Wells Fargo WFC Q4 2025 Earnings Call Transcript

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DATE

Wednesday, January 14, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Charles Scharf
• Chief Financial Officer — Michael Santomassimo

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TAKEAWAYS

• Net Income -- $21.3 billion for the full year, reflecting a 17% increase in diluted earnings per share.
• Fee-Based Revenue -- Up 5% year over year, with growth across consumer and commercial lines.
• Expenses -- Noninterest expense declined $174 million year over year, driven by lower FDIC assessment costs, operating losses, and efficiency initiatives, partially offset by higher compensation expense and technology investments.
• Headcount Reduction -- Company achieved 22 consecutive quarters of headcount reductions, down over 25% since Q2 2020.
• Assets -- Total assets grew 11% year over year, including broad-based loan growth and higher trading assets.
• Loan Growth -- Average loans increased $49.4 billion, or 5%, with strongest linked-quarter growth since Q1 2020.
• Deposit Growth -- Average deposits increased $23.9 billion year over year, with reductions in average deposit costs of 29 basis points.
• Credit Performance -- Net charge-offs declined 16% year over year; net loan charge-off ratio declined by 10 basis points on an annual basis (increased 3 basis points sequentially).
• Shareholder Returns -- $23 billion of capital returned in 2025 through a 13% increase in common stock dividend and $18 billion in share repurchases.
• CET1 Ratio -- 10.6%, down from the prior quarter but above the minimum regulatory requirement of 8.5%.
• Credit Card Performance -- Nearly 3 million new credit card accounts opened in 2025 (up 21%), with balances up 6%.
• Auto Lending -- Loan balances grew 19% year over year, with stronger origination volumes and new exclusivity with Volkswagen and Audi in the U.S.
• Home Lending Portfolio -- Servicing portfolio reduced by $90 billion in 2025; headcount cut by over 50% in Home Lending over past 3 years.
• Digital Engagement -- 50% of new consumer checking accounts opened digitally; mobile active customers up by 1.4 million (4% growth).
• Wealth and Investment Management -- Revenue increased 10% year over year, driven by higher asset-based fees and net interest income.
• Commercial Banking -- 185 coverage bankers hired over 2 years (over 60% in 2025); higher client acquisition and loan/deposit growth noted.
• Investment Banking Fees -- Fees earned from commercial clients rose over 25% in 2025.
• Trading Assets -- Trading-related assets increased by 50% in 2025 to support client activities.
• M&A Advisory -- U.S. M&A ranking improved to 8th from 12th prior year; involved in two of the largest M&A deals in 2025.
• ROTCE -- Return on tangible common equity reached 15% for the year, with a medium-term target set at 17%-18%.
• Segment Performance -- Consumer Small and Business Banking revenue rose 9%; Home Lending revenue declined 6%; credit card revenue up 7%; auto revenue up 7%.
• Markets Revenue -- Increased 7% year over year due to equities, commodities, and structured products performance.
• 2026 Guidance -- Net interest income projected at approximately $50 billion (plus or minus); markets NII expected to reach $2 billion; noninterest expense targeted at $55.7 billion.
• Efficiency Initiatives -- Additional $2.4 billion in gross expense reductions planned for 2026; $15 billion of gross expense saves realized over past 5 years.
• Capital Management Outlook -- Share repurchases in 2026 expected to be lower than 2025; CET1 target remains 10%-10.5%.
• Loan and Deposit Projections -- Both expected to grow at mid-single-digit rates from Q4 2025 to Q4 2026.
• Allowance Coverage -- Corporate investment banking, commercial real estate office portfolio coverage ratio declined to 10.1% in the fourth quarter.
• Commercial Nonperforming Assets -- Modest sequential increase attributed to borrower-specific factors, with no systemic weakness detected.
• Expense Drivers -- $1.1 billion incremental technology investment, $800 million in other investments, and $800 million in additional merit/benefit and performance-based compensation for 2026.
• Disclosure Enhancement -- New transparency in financial supplement regarding trading assets/liabilities and segment-level NII details implemented for 2026.

SUMMARY

The removal of the Federal Reserve asset cap enabled balance sheet expansion, including aggressive growth in trading assets and commercial lending. Management expressed intent to balance organic growth with capital optimization, emphasizing reduced focus on share repurchases in favor of business investment. Executive commentary established a medium-term ambition to achieve a 17%-18% ROTCE, noting this is not the final target and is dependent on macroeconomic and regulatory variables. Expanded disclosures were introduced for markets-related activity for investor transparency, in response to portfolio composition changes. Current guidance projects further mid-single-digit loan and deposit growth, substantial technology investments, and continued workforce reductions.

• Charles Scharf stated, Since the lifting of the asset cap, we've been growing our balance sheet, and our assets grew 11% from a year ago including broad-based loan growth and higher trading assets to help support our markets businesses.
• Michael Santomassimo projected, we currently expect total net interest income to be $50 billion, plus or minus, in 2026. based on current rate assumptions and balance growth.
• Management clarified, 17% to 18% is not our final goal, but another stop along the way to achieving best-in-class returns by business and ultimately, our returns should be higher than this target.
• Hiring of 185 commercial coverage bankers over two years was cited as contributing to higher client acquisition and business growth momentum in commercial banking.
• Chief Financial Officer disclosed, We expect approximately $2.4 billion of gross expense reductions in 2026 due to efficiency initiatives.
• Michael Santomassimo explained, Average deposits increased $23.9 billion from a year ago as growth in consumer and commercial deposits more than offset declines in higher-cost corporate treasury deposits.
• Michael Santomassimo noted, we have reduced head count every quarter since the third quarter of 2020 and we continue to have opportunities to further streamline the company and become more efficient.
• Company emphasized that organic opportunities will continue to guide capital allocation decisions, with management stating, we feel no pressure to do any M&A whatsoever in any of our businesses because we feel so good about the quality and the completeness of our franchise

INDUSTRY GLOSSARY

• ROTCE: Return on tangible common equity; a key profitability ratio measuring net income available to common shareholders, divided by average tangible common equity.
• CET1 Ratio: Common Equity Tier 1 capital expressed as a percentage of risk-weighted assets, serving as a primary regulatory capital standard for banks.
• Net Interest Income (NII): The difference between interest income generated by assets and the interest paid on liabilities, a central revenue metric for banks.
• Markets NII: Net interest income specifically attributable to the Markets business line, including trading-related assets and liabilities.

Full Conference Call Transcript

Charles Scharf: Thanks, John. I'm going to provide an overview of our 2025 results and update you on our priorities. I'll then turn the call over to Mike to review fourth quarter results as well as our net interest income and expense expectations for 2026 before we take your questions. Let me start with our 2025 highlights. Our strong financial results reflected the significant momentum we're building across the company. Our net income increased to $21.3 billion and our diluted earnings per share grew 17% from a year ago. Our continued investments in our business helped drive revenue growth with fee-based revenue up 5% from a year ago. This growth was broad-based with increases in both our consumer and commercial businesses.

Much of the investments we have been making have been funded by our disciplined approach to managing expenses. We had positive operating leverage in 2025, and we continue to have opportunities to generate efficiencies. Our ongoing focus has resulted in 22 consecutive quarters of headcount reductions, with headcount down over 25% since second quarter 2020. Since the lifting of the asset cap, we've been growing our balance sheet, and our assets grew 11% from a year ago including broad-based loan growth and higher trading assets to help support our markets businesses. We also grew deposits with higher balances in both our commercial and consumer businesses. Credit performance was strong and net charge-offs declined 16% from a year ago.

The economy and our customers remain resilient, but we continue to closely monitor our portfolios for signs of weakness. In addition to tracking credit metrics in our loan portfolios, such as early-stage delinquencies, we also monitor consumer behavior more broadly to help us understand consumer health. For example, we look at things like checking accounts with unemployment flows, direct deposit amounts, overdraft activity and payment outflows and we've not observed meaningful shifts in trends. Our capital levels remain strong, while returning $23 billion of excess capital to shareholders. During 2025, we increased our common stock dividend per share by 13% and repurchased $18 billion of common stock.

Given we have many opportunities to grow organically, we currently expect share repurchases to be lower in 2026. We will continue to focus on optimizing our capital levels as we manage to a CET1 ratio of approximately 10% to 10.5%. Let me turn to the progress we've made throughout the past year on our strategic priorities. The removal of the asset cap by Federal Reserve was a pivotal moment for the company. This milestone combined with successfully closing 13 regulatory orders since 2019 underscores the significant progress we've made in transforming the organization. We are incredibly proud of our success and understand the importance of continuing to build on that work and sustain the culture that supports it.

While executing on our risk and control initiatives, we simultaneously worked to position the company for stronger growth and improved returns. Let me walk you through how these actions are improving our business drivers, beginning with our consumer business. We have been investing in our credit card business since I joined Wells Fargo and our focus has been driving strong outcomes. We opened nearly 3 million new credit card accounts in 2025, up 21% from a year ago. Credit card balances were up 6% from a year ago. And importantly, we've maintained our credit standards. After 2 to 3 years of absorbing the upfront costs of our new products, we are beginning to see the early vintages contributing to profitability.

Our auto business returned to growth in 2025 with stronger origination volumes and 19% growth in loan balances from a year ago. Our results reflected growth across our portfolio including benefiting and becoming the preferred financing provider for Volkswagen and Audi brands in the United States in the spring of last year. The auto business goes through cycles, and we have intentionally scaled back growth in recent years. With the investments we have made to improve our capabilities, we are now well positioned to methodically return to broad spectrum lending. Importantly, we're focused on making sure we have the right level of profitability in this business not just growth.

We have made good progress in transforming and simplifying the Home Lending business. Over the past 3 years, we've reduced headcount by over 50% and the amount of third-party mortgage loans serviced by over 40%, including reducing the servicing portfolio by $90 billion in 2025 alone. We are continuing to reduce the size of this business while focusing on serving our bank and wealth management customers, which will help improve profitability. Within consumer, small and business banking, we had stronger growth in net checking accounts in 2025 than last year driven by digital account openings and an increase in marketing. We continue to refurbish our branches, completing approximately 700 branches in 2025.

Over half of our network is now refurbished and we are on track to complete the remaining branches over the next few years. We continue to make enhancements to our mobile app, including making it significantly easier to open accounts. And in 2025, 50% of our consumer checking accounts were opened digitally. We grew mobile active customers by $1.4 million in 2025, up 4% from a year ago. Wells Premier are offering to serve our affluent clients, continue to build momentum in 2025.

We increased the number of licensed bankers and grew branch-based financial advisers by 12% from a year ago, with a focus on increasing the number of bankers and advisers in the locations where we have the most opportunities. Premier deposit and investment balances grew 14% during 2025. This remains a significant area of opportunity for us. We also had continued momentum in our Wealth and Investment Management business with total hires increasing, attrition declining and net asset flows accelerating in the second half of 2025. Turning to our commercial businesses. In the Commercial Bank, while we are the market leader with strong returns, we still have plenty of opportunities for growth.

We have hired 185 coverage bankers over the last 2 years with over 60% of the bankers hired in 2025. We are starting to see early signs of success from these hires with higher new client acquisition as well as loan and deposit growth. We also continue to be focused on providing investment banking and markets capabilities with fees from providing these capabilities to our commercial banking clients growing over 25% in 2025. [ Overland Advantage ], our strategic partnership with [ Centerbridge Partners ] has enabled us to better serve our Commercial Banking customers with a direct lending product and since inception, we have helped our clients raise approximately $7 billion in financing.

As I highlighted on our last call, our goal is to be a top 5 U.S. investment bank. We grew our share in 2025, and we're confident that we can continue to make progress over time by using our competitive advantages including our long and deep relationships with large corporate and middle market companies, a complete product set, significant existing credit exposure, strong risk discipline and the capacity to support our clients through cycles. In M&A, we're winning increasingly bigger and more complex assignments. We advised on 2 of the largest M&A deals of 2025 increasing our announced U.S. M&A ranking to 8th in 2025, up from 12 in 2024.

We entered 2026 with our deal pipeline meaningfully greater than it has been at any point in the last 5 years, although market conditions can always change. And with the lifting of the asset cap, we've been able to utilize our balance sheet to accelerate growth in our trading businesses, including increasing trading-related assets by 50% in 2025 to accommodate customer trading flows and financing activities. While many of the assets have been added recently are lower margin, they also have lower risk and are less capital intensive. Our ability to support this client activity increases engagement and should lead to more business.

In summary, our strong performance in 2025 reflects the meaningful progress we've made to transform Wells Fargo and our actions position us for continued higher growth and returns. Our ROTCE increased to 15% in 2025. To put this in perspective, when we first started talking about increasing our returns in the fourth quarter of 2020, our ROTCE was 8% and we set a goal of reaching 10%. Once we establish that goal, we raised our target to 15%. As we discussed on last quarter's call, we have a new medium-term ROTCE target of 17% to 18%.

While both the path and the timing to achieve our target is dependent on a variety of factors, including interest rates, the broader macroeconomic environment and the regulatory environment, we are confident that we can reach this goal by maintaining our expense discipline, realizing the benefits of our investments to drive stronger revenue growth and further optimizing our capital levels. As a reminder, 17% to 18% is not our final goal, but another stop along the way to achieving best-in-class returns by business and ultimately, our returns should be higher than this target. I want to end by thanking everyone who works at Wells Fargo for their hard work and dedication last year.

Their unwavering commitment to our customers and to our transformation is what positions us to become a best-in-class company. I'm excited about our momentum and look forward to building on our success as we enter the new year from a position of strength. I will now turn the call over to Mike.

Michael Santomassimo: Thanks, Charlie, and good morning, everyone. We are in $5.4 billion in the fourth quarter, up from 6% from a year ago. Diluted earnings per common share was $1.62, up 13% year-over-year, and excluding the severance expense, our diluted earnings per share was $1.76. Fourth quarter included $612 million of severance expense, primarily for actions we will take throughout 2026. We also had severance expense in the third quarter for a total of $908 million in the second half of 2025. As Charlie highlighted, we have reduced head count every quarter since the third quarter of 2020 and we continue to have opportunities to further streamline the company and become more efficient. Turning to Slide 4.

Net interest income increased $381 million or 3% from the third quarter driven by higher market NII. Net interest income, excluding markets, increased $167 million from higher loan and deposit balances as well as fixed asset repricing partially offset by changes in deposit mix. I will update you on our expectations for 2026 net interest income later in the call. Moving to Slide 5. We had strong loan growth with both average and period-end loans increasing from the third quarter and from a year ago. Period-end loans grew 5% in the third quarter, the strongest linked quarter growth since the first quarter of 2020 when we had COVID-related growth.

Average loans increased $49.4 billion or 5% from a year ago, driven by growth in commercial and industrial loans, in Corporate Investment Banking as well as growth in Commercial Banking. As you can see on this slide, one of the industry categories driving commercial loan growth has been financial [indiscernible] banks. While it is often referred to as one category, it's actually fairly broad. In our 10-Q's and K, we have traditionally broken down these loans in 4 types: lending to asset managers, commercial finance, consumer finance and real estate finance. Let me walk through each of these categories briefly to give you a better understanding of what they include asset managers and funds.

The biggest piece of this category as well as the driver of most of the growth is from our fund finance group, which is largely subscription or capital call facilities for alternative asset managers, targeting larger funds with strong investment track records where we have long-standing strategic relationships and that are generally backed by a diversified pool of limited partner commitments to the fund. Within Commercial Finance, the biggest piece is our corporate debt finance business, which is secured lending to asset managers and private equity funds that is typically backed by middle market and broadly syndicated loans. We underwrite, approve and monitor the performance of each underlying loan.

Consumer Finance, the smallest category lends to clients engaged in auto lending, credit card issuers and other types of consumer lending. Finally, the real estate finance portfolio includes both secured lending to mortgage REITs and private equity funds that originate or purchase commercial real estate mortgage loans and secured lending to asset managers and specialty finance companies backed by agency residential mortgage loans and residential mortgage-backed securities. Since this portfolio has been growing, we are now providing additional detail by category earnings rather than just in our 10-Q filings as we've done in the past.

While this type of lending has picked up across the industry recently, we have made these kinds of loans for many years, they are generally secured and have features to help manage credit risk, such as structural credit enhancements and collateral eligibility requirements as well as collateral advance rates that generally get us to the equivalent of investment-grade risk. Given these features and our experienced underwriting these loans as well as the collateral that supports them, we have found this type of lending to offer an attractive risk return. Now turning to consumer loans, which also grew from a year ago with growth in auto, securities-based lending and wealth and investment management and credit cards.

While residential mortgage loans continued to decline driven by our strategy to primarily focus on our bank and wealth management customers, the rate of decline slowed. Turning to deposits on Slide 6. Average deposits increased $23.9 billion from a year ago as growth in consumer and commercial deposits more than offset declines in higher-cost corporate treasury deposits. We achieved this growth while reducing average deposit costs by 29 basis points from a year ago, with lower interest-bearing deposit yields across all of our businesses. Turning to Slide 7. Noninterest income increased $419 million or 5% from a year ago.

Our results a year ago included losses from the repositioning of the investment securities portfolio as well as strong results from our venture capital investments. We grew fee-based revenue across multiple of our business related fee categories, including 8% growth in investment advisory fees and brokerage commissions our largest category, driven by growth in asset-based fees reflecting higher market valuations and wealth and investment management. Turning to expenses on Slide 8. Noninterest expense declined $174 million from a year ago. Let me highlight the primary drivers. We had lower FDIC assessment expense, lower operating losses, and we benefited from the impact of efficiency initiatives.

Partially offsetting these declines was higher revenue-related compensation expense, primarily in Wealth and Investment Management, driven by strong market performance. We also had higher advertising and technology expense driven by the investments we are making in our businesses to generate growth. I would note that while our fourth quarter 2025 expenses included the $612 million of severance expense I highlighted earlier in the call, severance expense was slightly lower than a year ago. Turning to credit quality on Slide 9. Credit performance remained strong. Our net loan charge-off ratio declined 10 basis points from a year ago and increased 3 basis points from the third quarter.

Commercial net loan charge-offs increased 4 basis points from the third quarter, driven by higher commercial real estate losses predominantly in the office portfolio. Office valuations continue to stabilize and although we expect additional losses which can be lumpy, they should be well within our expectations. Consumer net loan charge-offs increased modestly from the third quarter to 75 basis points of average loans with higher losses in credit card and auto. Since there is seasonality in these portfolios, I would note that both credit card and auto losses were lower than a year ago.

As Charlie highlighted, we closely monitor our portfolio for signs of weakness, and consumers continue to be resilient as income growth has generally kept pace with increases in inflation and debt levels. Our nonperforming asset ratio declined modestly from a year ago and increased 3 basis points from the third quarter, driven by higher commercial real estate and commercial and industrial nonaccrual loans. The drivers of this increase were borrower specific, and we do not see any signs of systemic weakness across the portfolio. Moving to Slide 10. Our allowance for credit losses for loans was relatively stable from the third quarter.

Our allowance coverage ratio was down modestly and included a decline in the coverage ratio for our corporate investment banking, commercial real estate office portfolio to 10.1% in the fourth quarter. Turning to capital and liquidity on Slide 11. Our capital levels remain strong with our CET1 ratio at 10.6%, down from the third quarter but well above our CET1 regulatory minimum plus buffers of 8.5%. We added approximately 45 basis points from earnings, which was more than offset by approximately 40 basis point reduction from common stock repurchases and an approximately 45 basis point decline from risk-weighted asset growth. We repurchased $5 billion of common stock in the fourth quarter.

Average common shares outstanding were down 6% from a year ago and have declined 26% over the past 6 years. Moving to our operating segments, starting with Consumer Banking and Lending on Slide 12. Consumer Small and Business Banking revenue increased 9% from a year ago, driven by lower deposit pricing and higher deposit and loan balances. Home lending revenue declined 6% from a year ago due to lower net interest income from lower loan balances. Credit card revenue grew 7% from a year ago from higher loan balances and an increase in card fees. Our new account growth has been strong and approximately 50% of our loan balances are now from the new products we've launched since 2021.

Auto revenue increased 7% from a year ago due to the higher loan balances with auto originations more than doubling from a year ago. The decline in personal lending revenue from a year ago was driven by lower loan balances and loan spread compression. Turning to Commercial Banking results on Slide 13. Revenue was down 3% from a year ago as lower net interest income was partially offset by growth in noninterest income driven by higher revenue from tax credit investments and equity investments. Average loan balances in the fourth quarter grew $4.6 billion or 2% from the third quarter, driven by higher client activity. Turning to Corporate and Investment Banking on Slide 14.

Banking revenue declined 4% from a year ago, driven by lower investment banking revenue and the impact of lower interest rates. I would note that while investment banking revenue declined in the fourth quarter, it was up 11% for the full year. Investment banking revenue will vary from quarter-to-quarter based on the timing of when deals close, so looking out over a longer time frame in a more meaningful way to see the momentum we are generating in this business.

Commercial real estate revenue was down 3% from a year ago, driven by the impact of lower interest rates, reduced mortgage banking servicing income resulting from the sale of our non-agency third-party servicing business in the first quarter of 2025 as well as lower loan balances. Markets revenue grew 7% from a year ago, driven by higher revenue and equities higher commodities related revenue from increased market volatility as well as higher revenue and structured products. Average loans grew 14% from a year ago and 6% in the third quarter with growth in markets and banking driven by new originations as utilization rates on existing facilities were relatively stable from the third quarter.

On Slide 15, Wealth and Investment Management revenue increased 10% from a year ago, driven by growth in asset-based fees from increased market valuation and as well as higher net interest income due to lower deposit pricing and the growth in deposit and loan balances. Underlying business drivers continue to show momentum in the fourth quarter with growth in loan and deposit balances as well as growth in total client assets, which benefited from the market valuations as well as net asset flows. As a reminder, the majority of wind advisory assets are priced at the beginning of the quarter, so first quarter results will reflect the higher January 1 market valuations.

Turning to our 2026 outlook on Slide 17, we provide our expectations for net interest income. We reported $47.5 billion of net interest income in 2025, and we currently expect total net interest income to be $50 billion, plus or minus, in 2026. Additionally, for the first time, we are providing our net interest income expectations for our markets business. We also enhanced our disclosures related to this activity in our financial supplement by providing more details on trading assets and liabilities on Pages 6 and 7 and including disclosures in the Corporate & Investment Banking segment on Pages 14 and 15 as well as providing net interest income, excluding markets on Page 27.

We believe these disclosures will provide additional transparency and insight. As you know, we've been investing in the markets business. And while it is still a relatively small contributor to our total net interest income, its contribution has grown and it can cause volatility in our NII outlook given changes in interest rates and other market factors. We currently expect markets NII to grow to approximately $2 billion in 2026 driven by lower short-term funding costs and balance sheet growth, including increased client financing activities, which as Charlie highlighted, tend to be lower margin and lower risk assets but are accretive to net interest income.

As a reminder, while markets NII is expected to be higher, this growth is expected to be partially offset by lower noninterest income. Our focus is on growing markets revenue, which we expect to increase in 2026. Net interest income, excluding markets, was $46.7 billion in 2025, and we currently expect NII, excluding markets to be approximately $48 billion in 2026. Key assumptions used for our expectations include 2 to 3 rate cuts by the Federal Reserve in 2026 with 10-year treasury rates remaining relatively stable throughout the year, which would be a modest headwind to NII. However, this expected headwind should be more than offset by loan and deposit growth as well as continued fixed asset repricing.

Average loans are expected to grow mid-single digits from fourth quarter 2025 to fourth quarter 2026 driven by growth in commercial, auto and credit card loans, all else equal, our provision expense would increase in 2026 as we set outside reserves to support this expected loan growth. Average deposits are also expected to grow mid-single digits over this period with growth in all of our operating segments, with stronger growth in interest-bearing versus noninterest-bearing deposits. We currently expect net interest income, excluding markets to decline in the first quarter due to the impact of 2 fewer days.

Ultimately, the amount of net interest income we earned in 2026 will depend on a variety of factors, many of which are uncertain, including the absolute level of interest rates, the shape of the yield curve, deposit balances, mix and pricing, loan demand and the ultimate mix of activity and volatility in markets. Turning to our 2026 expense expectations on Slide 18. We continue to focus on efficiency as we simplify the company for our customers' employees while at the same time investing for the future. Following the waterfall on the slide from left to right, our noninterest expense in 2025 was $54.8 billion.

Looking at the next bar, our assumptions do not include significant additional severance for 2026, which would result in an approximately $700 million decline in severance expense. We expect revenue-related expenses in 2026 to increase by approximately $800 million in our Wealth and Investment Management business. As a reminder, this is a good thing as these expenses are more than offset by higher noninterest income actual revenue-related expenses will be a function of market levels with the biggest driver being the equity markets. Our outlook assumes the S&P 500 will be up modestly from current levels, but clearly, the ultimate performance of the market is uncertain.

We expect our FDIC assessment expense to increase by approximately $400 million in 2026 driven by expected deposit growth and the absence of the approximately $200 million special assessment credit that reduced FDIC expense in the fourth quarter. We expect all other expenses to increase approximately $300 million in 2026 with the impact of efficiency initiatives more than offset by higher investments in other expenses. We expect approximately $2.4 billion of gross expense reductions in 2026 due to efficiency initiatives. We successfully delivered approximately $15 billion in gross expense saves since we started focusing on efficiency initiatives 5 years ago, and we continue to believe we have opportunities to get more efficient across the company.

There are 3 primary expense drivers that we expect will more than offset the gross expense saves in 2026. First, we expect approximately $1.1 billion of incremental technology expense, including investments in infrastructure and business capabilities. Second, we expect approximately $800 million of incremental other investments, including in the specific areas highlighted on the next slide. And finally, we expect other expenses to increase by approximately $800 million including expected merit and benefit increases as well as performance-based discretionary compensation. Additionally, other expenses reflect approximately $400 million of lower expense following the sale of our railcar leasing business in the first quarter of 2026. However, this benefit will be offset by a reduction in noninterest income.

Putting this all together, we currently expect noninterest expense to be approximately $55.7 billion in 2026. And as a reminder, the first quarter personnel expenses are seasonally higher and are expected to be approximately $700 million. On Slide 19, we provide our key areas of focus for our 2026 investments across the company. And in summary, our results in 2025 reflected continued momentum in improving our financial performance. We generated strong fee-based revenue growth, maintain strong expense and credit discipline grew our balance sheet, returned significant amounts of capital to shareholders, retained our strong capital position and increased our return on tangible common equity.

I'm excited about the opportunities ahead as we build on our momentum and further improve our results. We will now take your questions.

Operator: [Operator Instructions] The first question will come from Scott Siefers of Piper Sandler.

Robert Siefers: Mike, I was hoping you could just expand a little on your thoughts on NII, particularly ex markets. It looks like 2026 should be basically flat with the fourth quarter annualized level despite the outlook for a pretty good loan growth. It sounds like from what you said, that's mostly going to be a function of the rate outlook, but would just love to hear your expanded thoughts on sort of the puts and takes.

Michael Santomassimo: Yes. Sure, Scott. Thanks for the question. You do need to adjust for day count. So it's -- I mean it's a little bit up from when you annualize the fourth quarter. But as you said, you really got 3 things going on. You've got rates coming down, which will be a headwind for NII x-markets. And then you've got the continuation of deposit and loan growth coming throughout the year, and it's about a build as you go. And so the results will look better as you get towards the latter part of the year. And at this point, the rate curve is -- our assumptions are pretty similar to what's in the forward curve at the moment.

It's really 2 rate cuts with maybe another one right at the end of the year, which doesn't have much of an impact. And then you've got the loan growth that we've been seeing across the book. I would point out like some of the loan growth in places like cards will be coming in at either intro APRs or 0 rate as we continue to grow the book. But when you look at the rest of the portfolio, we're seeing good growth, and that should continue as we look through the year. So it's really just those 3 things.

When it comes to like deposits and pricing, we're not seeing anything different than what we expected to see as we come into the year on the commercial side. The betas are what we expected as rates have been coming down, the betas are high. We don't have -- we don't -- our rates on the consumer side are already -- have already been adjusted downward. And so and we're not seeing any substantial like change in trend relative to what we expected. So those are the drivers that go into it.

Robert Siefers: Perfect. And then I guess to the extent that you can, given how new this issue, I was hoping you could please maybe address sort of this increased volume around credit card rate caps, how you're thinking about this newer issue. It doesn't sound like it's affected your appetite for growth here at all, but I would just love to hear how you're sort of framing that internally.

Charles Scharf: Well, I think -- listen, I think, first of all, I think we all agree that the underlying issue of focusing on affordability which is people have been experiencing for some time, which we pointed out multiple times when we look at those who have less savings with us than others is a real issue. And so what the right response to that is, is something that we do think should be carefully considered. And so relative to what all this means for us, it's just -- it's too early to know because we're not quite sure what the ultimate actions, whether it's the administration or of Congress choose to go down, and that's something we hope to engage in.

But we're very much aligned with trying to find solutions to help as many as we can and just do it in a way that doesn't have adverse impact.

Operator: The next question will come from Ken Usdin of Autonomous Research.

Kenneth Usdin: Guys, good morning. Good to see the expected balance sheet growth. One of the base is on how much you're going to continue to be able to -- or desire to grow the lower NIM over spread type of assets and RWA growth vis-a-vis your buyback opportunities and your use of CET1 capital. Can you just kind of help us understand how you're thinking through those trade-offs? And when -- and what's the balancing act between the types of balance sheet growth that you're aspiring to as you think through the overall balance sheet mix?

Michael Santomassimo: Yes. Sure, Ken. I'll take a shot at that because there's a few pieces that I'll try to disaggregate for you. When you look at what's happening in the markets business and adding some of the lower ROA financing repo trades I think that -- those don't attract a lot of capital or RWA because the collateral that sits behind them, right? So a lot of treasury collateral and other general collateral that sits there. And so -- and those are an important piece of the puzzle as you look to do more across the client base in the markets business. And so you'll see that grow throughout the year, for sure.

But again, it doesn't attract a lot of capital to bring with it. What you're seeing across the rest of the balance sheet is growth in loans. And I think those bring varying degrees of capital depending on what they are. And even when you look at some of the growth that we've seen in the nonbank financial space, again, given sort of the way they're structured and given the collateral is behind them, they don't necessarily attract as much capital as a regular way, commercial loan. And so I think as we look at the opportunity there, we want to be able to support clients across the broad spectrum of businesses we have.

We're going to continue to focus on the consumer side in the card space and in the auto space where we think we -- within our risk appetite there. And then I think on the commercial side, we'll continue to be very thoughtful about what we go after. But just to point out something we've said a lot is our risk appetite really hasn't changed and we're not looking to change that in a significant way. But now that the asset cuts gone, we've got more opportunity to continue to do more with clients. And that should create this good virtuous circle where they do more fee-based business with us as well.

Charles Scharf: Let me just add a couple of things, if I can, Ken. First of all, just agree obviously, with everything that Mike said. But as we increase the financing that we do in markets business, our expectation of doing that is because we will wind up getting paid in other ways as well. And so that's not -- those don't happen concurrently, but it's something that we track by client to ensure that we're actually seeing that payoff. And we'll do our best to share that as time goes on. And that will determine ultimately how much we're willing to grow the financing business, right?

The assumption is, as we've seen up until now that we do get paid for it. But the card is a little bit ahead of the horse on that one kind of period by period, we need to see that play out. And then the only other thing I would add on what Mike said in terms of just the rest of the balance sheet, just to be really clear is this is not an either/or for us at this point, right? We have significant opportunities to be able to extend loans and use our balance sheet for customers and to continue to buy stock back.

We're not -- on the margin, we're making the trade-off decision but just given the amount of capital that we generate, the amount of opportunity that we have on both is significant. And so it's a good problem to have because is in the past, all we could do is buy stock back because we were limited in what we can do for clients. Now we can do both, but there's significant capacity and as you well know, we're still above what we've said our targeted range of capital should be.

And we've also said that our targeted range still has significant buffers on top of the regulatory buffers, and that's something that we'll evaluate as the regulators finalize the capital proposals and the other things that we would be able to step back and say, okay, what do we think that means for us going forward, but it's all positive for us to have flexibility.

Kenneth Usdin: And Charlie, my follow-up just on that last point, [ 106 ] exiting the year and you mentioned you have the 10, 10.5 range outlook. Does that mean that you're also comfortable guiding towards the lower end, which would still give you a lot of buffer to your earlier point?

Michael Santomassimo: Yes. I mean, look, we gave a range, Ken, of 10%, 10.5%. And so that would mean we're comfortable operating in the range, right?

Operator: The next question will come from Ebrahim Poonawala of Bank of America.

Ebrahim Poonawala: Good morning. I just want to follow up. I think there's -- so I completely appreciate what you're saying in terms of focus on profitability while you're growing the businesses. Like we heard JPMorgan talk about investing in businesses and investing capital where the returns are probably sub-17%. I think maybe, Mike, Charlie, to the extent, I think that's one concern that you hear persistently over the last few months is how do you grow the business while improving the ROTCE capital leverage aside maybe if you don't mind, double-clicking on some of the expense and the efficiency initiatives you laid out on Slide 18.

And I think you mentioned that even beyond 2026, you see that, just trying to get a better sense of the outsized efficiency opportunity that Wells has to achieve that ROTCE while delivering superior growth.

Charles Scharf: Yes. Let me just start out, Mike, and then I'll hand it over to you for like some real facts. But just what we have been doing -- I mean, what we're talking about doing is a continuation of what we have been doing, right, which is we believe that we continue to have opportunities going forward. And if you look at what we've been able to do, we've cut $15 billion of expenses out of the company. Our -- as we've said, we a couple of years ago, we had increased our regulatory expenses by $2 billion to $2.5 billion on an annual basis. And our expenses have come down.

And so if you look at what that difference and all that is, that is a significant amount of money that we've been able to use to reinvest to position ourselves for growth. And that's very much of the way that we continue to think about what we want to accomplish here, which is we think we have more tools on a going-forward basis to get more efficient than we've ever had and especially with AI. And we're going to continue to figure out what we think the right trade-off is to reinvest those savings into driving growth inside the company as we've done in the past.

But as we think about what we've done to be able to increase the returns of the company it is either -- what we've done is we've reduced the expense base of the company while we've grown revenues. And so there's not a lot of rocket scientists to what we're trying to accomplish here, it's more of the same. And we feel like we're in a great position to both use the benefits that we get by driving increased efficiency to contain any expense growth at this point and to see the benefits of those investments come through to increase revenue growth.

Michael Santomassimo: And Ebrahim, maybe I'll just point out some things we saw in 2025 that sort of go at what Charlie said. The credit card business new accounts up 20% year-on-year. Auto lending balances up 19%, loans in the commercial side, up 12%. Growth in Investment Banking, 12% investment banking fee growth, win fees up significantly. And then if you look at it over a slightly longer time period, you also see trading up substantially. And so a lot in banking -- and so a lot of what Charlie talked about is coming through in the results while we're getting more efficient.

And I think as we've said a number of times, but also in sort of the prepared remarks is that we're just getting started in terms of really realizing the opportunity we have across each of the businesses.

Ebrahim Poonawala: That is helpful. And I guess maybe just a separate question on capital. M&A comes up a lot in the context of well rightly or wrongly now. And I appreciate you're going to be disciplined and you should be looking for sort of strategic opportunities. But just remind us when you think about M&A, either Wealth Management or bank M&A, just how you're thinking about it what do you think makes strategic sense where it would not be a distraction from what you're trying to achieve organically?

Charles Scharf: Yes. I mean, I'll start with probably the most important thing is, which is we feel no pressure to do any M&A whatsoever in any of our businesses because we feel so good about the quality and the completeness of our franchise is -- and the opportunities that we have. And not everyone is in that position, and we feel blessed to be in that position. But as you point out, it's wrong not to say we would never think about something. We, of course, would think about anything that made sense.

But I would just say the bar would be high for us, both in terms of what we would expect financially, and it should be something that would have some kind of material -- make us materially more attractive for investors. So we're not just looking to buy things for the sake of buying things. In fact, it's just the opposite. We spend our time focused on driving the organic opportunities that we have.

Operator: The next question will come from John McDonald of Truist Securities.

John McDonald: Mike, one follow-up on the NII. Does the growth in markets NII that you expect in '26 have a trade-off in the trading fees? Or maybe said differently, the base of trading fee revenues in '25 looks like about $5.1 billion? Is that a good starting point that you feel like you can grow off of? Or is there any kind of trade-off with markets NII?

Michael Santomassimo: Yes. No, John, it's a good clarification. And I tried to address that in my remarks, but there is a trade-off the growth in NII is partially offset by a reduction in the fee line, not entirely, but partially offset by the fee line given the dynamic we have in terms of overall growth. But as I said in the remarks, if you look at overall revenue, overall revenue, we expect to grow in the markets business this year. And you should see some normal seasonality in there as well, right, where you see a low point in the fourth quarter, and you see a little bit of a snapback in the first quarter.

And so I think you'll see some of that -- you'll see that normal pattern. But overall, revenue in the markets business, we would expect to be higher.

Charles Scharf: Yes. So to that point, we do disclose that, and so we would encourage everyone to look at disclosure and as you project forward to think about that number as opposed to just the pieces because it will -- the mix will change depending on the rate environment.

John McDonald: Yes. And maybe just pulling back then, just thinking about total revenues, you've got the NII growing maybe about 5% this year. Are you thinking about total revenue growth also in kind of that mid-single-digit kind of growth category, and you've got 1% to 2% expense growth and a couple of hundred basis points of operating leverage this year?

Michael Santomassimo: That's not a number we guide to, John. But -- and obviously, in the markets business, it's going to be a function of what we see throughout the year in terms of the opportunity set that's there, the volatility and all the right caveats that go there. But we would expect the overall to be up, and we'll see by exactly how much.

Charles Scharf: Yes. Just listen, just -- we're not trying to be coy and not give you something that we think we should be giving you. But it's just the reality is a significant number of the items that are embedded in noninterest income, are highly dependent on the world and on the markets, which as we know can be very, very volatile whether it is the trading numbers or the revenue items related to our wind business. And so we're long-term believers that those -- that the underlying business grows that we can take share, and so we would expect to see growth in those numbers.

We just want to be really careful about providing any kind of guidance in any way, shape or form that boxes any of us in relative to our inability to predict that.

John McDonald: Okay. Great. Fair enough. And Mike, one quick follow-up on the commercial nonperformers. It did move up. You mentioned it in the opening comments. Any more color on just what drove that? It's off a low base, but lost content or any thoughts about the drivers there?

Michael Santomassimo: Yes. A couple of thoughts. I mean, look, I mean, if you look at it over a long time period, the number can be quite volatile like period-to-period. So I wouldn't read too much into that. There's really nothing systemic that we're seeing come through. And when you really look back at nonperforming assets, they're actually not a very good predictor of loss. And the vast majority of them are performing both on principal and interest. And so it's some individual names that sort of move around quarter-to-quarter, but nothing systemic as you sort of look at it that we can see.

Operator: The next question will come from Betsy Graseck of Morgan Stanley.

Betsy Graseck: A couple of questions, follow-up here. One is just on the markets commentary that we were discussing earlier around its lower ROA business. Can you talk to us about how you're thinking about the impact on ROTCE? And is there a limit to which you would go because if it's dilutive to ROA, it's dilutive of ROTE, I realize that regulatory capital is low. But [ GAAP ] capital still there. So help us understand how you're navigating that? How large are you okay? With it becoming?

Michael Santomassimo: Yes. Betsy, I don't anticipate it's going to have any kind of negative impact on where we think returns go. The returns given the nature of it, the returns are fine, and it's not going to be going to have be dilutive relative to the overall returns of either the segment or the overall company. And as Charlie mentioned, the financing opportunity that you get through doing this -- kind of the -- or the additional opportunity you get by providing financing capacity to clients should start to build more meaningfully over time as well that sort of builds up the kind of the full set of revenues for each of those clients.

Charles Scharf: And Betsy, if I can just say a couple of things. Just number one is we are not going to grow our trading business in any kind of outsized way, which would have a negative impact on our ability to produce the kind of returns that we want and you would expect. So there's nothing outsized in our minds about where that goes. I think we're starting from a low base. So it looks like it's -- it sounds like it's significant, but it shouldn't be significant to the impact to what we can produce as a company.

And the other thing I would point out is a big part of why we're in the markets business, it's not for the sake of just making money and trading on its own. These are corporate relationships and these -- in which we have a broader set of business activities and as you grow your secondary business, it helps with your primary business. They're very, very much related. And so as we think about returns, we are very focused on returns overall and specifically ROTCE and weather going to see it or will slow it.

And again, just the size is relative to like who we are not relative to what everyone else is out in the marketplace and we are driven by where we intend to move the firm from an overall return standpoint.

Betsy Graseck: Okay. That's helpful to understand how you think through that. And then just separately, when I think about -- first of all, loan growth accelerating this quarter, very nice to see and heard all of the commentary around how you're expecting trajectory from here. Charlie, I had a question just on what kind of kind of loan growth firm credit quality should we be anticipating as you build out this loan growth over the medium term. The reason I'm asking the question is before the asset cap, before GFC Wells was very well known as a full spectrum lender, both on the consumer side and in the corporate side as well, SMBs, a lot of middle market et cetera.

And so I'm -- where are you looking to take the organization as you have the opportunities to lean into growth?

Charles Scharf: So yes, so if we separate the business into the wholesale side and the consumer side for a second, where we are going on our wholesale credit business is no different from where we've been, specifically in the commercial bank. The business -- the risk appetite that we've had continues to be the same level of risk appetite. And what we're focused on is getting stronger in geographies where we have more opportunity, where there are more opportunities to grow and grow with the clients in the rest of our business. So there, it is more of a market share gain than any kind of change in where we're looking in terms of what the credit opportunity is.

On the CIB side, we have done more to support our corporate client base. But again, very, very focused on not taking risks that go beyond the way we've thought about risk appetite as a company. So very, very consistent there. When we look at our consumer businesses, I put it like there are different phases. There's the way we operated historically, where we were historically, we were very, very good at credit.

In different businesses, we were more of a full-spectrum lender across different segments, but more weighting towards the higher FICO customers, as we've gone through the last bunch of years is we've had to focus on different things and there have been different economic circumstances there, it's been much more focused on the higher credit quality. So I would say the opportunity for us, and we referred to this when we talk about our auto business specifically, is to be more full spectrum but not in a way that materially changes what you've ever thought of us as. In fact, it's probably much more of way you've thought about us in the past.

So again, just go back to what the North Star is, is that we're very, very focused on returns in places like the auto business in order to get the right returns being a full-spectrum lender is helpful, but we're not going to do it in a way that creates a tale of risk in our lending book which is not consistent with how we think about our risk appetite.

Operator: The next question will come from Erika Najarian of UBS.

L. Erika Penala: Just one follow-up question. You mentioned $800 million in higher revenue-related expenses for the year and considering the S&P up a little. I'm just wondering in this period of what Charlie mentioned, not putting in a box, is the expense number of 55.7 contemplating a pretty robust capital markets environment that the investors are expecting?

Michael Santomassimo: Erika, this is Mike. The $800 million is exclusively in our Wealth Management business. And that -- and that is based primarily on sort of where the overall equity market will land. And we do expect it to be up modestly from where it is today. I think more broadly, we do include in that -- in the bottom of our expense expectation slide in the other category, there is performance-based compensation included there, and that would include anything we expect for the market, and we do expect to have a pretty active market this year.

Operator: The next question will come from Steven Chubak of Wolfe Research.

Steven Chubak: So I wanted to ask on the assumptions underpinning like the '26 NII guidance, specifically around loan and deposit growth. You guys saw a really nice acceleration in some of the balance sheet KPIs to close out the year. Lending and deposit growth both grew mid-single digits sequentially. That's essentially the level of growth that you guys are contemplating for the full year for '26, so it does imply a pretty meaningful deceleration. And I recognize mid-single-digit growth is nothing to scoff add. But just what informs the slowdown? Is that a function of conservatism? ADO sources of lending strength in the fourth quarter or something else?

Michael Santomassimo: Yes. Steve, look, I think you got to be careful to extrapolate from 1 quarter and you can see quite some seasonality that's in there. So in our Commercial Bank as an example, there's some trade finance type loans that are seasonally there at year-end. It's a lot of roll down a bit in the first quarter. So there are some elements that sort of -- that offset it. And it can be pretty volatile quarter-to-quarter in terms of the growth you see there.

But what I would say is like what we're not -- and I try to get this across in the remarks, what we're not assuming is some like big broad-based increase in utilization across the commercial bank. So there could be more loan growth if we start to see utilization rates tick up. There's lots of factors that could drive it higher from what we have there. But I think as we sit here today, we think this is an appropriate place to be based on all of what we're seeing.

Steven Chubak: Okay. Great. And then for my follow-up, Charlie, I did want to ask on the 17% to 18% ROTCE target. So it's pretty clear based on our investor conversations that no one is really questioning the potential for the franchise to get to the 17% to 18%. You even noted that's not the extent of your longer-term ambitions but you've been reluctant to commit to timing. It does appear that's driving a wider range in terms of earnings expectations.

I was hoping you could just contextualize what are some of the milestones you're looking for or areas where you might need better visibility in order to get sufficient comfort to offer a more explicit time line for that 17% to 18%?

Charles Scharf: Yes. Come on -- I mean let's just be a little reasonable here. Like you're all very smart people right? And you traffic in the same world that we traffic in, which is we don't know what the credit environment will be over the next 1, 2, 3, 4, 5 years. We don't know what the interest rate curve is going to be. We don't know what the market levels will do.

And so asking for a very specific time line where there are just a huge amount of variables that impact that end result it's just not a -- certainly -- we don't think it's a smart thing for us to be able to predict because we don't know those things. But what we've said historically is what we continue to say, which is those things can be volatile. Those things will go up or down. But what we're focused on is ensuring that we are building a business which will drive higher revenue growth reasonable expenses where we see the payoffs for the investments that we're making.

Very, very focused on ensuring that we're getting the right returns for what we're doing. And so as you see the underlying growth metrics that we pointed out in our remarks that you'll be able to tie that to the underlying revenue captions, and look through the impact of volatility. And so as we grow accounts, as we grow balances, as we grow market share, you see it coming through revenue, you see control of expenses it will be -- like is it a straight line in these businesses, which is why we want to stay away from putting any specific time frame on it.

But we've also been tried to be helpful in saying, it's not what's midterm, meaning it's not tomorrow, but it's also not over an extended period of time. And we know that we should be able to show you that we're making progress to get there, and you should feel like it's possible. And we've shown up to this point that we've been able to do that. And hopefully, you'll see that in the underlying results in you'll have the confidence that will have the confidence that it continues. But you'll either see it in the results or you won't.

Steven Chubak: All right. Well, Charlie, your peers do provide a time line. So I don't think it's an unreasonable expectation for us to ask for that. If I understand your perspective, there is a lot of uncertainty. If I could just squeeze in one more. Just you listed various sources of efficiency initiatives in the slides, you're making good progress there. You didn't explicitly mention how much of that reduction in the excess regulatory cost of 2% to 2.5% is contributing to some of those efficiency gains. So just wanted to understand how much relief should come from that this year? Is that should also drive incremental efficiency gains beyond 2026, which informs that improvement in returns you just alluded to?

Michael Santomassimo: Steve, it's Mike. Yes, we continue to work to streamline and bring better technology to some of what we've implemented over the last number of years. So I'd say there's a little bit of impact from that in the efficiency work this year but that will likely continue to come over a slightly longer period of time. And I would just kind of also reinforce just on the efficiency stuff. It's like there's -- there's no new silver bullet here. It's continuing to peel back the onion in each of the areas, drive better automation, reduce real estate costs, reduce third-party spend.

And so -- so there's hundreds of things that happen across the company in any given quarter to sort of help drive that. But we would expect to be able to continue to optimize some of that over a slightly longer time period, but there is a little bit of impact this year.

Operator: The next question will come from John Pancari of Evercore ISI.

John Pancari: Mike, just on the margin dynamics for the fourth quarter. I know your loan yields declined by about 19 basis points linked quarter. Can you maybe give us a little more color of the driver? How much of that was -- I know you cited the trade finance dynamic, maybe securities lending and the markets business. Curious what really were the bigger drivers behind that? And maybe if you can kind of dovetail that into how you think about the underlying margin trajectory as you look at 2026, given these dynamics?

Michael Santomassimo: Yes. No. On the loan side, the biggest driver is rates coming down, right? So you've got a big variable rate portfolio there on the commercial side. So that's going to be the biggest driver. In some of the areas, it's very competitive. And so you see a little bit of spread compression across some of the commercial book as well, but the biggest driver in the sequential quarter is going to be rate. And then when you just look -- as we come into next year, as we said, you'll be growing a little bit of some of the lower ROA exposures. So that will have an impact on overall margin.

And then you'll also have rates coming down again this year if the forward rates materialize. And so -- and then you -- then that will be offset by new activity that we put onto the books and some of the fixed asset repricing, particularly in the securities portfolio.

John Pancari: Got it. Okay. And then one follow-up, just related to that on the deposit side. Maybe if you could help us update us on your deposit gathering strategy overall. I know you cited the mid-single-digit deposit growth for '26. Maybe can you talk about the mix shift that you would expect between interest-bearing and noninterest-bearing. And what businesses do you see driving the bulk of growth? It looks like you saw a pretty good leg up in your deposit volume through the wealth management business, for example, this quarter. So I just want to see if we can get some color there in terms of the businesses that are driving the growth.

Michael Santomassimo: Yes. No, it's going to be a bit of each of them, and I'll kind of go through each. But on the Wealth Management side, it's continuing to focus the lending and banking products, bringing focus to those across the adviser base that we've got. And that will -- and we're seeing good uptake there. And so that will continue to grow. Won't be a straight line, but it -- but we do expect to see some growth in the wealth business. Now that we can compete more effectively with the asset cap on, on the commercial side, you're seeing good loan growth there.

And on the commercial side, those are going to be mostly interest-bearing, even though there'll be some noninterest-bearing component of it with it. And so that's why in my remarks, I said, you'll see a little bit more interest-bearing than noninterest-bearing because you'll see more growth on the commercial side. And then on the consumer side, it's just continuing to see better execution across both our digital marketing and branch channels to drive more checking account growth and deposit growth there. So it's really going to be a function of executing across each of the businesses there.

Operator: The next question will come from Matt O'Connor of Deutsche Bank.

Matthew O'Connor: I was wondering if you could just talk about the environment for commercial real estate, broadly speaking. I mean you mentioned on credit obviously past the work. You have a lot of reserves. You could have some lumpy losses. But the industry and you grew loans for the first time in a really long time this quarter. And there's just been a lot like anecdotal kind of articles out there in the media talking about parts of CRE kind of coming back. So just wondering how meaningful recovery you guys think this could be and how well levered you are to that?

Michael Santomassimo: Sure. I'll take a shot. And if you look at the commercial real estate book, excluding office for a second, just put that to a side and I'll come back to it. There's been good demand there for a while across a lot of different sectors, whether it's multifamily, industrial, data centers on and on. And so -- and the fundamentals there haven't shifted that much as we go into this year. So we do expect to see some continued demand come through in some of those subsectors. I think when you look at office, I think there's where you're definitely seeing stabilization in valuations.

But you do have a bifurcation there between really good office space, kind of newer Class A or better space in vibrant cities that are doing really well and demand is up substantially. And you can see that just even through some of the CMBS market executions that have happened over the last number of months. And then -- and then I think on the older inventory and older stock, I think things have stabilized there. And we continue to work through that portfolio. But I think overall, if you look at everything other than kind of the older office stock, there seems to be good demand and activity levels.

Operator: The next question will come from Saul Martinez of HSBC.

Saul Martinez: I just have one as well. Totally get the reluctance to give specific revenue guidance. And as you indicated, a number of the fee line items are tied to market conditions and can vary. But I'm curious what -- if you can just give us some color on what your expectations directionally are for some of the major fee lines, deposit fees, investment advisory, card fees, trading IP. And part of the reason I ask is that if you do look at some of these lines deposits, advisory cards, they're tracking at mid- to high single-digit growth. banking.

There's reasons, obviously, for optimism there, and you mentioned trading, you expect to grow even with some of the headwinds from the offset to trading-related NII. So it does feel like there is reason to be optimistic here. But just curious if you can -- maybe just give us some color on how to think about these line items and what some of the major drivers are that could move them one way or another.

Michael Santomassimo: Yes, sure. So if you start with the biggest one, which is investment advisory and other asset-based fees, that's really going to be driven by how the markets hold up.

Charles Scharf: In the short term.

Michael Santomassimo: In the short term, yes. And I think as long as the equity markets hold, which is the bigger driver, you also have some impact on fixed income markets there as well. If rates come down, you get a benefit as asset prices go up. But you will see the equity markets in the short run, drive that the most. So as long as we have a pretty stable growing market there, I think you should be able to model that relatively easily in the jumping off point, this year is much better than where we entered last year. So that -- I think that's what you're alluding to.

When you look at then deposit-related fees and card fees, I'll kind of lump them together. It's really going to be a function of just the overall macro picture in the economy. And at this point, what we're seeing and what's happening across the consumer base is just very consistent activity. And so I think as long as that continues, that should support those fee lines. And between the 3 of those, that's over half of the fee line just right there alone.

And then I think Investment Banking fees, it appears like I think everybody thinks that we're going to have a pretty active deal make, both on the M&A side, but also sort of the maybe even more active equity capital markets outlook as well. And so -- and then the debt market, I think, has been holding up quite well over the last couple of years. And so assuming that's the case and given our investments, we should be able to continue to grind out share gains as we go over time. And then the last one I'll sort of maybe highlight is just trading.

Again, we talked about it earlier, but you will have an impact of rates come down, you'll have higher NII in the markets business, lower fees, but we should continue to be able to grow overall revenues in the markets business. So I think as long as the kind of macro picture sort of holds, then it should be quite constructive for a lot of the fee lines as we look at them.

Operator: The next question will come from Chris McGratty of KBW.

Christopher McGratty: Mike, on the consumer deposit growth, just to follow back on the prior question. It was about 1% year-on-year. I'm interested now that rates have come down and excess liquidity has kind of been pulled. Like is this a GDP or GDP plus opportunity for deposit growth over the medium term?

Michael Santomassimo: Yes. I mean, look, I think for us, it's now that we're able to kind of more aggressively in a much more front-footed way, deploy marketing and get our branch system to be more productive, hopefully, over time, we'll be able to see outsized growth there. But I do expect that we'll -- that will not be kind of a linear path up. But I do expect us to see some growth in the consumer deposit base. And I think you'll start to see that relationship between deposits and GDP start to move in sync again hopefully over time. It's been a lit bit...

Charles Scharf: Like remember, our -- we believe based upon who -- what the franchise is and the benefits that we bring that we should be able to grow faster than the market over time. And we're working hard to reinvigorate the business, which was really hard hit by all the issues that we've been that we've gone through, not just the actual cap itself, but like how it limited the things that we could do internally. And so that's something that you build up over a period of time. But we think the opportunity is to be able to, over time, grow faster than the market and to take share in a profitable way.

Christopher McGratty: Great. And then just coming back to the -- I think you said 185 coverage bankers over the past 2 years. Is the pace of -- or the opportunities for hiring '26 greater or less? Is it slowing? Any coverage kind of company question there.

Michael Santomassimo: It's about the same per year.

Charles Scharf: Which, again, I would just say, as we think about it, these efforts that we have underway, these are multiyear plans where we've looked at whether it's geographies, industry coverage within our CIB is what you want to accomplish in a year, you want to see the payoff and then we'll keep going. And so we still see materially more opportunities to grow in both the commercial bank and the corporate investment bank as well as in our consumer banking system for a whole bunch of different reasons.

Operator: And the final question for today will come from Gerard Cassidy of RBC Capital Markets.

Gerard Cassidy: Guys, when we take a look at your average balance sheet on Slide 7 in the supplement, you show that you've had some nice growth, obviously year-over-year in the balance sheet. And the funding of that, you've had real good strong growth in the Fed funds purchase and short-term borrowings on a year-over-year basis. Can you share with us you're thinking the strategy of using that source of funding to grow the balance sheet as we go forward and what the outlook could be for this going in 2026?

Michael Santomassimo: Yes, Gerard, that's just funding the growth in the markets business, very similar to the way the other investment banks do it. So there's nothing too exciting there, to be honest. And when we came out of -- and I think we mentioned this maybe coming out of the second quarter, we did move some funding to the repo line that we had internalized while the asset cap is in place. And so this is just normal funding of the markets business.

Gerard Cassidy: Very good. And then just a quick follow-up. You talked a lot about the success you're having in investing in Investment Banking and markets and you just commented about the hiring if it's about the same or more challenging. When you look at the team on the field, I think there was a Financial Times article, Charlie, talking about some areas that you may want to add to. But when you look at this team, are you 75% there in terms of you got all the people you need? Or where do you stand on both markets and then Investment Banking?

Charles Scharf: I would say, well, first of all, I think what's really important is just the quality of the people that we've hired, not just the numbers. And so I didn't say that before. But what our team has done just a great job of attracting some of the most talented people from great institutions out there that have just done a great job of building talent. So we're not just focused on growing the numbers. It's about the quality and then making sure that we're seeing the payoff. Listen, I think it's -- I don't really want to put a percent number on it because it's a journey.

And we've seen -- as we've added resources this year, it's so much a moving target because other companies aren't standing still either, and they've grown their resources as well. And so I think let's just -- we'll try and provide a little bit more context as time goes on to give you a sense. But I'm just kind of going to leave it at that, that we think the opportunity to continue to add resources to see the continued growth is as strong as it's ever been for us.

Michael Santomassimo: All right. Thanks, everyone. We appreciate the questions. We'll talk to you next time. Bye.

Operator: Thank you all for your participation on today's conference call. At this time, all parties may disconnect.

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