, the client selection we have, that stands first and foremost.

I would say at this point, I would kind of take your question, put into two different categories. Number one is we're not reacting today relative to where we're lending to the amount of airtime that's getting.

Over time, we do have to be thoughtful about how large any one asset class should be, whether in terms of who the borrowing base is and things like that. Those are the types of conversations we're very much engaged in, as we are in everything that we do to make sure as a company we've got the right kind of diversification.

Hopefully by providing the kinds of disclosures we did here, and we'll continue to make sure that we're as transparent as we can, so that investors will feel as good about what we're doing as we do.

All right, perfect. Thank you.

Thank you very much for that. Then separately, I guess I think we'd all been surprised at how well lending momentum has performed year-to-date for the industry, particularly on the commercial side, and it certainly seems to be the case for you all as well, and if anything, Mike, from your comments, sounds like feeling better about how the full year could play out.

Maybe just a thought or two about what it would take for customers to start to pull back on some of their borrowing plans, just given all the volatility, macro concerns, etc. It's just been kind of confounding to see how well trends have held up, would be curious to hear your thoughts.

It's an interesting point, and maybe I'll come back to I think I might have said this in the script, but we're not actually seeing utilization increase in people's revolvers yet. A lot of the growth that we've been seeing is coming either, we saw some growth in nonbank financial space, we saw some growth from new clients we've added, and some other drivers that sort of then spread across the commercial book.

What we haven't really seen yet is that increase in the utilization yet of revolvers. It's not necessarily that we expect given what's happening that we'll see a pull back.

It could be quite the opposite. If people start to get more comfortable, then you could see some growth actually come from the core Commercial Banking, middle-market-type client who has been somewhat cautious now for the better part of a year plus, waiting to kind of see how the environment develops.

I think it's actually maybe, probabilities are maybe more weighted that way than sort of a pullback, just given we haven't seen a lot of utilization increases so far.

Yeah. Okay.

All right, perfect. Thank you guys very much.

Appreciate it.

Sure.

Hey, good morning. I guess I just wanted to follow up very big picture, Charlie and Mike, the path to the 17% to 18% ROTCE is looking quite tough given what's happening with the margin, and I totally get the repo book growing, the deposit mix on interest-bearing, all of that makes sense.

As we think about, and I think as investors think about the stock, and think about how realistic it is that over the next, let's say, year or two Wells can be a 17% to 18% ROTCE company, that feels a bit tough. I'm not sure if you agree, and maybe that two-year timeline was super aggressive, and it's not your timeline, those are my words, but would love some context around that in how you're thinking about this today.

It's Mike, maybe I'll I'll take a shot at it, and and thanks, Ebrahim. The, actually we're we're actually really confident in the path to get to from where we are, roughly 15% to kind of 17% to 18%.

I think if you go across, some of the key, drivers, and and, I won't necessarily probably can be exhaustive, but I'll try to get to some of the key ones. And, if you think about, where we are on the consumer side, we've got our credit card business that we've talked about now a lot for a while.

We've seen really good growth across originations and and balances, but it hasn't contributed a lot to profitability given the upfront cost of marketing and and some of the allowance, that you have to put up. As long as we get the credit, box correct, which we believe we do given sort of the performance we're seeing, it's just a matter of time for that more meaningfully contributes to, the profitability.

You'll start to see a little bit of that this year, as the earliest vintages mature, and and as as more vintages, mature, that'll start to incrementally come in in in the into the P&L. That's sort of a big driver, too.

On the consumer side, as we continue to grow sort of the wealth wealth business, our, Wells Fargo Premier offering that offers wealth management advice through the branch system, that's going to continue to, have fees that come in that are very, very high-returning, and and we're seeing really good flows coming to that in business. We've got roughly 2,500 advisors across the branch system already, and that's that momentum is just built, just really building.

Then as we increase productivity in the branches and grow core checking accounts again, I think you've got a lot of growth drivers across the the consumer side of the business. If you then then look at, the wealth business, we've talked a lot about the momentum that we're building there, and and as that business just grows, through, improving, just naturally improving the net flows we're getting, the the recruiting we're seeing, you're going to see contribution from that business as well.

Then on the commercial side, in the Commercial Bank, we've been adding, a couple hundred, roughly a couple hundred, commercial bankers the over the last 18, 20, 24 months. We're really starting to see some of that get some traction as we as we add new clients, and and a bunch of the loan growth we're seeing in the Commercial Bank is actually driven by those new clients coming in, and as we add in payments and and and deposit, work with them.

Then on the on the Corporate & Investment Bank, the investment banking stuff, they're doing a great job, making incremental progress, but we got a long way to go still, to continue to monetize the investments we're making and, but we see really good progress, quarter after quarter in terms of the deals we're involved in. Then as you sort of look at, the rest of the CIB, I think, as we talked about, the markets business, that'll be a contributor.

We're not overly reliant on any one thing to get us there, and as we continue to have, better, good expense control that that we've talked about and and sort of Charlie mentioned, earlier. Then and then we continue to optimize capital, and we talked about sort of, how that's how that's playing out through, Basel III.

I think, when you add it all up, actually there's a bunch of different paths to get us to that 17% to 18%, which should give you a lot of confidence that, it's it's achievable in a reasonable amount of time. Then as we said when we when we rolled it out, like we think that's not the end, right?

We think there's more to do once we hit that

hit that. This is Charlie.

Let me just add a couple of things. Mike was very complete in what he said, and I agree with all of it.

Just to be clear, we feel as confident as ever in that. There is absolutely nothing that has changed.

I also want to point out that this is a good thing, which is we don't have a business model where points of view like that should change quarter on quarter. Okay?

That's not the kind of business that we're building. The only thing that would have these dramatic changes is if we thought we got something very wrong or if there was some huge event out there that we missed.

None of that is the case. The question for us is, are we building the underlying organic growth of the businesses business by business?

The reason why we have the confidence that we have is because we're seeing these KPIs across every one of our businesses growing in a reasonable way. You don't want to grow too quickly, but we want to start making sure that we're seeing this consistently business by business.

Listen, and we understand, and we think this is good that we're transparent about this, that we have room to improve performance in every one of these businesses. The things that we're doing, we're very confident will ultimately lead to increased profit, faster growth, and higher returns.

As we've said, nothing has changed from last quarter or the quarter before that in terms of how we feel about that.

That is very comprehensive. Thank you.

Just one quick follow-up. On and off, there's a lot of chatter on what Wells could do on M&A in banking and wealth.

I'm not sure there are too many financially attractive deals available today given where the stock trades. Give us a mark-to-market on how you're thinking about deals.

I appreciate the bar is high, but I think it'll be helpful to hear your thoughts again on how you're thinking about inorganic growth, yeah.

It's funny, we spend more time answering questions, and this isn't just about your question, obviously we get this everywhere, we spend more time answering the questions about it than we do actually thinking about doing deals. We are focused on organic growth.

We think we have a differentiated opportunity versus all the people that we compete with because of where we've come from, being so constrained. Match that with the quality of the business and the opportunities that we have, we are entirely focused on that.

It doesn't mean that we won't look at smaller things. I always say you can't say never is never, but we're not spending time on it, we're not focused on it.

This is the opportunity that we're focused on, and we feel really great about it.

Super clear. Thank you.

Okay.

Hi, good morning. On the Basel III Endgame estimate, the 7% RWA decline, I guess all else being equal, we're calculating that would give you about 80 basis points of net new excess capital.

I guess a couple questions, Mike. Is that sort of the right way to think about it?

If so, combined with the G-SIB of 1.5% and assuming you sustain sort of the floor on SCB, Wells would be at a minimum of 8.5%, and contemplating all of that, would you run this company at lower than 10% CET1?

Erika, we're not at the point where we're going to put a new target out. We got to see how this gets finalized.

It's going to be a year plus probably before it gets implemented. Lots can change, and so we're still going to stick with the 10%, 10.5%.

Listen, I think there's no magic to 10% to 10.5% in the future if our capital requirements change, and there's no floor at 10%. As Mike said, we don't want to put the cart before the horse and start talking about something before it's finalized.

Things can change. When these rules are finalized, we will look at what our requirements are.

We'll have the conversation about how much excess do we want to run now that there's more certainty in some of these things, and then make a decision. The trajectory is very favorable for us.

We just don't want to get ahead of ourselves and say we're going to change where we're running at this point before things are finalized. Directionally, there's a place to go here.

Got it. Just wanted to just add clarity to the ROTCE discussion given the positive direction on the denominator.

Just my follow-up question is, just thinking about all the net interest income questions another way. You reported a year-over-year increase in net interest income of 5% despite 20 basis points of year-over-year net interest margin compression.

Mike, if we think about year-over-year net interest income growth of about let's say at the same pace, let's say 4% year-over-year, clearly some balance sheet driven, maybe a little bit stability in the NIM in the second half of the year, we get to that $50 billion plus or minus. Is that the right different way to think about it rather than just thinking about the quarterly cadence?

Let me give you some of the drivers underneath it and then maybe see if that sort of gets at what you're trying to get at, Erika. Obviously, all of what you sort of quoted in terms of what you saw this quarter is right.

As you sort of look to how we get from where we are to sort of the 50 billion plus or minus, what we're expecting to continue to see throughout the year is we continue to expect to see loan growth each quarter. If you break that down a little bit and you go into the consumer side of the house, mortgages should stop declining.

You'll see growth from the first quarter in card. The first quarter's got some seasonality baked in, coming off the back of holiday season in the fourth quarter, you'll see growth there.

We expect to see continued growth in the auto portfolio. Overall, consumer loans continue to grow throughout the year.

You've got our growth in deposits that we expect to see, again, largely interest-bearing. We're not relying on any significant growth in noninterest-bearing as we go through the year.

That'll build up over time as we're more and more successful growing sort of checking accounts or that growth in noninterest-bearing will. Then the other side of it is also we haven't assumed that we've got a big deployment in securities.

If we see we've got good amount of excess cash, we could do more in securities as well to pick up some extra NII. Then you've got really the path of rates.

As I said in my script, if rates do stay higher for longer than people expected beginning of the year, that alone will be a net positive, and then we've just got to see how that sort of plays out across all the other variables. Do we see a little bit more change in deposit mix or other drivers that are underneath it.

Ultimately, I think we have a really achievable path to 50 billion, and if all works out, it could be better than that depending on how it all plays out through the rest of the year. Then obviously, the markets-related NII will swing around a little bit depending on sort of where the ultimate path of rates goes, but largely offset on the fee side.

Does that help?

Thank you. Yep, very helpful.

Thank you.

Morning. Just on the expense topic, I know you saw about a 3% year-over-year increase.

You cited the investments in technology and advertising or we saw some ongoing business investments, including in technology and other areas. Would you say and I know you're confident in the 55.7 guidance, could you talk to us about any pressures there that you're seeing that may move you off that target or just if you can maybe give us more detail on your confidence in attaining that target despite running at somewhat pressured levels in the near term here?

I think the only real pressure that we see would be revenue-related expenses to the extent in our asset wealth business that we generate higher levels of revenues and we've got commissions that are tied to that. Everything else we're continuing to track relative to what we thought in the guidance.

By the way, the revenue-related comp we still think is tracking to that, we've have re-looked at that. Nothing has changed relative to our views on where we think overall expenses look.

Again, I just want to reiterate that it's a continuation of the story that we've been talking about for quite some time now, which is we're increasing the level of investment in the areas that we think are important to do for the franchise, and we're driving efficiencies in other parts of the organization. We still see the opportunities to do that, and contain the expense base while we're able to grow the revenues and increase pretax pre-provision.

John, your question might have implied that there's pressure relative to consensus, but in reality, we're actually exactly where we thought we'd be relative to the guidance we gave. We feel really, as Charlie said, confident about what we've given.

The bulk of the increase that you saw year-on-year, the roughly $440 million of increase the bulk of that's really the revenue-related comp in WIM. The rest of it's very small on a net basis across the rest of the whole company.

We feel good about the guidance we have.

Got it. All right, thanks for that.

I appreciate it. Then separately, on the additional NBFI disclosures, I appreciate the detail, and appreciate the quantification of the BDC exposure looks like at about 8 billion.

Can you maybe help us frame the broader private credit exposure if you can help size that up and any impact of regulatory impetus around this, I know clearly the regulators have stepped up their inquiries around the area as well, any changes expected as a result of the ongoing discussions on that front?

The short answer on the last piece is no. We're comfortable with our exposures and that's where the conversation starts.

I think, as I mentioned, but I'll kind of re-go through it, the majority of our private credit exposure sits in that corporate debt finance bucket, which is on page 10 of the presentation, about 36.2 billion of it. That's the vast majority of the exposure.

Great. Thanks, Mike.

Hey, good morning. One clarification on your response to Erika's question.

Just given the clarity on the capital rules, you're suggesting that the bias would be to eventually take down the 10% to 10.5% CET1 target, right? In other words, as you get the benefit of the lower RWAs, the excess capital you free up would be something available to deploy quickly?

What we said was that we are running our excess today based upon today's capital rules. When the capital rules get finalized, we will reevaluate what that is and evaluate how big a buffer we think we need at that point in time, period end of story.

If our RWAs go down, then that's a positive, and we got to think about what's going on in the environment at that point in time, what we're comfortable doing. Directionally, it's constructive for us relative to how much capital we ultimately need to hold.

All else equal, if our CET1 percentage goes up as a result of lower RWA, that gives us X more capacity to deploy to support clients or return to shareholders.

Right. We're confusing RWAs, capital requirements, and dollars of excess capital.

It's going to come down to how much of that dollar excess there is and how we expect to use it.

No, that's clear. I appreciate that.

Then, maybe as a follow-up, as we get some of these changes that benefit the mortgage banking business, both on originations and on servicing, is there anything that Wells would do maybe to lean in, and is there more long-term opportunity for either of those businesses?

I think we're very comfortable with the plan we have in our home lending business today, which is focusing on people who are broader clients within the bank. As I've said this in the past, it's not just the capital levels that drive our desires in this business.

It's the operational risk that's embedded in there, it's the reputational risk, there's a relative to making mistakes foreclosing on behalf of others when you're following their rules and whatnot, and so there's just a certain level of sizing that we're comfortable, and we don't see that changing at this point.

On the servicing side, the capital rules aren't really changing much other than a removal of a penalty rate if it gets too big. That doesn't change much there on the servicing side and the capital, so.

Got it. Thank you.

Thank you. Good morning, gentlemen.

Mike, can you share with us, when you look at your loan loss reserves, what maybe the scenario weighting was this quarter with the evolving macro risks that are out there, of course with the hostilities in the Middle East and how that might have affected the way you guys address the reserves this quarter?

Sure, Gerard. For a while, we've had a significant weighting on our downside scenarios, and that weighting hasn't changed, but every quarter, the scenarios change a little.

In this quarter, if you look at unemployment rate, just as one example, the peak unemployment rate went up 4 basis points as a result of our scenarios, went up to a little over six, six six and six and 1 basis point to be exact, is sort of the peak unemployment rate. When we look at all the different scenarios as we know it today based on what we think can happen as a result of what we're seeing, we think the scenarios cover anything that's sort of probable at this point.

Then other variables moved around a little bit, but not a lot, and so we've maintained that significant downside's weighting, and then we'll keep it that way at this point for the quarter, and we think that's appropriate for where things stand.

Very good. Then as a follow-up, possibly for you, Charlie, you talked about the organic growth.

That's what you're focused on. I think you mentioned you finally closed on the rail leasing deal, and obviously, all the regulatory orders with the exception of the one for BSA are behind you.

Putting that one regulatory order off to the side, can you share with us just this organic growth, everybody's obviously pulling the oars in the same direction, are we going to see it really start to materialize more in the consumer sign, commercial side? What are you guys seeing when you focus on this organic growth over the next 12 to 24 months?

Hey, Gerard, it's Mike. I'll try to take that, and Charlie can chime in.

I think we're starting to see it everywhere. If you go back to page two of the presentation that we put out today, we tried to just summarize some of the key things that we're seeing across each of the businesses.

If you look on the Consumer Banking and Lending segment, checking accounts up 15 new checking accounts openings up 15%, credit card accounts up 60%, auto originations up 2x what they were last year. In the CIB, we saw banking revenue up 11%, markets up 19%, our share was stable, but good growth in equity capital markets in the investment banking side.

In wealth, we continue to have really strong recruiting across the different channels and client assets up 11%, revenue up 14%. We saw good loan growth in that business.

We saw good deposit growth in that business. Then lastly in Commercial Banking, we're seeing the benefit of the investments that we've been making now for the last couple of years really come through with both loans and deposits up, and even better, new clients that we're adding to the platform up substantially from where they've been in prior years.

Look, these things take time. We're not claiming victory in any way.

We got a lot more to do to improve the performance across each of these businesses, but a lot of that organic activity is coming through in the numbers, and you can see it in many of the metrics that we put out.

Very good. Thank you.

good morning. Thank you.

Mike, on the NII, just wanted to split hairs for a moment if you don't mind. When you talk about the fluidity of the cuts in the forward curve and two to three cuts last quarter and maybe nothing now, how much of an impact does it have on the fourth quarter exit run rate?

I guess it's more of a jumping-off question for 2027.

Look, obviously, that's going to have a bigger impact for next year as you point out than this year. Where we end the year will matter a lot more as we go into 2027, and you can annualize it.

I think when you look at our Q, and you see sort of the sensitivities there, that's a good enough way to start to mention sort of what it means for a full year, particularly coming out of the fourth quarter. I would start there with your modeling.

Obviously, any changes in the forward curve are going to have a little bit of an impact this year, but not super big because they were all back-weighted.

Okay. Thanks for that.

My follow-up, the 7% reduction in risk-weighted assets, I'm interested. I know you didn't publicly comment before it was out there, but was that better or worse than you thought you might see from the proposals?

We don't know. It's hard.

We had a bunch of stuff we made up, anticipating what we might see, but as others have pointed out, it's a 1,200-page proposal, any of those estimates we had going into it were kind of meaningless.

Listen, I think the areas that we benefited from are all the areas that we had commented on and we believe they've got it right. Do we think the thing is perfect and they've got everything exactly right?

No. It was directionally sort of where we thought.

All right. Thank you very much.

Hi, thanks for the question. Mike, just a quick clarification given the overlapping calls going on and your call's gone on long, I won't keep you.

The 30 the private credit exposure, the answer you gave, majority of it is in the commercial debt finance of 36 billion. Is that all That is all,

Vivek, that is all private credit exposure, and the vast majority of our private credit exposure is the 36 billion, and then the BDCs are a subset of that.

Got it. Got it.

That's all I wanted to just check. Thanks.

No worries. Thank you.

Hey, thanks for squeezing me in. I'm sorry to beat a dead horse with the net interest income, but NII ex-markets was only up 2% year-on-year.

If I look at loan growth excluding markets lending, it was up 8%. Deposit growth has been good.

I guess so it does seem like you are seeing some core margin pressure there. I just wanted to ask if you have a little bit more color on what is driving that.

Is this competitive dynamics in deposits? I guess are you competing in terms of pricing on lending and deposits, or is there a risk that you're pricing loans and deposits in a way that is sacrificing returns in order to foster growth?

Thanks, Saul. Rates is driving it, number one.

Interest rates coming down year-on-year is sort of driving it. We saw rate cuts last year.

We're seeing growth in the interest-bearing deposit side. Noninterest-bearing are slower to sort of grow as we sort of build the checking account growth that we've talked about in the call.

Then on the lending side of things, on the consumer side, we're not seeing compression there. Spreads are in a little bit on loans across some of the commercial side, nothing super significant.

We're not out there competing on price to try to grow the balance sheet. You're seeing all those things sort of come through in the underlying results, which is exactly kind of what we thought would be happening as we sort of rolled out the guidance in January.

Largely nothing that's unexpected to sort of come through. Your point on competition on pricing and deposits, we're not seeing competition on pricing.

That's not where it is. We're just growing some of the interest-bearing stuff faster than noninterest-bearing, but it's all at rates that are within where we thought they would be.

If we do a good job, as Mike alluded to a couple of times, we should be growing the noninterest-bearing further down the line as we bring on more of these relationships and have more balances here to work with customers both on the consumer side and on the business side.

Got it. Okay.

I guess on reserving, a follow-up to the earlier question, your reserve rate for C&I is about 1%. It's been about 1% for a while.

NBFI is obviously a big part of that. I'm curious, it sounds like the NBFI portfolio generally has a lower loss content than the balance of the book.

Maybe, correct me if I'm wrong. Do reserves reflect that?

I'm curious if there's been any change in your views of loss content in those portfolios and which would influence how you're reserving for those books?

No change in sort of our thinking as we look forward in terms of loss content, and in most of those portfolios, it's been virtually nothing for a long time. The allowance is lower, and not changing materially at this point.

Got it. Thank you.

Yep.

Hi, thanks for taking the question. Wanted to start on the capital markets outlook and the pipeline.

Can you frame the outlook following a strong first quarter here?

Look, I think we still expect that the financing markets are sort of wide open still. We still expect to see a lot of activity on the debt side, both investment grade and sort of leveraged finance.

There's plenty of money on the sidelines to sort of be put to work there. That's certainly been the case for a while.

I think on the equity capital markets side, you've certainly seen some delay in IPO activity in the latter part of the first quarter, assuming some of the volatility subsides or stabilizes. You may see some of that start to come back.

There's certainly a pipeline of companies sort of waiting to go. Then in the meantime, you've definitely seen a lot of activity on the convert side and other parts of the ECM wallet.

Overall, I'd say the pipeline and the expectation is still to see a pretty active rest of the year.

Great, thanks for that. Then shifting over to your credit card account growth, which is very nice to see, good growth, very strong.

What is the drivers behind that? Is it more rewards, more marketing, better rate?

What are some of the drivers there?

It starts with really good, compelling, simple products. I think in the last five years, the team has replatformed every product that we had in the market, starting with our Active Cash card, which is a very simple 2% cash back value proposition, and then added a series of products since then.

I think what we've seen is that we've had really good reception from both existing and sort of new clients to the bank for what are very easy to understand, compelling products. Then over the last three quarters, we've seen an uptick in originations as our branches have become more productive, in terms of helping customers get the right card.

We've also seen an increase in customers come to us directly looking for the cards as the awareness and the size of the portfolio.

It's awareness, it's advertising both targeted and more and more general, and we're increasing the amount of advertising we're doing both in the card business and the broader consumer business, and so that plus more of the targeted things we're doing in the digital space is driving increases there. It's a combination of, as Mike said, of just the products we have, but us getting better and better at targeting originations.

Our credit quality is still really strong.

Very helpful. Thank you.

All righty. All right, thanks, everyone, for the questions.

We'll see you next time.