Welcome and thank you for joining the Wells Fargo second quarter 2026 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 a question during this time simply press star one. If you would like to withdraw your question start. 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.

Good morning, everyone. Thanks for joining our call today, where our CEO, Charlie Sharp, and our CFO, Mike Santamissimo, will discuss second quarter results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our second 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 8K 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 comments about our results and the momentum we are seeing across our businesses. I'll then turn the call over to Mike to review second quarter results in more detail before we take your questions let me start with slide two of the presentation deck where i will walk you through the broad-based strength we see in our business we grew diluted earnings per share to two dollars in the second quarter up 25 from a year ago revenue grew nine percent from a year ago growth was broad-based with every one of our operating segments generating higher net interest income and non-interest income. We are clearly benefiting from the economic strength we see in the U.S., but the investments we are making and our improved operating discipline drove strong momentum and continued to result in improved performance. Net interest income grew 5% from a year ago and non-interest income grew 13% as we're making good progress against our goal to create a more balanced revenue mix by growing fee-based revenues. Expenses increased 2% from a year ago, reflecting investments we are making, offset by continued expense discipline. Expenses, excluding revenue-related compensation, declined. One of the ways you can clearly see the results of our efficiency initiatives is through headcount, which has declined for 24 consecutive quarters. And in the second quarter, our headcount was $197,000, down $79,000 from six years ago, $15,000 from last year, and $3,500 from last quarter. We are using these efficiencies to offset broad-based investments across the company to drive growth, including adding branch bankers, investment advisors, commercial banking relationship managers, investment bankers, and traders. We are also increasing our marketing investments, accelerating product development, investing in AI, and increasing our cyber defenses. Consumer and commercial credit quality remain strong across all portfolios, and net loan charge-offs declined 10 basis points from a year ago. After years of not being on a level playing field with our competitors because we couldn't grow our balance sheet, We had strong growth during the first half of this year, including in the second quarter, with average loans up 12% and average deposits up 10% from a year ago. Just a reminder, growth can be risky, and we are carefully deploying capital to grow and support our clients by taking risks that we think are prudent through economic cycles, not just the strong environment we see today. We returned over $9.8 billion of capital to shareholders in the first half of this year, including repurchasing $7 billion of common stock while continuing to maintain the significant amount of excess capital. As we previously announced, we expect to increase our third quarter common stock dividend by 11% to $0.50 per share, subject to approval by our board directors at its meeting later this month. Our continued focus on improving returns was evident with ROTCE increasing from 15.2% a year ago to 17.7% in the second quarter and 16.1% in the first half of 2026. While outsized venture capital equity gains favorably affected our returns this quarter, we have said that they can be lumpy, but that we do expect strong returns from these investments over time. But more importantly, the growth and efficiency improvements that we have seen over the past several years are now broader-based, and it is these trends that give us confidence in reaching our goal of a sustainable ROTCE of 17 to 18 percent. We are often asked about the timing of achieving this goal and I know you all understand that interest rates markets and credit impact us and are hard to predict making it difficult to give a definitive answer but assuming favorable condition conditions continue to exist we remain confident that our favorable trends will allow us to achieve this goal in a reasonable time frame and then reset the bar higher for the future. As we show on slide three, our strategy is driving growth across all of our businesses. Let me start with consumer banking and lending, with 6% revenue growth from a year ago. After years of little to no growth in checking accounts, our investments in marketing and digital account openings are paying off, and we have grown consumer primary checking accounts year-over-year for 13 consecutive quarters. We have significant opportunity to increase the pace of growth, and this, along with offering our broad set of products, including credit cards, investments, and mortgages, should drive low-cost deposits higher over time. Over the past five years, we have enhanced our credit card products and improved the customer experience, which has driven new account and balanced growth, including new accounts increasing 46% in the second quarter from a year ago. Building a larger credit card business is an investment that puts pressure on profitability in the initial years, with new products having significant upfront costs related to marketing, promotional rates, onboarding, and allowance. It takes approximately two to three years for vintages to season and earn through these upfront costs. Our 2022 through 2024 vintages are now adding to profitability. Our 2025 and 26 vintages are bigger as account openings have accelerated, so they offset some of the positive contribution from the earlier vintages. Importantly, we have seen strong performance versus our original assumptions regarding new account acquisition and credit performance, which gives us confidence that we should see profitability and returns increase. I do want to note that the rate of growth is a decision point for us. We could have higher profitability in the shorter term by reducing our growth, but we are prioritizing longer term results given the quality of the accounts we are generating. We evaluate this each quarter and will continue to do so. The momentum in our digital offerings continued with mobile active of users increasing to 33.7 million in the second quarter. That's 1.6 million more than a year ago. The investments we've been making to improve the customer experience were reflected in the 2026 J.D. Power mobile app study where we moved up to number two in mobile app satisfaction. We are also doing more for our affluent clients. We've been hiring licensed bankers and branch-based financial advisors and that investment is helping to drive better results with premier client assets up 13 percent from a year ago our auto business returned to growth last year after intentionally scaling back to improve our capabilities and the momentum has continued originations increased 41 percent from a year ago and average balances were up 31 in part due to becoming the preferred financing provider for Volkswagen and Audi vehicles in the US. Importantly, credit performance has remained strong and in line with our expectations. Turning to wealth and investment management, revenue grew 13% from a year ago. Wealth and investment management client assets grew 15% from a year ago to over $2.4 trillion, driven by increased market valuations and also benefiting from four consecutive quarters of positive net flows. We have invested over a billion dollars over the past several years to modernize the technology platform, and in the second quarter, we launched Advisor Gateway, a new desktop technology with Gen AI capabilities that gives advisors better tools to serve clients and grow their practices. Investments like this are improving productivity, strengthening the client experience, and driving improved advisor hiring and retention. We are also working to be our client's primary bank by expanding our deposit and lending capabilities and are seeing strong results with average deposits up 10% and average loans up 12% from a year ago. Securities-based lending has been a key driver of loan growth with average balances up 31% from a year ago, reflecting our success in increasing the number of financial advisors offering this product to their clients. Importantly, the opportunity in this business to grow investments and banking remains significant. We estimate that our existing customers hold trillions in assets at other financial institutions, and their lending, deposit, and payment needs are large and growing. Turning to our commercial businesses, starting with the corporate investment bank, revenue grew 16% from a year ago. In our markets business, revenue grew 24% from a year ago. We've been growing our balance sheet to support our clients with average trading related to assets increasing 41% from a year ago, driven primarily by financing related activity. While this financing activity impacts our net interest margin because it is lower spread, it has good returns and profitability and positions us to attract more flow business. We track this by client and we're seeing higher trading revenue and wallet share gains from customers where we are providing financing. While the most immediate revenue benefits are expected within markets, including trading, hedging, and risk management products, these deeper client relationships also enhance opportunities across the broader corporate investment banking platform over time. In our banking business, revenue grew 20% as our focus on providing a broader set of capital and advisory solutions is working. This was a record quarter for investment banking fees across the firm. Our willingness to invest more in senior talent and in technology and dedicate more balancing to these activities is paying off. What's important here is having a growth plan that is properly paced and leverages the broader strengths of Wells Fargo. The team has executed with discipline, has hired and promoted the right people, and is taking risks that are in line with our risk tolerance. A favorable environment for M&A and financing is helping drive higher revenues across the industry, but our investments are also delivering strong results and we are increasing market share in key areas. In leveraged finance, our year-to-date market share is 7.2 percent and we rank number three. In equity capital markets, our shares increased 74 basis points from a year ago to 3.8%. In M&A, we have climbed from number nine to number four among U.S. advisors by announced deal volume, reflecting our active role in advising our clients on franchise-defining transactions. We also have strong share in CRE capital markets, including being the number one non-agency CNBS bookrunner, number one in real estate loan syndications, and number one in CRE each DLOs. This was a strong quarter across corporate investment banking, and we still have significant opportunity to grow each of the businesses. Finally, let me highlight commercial banking, which generated 6% revenue growth from a year ago. The investments we've been making in the business over the past couple of years are driving strong results. Absent the transfers of loans and deposits to consumer banking and lending last year. Average loans grew 9% and average deposits grew 10%. Our investments include targeted hiring in 20 high-density markets where we are underpenetrated relative to the rest of the country. The plan is working as we are seeing incremental client growth and higher loan and deposit balances, and we expect this momentum to continue as we execute on our plan. We've also focused on delivering investment banking and markets products to our commercial banking clients. We've had success, which has helped drive revenue growth, but we still see significant opportunities to grow revenue here. While commercial banking is one of our more mature businesses, we still have significant opportunities to grow. Our treasury management and payments revenues are embedded in our commercial bank and corporate investment bank results. Across both segments, revenue was up 5% from a year ago. We've been investing in coverage teams and payment platforms that are beginning to innovate using blockchain technology to create better payment solutions for our commercial customers. These solutions will use blockchain-based payment rails to make cross-border payments faster, more transparent, and more predictable. And over time, they will extend operating hours to 24 hours. This remains strong, and savings and investments are growing across when credit spreads are narrow. Concerns around affordability and inflation exist, but the labor market and wage growth remain strong. The markets and U.S. economy have absorbed macroeconomic and general environments like this don't last forever, and we see large amounts of capital being deployed by both banks and non-banks when times like this continue. It's sometimes hard to set a position for our resources carefully and deliberately to serve our clients and build sustainable market shocks that's in our results from the actions we've taken which should endure two cycles as i said some across all you to remain focused on driving towards higher sustainable returns i will now turn the call over to mike thank you charlie good morning everyone the drivers climbed one basis point from a year ago and non-controlling interest

it's important to look at these results after the impact of non-controlling interest We also had double-digit growth in investment advisory fees, brokerage commissions, and investment banking fees from a year ago. We had over $900 million investment banking fees in the second. Turning to expenses on slide 9. Not interested to have higher technology and advertising costs driven by the investments we were making in our businesses to generate growth. These higher expenses related non-revenue related expenses were actually down from a year ago. Turning to credit quality on slide 10. Our credit performance in the second quarter remained strong with our net loan charge-off ratio down 10 basis points from a year ago to 34 basis points. Commercial credit continued to be strong with net loan charge-offs declining to 10 basis points, with loan charge-offs declining continued net recoveries in the residential mortgage portfolio. Non-performing assets as a percentage of total loans declined from the first quarter and from a year ago with improvements in both our allowance coverage ratio for loans was relatively stable from the first quarter. credit card and auto loan growth drove a modest increase in our allowance which was largely offset by a lower allowance for commercial wheels turning to capital and liquidity outside 11. our capital levels remain strong with our cet1 ratio at 10.3 percent within our stated 10 to 10 and a half percent target range and well above our cet1 regulatory minimum plus buffers at 8.5 percent of stress common shares outstanding decline six continue to have our operating segment starting with consumer banking and lending on slide 12. Consumer small and business banking revenue increased 8 percent from a year ago driven by higher deposit and loan balances, wider deposit spreads, and growth in non-interest income. Credit card revenue grew 2 percent from a year ago due to higher loan balances. Home lending revenue declined 7 percent from a year ago reflecting lower loan balances. However, the rate of reduction has continued to slow low, with balances relatively stable from the first quarter. Lower revenue also reflected the continued reduction in the size of our servicing business with third-party mortgage loans serviced for others down 21% from a year. Auto revenue increased 33% from a year ago due to higher loan balances. Auto originations increased 41% year-over-year, but were stable from the first quarter. Turning to commercial banking results on slide 13. Revenue increased 6% from a year ago driven by non-interest income growth from equity investments, revenue from the financing we do for renewable energy projects that come in the form of tax credits and investment banking as well as growth in net interest income from higher loan and interest-bearing deposit. Increased demand from the corporate investment banking of slide 14. Banking revenue increased 20% from a year ago with growth in investment banking fees and equity and debt capital markets as well as higher loan and interest-bearing deposit balances. State revenue declined 1% from a year ago as higher capital markets activity and loan balances were more than offset by the impact of lower interest rates. Markets revenue grew 24% from a year ago, driven by stronger performance in equities and higher revenue across most fixed-income products, including the impact of balance sheet growth. As you know, we've been throwing our balance sheet in the markets business. It has increased $198 billion since the end of 2024, with approximately 60% in financing balances, 20% on the trading side, and 20% for the lending we do in this business. We extend these balances to clients who can also bring us additional business, and our early tracking shows that is what's occurring. We track this on a granular basis and will continue to optimize with clients to drive growth. Average loans in corporate investment banking grew 26% from a year ago, with growth across all businesses while utilization rates were well on slide 15 wealth and investment management revenue increased 13 percent from a year ago driven by growth investment advisory fees from increased market valuations as well as higher net interest income due to lower deposit pricing and higher deposit loan balances as a reminder the majority of whim advisory assets are priced at the beginning of the quarter so third quarter results will reflect market valuations as of july 1st our 2026 outlook on slide 17. we are maintaining our guidance of 50 billion plus or minus of net interest income for the full year and similar to last we expect stronger growth in the second half of the year compared to the first half we still expect net interest income excluding markets to be approximately 48 billion for the full year looking at the key drivers starting with loans as i highlighted average loans in the second quarter grew 12 percent from a year ago so year-over-year average loan growth in the fourth quarter will likely be higher than the mid-single digit increase we assumed in our outlook back in january this is a positive versus our original expectation we have also successfully grown interest-bearing deposits which is a good thing since these higher balances help us deepen relationships earlier gives us the opportunity to attract non-interest-bearing deposits in the future we had originally assumed some growth in We will now begin the question and answer session.

If you would like to ask a question, please first unmute your phone and then press star Please record your name at the prompt. If you would like to withdraw your question, you may press star 2 to remove yourself from the question queue. Once again, please press star 1 and record your name. If you would like to ask a question at this time, please stand by for our first question. The first question comes from Ken Ysden of Autonomous Research. Your line is open.

Hey, thanks. Good morning. And Mike, thanks for the color on the second half expected dim trends. The two questions I have, one is just, again, to get to 50 billion, I think we need to assume that the average earning assets continue to grow at around this 3% pace, and given your comments about loan growth and the deposit growth, is that kind of what we need to put forward to get there? Any other things we need to think about in terms of mix within? Thanks.

Yeah, sure. Yeah, I mean, look, when you look at what's going to progress for the second half of the year. It's very similar to what we saw last year, right, in terms of the step up as we went through each of the quarters. You do benefit from an extra day as you sort of go into the third quarter, so you sort of have to account for that. But we expect to see some growth in loans, securities. You know, you get benefit of, you know, the fixed asset turnover given where rates are.

And so I think it's all progressing, so it's not a not a bad assumption sort of relative to where what to what to expect but we still feel very good about getting to that 50 billion in total got it and then the second question is just on that nim stabilizing in the fourth quarter what are the pieces that kind of get there meaning like is it that one piece slows relative to the growth rate is it just that you kind of lap some comps um you know what are the helpful things underneath that that can give us the confidence that that that stabilization happens yeah sure and we know we've talked about this a little bit over like throughout the quarter but you know we didn't we don't expect to see the

market's balance sheet to grow at the same pace and so the the impact that we've seen over the last you know a few quarters moderates uh and that's certainly part of the story as you get into the latter part of the part of the year um and then i think you continue to get the benefit of all of what we just talked about in terms of the growth in earning assets, the repricing, and then you sort of see the rest of the growth across the balance sheet. But at this point, as I said, we expect just a small decline potentially in the third quarter. Hopefully, it ends up maybe even being better than that, and then we sort of stabilize from there. Okay. Got it. Thanks, Mike.

Next question will come from John McDonald of Truist Securities. line is open.

Hi, thanks. Yeah, I was wondering, Mike, on expenses and efficiency, what's the outlook? I mean, you've done a great job with the outlook on headcount. So, from here, are you still looking to keep that flat to down? And just the broader commentary about the opportunity for efficiency improvement from here to keep going? Thanks.

Yeah, sure. I'll take a shot and start, and Charlie can add if he wants. You know, on the headcount side, just more broadly on efficiency, we still come into the environment thinking the same thing we've done now for a number of years. We've got a lot of room to go to continue to make the place more efficient. And in part, that drives headcount down. And so, given the size of our business, the activity levels we've got, we expect that we should be able to run this company with less headcount than we've got today. Certainly, you know, technology and AI helps us get at aspects of that, you know, in a different way or faster than maybe in the past, but we expect that we'll continue to see more efficiency, you know, from here. And then just more broadly, you know, it applies to just about everything we do. And I know we keep talking about this over and over and over, but as you peel back the onion, there's more opportunity to make things more automated, to improve the client experience, to, you know, make things more efficient in terms of how we serve clients every day. And I think there's a lot still to go. And we, you know, we just come in every day and every week to sort of make sure that we continue to execute like we've done over the last few years.

Okay, thanks. And then maybe just to follow up on Ken's line of questioning around the net interest income drivers, the change in non-interest bearing from what you saw, what you were expecting earlier in the year, Mike, Is that related to any developments in your checking account growth, or is it more attributable to rate-seeking behavior on customers and just the rate environment? What do you attribute the change in your Nib Outlook to?

Yeah, no, it's actually not related to the checking account growth. That's actually progressing quite well. And as Charlie mentioned, you know, we're up in sort of the checking account growth now for a number of quarters and months in a row. And so I think that's actually going quite well. I think when you look at just the broader backdrop in terms of the rate environment, we expected a little bit more growth than we're seeing. You know, we did see a little bit of growth, you know, from the first quarter and the second quarter, so that's good, but we expect it to be pretty stable from here. You know, we are seeing really good success in growing interest-bearing deposits and growing other business with, you know, with clients, you know, in the payment space and the treasury management space. And so those things will bring non-interest-bearing deposits with them over time. It just takes a little bit longer for that stuff to get onboarded and to see the results there. But we're not seeing pricing pressure, sort of, or client behavior drive any of the results.

Okay. Thank you. Next question will come from Erica Najarian of UBS. Your line is open.

Hi. Good morning. Thanks for all the callers so far. You know, as we think about the trajectory of net interest income and net interest margin, I'm wondering if we could maybe just take a step back because, you know, obviously there is a lot of focus on this number, but I'm wondering if we could sort of separate sort of the structural factors versus the cyclical factors. So, you know, first, you know, what are you expecting for deposit costs in the second half of the year? You know, is there a rate hike priced in? I think he removed the cuts, but Mike, I just wanted to make sure I understood what you were assuming for the short end. So what should we expect from deposit cost standpoint from here? And additionally, you have two strategies that are sort of competing factors on the NIM. One is this great growth in markets, which is obviously NIM dilutive, and also strong momentum in card, which in theory could be NIM accretive, especially once the accounts mature. So, you know, as we think of all of those factors, you know, how should we think about, you know, whether or not we should expect more secular pressure on the NIM, you know, beyond the macro factors with rates and deposit costs in the second half of the year?

Yeah, okay, Eric, there's a lot in there, so I'll try to get it. And if I miss a piece, please point me in the right direction. So I think when you look at what's happening across NIM, obviously what we've got baked in to the second half of the year is, you know, the market's pricing in a little over one increase at this point. And so I think we'll see how that actually plays out. But that will have very little impact on the full-year results just given, you know, the timing of it depending on when that happens. And so I think that's not like a huge driver one way or the other. I think what's happening in our deposit book, though, is that we're seeing the pace of interest-bearing deposits grow at a really good clip. And you can see that in the results quarter after quarter after quarter. And I think even if you just look at the CIB and the corporate investment bank and the commercial bank deposits where you've seen really good deposit growth year on year and sequentially, And the majority of those deposits are going to be interest-bearing deposits. And so since they're growing faster and you're seeing slower growth in the consumer side and pretty stable, non-interest-bearing deposits, you're going to see the deposit cost inch up a little bit. And that's actually fine and expected and, frankly, not a bad thing because we're growing sort of these profitable, you know, balances, you know, across the businesses. So I would expect the deposit costs to just move up a little bit as you go in the second half of the year. But ultimately, I think that's actually a good thing from a profitability point of view and support sort of the broader set of business that we do, you know, with those customers. And then as I sort of mentioned in the commentary, you know, we expect a little bit more, you know, NIM compression in the third quarter and things, then it starts to stabilize and you get the benefit of all of the other, you know, impacts of, you know, that we sort of talked about in terms of the earning asset growth, the repricing that's happening across, you know, a large portion of the book, of the securities book. And so, and all of that, I think, contributes quite well. And I think just keep in mind, as we sort of look at NII, you know, what we're most focused on here is really growing NII over a long period of time that will generate really profitable business and relationships that I think, you know, will see, you know, benefit us for, you know, for many years to come. And you may see a little bit of volatility in the NIM number that you've seen over the last, you know, few quarters. And that's to be expected just given where we came from last year with the asset cap coming off and the pace of growth that you've seen, you know, since then.

Let me just add, Eric, this is Charlie, if I can, a couple of things. Number one is, you know, I think about this is kind of separate out our balance sheet and what you're seeing into a couple of different components. One is just kind of like the business that we have which generates the majority of NII. That is very – and then we have these businesses that we're looking to grow, both in the markets business but also ultimately expanding relationships and treasury management on the consumer side. And there, as we talked about, you're seeing growth in interest-bearing liabilities. And so it's those additional businesses that have narrower margin, NIM that is, that's bringing down the NIM, but we're looking at it in terms of what it means in the shorter term for profit growth and for returns. and we feel good about that. But more importantly, over time, that should also, as we attract more non-interest bearing over a period of time, and away from NIM, we generate stronger trading revenues. And so that is the flywheel effect of that financing that we're providing. And as I've said, if we don't see that, then we can certainly pull back on some of that activity and improve the NIM. But as he said in our prepared remarks, we are seeing the payoff certainly on the market side at this point, even though it's early. But that's a decision point that we have to make, and we'll be very conscious of what the impact is both on NIM, but also on this balance between what you see in terms of NIM, profit growth, but returns.

MS. Yep. Hear you loud and clear, Charlie. I think that's why I wanted to frame it in terms of, you know, structural and growth. And to that end, the second question is just the opportunity set in your areas of where you're focusing growth. So maybe talk a little bit about the investment banking pipeline, but also in terms of the equities opportunity. So we're hearing that a lot of your peers are a little bit more limited in terms of prime equities financing capacity, given the hyperscaler trade in Asia. Of course, you're not quite big globally yet. And you did mention it in your prepared remarks in terms of financing-related activity. Maybe describe a little bit more the prime financing opportunity that lies ahead, especially if the sort of traditional counterparties have more limited capacity because of activities outside of the U.S.

Yeah, it's Mike. Eric, I'll start on both parts of it. So on the investment banking pipeline, you know, the pipeline is quite strong. And I think we see that now very consistently for for a while now. And I think, you know, the environment is very supportive of deals. The markets are wide open, both on the equity side and sort of the debt side. And I think, you know, the art of the possible in the M&A, you know, in the M&A space is quite alive, right? And I think there's a lot of active dialogue there. And I think you can see our investment banking, you know, business had a really good quarter. And I think, you know, that all the investments that we've made over the last three or four years have positioned us to take advantage more than we would have – take advantage of this environment more than we would have been able to, you know, three, four, five years ago by a lot. And I think we're continuing to make more investments in targeted areas across different coverage sectors and in some of the product areas. And so we feel good about the trajectory there, and we'll see how it progresses.

And just on the broader question, I would just say, listen, I think what we've said in the past still holds true, which is that there's a lot of great competition out there. There are people that are very, very large in some of these businesses, including Prime. time, but what we have found is that people want more options, they want more counterparties. We have relationships with the broad set of these customers, and they generally like doing business with us, and so they want to do more, and so for us it's a question of just pacing that addition in terms of the amount of business that we do properly. We're still very, very early in terms of growing out our prime business, so, you know, there's nothing really material in this current quarter relative to that, but it is an opportunity that, you know, we're going to be careful about. But, you know, that along with, you know, other trading flow opportunities that we have and the investment banking opportunities that we've talked about, we still think are incredibly significant for us.

Thank you.

Question will come from Ibrahim Pugnawala of Bank of America. Your line is open.

Hey, good morning. So not to beat a dead horse on the margin, and the stock obviously sold off when you started talking about your margin outlook. I understand you're not running the bank on one-day stock reaction. But maybe I think just a bigger picture question, if we take a step back and appreciate, Mike, your comments around the trajectory of the NII which I think is more important than what the NIM does any given quarter but as we look forward beyond even this year do you think the the net interest margin given your balance sheet and the business strategy on the going forward is at a point where the margin should begin to stabilize post that 3Q compression you talked about and one of pushback this morning has been like the market's revenue growth predominantly NII driven. So I guess the street is struggling to see the cross-sell of deploying that market's balance sheet into lower NIM and then that translating into better fee growth on the market side. Or maybe help us understand that from a market standpoint and then how should we think about just a normalized NIM for your balance sheet or business strategy?

Sure. You know, I think on the NIM side, you know, as I said earlier on the call, you know, we do expect it to stabilize after you get through the third quarter. And so that's definitely the case. And as Charlie mentioned, you know, there's, you know, over a slightly longer time period, like there's opportunity to expand the NIM, not just stabilize. And so I think that's certainly what we expect as we sort of look at the right rest of the year. I think when you start looking at the overall, you know, trading business there, you certainly see some growth in NAI, but it's not all because of the rate move that we saw. You know, you get paid, you know, in some of these trading businesses through NAI, you think mortgages, you know, mortgage trading and other areas of that business. And so you do really need to look at overall sort of revenue in the markets business. And when you look at, the financing, and I'll break it down a little bit for you, you look at the financing side of the business, that's up a, it's not quite a double, but it's pretty close when you sort of look at the year-on-year performance and the overall financing revenue within the business. And then you saw roughly a 20-plus percent increase in sort of the trading-related revenue off the back of that. And so I think we've seen quite a bit of growth across these parts of the business within trading. And then more importantly, when you start looking at the individual clients where we're deploying some of this incremental financing balance sheet to, every single one of them, all but a couple, have done significantly more business with us than they did just a year ago. And that's just getting started in terms of ramping up some of the volumes. And so I think you'll, you know, you'll continue to see that, you know, across the markets business, I think, for, you know, into the coming quarters. But we feel really good about what we're seeing and the trend that we're seeing there.

Let me just add one thing, slightly different words, but kind of reinforcing a point that I made earlier, which is what we're seeing in them is not happening to us. What we're seeing in NIM is because things that we're doing, and those are things that we don't have to continue to do, or we can unwind at some point as well. And again, the reason why we're doing it is because we believe that it'll lead to stronger NIM in some of these businesses in the future by attracting more non-interest-sparing deposits or by attracting additional trading. and that's either going to drive the kind of profit growth and higher returns that we believe we can deliver or that's a decision point that we can make and so we understand that you know it's hard to see that as clearly from the outside so we've got to do a good job of doing our best to show you how that's actually playing itself out but as mike said when it comes to the financing as an example we look client by client and we're providing more financing we're getting more share higher trading revenues um and so that's when i said on the last call you know we're either gonna get paid for it we're not going to do it um and that very much holds true and so um the fact that like that is in our control uh is something i think that's critically important and is a tool for us to help grow the returns and the profit of the company um or we can either slow things down or reverse course if we had to but nothing suggests that we should do that because we believe that we're getting the payoff for it, and we'll have to show that to you.

So I think that's a great point, Charlie, that the name is due to the deliberate actions you're taking, and I think the one point of discussion that's come up repeatedly with investors over the last month or two is no one doubts when they think about can wealth achieve a higher end of year 17 to 18, so let's call it 18% rot C over the next few years. I think as the street is trying to digest what the execution around this growth strategy may imply, I think the timing of that has become a bit more uncertain, I would say, over the last six months. And so to the extent you can address that, like just through your crystal ball, like how do you think about when you could achieve that target, maybe towards that 18%, which also, if I recall, you've talked about as a waypoint, and we could go even higher than 18%. Maybe if you can provide some color around the timing of how you think about it, I think that would be very helpful to your shareholders. Thank you.

Sure. And listen, I know it's a very busy day and you guys are trying to juggle lots of different companies. I did talk a little bit about this in my prepared remarks where I talked about the fact that I know that people ask about timing. It's difficult to answer because what I don't want to do, what we don't want to do as a company is give you a definitive date and then have the interest rate environment change, the market's environment change, credit change, and then you believe that we haven't actually delivered on something because the fact is we are subject to those things. But assuming that the markets continue to behave and that conditions continue to be favorable, what I said is that we would expect it to achieve in a reasonable time frame. And the one thing I would say, which is, you know, as time goes on and, you know, from last quarter's underlying performance in our business trends in this quarter, we feel even more confident about being able to deliver it. And what I said in my prepared remarks is that our intention is to get there and then raise the bar higher for the future. So if we didn't have the kind of confidence that we can get there in a reasonable period of time, you know, we wouldn't be saying that. And again, what gives us that confidence is looking at the underlying business drivers that we tried to lay out in the first two pages of the presentation, because it's those things which are going to drive the continued growth of the franchise, regardless to some extent of outsized performance in the markets. So I know it's not giving you a definitive time frame, but I think what's important to read is our confidence is higher, not lower, as each quarter goes by.

Appreciate you going through it again. Thank you.

I'm Kosalia of Morgan's team. Your line is open.

Hi, good morning. I wanted to dig in a little bit on loan growth. You're clearly very strong this quarter, you noted upside to the original long growth guide to the full year. Can you just walk us through some of the drivers on what you're seeing now? How much of the commercial long growth reflects high utilization versus new customer activity? And I guess your willingness and ability to lead more on the auto side going forward?

I'll start maybe on the consumer side, and then I'll bring it back on the commercial side. So on the consumer side, you know, we continue to see really good growth in auto. We see steady growth in card. And the home lending business is kind of pretty stable at this point. And I think those trends, like, we would expect to continue as you sort of look at the rest of the year. And so steady as you go in terms of what we've been seeing quarter to quarter there. um i think on the commercial loan side um it's it's really not utilization you know we see a little bit in pockets of like slightly more utilization here or there but it's really not you know you know substantially higher utilization of of revolvers it is it is new business we've been bringing on that drives a lot of it in the cni uh in the cni space um and i think you know we'll see how the rest of the year progresses you know as i mentioned in the script you know we You know, we certainly have seen, you know, higher loan growth than what we had assumed in the beginning of the year, and that's a positive. You know, we'll have to see how the rest of the year goes. I think, you know, you definitely see tariff refunds coming through, impacting some commercial bank clients in terms of their utilization. You see a bunch of other factors there, but I think it's been good so far, and we'll see how it progresses for the rest of the year. And, you know, importantly with that, we're not, you know, we're seeing really good, you know, performance from a credit perspective across really all the portfolios. And I think that supports, you know, continued sort of execution across each of the businesses and growing, you know, those portfolios.

Got it. Thank you. And then maybe on the capital side, $3 billion in buyback this quarter, a little bit below the recent pace. How should we think about where you want to manage to in your CD1 target range, and how should we think about repurchases going forward here?

Sure. I mean, we're really comfortable in the range that we put out there of 10 to 10.5, really anywhere in that range we're comfortable with. And, you know, we approach buybacks the same way we do every quarter. You know, we look at, you know, what we expect to do from a client perspective and what growth we expect to see across the portfolios and the business. We think about all the different risks that are out there, including the rate environment and the volatility that may be there and how that impacts capital. And then we'll make decisions on how much we will buy back each quarter. And so we'll sort of keep that progression as we go this quarter, and we'll see where we get to. But we certainly, as we mentioned, we bought back $7 billion in the first half of the year. And I think we still have capacity to buy back more as we go. We'll make the decision as we go in the quarter.

And also keep in mind, you know, Mike's talking about, you know, this absent the finalization of the capital rules. And as we've said in the past, you know, the capital rules might not necessarily change, you know, that CET1 minimum plus buffers. but it could certainly change what goes into the calculation relative to freeing up capital through the RWA calculation for us.

Yeah, and just as a reminder, we still expect our RWA to go down as a result of at least what was proposed by about 7%, so we'll see how it gets finalized.

Got it, and if I can ask a quick clarification on that. So you would need to see the rules being finalized before you act on that lower CET-1 ratio? Oh, sorry, on the higher capital, on the ability for the new capital rules to give you more CET-1, you would only act on that in terms of buybacks or capital going with once the rules are finalized?

Yeah, I think we need to see the rule get finalized, but hopefully that'll get done pretty quickly. got it thank you the next question will come from matt o'connor of deutsche bank your line is open uh good morning uh just a quick comment before my question here um you know as your markets business has gotten bigger i need to give us the pieces uh that we could probably calculate it but showing them in x markets i think might be helpful and cut a handful of these questions uh related to it um my question is uh you know the new credit card accounts as you pointed out are up sharply post lifting of the asset cap. I think it's up 50 to 60% now in the four quarters. Any way to estimate how much of a drag there is from those new cards and related promotions as we think about the credit card yield? And then when does that inflect as that backbone kind of starts overwhelming the new accounts?

Yeah, so as Charlie sort of mentioned in his script, like we've made some intentional decisions to, you know, see the growth, like, you know, continue to execute on growing those accounts. And I think, you know, the good part about what we've seen now for the last, you know, almost four quarters, I guess, started really in the third quarter of last year, is a lot of those new accounts are actually coming through either our branch network or, you know, people coming directly to wellsfargo.com. And so the acquisition costs there are lower than, you know, if you're doing them through, you know, third-party affiliates and others. And so that's a really good thing, you know. And with that comes really high-quality, you know, accounts. We know these customers. You know, the majority of it's still existing customers that are, you know, coming to, you know, us for these, you know, these cards. And so I think that's a good thing. And I think, you know, those vintages are a little bit bigger than, you know, the early vintages. And so – but overall, we continue to make – you know, we'll continue to make those decisions as we go quarter to quarter and decide sort of, you know, what we're seeing and how happy we are with the quality of it. And I think, you know, but despite that, I think over the next couple years, you will see, you know, the profitability of that business, you know, just, you know, continue to increase and the returns increase in the business. and that's, you know, the way we've been sort of managing it. And then, you know, the yield quarter to quarter, you know, in terms of, you know, what you see from the credit card yield, that'll move around a little bit depending on sort of what we see from the new acquisitions. But over a longer period of time, you'll see that continue to increase as those vintages mature and you transition from the intro APRs or the, you know, balance transfer APRs into sort of real revolving balances.

And that will happen over the next couple of years. okay thank you the next question will come from john pancari of evercore isi your line is open morning i just want to see if you can um comment a bit more just around deposit price competition that you're seeing uh how is it trending you know versus your expectations and then related to that i know you did comment on the the growth expectation on the loan front on the mid single digit side um do you self-confidence around a mid single digit pace growth as you look at your deposit strategy? Thanks.

Yeah, I mean, the short answer on the second part is yes, on the deposits. And again, a little more weighted to interest-bearing than non-interest-bearing, as I mentioned, John, but we're seeing, you know, week-to-week, month-to-month, sort of the growth that we expect there. So I think that's good. You know, on the pricing competition question, you know, it really hasn't changed over the last few quarters. You know, on the consumer side, you know, our standard, you know, rates haven't moved. We're not seeing, you know, shifts in behavior than what we've seen over the last few quarters there in terms of, you know, people yield seeking in any way. So I think that's good. And then on the commercial side, you know, rates are always competitive, but we have not seen rates get more competitive than what we would have expected normally, you know, across those businesses. And we're really careful to, you know, not overpay to attract balances. And so I think we're not seeing that kind of pressure. And, you know, there's always an example of something to the contrary to what I said. But I think when you look at the vast majority of the activity we're seeing, it's all very much right in the fairway of what we would have expected to see.

Okay, thanks. And then separately on expenses, I appreciate the color you already gave around efficiency and everything. Can you maybe just give us a little update around the risk and reg area of the cost base? I know there's still a fair amount of headcount dedicated to that area. Is this broader area now that a lot of the regulatory issues have been worked through becoming a greater expense lever for you?

Yes, certainly. And I think, you know, we talked about that over the last couple of years, right, as we completed the work and moved past, you know, the consent orders that we have in place, you'll see us continue to make those processes that we put in place more efficient. And if you think about where we started this journey five, six, seven years ago now, you know, I think there's better technology, there's better ways to do things. And so the normal streamlining that sort of happens is happening. But that will be a very methodical sort of approach, and you'll see that, you know, happen over, you know, over time. But it's certainly, you know, part of some of the efficiency that you're seeing come through in the last couple quarters.

Okay. Thanks, Mike. Appreciate it.

Question will come from Chris McGrady of Keefe, Brouillette, and Woods. Your line is open.

Just one on credit. It's been – questions have been fairly limited on conference calls this quarter and throughout the quarter. Or just, I guess, a check-in on consumer health, the consumer, anything incremental you may be seeing. And then, you know, conversely, on the commercial borrower, you know, demand for credit we talked about. But just any signs within the commercial book of weakening or normalization?

Yeah, on the consumer side, it really is good. You know, the delinquency trends are better than we model most months, really every month that we've seen now for all year. across each of the portfolios. We're not seeing any cohorts of clients, whether you break it by FICO or other ways to look at higher or lower income levels. We're not seeing any of the trends in any of the cohorts change really at all, certainly not anything meaningful. And so I think it's supportive of a good second half of the year. When you think about sort of delinquencies and charge-offs. And so I think that's really good. And that's supported by the strong employment picture that we see more broadly. And we've seen good wage growth to counteract some of the inflationary issues that we've had. And so overall, you're seeing really good performance on the consumer side. On the commercial side, same. Really, there's no systemic issues that we're seeing, you know, come through the portfolio. There's always, you know, individual idiosyncratic issues you might see with an individual borrower. But overall, we're seeing really good credit performance. I think people are still being very cautious about, you know, big investments. They still have more liquidity in most cases than they did, you know, maybe historically, you know, pre-COVID days. You're not seeing people, you know, make big investments in terms of hiring lots of people, but you're also not seeing people fire a lot of people, at least from what we can tell in our book. And so, I think overall, you know, I think people are managing their liquidity and managing their, you know, overall balance sheets quite well on the commercial side. And so, again, you know, we have not seen anything that would suggest there's a change to that at this point. Great.

Thank you. The next question will come from David Ciaverini with Jefferies. Your line is open, sir.

Hi, thanks for taking the question. So, you mentioned about the market's business asset growth should slow in the second half. Is that a function of this business getting to your comfort level and then from there the market's business asset growth should be in line with overall balance sheet growth?

No, it's not necessarily that. I think, you know, when you think about what happened, you know, pre-asset cap, we really had to constrain that business. And so, you know, the financing balances that we added, you know, starting in the second half of June last year, you know, was at a pace that is just not, you know, sustainable for, you know, forever. And so, it really was the reemergence and the, you know, the reentry, I guess, in some cases, into sort of the financing activity that had just more broadly across that that business um and so you'll see it just start to more get to kind of more of a natural you know growth rate um over the next uh you know couple quarters and then we'll see how we'll see and then we'll decide you know how fast it goes from there based on the opportunity sets is there but but it really you know the pace you saw was really a reflection of us coming out of the asset cap and being able to deploy balance sheet at a at a pace that was just different than normal and just as a reminder because we haven't mentioned this in a while that when we had to live with the asset cap we reduced the balance sheet in markets more significantly

than any other place in the company because we didn't want to limit things like consumer loans consumer deposits and things like that and so you know a lot of what we're seeing is just kind of a return of the balance sheet that they had originally had and we'll have a normal pace of growth going forward yeah and as i mentioned in my commentary we're up about 200 200 billion dollars since the end of 2024 so that's a good clip i think over the last 18 months got it uh that's helpful and then uh shifting over i was curious about advisor hiring can you talk about the competitiveness and the pipeline you're seeing there yeah i mean advisor you know getting really good advisors and

teams of advisors, you know, has always been competitive. And I think continues to be competitive. We're very disciplined about our approach to that. We don't overpay. We have not changed our deal, you know, to recruit advisors in a while and don't plan to. So we may miss out on some teams if that's the case. So what we try to make sure that we're providing is the right platform with the right capabilities to attract these advisors. And I think that's really resonated. and if you look at the last you know three quarters you know we've had close to if not record recruiting in terms of the the amount of business they bring so think about it as like revenue that's coming onto the platform uh over the last three quarter each quarter for the last three quarters and so it's been quite good to see um those advisors and our yeah and our attrition is is at you know record low for us in terms of attrition that we're seeing you know across the advisor space. And what's good about the types of advisors we're attracting is they bring really good investment business, but they also bring, you know, the need for banking, which is, you know, both deposits and lending, which I think really rounds out the profitability of the business that's coming out of the platform, which helps improve the margin of that business over a longer period of time. And so the team's done a really nice job attracting, you know, the right types of advisors. And the pipeline that we've got is quite good in terms of looking at, you know, the rest of the year. Very helpful. Thank you.

The next question will come from Vivek Janeja of JPMorgan. Your line is open.

Thanks. Can you hear me? Yeah, we can. Yeah. Thanks. Charlie, Mike, sorry. You know, just stepping back on NII, but stepping away even just from them, Both you and Mike said at conferences in the second quarter, you were very confident about the 50 billion NII. And today you've gone to 50 billion plus or minus. Seems like a little bit of a shift. Any color on what's driving that? Is that a shift? What's driving that little shift?

In fact, no shift at all. The $50 billion plus or minus is exactly what we said in January and exactly what we said, you know, end of the first quarter and what I said at Morgan Stanley, you know, the conference and others. And so I think no shift at all, and we're very confident. No intention to shift anything.

Our guidance is the same, and we feel confident about it.

That was an important clarification. Commercial loans, your period end growth slowed a little bit. Any color on what's driving that? do you expect that to pick up again? And then what would be the drive of that? Anything that you can...

Yeah, look, the period end number is driven by lots of factors, Vivek. You have some seasonality through the quarter. You saw some tariff-related, refund-related paydowns. But there's nothing that I would highlight as sort of a change in overall sentiment that is impacting the clients. And as I, you know, said earlier, I think on the consumer side, you're going to, we expect to see more growth in, you know, in auto and in card. I think you'll see home lending be stable, and then I think you'll see some growth in the commercial portfolios in the second half of the year.

Thank you. Question for today will come from Gerard Cassidy with RBC Capital Markets. Your line is open, sir.

Thank you. Hi, Charlie. Hi, Mike. Can you guys share with us on credit? Obviously, your credit quality is very strong. The industry is experiencing really good credit in this period. Are you seeing any signs of risk taking by your competitors in terms of underwriting in the commercial loan area or it could be in consumer? And if not, what are you looking for as we go forward for some aggressive underwriting that could lead to issues, you know, in the next credit cycle?

Yeah, let me take a stab at it. And, Mike, you can either agree, correct me, or not. I think on the consumer side, we would say not really. What we see is kind of, you know, consistent underwriting versus the people that we compete with. You know, everyone kind of comes and goes sometimes and, you know, times are good, but not a lot on the consumer side. I think on the wholesale side, it is a very, very different story. And, you know, that's where you see the deployment of significant amounts of capital, not just from banks, from non-banks. And there's a wide range of risk that people are taking in the lending activities. I kind of try to allude to this in my remarks. You know, we are, you know, staying true to who we are in terms of what our risk tolerances are in the context of a growing franchise. But when you look at whether it's, you know, things in data centers, some of the, you know, the strategic transactions that are done, you know, that are being done out there, there is, you know, there are more risk assets being created on the wholesale side. And there's a lot of capital out there that's, you know, there to support that. And, you know, we're doing, you know, the pieces of the transactions that we're comfortable with that have the credit profile that we're used to underwriting. and there are others that are willing to take more risk than we are.

And just as a quick follow-up to that answer, Charlie, on the consumer, is there any way you guys measure or can capture the non-bank consumer lenders? And I know that it's not primarily your customer because they tend to be a higher-risk customer, but is there any way of making sure that there's not a second derivative effect on your better quality consumer customers?

Well, I mean, I'm not sure. I make sure I'm following this. I think, you know, when it comes to, you know, the consumer credit that we're extending, we're making our own credit decision with every single loan based upon everything that we know, including looking at bureau information and things that they might have away from us to the extent we can see it. And so, you know, that's totally within our control, and we understand that. We do see some of the activities in the non-bank universe through what we do on the wholesale side in terms of who we finance. We've talked about this last quarter. It's good information to have, but we're also selective about who we're lending to, because not everyone in that space has the same risk tolerance.

Understood. And then just as a last final question, I know this is probably hard to answer, but AI has been just so powerful to the U.S. economy in terms of capital expenditures. You mentioned data centers, of course. Is there any way of getting your arms around of second derivative exposures to the AI industry for wells so that I think you or many of your peers have direct data center construction loans? But I'm just wondering that if this, when this boom slows down, is there some fallout that we could see potentially down the road on the second derivative of the suppliers or other folks that it's not as clear maybe today that they have that kind of exposure in their business models? um yeah i mean listen i think you know when you look at uh the exposures that are being created to uh to help finance the build out i mean you're you're absolutely right there are different types of things that are being financed right there's core and shell there's power there are chips and

there are a whole series of things that go into the data center um and you know uh we underwrite those different pieces of those financings very differently because we rely on, you know, different types of, you know, different types of credit support for those to be paid off. And, you know, it's very, very different lending to a chip maker that has 80 percent margins where we get paid back in a year and a half versus lending to you know someone else in the supply chain who it's going to take you know you know 15 years to get paid back or 10 years to get paid back and hope that the llm provider who's renting that space uh is going to be there and so you know there are and so that is the complication um that you know everyone is working through in terms of you know who we lend to and that's when i say that you know there are different kinds of risk that are being created here um and we're you know working to stay within the lane of the risks that we understand uh we're confident um not just that we understand that we'll obviously get paid back um and different people have different risk tolerances and you know that's uh that's always been the case you know i appreciate the color thank you charlie all right thanks everyone.

We appreciate the time.