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The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

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The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are banks, insurance, and real estate companies.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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F500-2023-047-Wells-Fargo

The fourth biggest bank in the U.S. in terms of revenue dropped six spots on this year’s list amid a tumultuous period marked by rising interest rates. 
<ul> 
 	<li>The bank posted revenues of $82.8 billion for 2022, up 0.5% from the year prior. It accrued $13 billion in profits in 2022, down 38.8% from the previous year.</li> 
 	<li>In May 2023 Wells Fargo paid $1 billion to settle a class action lawsuit in which shareholders accused the bank of overstating its progress toward fixing practices that had gotten it into legal trouble in the 2010s. Most prominent of those scandals was a fake-accounts scheme in which bank employees frequently opened accounts without depositors’ knowledge to meet sales goals.</li> 
</ul>

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022-Wells Fargo

Wells Fargo is the third-largest bank in the U.S. by assets, with $1.79 trillion as of February. It serves one in three U.S. households and more than 10% of small businesses in the country. Its stock surged more than 61% in 2021, as Wells Fargo produced a massive $21.5 billion in earnings—fueled in part by a post-pandemic resurgence in lending. But the financial giant continues to labor under a balance-sheet cap imposed by the Federal Reserve after its 2016 fake-accounts scandal. Other legal problems have bubbled up in 2022: In March, Wells Fargo was sued in California for alleged discrimination against Black mortgage borrowers. (The bank has denied that it discriminates in its lending.)

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500 103 Wells Fargo

Wells Fargo continues to experience fallout from its 2016 fake accounts scandal, even five years on. An asset cap imposed in 2018 in response to the bank’s misdeeds prevented the company from taking some deposits during the pandemic. Net income for 2020 slipped to $3.3 billion, compared with $19.5 billion in the year prior. And with a smaller trading and investment banking arm compared with its megabank peers, Wells Fargo also missed out on much of the surge in equities during the year. Still, the bank is seeing a flicker of light: The Fed accepted a proposal to overhaul the bank’s risk management in early 2021, signaling a first step toward lifting the bank’s asset cap. But that comes after Wells Fargo’s continued struggles have worn on investor patience: Warren Buffett’s Berkshire Hathaway, once one of the company’s largest shareholders, culled its holdings by 83% in 2020.

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F500-2021-37-Wells Fargo

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G500-2020-069-Wells-Fargo

Three years after Wells Fargo's fake accounts scandal erupted, the cleanup continues. There have been countless lawsuits, two CEO exits (three, if you count the departure of an interim leader), and, this February, a new $3 billion fine to resolve further investigations. A $1.95 trillion asset cap on Wells Fargo, imposed by the Federal Reserve in 2018, continues to limit the bank’s growth compared with its peers. Now, CEO Charles Scharf, who joined in October 2019, is tasked with reforming Wells Fargo’s image in the eyes of consumers and regulators alike. Scharf, a former CEO of Bank of New York Mellon, and before that, Visa, is the first top leader brought in from outside Wells Fargo in more than a century; so far he has reorganized reporting lines and brought in more outside executives.

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F500-2020-030-Wells-Fargo

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Wells Fargo was among the top six U.S. banks in terms of total assets in 2026. It provides consumer, commercial, corporate, and investment banking services, as well as wealth and investment management.

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Wells Fargo (WFC): Company Profile, Stock Price, News, Rankings

legacy

Wells Fargo

wells fargo

Welcome, and thank you for joining the Wells Fargo First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. 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.

Good morning. Thank you for joining our call today where our CEO, Charlie Sharp and our CFO, Mike Sanamacimo, discuss first quarter results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our first quarter earnings materials, including the release, financial supplement and presentation deck are available on our website at wellsfargo.com. I'd also like to caution you that we may make forward looking statements during today's call that are subject to risks and uncertainties.

Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form eight ks 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'll make some brief comments about our results, update you on our priorities and provide some observations on what we're seeing in the current environment. I'll then turn the call over to Mike to review first quarter results in more detail before we take your questions. Let me start with first quarter highlights. We had solid first quarter results with diluted earnings per share up 16% from a year ago, including some items noted in the earnings release.

While revenue declined from a year ago, driven by lower net interest income as expected, We grew our fee based revenue across many of our businesses, reflecting the benefit of the investments we've been making to diversify revenues and reduce our reliance on net interest income. We continue to take a disciplined approach to expenses, with expenses declining from a year ago as we executed on our efficiency initiatives, which have helped drive headcount reductions for 19 consecutive quarters. We maintained our strong credit discipline and credit performance improved during the quarter with lower net charge offs from both a year ago and the fourth quarter driven by improved performance in our commercial portfolio while consumer losses were relatively stable. We have been actively returning excess capital and in the first quarter, we returned $4,800,000,000 of capital to shareholders through dividends and share repurchases and our diluted average common shares outstanding were down 8% from a year ago. Regarding our strategic priorities, I am very proud of the significant progress we have made on our risk and control work.

It remains our top priority and closing consent orders is an important sign of progress. Five consent orders were terminated in the first quarter. Some of these were long standing and others were resolved with timeframes that are much improved from other historical orders, which is an indication that our team is establishing the right processes and controls to meet our regulators and our own expectations. Since 2019, '11 orders have been terminated. We are a different company today than when this new management team arrived.

These recent closures reflect that we have completed much of the common risk and control infrastructure work across the company that is required by other orders. I'm incredibly proud of the work done by our teams and remain confident that we will complete the work needed to close our other open consent orders. We also continue to show progress on our other strategic priorities, which are helping to improve Wells Fargo's returns. Our investments in our card business have continued to drive higher balances and spends from a year ago, while credit results have continued to be within our expectations. During the first quarter, Ed O'Lee joined us as the Head of Cards and Merchant Services.

I want to thank Ray Fisher for his leadership of our card business over the last five years. Ray was my first hire when I joined Wells and I worked with Ray for much of the thirty eight years we have known each other. So I am not surprised at the great job he did in transforming our card and merchant business. He brought great talent into the business, transformed our product offerings and greatly improved the customer experience while making the card business an important strategic part of Wells Fargo. I am equally excited to welcome Ed to the company.

He brings more than twenty five years of financial services and credit card experience and his expertise will be invaluable as we continue to grow our credit card business and expand our payment capabilities across merchant services. Turning to our auto business, we started to launch our partnership with Volkswagen and Audi brands as their preferred purchase financing provider in The United States. Following the termination of the sales practices consent order over a year ago, we have been taking measured actions in consumer, small and business banking that started to generate modest growth across a number of metrics, including net checking account growth, more credit cards originated in our branches and improved customer experience scores. We have also continued to invest in refurbishing our branches, while at the same time making enhancements to our account opening experience in both our digital and branch channels. In the first quarter, active mobile customers grew 4% from a year ago and digital account openings continue to grow.

We continue to increase collaboration between our bankers and advisors that is helping drive an increase in net asset flows into the wealth and investment management premier channel. We've also seen more of our clients investing in alternative products, which is one of our goals. Turning to our commercial business, we continue to generate strong growth in investment banking fees driven by strength in debt capital markets. I want to thank John Weiss, who announced his retirement earlier this year and started leading corporate investment banking in 2020. John has built a great management team and together they have taken a good corporate investment bank and have made it an important driver of growth and strong returns for the company.

We are a better and stronger company because of John's leadership and he is leaving Corporate Investment Banking well positioned for future growth. Fernando Rivas, who joined Wells Fargo last year with nearly thirty years of industry experience, is now the sole CEO of Corporate and Investment Banking. We are also focused on expanding our Commercial Banking business and the investments we've made in relationship managers and business development officers has helped to attract new clients and we have seen some early success in offering our investment banking capabilities to our commercial banking clients. Now let me turn towards what we are seeing from our customers. Through the first quarter, our internal indicators continued to point towards the strength of our customers' financial position.

Consumers have remained resilient and debit and credit card spending patterns have remained stable. More affluent customers continue to show strength, while less affluent customers show more stress. Consumer credit also continues to perform well. Delinquencies appear to have leveled at historical norms and payment rates on unsecured portfolios have been quite strong. Deposit flows for both consumer and commercial clients have been consistent and in line with seasonal trends.

And while overall loan growth was modest, we have seen pockets of increased loan demand from our commercial clients resulting in modest growth in both average and period end commercial loan balances from the fourth quarter. All of this points to the strength of our customer base through the end of the first quarter. Some broader comments now on what we see currently. I am encouraged by the willingness of the administration to take on some very difficult issues. It's been over fifteen years since the financial crisis and we greatly support the willingness to look at the cumulative impact of the regulatory changes that have been made during this period and evaluate where changes are needed to better support a growing U.

S. Economy. This is not just a bank issue. We also hear from our corporate clients that they experience significant regulatory barriers to growth and support the effort to look at regulations and make meaningful changes. We believe the changes that are being discussed would allow us to better support our customers.

That means make more loans, take more deposits and provide more liquidity to the markets while still preserving robust regulatory oversight. Regarding trade, we also support the administration's willingness to look at barriers to fair trade for The United States. Though there are certainly risks associated with such significant actions and we see concern playing out in the markets and the economic uncertainty that now exists. Timely resolution, which benefits The U. S.

Would be good for businesses, consumers and the markets and therefore good for Wells Fargo since we are predominantly a U. S. Bank. Wells Fargo prospers when The U. S.

Prospers. Though we have heard a great deal from our clients as they work through this transitionary environment, we have not seen an impact on their condition yet. This is a complicated issue and is our current expectation that we will face continued volatility and uncertainty and are prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of policy changes. We and our customers come into the current environment from a position of strength and that should serve us well. We have managed credit well over many cycles and over the past couple of years, we have taken several credit tightening actions that have reduced our origination volume and improved our credit performance, which should position us well if there is an economic downturn.

We have a strong balance sheet, including our capital and liquidity levels, which allow us to support our customers and clients in a variety of economic scenarios. We will continue to react to both known and anticipated policy changes and their potential effects on the economy and we'll continue to carefully monitor these trends and respond accordingly. Our focus is unwavering. We want to be an important partner for our clients, communities and governments in driving sustainable economic growth in The U. S.

We are transforming Wells Fargo by investing to build a well controlled, faster growing and higher returning company while we work to better serve our customers to become more efficient. I am proud of all that we have accomplished and even more excited about our future as we build one of the most respected financial institutions in the country. I will now turn the call over to Mike.

Thank you, Charlie and good morning everyone. Our first quarter results were solid with net income of $4,900,000,000 or $1.39 per diluted common share, both up from a year ago. These results reflect the consistent execution on our strategic priorities. We continue to see growth in fee based revenue across many of our core businesses, had a focus on reducing expenses and maintain strong credit discipline and continue to return excess capital to shareholders. Our first quarter results included $313,000,000 or $09 per share of discrete tax benefits related to resolution of prior period matters and a $263,000,000 or $06 per share gain on the previously announced sale of the non agency third party servicing segment of our commercial mortgage servicing business.

These benefits were partially offset by $149,000,000 or $03 per share of losses related to $2,600,000,000 of debt securities as we continue to repositioning the investment portfolio. Turning to Slide four, net interest income was down $341,000,000 or 3% from the fourth quarter driven by two fewer days in the quarter as well as the impact of lower rates and floating rate assets. I will update you on the full year net interest income expectations later on the call. Moving to Slide five. Both average and period end loans grew slightly from the fourth quarter driven by growth in commercial and industrial loans.

While still quite modest, it's the first time we have seen growth in average loans since first quarter twenty twenty three. Average deposits increased from a year ago across our commercial and consumer businesses, enabling us to reduce higher cost corporate charges deposits by $69,000,000,000 or 58%. Average deposits declined 1% from the fourth quarter as higher consumer balances were more than offset by a reduction in higher cost corporate treasury deposits as well as seasonal declines in our commercial businesses. Average deposit costs declined 15 basis points from the fourth quarter with declines across all of our businesses. Turning to Slide six.

Noninterest income was stable compared to a year ago. The impairments in the venture capital portfolio and losses from the investment portfolio repositioning were offset by growth across many of our businesses where we have been investing, resulting in higher investment advisory and investment banking fees. We also benefited from the gain on the sale of a part of our commercial mortgage servicing business. Turning to expenses on Slide seven. Noninterest expense declined 3% from a year ago, driven by lower operating losses and the lower FDIC special assessment as well as the impact of our efficiency initiatives.

Non interest expense was relatively stable compared to the fourth quarter, which included $647,000,000 of severance expense, while the first quarter included approximately $700,000,000 of seasonally higher expenses, including payroll taxes, restricted stock expense for retirement eligible employees and four zero one matching contributions. Turning to credit quality on Slide eight. Credit performance improved with our net loan charge off ratio down five basis points from a year ago and eight basis points from the fourth quarter to 45 basis points of average loans. Commercial net loan charge offs decreased $192,000,000 from the fourth quarter to 16 basis points of average loans driven by lower losses in the commercial real estate office portfolio. Consumer net loan charge offs declined $10,000,000 from the fourth quarter and were 86 basis points of average loans as declines in auto and other consumer loans were partially offset by higher losses in the credit card portfolio reflecting seasonality, which was consistent with our expectations.

Non performing assets increased 4% from the fourth quarter, driven by an increase in commercial and industrial non accrual loans. Moving to Slide nine. Our allowance for credit losses for loans was down $84,000,000 from the fourth quarter, reflecting a lower allowance for commercial real estate loans on lower loan balances. Although we haven't seen evidence of weakness in our consumer or commercial portfolios, when setting the allowance in the first quarter, we made a modest adjustment to reflect the potential economic weakness that could develop. Our allowance coverage for our corporate and investment banking commercial real estate office portfolio declined to 11.2%, which was in line with the coverage ratio we had in this portfolio for most of the last year.

Turning to capital and liquidity on Slide 10. Our capital position remains strong with our CET1 ratio stable at 11.1%, well above our CET1 regulatory minimum plus buffers of 9.8%. We repurchased $3,500,000,000 of common stock in the first quarter and have the capacity to continue to repurchase shares. Moving to our operating segments, starting with Consumer Banking and Lending on Slide 11. Consumer, small and business banking revenue declined 2% from a year ago, driven by higher deposit costs, reflecting the impact of customer migration to higher yielding deposit products.

Of note, deposit balances grew from a year ago, marking the first year over year gain since fourth quarter twenty twenty two as the average balance per checking account stabilized and the pace of migration to higher yielding products continued to slow. Debit card spending remained strong, up 4% from a year ago, consistent with the fourth quarter growth rate. Loan lending revenue was stable from a year ago. Mortgage loan originations increased 26% with increases in both purchase and refinance volume. We continue to streamline the business with headcount down 47% and the amount of third party mortgage loans serviced for others down 31% since the end of twenty twenty two.

Credit card revenue grew 2% year from a year ago as loan balances increased. Auto revenue decreased 21% from a year ago, driven by lower loan balances and loan spread compression. The spread compression reflects our previous credit tightening actions, which have resulted in an increased concentration of higher FICO borrowers in our portfolio as well as improved credit performance. The decline in personal lending revenue from a year ago was driven by lower loan balances. Turning to Commercial Banking results on Slide 12, revenue was down 7% from a year ago as growth in non interest income driven by higher treasury management fees increased revenue from tax credit investments and higher investment banking fees was more than offset by lower net interest income due to the impact of lower rates.

Average loan balances in the first quarter were stable from a year ago and up 1% from the fourth quarter. Turning to Corporate and Investment Banking on Slide 13. Banking revenue was down 4% from a year ago, driven by the impact of lower interest rates. This decline was partially offset by lower deposit pricing and higher investment banking revenue from increased activity in debt capital markets. Commercial real estate revenue grew 18% from a year ago, driven by the gain on the sale of a part of our commercial mortgage servicing business.

Increased capital markets activity and higher revenue in our low income housing business also benefited revenue in the first quarter. Markets revenue was stable from a year ago as higher revenue from activity across most commodity products as well as foreign exchange was offset by lower results in structured products and credit trading. The 22% from the fourth quarter reflected seasonality and higher trading activity across most asset classes. Average loans declined 2% from a year ago, but increased 1% from the fourth quarter as growth in markets and banking more than offset continued declines in commercial real estate as transaction activity remained muted, capital markets remained liquid and our office portfolio continued to decline. On Slide 14, wealth and investment management revenue increased 4% compared with a year ago as higher asset based fees driven by increased market valuations were partially offset by lower net interest income due to higher deposit costs.

As a reminder, the majority of wind advisory assets are priced at the beginning of the quarter, so second quarter results will reflect market valuations as of April 1, which were down from January 1, but up from a year ago. Despite the market volatility during the first quarter, the mix of our clients' assets allocation was relatively stable. Average deposit balances continue to increase and the migration of deposits to cash alternatives continued to slow. Slide 15 highlights our corporate results. Revenue declined compared to a year ago, driven by lower results from our venture capital investments and higher net losses on debt securities related to the repositioning of the investment portfolio.

Turning to our 2025 outlook on Slide 16. We have not changed our net interest income outlook and we still expect 2025 net interest income will be approximately 1% to 3% higher than in 2024. However, given what has occurred over the past three months, we currently expect our full year 2025 net interest income to be in the low end of the range. It is still early in the year, and clearly, we are entering a period with more volatility, so we will need to see how the key variables driving net interest income such as rates, deposit flows and mix as well as loan growth play out, and we will continue to update you over the remainder of the year. I would also point out that the amount of trading related interest income will be impacted by rate and asset levels, which would be largely offset by trading related non interest income.

Regarding our expense outlook, we still expect 2025 non interest expense to be approximately $54,200,000,000 In summary, our results in the first quarter reflected the progress we have been making to improve our financial performance. Compared with a year ago, we had double digit growth in diluted earnings per share, grew fee based revenue across many of our businesses, reduced our expenses and improved our credit performance. Lastly, the strength of our balance sheet, including our capital and liquidity positions, our risk discipline and our diversified business model allows us to be a source of strength for our customers throughout economic cycles. We will now take your questions.

And our first question will come from Scott Siefers of Piper Sandler. Line is open.

Thank you. Good morning, everybody. Appreciate you taking the question. Charlie, maybe I was hoping you could start by perhaps expanding on your thoughts regarding current customer sentiment. Is sense that customers are still eager to do things once we get past all this turmoil?

In other words, we just sort of need a finite termination to some of this uncertainty or are they now beginning to like gear themselves for a more prolonged slowdown that would sort of dial back some of their plans?

Listen, I would say, I think they're trying to figure it out. I mean, I think everything that we see in the behavior both in terms of both our consumers as well as our corporate customers has been discontinued strength, which is a great position to start from. But everyone is trying to assess the situation in terms of will there be resolution to some of these things, what does it mean for their business, and that's not completely clear. So business hasn't come to a halt in any way at this point, but people are certainly taking stock of what it means, figuring out where to sit and wait and where to continue to move forward. And I think there is still a hope that the positives of regulation, positives of tax reform, the long term positives of changes in trade can put us in a position to feel better about the future and a growing economy.

But people are cautious. So I just kind of put it in the wait and see category. Cautious in the shorter term, but probably still bullish for the longer term.

Okay, perfect. Thank you very much. And then Mike, was hoping you could unpack a little more on the NII commentary, few caveats in there and appreciate you're thinking more toward the lower end of the range given what we see currently. But maybe as you

the puts and takes regarding rates, the forward anticipated loan growth or lack thereof, if you could just maybe point to where you feel like you're most confident and by contrast what might need to be right to get a little stronger performance as the year plays out?

Yes. No, I appreciate it. And there are a lot of puts and takes and certainly a lot of uncertainty just more broadly around like where the path is. If you start and think about where rates are relative to the expectations we set in January, really the difference is on the short end of Fed funds really the difference is in the second half of the year. The first half of the year is pretty close and that's moving around a lot, right?

And you can just look at the implied forwards for year end on Fed funds and it's you got a 30 basis point plus or minus move like over the last six, seven days. And so that'll I think that's going to continue to evolve a bit as we kind of look forward. On the long end right now rates are a little bit lower than what we projected, but it's not a huge driver of what's going to be success for NII. And we're up 50 basis points in the last seven days. And so that can move pretty or a little over that actually as of now.

And so that can move pretty quickly. So we'll see and it's hard to predict exactly where rates are going to go just given sort of the volatility that we've seen. On the loan side, like we said in January, we didn't expect to see a lot in the first half. We expected to see more in the second half and call it sort of mid single digit kind of growth rates kind of three ish, four ish percent sort of growth rates that of place when you look at the versus fourth quarter. And that's still like an open question.

Charlie sort of highlighted a little bit of the uncertainty that's there. We did see a little bit of growth in the first quarter. So that's a positive. As I mentioned in my remarks, we haven't seen that in a while. So that's good.

And so we'll see how that progresses. And hopefully we get a little bit more clarity and things calm down a bit and we start to see some of that growth that we expect to happen. But that's certainly going to be a place that could move around a little bit. And then when you look at deposits, we come into the first quarter, you see non interest bearing down a little, interest bearing up a little bit. So you got a little bit of on a negative side, you got a little bit of mix changes there.

On the positive side though as we look at the consumer business we saw a little bit of growth plus we're doing we're getting better results when we look at the retention of some of the savings promotions that we had on or the CDs that are rolling over. So we're retaining more of those deposits than we model. So there's some puts and takes there as well. And so as you look and then you have like trading NII that's going to move around a little bit. You see a little bit of that in the first quarter where we had higher trading assets driving a little bit lower NII that's but that's offset in fees.

And so you see there's lots of puts and takes. And so at this point we still feel like that low end of the range is kind of what it looks like now, but it could move around a little bit as we go into the middle of the year both on a positive or negative way.

Yes. I just want to emphasize just what Mike just said, which is we're trying to be as transparent as we can be about what the outcomes can be in terms of NII. But there are huge unknowns. And the huge unknowns can go both ways in this, right? You can make arguments if I look at the forward curve in terms of how many rate cuts there'll be.

You can also make an argument that suggests there just won't be nearly the amount of rate cuts that are embedded in the forwards. And you see what's happened to the curve over the last couple of days, let alone the past couple of hours. The same holds true relative to what happens in terms of just loan balances. There are scenarios where, for a host of reasons, both positive it could be positive or negative in terms of customers wanting to borrow. And so it's just it's a it is a volatile time.

It is a time of unknowns. Again, we're trying to be as clear as we can about what we think today. As we think about what the future is, there's we're not locked in on one scenario that's locked in on the low end of NII. It's how could this play out? It can play out multiple ways.

And as we sit here next quarter, we'll hopefully have be able to share more because time won't just have passed. But hopefully, the issues that are driving the rate curve out there, we'll have a little bit more clarity on.

Perfect. Thank you all for the additional color.

The next question will come from Ken Usdin of Autonomous Research. Your line is open.

Thanks. Good morning. Charlie, your interest rate, and as you mentioned, the continued progress on knocking down more of the contempt orders. And I just want to ask a bigger question about the regulatory backdrop and does anything in the moving parts that we're all watching happen in terms of appointments and new heads and such impact how you move forward on trying to get the rest of them done? And just if you have to make an adjustment, like what are those adjustments that you have to just be thinking about?

Yes. Listen, I don't think we need to make any kind of adjustment. I mean, I've been I was asked in the past about how I felt about the willingness of people in leadership positions in the prior administration to close orders. And I was very consistent in my belief that the regulators are very objective when it comes to these things. They're very fact based.

They want us to see to do the work. They want us to do their validation. And if

the orders. And we've seen that. We've had 11 closed since 2019. And so I think no, don't think the change in administration suggests that we need to do anything differently. I do think certainly the view that this administration has and the people that are both whether they're acting or those that have been nominated or those that are in new positions would certainly want to be constructive when it comes to not just regulation but supervision.

And so I presume that they will react in a very positive way to the progress that they've seen us made. And I would point you to the quote in the press release about our view on the importance of the work that's been completed in the closed consent orders, and what that means for some of the orders that are outstanding. And so I think these things come together to not have us feel any different, meaning we still are extremely confident in our ability to do what needs to get done here.

Great. And Mike, one for you. You mentioned that you made a little bit of adjustment on the reserve. I think people are noticing that the reserve there was a bit of a reserve release. You guys are one of the more conservatives in your scenarios, but can you kind of just talk through just how you feel about where you stand now and how the environment also just makes you think about whether that was fully captured in the first quarter reserve or are there any things we should be thinking about going forward?

Yes, sure. I think first in terms of the adjustment we made that I highlighted it was a couple of hundred million dollars and so we would have had a bigger release given both the change in balances we saw in the quarter but also sort of the credit performance which has been really, really good. And you can kind of see that come look at the charge offs. And so it would have been a bigger release. I think when you take a step back and look at the way we've approached the allowance now for consistently now for a number of years, we start with a pretty significant weighting on the downside scenarios.

We have a baseline scenario. We have a couple of downside scenarios. And we've had a pretty significant weighting on those scenarios now for a number of years. When you look at how that projects out and you can see a little bit of this in the Q, but it's not it doesn't quite give you the whole time series. But when you look at what that shows is it shows unemployment kind of getting to a little over 5.8%, so a little under 6% out a couple of quarters versus what you might see in the Q.

So it already is pretty a pretty significant uptick in sort of unemployment running through the models. But I would also point out like that's like step one. So running the models, getting 5.8% as like the unemployment that's step one in terms of where we get with the allowance. Step two is really being thoughtful about all of the things the models might not capture appropriately. And so we increase the allowance based on a lot of the judgment that we then apply across the different risks that might be there within the scenario.

So I would sort of take comfort that one, we do have a pretty good weighting there in the downside. It is 5.8% unemployment and then we add more allowance on top of it. Now will that change based on the path of the economy? Maybe, right? We've got to see where this starts to go.

If we have a much deeper recession, would you see allowance uptick? Probably. But I think if something's got to change pretty changes in terms of the outlook in a pretty significant way. And I'd sort of bring it back to where Charlie was before when clients coming into this are in really pretty good shape, right? And you can see that through the charge off performance.

And both on the consumer side in good shape, we're not seeing deterioration happen in any meaningful way relative to what the trend that we've had over the last couple of quarters even on that lower end consumer. And on the corporate side same thing, very consistent performance now for a number of quarters. And really the only place that we've seen any systematic stress is still the office portfolio. And even there it's been pretty stable in terms of the trends and what our expectations have been.

Let me just add a couple of things if I can, and emphasize a couple of things Mike said. First of all, when you look at our change in reserve this quarter, it came down because loan balances came down and because we had charge offs really in our commercial property portfolio where we have substantial reserves and so it's appropriate to use those. As Mike said, our modeling which we think is very well, you can argue, but we think it's appropriate and probably on the conservative side given the unemployment numbers and the way we weighed our scenarios would have suggested a release. And so away from those two places where we did reduce the reserve, we kept it what we think are relatively conservative assumptions for unemployment and the weighting of scenarios and didn't release. So it's more conservative today than it was at the end of last quarter, which

an intentional reaction to what we see going on out there. But as Mike said, would that be enough under a range of scenarios? It depends on how bad the scenario were to get.

The next question will come from John McDonald of Truist Securities. Your line is open.

Yes. Hi. Good morning. Mike, I was wondering if you could give a

little more color on what you saw with commercial loan growth this quarter. It seemed like it picked up a little bit, change in utilization or a build out of customers. Just give a little color there please.

Yes. Sure, John. First, in the commercial bank, it was mostly a utilization story. There may have been a few new customers as well where we saw kind of a slight uptick there in utilization, mostly in kind of the bigger client segments, so the mid corporate segment not the smaller clients in the commercial bank. We also saw some upticks in our asset based lending portfolio as well both in the all in the commercial bank.

Again mostly utilization but a little bit of a couple of new clients. And then we also saw some uptick in the corporate investment bank. Again a mix there of utilization and a couple of new clients that sort of came into the portfolio. And so it was encouraging to see that. And the question I got earlier in the day too was, was it related to kind of tariffs or was it related just BAU sort of borrowing?

And it appears like it was mostly just BAU activities out there. We haven't really seen any evidence of people pre positioning significantly that caused significant borrowing at least as it relates to their expectations around tariffs.

Got it. Thanks. And I was wondering if you could give some more color on what you saw this quarter in terms of the market sensitive fee businesses across trading IB and venture capital. How did the environment impact this quarter? And what should we keep in mind as we think about the outlook for those items?

Yes. First on the venture portfolio, what you saw was a couple of things in that portfolio. One, we had an exit event late last year and we're in a lockup period on an IPO. And so you saw some mark to market losses on that stock and that'll that's been moving around a little bit, but that was part of it. That's still by the way an amazing return on that investment even with the noise there.

And then you had some impairments across a number of portfolios. And given the volatility that we've seen in the equity market in particular, but also just more broadly that's going to have an impact on exits coming out of that venture portfolio and kind of pushing them back in time. And so you really have to that number can be a little volatile quarter to quarter. So you really have to look at that over a slightly longer period of time. But overall we still we feel really good about the portfolio.

We feel good about the investments that are made there and it's just going to take some time to monetize it given some of the volatility. When you look at trading, which I guess is part of the other piece, we had a good decent quarter in trading really across a number of different deaths there and that's just a continuation of what we've seen now for the better part of I guess two or three years almost now where we've gotten better and better and more consistent at driving good results there. And then obviously we have some volatility coming into this quarter in early April at least and so we'll see how that progresses through the rest of the quarter.

Okay. And just again on the IB, obviously things have kind of ground to a halt a bit on activity levels, but you guys are building out your investment bank and adding people. Just kind of some thoughts there would be helpful. Thanks.

Yes. No, the look the investments that we're making continue. We've announced a few more over the last number of weeks with different people joining in different roles. We've got a really disciplined plan there and we'll continue to make those. And as you know you really have to have consistent coverage and product capabilities over a long period of time and we're going to continue to do that.

I think in the activity what you saw in the quarter was really led by debt capital markets not surprising. Probably you did see a little bit of equity capital markets activity at this with the volatility that we've seen over the last two weeks, it's going to be hard to see much activity in the equity capital market space until that comes down a bit. I think I do expect you'll continue to see good activity in debt capital markets. And then M and A, the conversations are good, the pipeline is good. And to Charlie's point earlier, I think it's going to be dependent how people when people start to get a little bit more certainty and around the policy adjustments that are being made and how that's going to impact their business.

So we'll see how that goes. But it's as you know in investment banking, it's a long game. And so we need to be consistent there over a long period of time and that's the goal.

The next question will come from Steven Chubak of Wolfe Research. Your line is open.

Hi, thanks for taking my questions. Maybe just a follow-up to the discussion around the fee outlook, maybe with an expense lens or framing it with an expense lens. Just given the better core expense outcome in the quarter versus the quarterly run rate implied by the full year guide and some of the headwinds you cited just on the fee side from various impairments or negative AUM marks. I was hoping you could speak to the expense flexibility in the model if the fee outlook or backdrop continues to deteriorate further?

Yes, sure. Look, think there's always a degree of flexibility as you go through the year. We want to try to make sure that we stay consistent and execute on a lot of the core investments we're making. But if you start with like the easy ones, right, if the market continues to decline from where it is today, you'll see less revenue related expense particularly in wealth and investment management. The IB comp will be a function of sort of activity and revenue that we see throughout the year.

And so there's flexibility obviously there depending on sort of where revenues come in. I think we've seen really good performance in the quarter on operating losses. So we gave you an estimation there. That's obviously running below sort of the run rate. So there's hopefully that will continue as well.

And so I think it's an active we're actively managing that each week, each month, each quarter as we have now for the last four or five years. And we'll take action if we think this is going to be sustained in some way and but while we protect some of the core investments that we need to make.

Thanks for that color. And Mike for my follow-up, I was hoping to drill down to some of the NII comments you made around the second half ramp and some of the IDO factors like the CD roll off you cited. It's certainly encouraging guide, especially given the changes in the forward curve, but myself and others appear to be struggling to reconcile some of the resiliency in Italy with all the incremental cuts that are now in the forward curve. And I was hoping you could maybe just speak to the exit rate on NII once those cuts are fully absorbed, just as we try to think about the jumping off point looking ahead to 2026?

Yes. I mean that's a difficult one, right, to give you a lot of specificity. I can understand why you want me to try to do that. But I think obviously rates are one factor that go into sort of the jumping off point. I think as you just sort of look at the where the forwards are relative to what we showed you in January as I said earlier your 40 or 50 basis points lower potentially on the forwards in part of the second half of the year.

But remember, in the fourth quarter, the cut usually comes in later in the quarter. So it doesn't have a lot of it doesn't have a big impact in 2025. And then I think loan growth, we're still expecting to see some loan growth. We think some of it will be resilient to the environment, but some of it obviously in the commercial bank and some of the corporate franchise is going to be a function of the broader macro view here. And so we'll see how it sort of plays out.

But I think trying to estimate where 2020 where we're going to exit 2025 is not something, I think we're going to try to get very specific on at this point.

And I would just remind everyone that just as we plan for different scenarios, you all should plan for different scenarios as opposed to just what the forward curve says. Forward curve is usually wrong and changes dramatically.

Yes. It's almost always wrong and is always changing. So I could certainly appreciate that sentiment. Thanks so much for taking my questions.

Wells Fargo (WFC) Q1 2025 Earnings Call Transcript

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