Wells Fargo's Scharf on Economy, US Consumer, Earnings

It certainly is for us. We're incredibly proud of the progress that we've made. We're a very different company than we were when I got to the company. I guess it'll be seven years in November. And what you've seen since the asset cap has come off is that we're able to compete on a level playing field with everyone, and we're growing our consumer bank. We're growing our commercial bank. We're growing the wealth business. We're growing our core investment bank, and we're doing it in a way we're very highly focused on sustainable growth and high returns, and we think we've got huge opportunity in front of us.

And sustainable, I think. Listen, in this business you've got to be very careful about what aggressive means. And we also have to be very careful about distinguishing between what the markets are adding to our performance or any other financial services provider's performance and what we're doing. We're not looking for quick wins. We're not looking to take outsized risks in the short term to drive stronger results. We're looking at building the underlying franchise, building customer relationships, building flow of things that will go up and down based upon how the markets are doing. But that's what I mean when I say sustainable over a period of time.

Just kind of regulatory rehab? Well, I think I wouldn't call it. I think you're right. It's not a turnaround story. The company was always very strong. We always had a great franchise, but we had to fix things that needed to get fixed inside the company. But from our customer standpoint, we were serving them every day. We were making loans, we were taking deposits, we were constrained on growth, but we were there providing what we did day in and day out. And financially, we were still doing okay. And when we looked at what we were able to deliver, we're not able to grow our balance sheet. We've been focused a lot on efficiency inside the company. We've been focused a lot on growing our fees inside the business. So our corporate investment bank has grown very nicely. Our credit card business and credit card spend is growing very nicely focused on building treasury services. And now we can grow the balance sheet so we can more holistically serve customers. And that's what you see when you look at the results of this past quarter, with earnings per share of 25%, revenue growth, double-digit growth across every one of our businesses in terms of revenue. We're certainly in a different place, and our goal is to be viewed as the best financial services provider in these businesses in the country.

Well, I think it's predominantly because of the quality of the franchise and the broad group of people that work at the company. Listen, what I and the new management team have been able to do was get people focused, create a different set of priorities. But a lot of people execute day in and day out. And the fact is the markets do help. So there's no question that these times are really good for banks. And so if you're not doing really well as a bank today, there's something not quite right with either how you're executing or what your strategy is. And that's not lost on us. But again, we look at the underlying metrics of each business. We're growing our consumer checking accounts. We're growing commercial banking customers. We're growing the kinds of loans that we want to grow. We're taking the risks that we want to take that we think will provide strong returns over cycles and not get over our skis and not pretend that it's all us. Some of it is the markets for sure.

Yeah. So we've been on a disciplined path to growth in our corporate investment bank. We're a huge lender to corporates of all sizes in this country. Large corporates down to middle market companies. We provide treasury services. And what we're doing is building on those relationships with a stronger set of products and services, coverage groups, M&A, underwriting capabilities. And so we've been very disciplined about adding resources in a sequential way, seeing that they're paying off. And we're seeing the results. And so yeah, we would expect that to continue as we move towards our ambition of being top five.

It's a combination of all of the above. We do have more resources in New York than we used to have for sure. But as you point out, we have more people in North Carolina and in Charlotte than any other specific location. And that goes back to the merger of Wachovia and Wells Fargo. Half of our corporate investment bank is down in Charlotte. The other half is here. We also, I should say, we do have offices around the country and other parts of the world. And so we would expect to see growth in both locations, and closer to serving customers across the country.

Footprint here in New York City? We have about between 4 and 5,000 in New York. That number at this point will probably in total stay roughly what it is. And the question for us is going to be where's the best talent? Where do they want to live? Where do they find the most attractive place for them to want to live and do business? It's very hard for us to get people to move from North Carolina to New York, even when we try. Sometimes it's hard to get people to move from New York down there. There are people that self-select, and over a period of time, how New York does and how North Carolina does and how California does matters to where people want to live. And that will be an important driver.

So I would say what you hear from them and what they're doing aren't the same things. People are nervous. They read the newspapers, they watch TV, they see what's going on in other parts of the world. They're concerned about AI. And so those are things that are very much on their mind. But when you look at what they're doing, when you look at consumers, they're spending more year over year. Their delinquencies are down. They're saving more. They're doing really well. When you talk to smaller companies across the country, again, they're nervous. They're concerned about how they should be planning for the future, but they're in really great financial condition.

I think yes and no. I mean, if you would have laid those things out, you would have said, well, would you have as strong an environment today? You'd say, probably not. But the fact is, employment is still strong. Wages, at least for our clients, are growing faster than inflation. And that's going to be the most important driver of how the consumer performs. Now, that's not to say that's going to last forever, but we do continue to see that. And so that's what's going to drive the results.

So I'd separate into what I know versus what we would guess. What we know is that the strength continues when we look at the stats day in and day out, the strength of the consumer, the strength of businesses hasn't changed from what we reported just a couple of weeks ago. Are we nervous about what the future holds? Sure. The fact is, things are really good. Markets are really strong. There's certainly volatility. But things are priced quite well in the credit markets and in the equity markets. There's a huge amount of liquidity out there. There's a huge amount of financing taking place. And it's something then that doesn't go on forever. So we're trying to be very thoughtful about recognizing that good times don't last forever. But things don't look like they're breaking quite yet.

We're 95% of our revenues come from the US. We're thrilled about that. So goes the US, so goes us. And we're very bullish on the US. And so we're going to continue to invest in all of our business here in the US and believe that there's significant opportunities for us to grow the economy and to take share. The business that you mentioned, the investment bank, does have to grow outside the US for us to serve large companies and middle market companies as they want to expand outside the US properly. We need to have a presence. We need to have distribution capabilities. We need to have advisory capabilities. But it's there primarily to serve the customers that we do business with here in the US with regards to the private markets.

Well, in the private markets, we say this, private markets are a very broad group of people. There are some that do it really well that have the experience, that have been through cycles, that have the analytics, that have the rigor. Those are the ones that we try and do business with. And those are the ones that we focus our attention on. And we feel really good about the credit support that we're providing for them. There are others out there that people potentially should be more concerned about, but we don't have broad exposure to that. But when we see certain transactions, there are those that are willing to take a lot more risk than others that do seem to have different levels of discipline and different levels of analytics. So if credit does turn down, it's just like in the banking universe, some do it really well, others do it less well. Some will do quite well. We believe those are the ones that we bank, others not as well. And that'll be shown away from us with the structure of some of these data center financing deals as well.

We are listening. I mean, the fact is, this is a necessary build that needs to take place to support what AI can do. But here, too, just like we talked about private credit, not every transaction is the same. Not every piece of risk is the same. Who you finance, who the guarantor is, who's got the revenue model to support, it really does matter. And so we are in active dialogue, not just with the things that we've done in the past, but the things that we want to do in the future. But you've got to be selective about who you're financing and what the structures are.

But I have no ambition to do anything other than stay at Wells Fargo, build Wells Fargo and retire from Wells Fargo. That's what I intend to do. And that's what I'm going to do. If, by the way, I think it's a great seat. I mean, when you look at it, someone could give you the opportunity to run a company like Wells Fargo with the quality of the business that's been so constrained for so long that has chosen the businesses to be in. We have amazing opportunities to continue to do a better job for our clients, to grow and increase returns, and I think we can make a difference in this country, and that's incredibly appealing.

BMI, JP Morgan, the others? No, I don't get envious. I look at them and listen. You can learn a lot from people. A lot of companies out there do really well. They've done really well. Yeah. And hopefully over time, they'll look at us and feel the same way.

I talked to Jamie. I talked to all the other leaders in the business. Yeah, there are things we've got common interests on, and we talk about those things, but we compete hard day in and day out.

Going on? I have no idea. You know, Frank and I have known each other for, I think, maybe 30 or 35 years. I spoke to him the other night. He says it's not true. By the way, I don't know what I would have that anyone would have any interest in. And so I honestly don't think about it that much.

I think we've got the opportunity not just to have Wells be a better performing company, but be back to what we should be, which is the best performing financial institution in this country, which means real, sustainable growth with the highest returns adjusted for our business mix. And ultimately, that should drive us to be the most respected bank in this country. And we compete with great people out there. So it's not going to be easy to do, but that's our goal.