Wells Fargo & Company

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wells Fargo Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

Thank you, Regina. Good morning, everyone. Thank you for joining our call today where our CEO and President, Tim Sloan, and our CFO, John Shrewsbury, will discuss fourth quarter results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our fourth quarter earnings release and quarterly supplement 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 release and quarterly supplement. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can be found in our SEC filings in the earnings release and in the quarterly supplement available on our website. I will now turn the call over to our CEO and President, Tim Sloan.

Thank you, John. Good morning and thank you all for joining us today. 2018 was a year of continued transformation at Wells Fargo. We added impressive new leaders to our team, introduced new products and services for our customers, fundamentally improved risk management, invested billions of dollars in technology and innovation, and substantially increased our capital return to shareholders. At the same time, we earned $22.4 billion and $4.28 per diluted common share in 2018, the highest earnings per share in the company's history. While we face challenges, I'm so proud of the hard work and the perseverance of our team members. I'm going to highlight some of our accomplishments in 2018 on each of our six goals, starting with our goal to provide exceptional customer service and advice. We sent an average of more than 37 million monthly zero balance and customer specific balance alerts and helped over 2.3 million customers avoid overdraft charges through Overdraft Rewind in 2018. While these customer friendly initiatives lowered our revenue, They are consistent with our vision of helping our customers succeed financially and building long-term relationships. We also implemented fee waivers for customers affected by natural disasters, including the California wildfires and East Coast hurricanes. And most recently, we are supporting customers who are affected by the ongoing government shutdown through fee reversals and other assistance to those who are having difficulties making loan payments. In addition, we've made changes to better serve our customers and our branches as we have focused on conversations aimed at helping to better understand their financial needs. These improvements were reflected in both our customer loyalty and overall satisfaction with most recent visit branch survey scores reaching a 24-month high in December. As part of our focus on team member engagement, we increased pay for entry-level team members in the US and granted restricted stock rights to approximately 250,000 team members, which helps connect their success to what's important to our shareholders. Our voluntary team member attrition improved to its lowest level in six years in 2018, and we continue to attract new team members from outside the company, including our most recently announced head of technology, Saul Van Burden, who will join us and join our operating committee and will report to me in April. A progress on our goal of being a leader in innovation was demonstrated by launching many customer-focused products and services in 2018, including our online mortgage application, with 30% of all retail applications done online in December, our CEO mobile for wholesale customers, with half of the users now using biometrics to authenticate. Control Tower, with more than 90% of debit card on-off requests now handled digitally. Propel, one of the most compelling no annual fee rewards cards in the industry. And most recently, a seven-state pilot of Greenhouse, a mobile-first banking account app with innovative cash management functionality. Leadership in corporate citizenship is one of the six goals because we believe Wells Fargo should play a role in building stronger communities. In 2018, we exceeded our target of donating $400 million to communities across the country, up more than 40% from a year ago, making us one of the top corporate givers in the U.S. A recent example is our Holiday Food Bank program, which in partnership with our customers and team members, provided over 50 million meals to those in need. Our goal of delivering long-term shareholder value was demonstrated by returning $25.8 billion to shareholders in 2018, up 78% from 2017. Last year, we also established dollar targets for non-interest expense for 2018, 2019, and 2020 to help our shareholders better follow the progress we're making to become more efficient. We achieved our 2018 expense target, and we remain committed to meeting our expense targets for 2019 and 2020. I'll now turn to risk management and an update on the asset cap, which is part of the consent order we entered into with the Federal Reserve Board in February of last year. There are two parts to the consent order, governance and oversight, and compliance and operational risk management. We've made meaningful progress on both. We have hired new leaders in key roles, including our new chief risk officer, chief compliance officer, head of regulatory relations, and chief operational risk officer. And our corporate risk management team members grew by approximately 1,300 or 15% in 2018. We invested $1.8 billion on important initiatives as part of our technology expense on cyber, data, and risk management. We introduced our risk management framework, which we described in our third quarter 10Q, which fundamentally transforms how we manage risk throughout the organization in a comprehensive, integrated, and consistent manner, and involves team members throughout the company in every line of defense. We changed the composition of our board, including reconstituting several board committees and amending committee charters to sharpen focus and reduce duplication in the Board's risk oversight. And we enhanced information flow and escalation of matters to the Board, as well as the reporting and analysis provided to the Board. We continue to have a constructive dialogue with the Federal Reserve on an ongoing basis to clarify expectations, receive feedback, and assess progress. In order to have enough time to incorporate this feedback in our plans in a thoughtful manner and adopt and implement the final plans as accepted by the Federal Reserve and complete the required third party reviews, we're now planning to operate under the asset cap through the end of 2019. Making the changes necessary to not only meet but to exceed regulatory expectation remains a top priority, as is continuing to serve our customers and help them succeed financially. We believe that we can achieve both of these priorities while we operate under the asset cap, and our growth in both loans and deposits in the fourth quarter demonstrated our ability to do so. When I assumed the CEO role, I took responsibility for addressing the retail sales practices issue while also pledging to examine every business at Wells Fargo. I assured all of our stakeholders that we would be transparent in our actions, and we've done that. Nearly all the matters we have recently resolved reflect issues from our past, including the recently announced State Attorneys General Settlement last month. Regardless of when they occurred, these past matters need to be resolved in the present. The settlements we reached last year and the remediation we provided the customers reflects important progress on our goal to move Wells Fargo forward as quickly as possible while continuing to provide our customers with high quality service, and advice each and every day. Over the past two years, with the full support of our board of directors, we've undertaken a massive effort to transform Wells Fargo. In 2019, we will continue to build the most customer-focused, efficient, and innovative Wells Fargo ever, characterized by a strong financial foundation, a leading presence in markets we serve, focused growth within a strong risk management framework, operational excellence, and highly engaged team members. I'm confident we will succeed and that these efforts will result in an even better Wells Fargo for all of our stakeholders. John Shrewsbury will now discuss our financial results in more detail. Thank you, Tim, and good morning, everyone.