Wells Fargo & Company

Welcome and thank you for joining the Wells Fargo third quarter 2024 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 1. If you would like to withdraw your question, press star 2. Please note that today's call is being recorded. I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

Thank you. Good morning, everyone. Thank you for joining our call today where our CEO, Charlie Sharp, and our CFO, Mike Santosimo, will discuss third quarter results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our third quarter earnings materials including the release, financial supplement, and presentation deck, are available on our website at wealthbargo.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 8K file today containing our earnings materials. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can 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'll make some brief comments about our third quarter results and update you on our priorities. I'll then turn the call over to Mike to review our results in more detail before we take your questions. Let me start with some third quarter highlights. Our results were solid with $5.1 billion net income, diluted earnings per share of $1.42, an ROE of 11.7%, and an ROTCE of 13.9%. All were up from the second quarter. Our earnings profile is very different than it was five years ago, as we've been making strategic investments in many of our businesses and de-emphasizing or selling others. Our revenue sources are more diverse and our fee-based revenue has grown 16% during the first nine months of the year, largely offsetting the net interest income headwinds we have faced over the last year. We have maintained strong credit discipline and driven significant operating efficiencies in the company while investing heavily to build a risk and control infrastructure appropriate for a bank of our size and complexity. Headcount has declined every quarter four years and was down 20% since the third quarter of 2020. Our expenses in the third quarter were down from both the second quarter and a year ago. Average loans declined from the second quarter as we have maintained strong credit standards and our focus on returns over volume. We've continued to grow our credit card portfolio with balances growing for 13 consecutive quarters and commercial loan demand remains weak reflecting economic uncertainty and the expectation that rates will be lower in the future. Overall deposits declined slightly from the second quarter, but deposit balances at our customer-facing businesses continue to grow, which has enabled us to reduce higher-cost Treasury, corporate Treasury deposits. We've started to reduce deposit pricing in response to the recent Fed rate cuts, and we're closely monitoring market conditions and will continue to make adjustments. both our consumer and commercial customers have remained resilient. In our wholesale businesses, credit performance improved from the second quarter with lower losses in both our commercial real estate and commercial and industrial loan portfolios. The office market remains weak, and we continue to expect additional charge-offs in our commercial real estate office portfolio and have accordingly maintained strong allowance coverage. Overall, customers in our consumer businesses continue to hold up relatively well, benefiting from a strong labor market and wage growth. Consumer charge-offs declined from the second quarter, driven by lower losses in our credit card portfolio, while our other consumer portfolios continue to perform well, reflecting the benefit of prior credit tightening actions. We continue to look for changes in consumer health, but we have not seen meaningful changes in trends when looking at delinquency statistics across our consumer credit portfolios. Both credit card and debit card spend were up in the third quarter from a year ago, and although the pace of growth has slowed, it is still healthy. We continue to see more pronounced stress in certain customer segments with lower deposit and asset levels where inflation has partially offset strong employment and wage growth. The benefits of inflation slowing and interest rates starting to ease should be helpful to all customers, but especially those on the lower end of the income scale. Our capital position remains strong with our CET1 ratio of 11.3% up from 11% last quarter, and we continue to return significant amounts of excess capital to shareholders. We repurchased $3.5 billion common stock in the quarter and 15.6 billion of common stock during the first three quarters of this year, up over 60% from a year ago. And we increased our common stock dividend in the third quarter by 14%. Shareholders have meaningfully benefited from our capital management actions as our earnings per share are up over 50% since the third quarter of 2019, benefiting from the 22% decline in diluted average common shares over the same period. Now let me update you on our strategic priorities, starting with our risk and control work, which remains our top priority. We continue to move forward with confidence and believe we have the right culture, team, discipline, and sense of urgency to complete the work that's required. That includes what is required under the recent formal agreement we entered with the Office of the Control of the Currency. We are also continuing to execute on our other strategic priorities. We continue to build our credit card business, and this past quarter, we launched two new co-branded credit cards with Expedia, which provide our customers a unique travel rewards program with instant discounts, enhanced perks, and accelerated rewards. Our broader set of credit card products continue to be well received by both existing customers and customers new to Wells Fargo with nearly 2 million new credit cards accounts this year. Last month, we announced a multi-year co-branded agreement with Volkswagen Financial Services. Starting in the first half of next year, we will be the preferred purchase financing provider for Volkswagen and Audi brands in the United States. The investments we've been making in our consumer, small, and business banking segment are starting to generate growth. After several years of no growth, net checking accounts have now grown for three consecutive quarters, and we believe our debit card share has started to increase as well. Mobile active users increased by 1.6 million, or 5%, from last year. We are also investing in our branches and have refurbished over 460 branches during the first three quarters of this year. We continued to hire proven leaders in our corporate investment bank. In investment banking, we made several important hires focused on key coverage and product groups to help us build on our momentum and grow the business. We also hired a new vice chair of corporate banking who is focused on helping us continue to expand and grow that franchise. We also continue to attract experienced leaders in other areas. And in the third quarter, Bridget Engel joined Wells Fargo as head of technology reporting to me. I have worked with Bridget in the past and know firsthand how her deep experience leading large-scale technology transformations at large global financial institutions will benefit Wells Fargo. Our strategic priorities also include focusing on businesses that are core to our consumer and corporate clients, and when they aren't, shrinking or selling them. As part of this effort, during the third quarter, we announced we had entered into a definitive agreement to sell the non-agency, third-party servicing segment of our commercial mortgage servicing business. We will continue servicing agency loans and loans held on our balance sheet. Looking ahead, overall, the U.S. economy remains strong, with inflation slowing and a resilient labor market boosting income and supporting consumer spending. Company balance sheets are strong, contributing to both consumption and investment in the economy, but slowing demand for commercial lending. We continue to be prepared for a variety of economic environments and will balance our desire to increase returns and grow while protecting the downside. We have one of the most enviable franchises in the industry and a top management team capable of delivering strong results. I want to thank everyone who I work with at Wells Fargo for everything they've done to transform this great company. I'll now turn the call over to Mike.