Our charge-off ratio remained near historical lows and was only 15 basis points in the second quarter. Some of which, we'll keep on balance sheet when it makes sense. Image source: The Motley Fool. And obviously, if the market starts to rally, that's even more constructive. But there's -- other than that, there's a lot of stability generally to that line based on underlying activity. Your line is open. Yeah. Wells Fargo & Company Q2 2022 Earnings Call Transcript Fri., July 15, 2022 | AlphaStreet Listen to Conference Call View Latest SEC 10-K Filing Participants Corporate Executives John Campbell Director, Investor Relations Charles W. Scharf Chief Executive Officer and President Michael P. Santomassimo So not -- you won't see some outsized results in one versus the other as we go. Your line is open. And it's a very -- as you would imagine, a very robust conversation that we go through each quarter to evaluate how we feel about it. Our results included a $576 million impairment of equity securities, predominantly in our venture capital business due to the market conditions, which drove a total loss from equity securities of $615 million in the second quarter. Wells Fargo (WFC) came out with quarterly earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.77 per share. Wells Fargo WFC is set to give its latest quarterly earnings report on Friday, 2023-04-14. Yeah, sure. Should we anticipate some more negative marks in a world where there's no big turnaround in equity markets over the next few quarters? Think about them as unfunded commitments, number one. For example, in the U.S., our external hiring of individuals from racially or ethnically diverse populations increased by 27% in 2021 compared to 2020, and approximately one-third of all internally promoted executives last year were racially or ethnically diverse. And then Mike, just coming back to your comment about the mix of deposits, and this is a rhetorical question as well. Why don't I start and then Mike can chime in. Asset-based lending and leasing revenue increased 8% from a year ago, driven by higher loan balances. Commercial real estate revenues grew 5% from a year ago, driven by loan growth and higher interest rates. Then two other questions. To make the world smarter, happier, and richer. Q2 2022 Earnings Call Aug 11, 2022, 5:00 p.m. It seems like you'd have a big step-up both this coming quarter and the third quarter and then again in the fourth. It's an important part of your offering. Stock Advisor list price is $199 per year. About Wells Fargo Investor Relations Investor Relations Print Share Our Priorities View annual report and proxy statement 2023 Annual Meeting Our Annual Meeting of Shareholders was held virtually on April 25, 2023. Thank you very much. First of all, our targeted customer, those that we want to have a broader relationship with, what we have said is that as we've rolled out this new product set when you look at the credit quality of the borrowers and the spenders that we have been giving our new cards to, the credit quality is actually stronger than it had been historically. It really cuts across a whole series of lines. We are also helping women entrepreneurs by doubling our support for women-owned businesses through the Connect to More program with complementary mentorship opportunities. We also had net recoveries in our consumer real estate portfolios, and total consumer net charge-offs declined slightly from the first quarter to 33 basis points of average loans, as lower losses in auto and other consumer loans were partially offset by higher credit card losses. Seleccione el enlace si desea ver otro contenido en espaol. And Mike put that in place, and we talked about it and he wanted to do something different. Welcome, and thank you for joining the Wells Fargo second quarter 2022 earnings conference call. But as you pointed out, our exit rate will be pretty healthy. Average home lending loan balances grew 2% from the first quarter, driven by the fourth consecutive quarter of growth in our nonconforming portfolio, which more than offset declines in loans purchased from securitization pools or EPBOs. Good morning. It's subject to what we see happening in the markets. I mean I think that's -- we're not expecting balances to grow much from where they are. Understood. Now there's a lot of stuff that's public, but there's also a lot of the modeling techniques that aren't quite easy to understand. The Zacks Consensus Estimate for the company's 2023 earnings has been revised 1.3% upward in the past 60 days. Consumer credit card utilization rates remain below pre-pandemic levels. . M oney-center bank Wells Fargo ( WFC) will report second quarter fiscal 2022 earnings results before the opening bell Friday. 2022 Wells Fargo Bank, N.A. Wells Fargo Quarterly Earnings - Investor Relations - Wells Fargo About Wells Fargo Investor Relations Wells Fargo Quarterly Earnings Wells Fargo Quarterly Earnings Print Share Earnings dates Expected 2023 and 2024 earnings release dates have been announced. Credit card revenue was up 7%, auto revenue increased 5% and personal lending was up 7% from a year ago, primarily due to higher loan balances. All rights reserved. Utilization rates continue to increase, but they are still not back to historical levels. Markets revenue increased 11% from a year ago, primarily due to higher foreign exchange and commodities trading revenue as clients position themselves for rising rates, quantitative tightening, and growing recessionary concerns as well as higher equities trading. We also continue to invest to better serve our commercial customers. I think, ultimately, the exact progression over the next couple of quarters will be a function of how the Fed moves on rates. I'll just bring you through some of the key fee lines just to give you a sense of some of the dynamics, right? Average loans grew 8% from a year ago and 3% for the first quarter. And as a follow-up, I know as you guys talked through the recent conference season, it's hard to get a crystal ball with so many moving parts as you think about 2023. WELLS FARGO & COMPANY company earnings calendar and analyst expectations - Upcoming and past events | Nyse: WFC | Nyse. Again, if you just look at how much we originated historically versus what we're originating today, it will naturally just come down over time. I don't have the exact number in front of me. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Thanks very much, John. All these deals are subject to further spread widening, given the environment we're in, for sure. And you'll continue to see a little bit of loan growth come through. Origination volume declined 35% from a year ago and 26% from the first quarter due to increased pricing competition, credit tightening actions, and an ongoing industry supply pressures. Summary: Wells Fargo 's Q2 2022 revenue declined by 16% compared to the same period in 2021. On the credit card side, again, focusing on customers that are broader customers in the franchise. CFDs are leveraged products. Wells Fargo shares were marked 6.2% higher in early Friday trading following the earnings release to change hands at $41.12 each, a move that trim's the stock's year-to-date decline to around. Average loan yields increased 19 basis points from a year ago and 27 basis points from the first quarter, reflecting the benefit of higher rates. The mortgage market is expected to remain challenging in the near term, and it's possible that we have a further decline in mortgage banking revenue in the third quarter. Discounted offers are only available to new members. Hey, John. And I guess, longer term, as this plays out and we see the Fed continue to tightening, what do you view as a potential level that you may have to bring the reserve to? Good morning. In summary, while our net income in the second quarter declined driven by lower venture capital and mortgage banking results, our underlying trends reflected our improving earnings capacity with expenses declining and strong net interest income growth from rising rates and higher loan balances. And early in the second quarter, Tim O'Hara joined the Corporate and Investment Bank from BlackRock as head of banking. But it's a number of scenarios that have different severities of downside. However, spending, while still strong, started to slow in May and June. All right, everyone. The next question comes from Ebrahim Poonawala. I think he's talking about platforms in terms of the overall sort of the way we operate business. Well, as you think about the process we go through, which I think is similar to most in a lot of ways, you're really looking at a number of scenarios that you need to be thoughtful about and include in your modeling. So then what's the gross mark on that? And so when you look at cumulative betas, you really have to look at -- and you start to compare different banks, you're really going to have to look at the mix of the deposits. I'm wondering what you're doing to strategically enhance that offering to your clients, be it either through product or how you're structured, integration with consumer, your IT platform and solutions. The decline in average deposits from the first quarter reflected seasonality of tax payments as well as outflows from commercial and wealth clients. Great color. Consumer and small business banking revenue increased 17% from a year ago, driven by the impact of higher interest rates and higher deposit balances. And so we really haven't seen much variation to what we thought at this point in the rate cycle. Customer remediation matters are complex and take a significant amount of time to resolve and quantify the full impact. And it looks like we're tracking to a 15% drop, say, maybe by the end of the year. And Mike, I apologize if this is the umpteenth question on NII. I'll highlight the specific growth drivers when discussing operating segment results. But again, we already have a pretty significant weighting on those downside scenarios already. Good morning, guys. And he complements the strong leadership team in our markets and commercial real estate businesses, who have helped us navigate recent market volatility. The bank's average lending and average deposits were $926.6 billion and $1.4 trillion, respectively. I think what we can say though is as you look at the next couple of rate rises, I think you're going to start to see more acceleration. Additional changes will be rolled out in the second half of this year, including providing customers who overdraw their account with a 25-hour grace period to cure a negative balance before incurring an overdraft fee, giving early access to eligible direct deposits, and providing a new easy short-term credit product. But given that some of your peers have given specific guides and given how much the quality of your deposit base has changed for the better over the past several years, I'm wondering if you could give us a sense of what that beta range that you're assuming by year-end on a cumulative basis that underpins that guide? We continue to move forward in the area of ESG with the announcement of our 2030 reduction targets for greenhouse gas emissions attributable to financing activities in the oil and gas and power sectors. We are working toward offering one set of products and services that are tailored to the needs of these customers regardless of where they sit within our individual businesses. And can you continue to push this toward getting costs down next year? Yeah, sure. Thank you. Credit quality remains strong, and we expect net interest income growth to continue given rising interest rates, which should more than offset any further near-term pressure on noninterest income. So I'll let you do the modeling. Wells Fargo's projected full-year earnings growth of 846% from 41 cents a year ago to $3.88 per share is nothing short of remarkable. In addition to being available on the company's Investor Relations website, the earnings results also will be available on the Securities and Exchange Commission website at https://www.sec.gov . Call 1-415-371-2921. And you really have to, over time, think about term loans versus high yield a little bit differently. Jul. Good morning, Charlie. So you'll start to see that happen over the next couple of rate rises. Last quarter, we raised our guidance to an increase in the mid-teens. The next question will come from Betsy Graseck of Morgan Stanley. Wells Fargo & Company ( NYSE: WFC) Q2 2022 Earnings Conference Call July 15, 2022 10:00 AM ET Company Participants John Campbell - Director, Investor Relations Charlie Scharf - Chief. We believe we have a significant opportunity to serve our existing commercial customers with corporate and investment banking products in a way that works within our existing risk tolerance. This week, we launched our fourth new credit card offering in the past year, Wells Fargo Autograph. Let me take that. And then on the credit front, I want to get your thoughts on the likelihood of reserve bill. Credit card spend increased 28% from a year ago, above the industry trend driven by the new products we launched last year, with double-digit increases across all spend categories. The impact of higher rates also reduced revenue from the resecuritization of loans purchased from securitization pools. Thank you. We don't -- you got to think of these as unfunded commitments, not funded, right? There's been more deposit pricing pressure in corporate banking than we've seen in commercial banking. So that loan growth funding is coming from your cash balances and other sources of liquidity that you have? Our mortgage originations declined 10% from the first quarter, with growth in correspondent partially offsetting the decline in retail originations. Got it. Thank you. Your line is open. Investor Relations Take care. I appreciate all your color in terms of what's driving the NII guide of 20%. Now if the Fed does raise rates 75 basis points at the next meeting, now you're starting to get into territory that we didn't see in the last rate cycle -- rate rising cycle. The way we think about it is as we sit and look toward next year, we certainly know we have some increases to contend with, such as the full year impact of inflationary pressures that we see this year. So how did that all flush out relative to what you guys have kind of been anticipating? And so if betas stayed the same as last cycle by product, given our mix has changed, you would see a lower average deposit beta. It looks like you're entering next quarter with over 100 basis points buffer to your pro forma reg minimums. That's -- it's going to be key to see what happens in the equity and the fixed income markets. It's just we're being a little prudent in terms of the way we think about that growth rate. Just wanted to get a better sense as to what's being contemplated in terms of deposit beta. Middle market banking revenue increased 27% from a year ago, driven by higher net interest income from the impact of higher rates and loan balances. Selected Balance Sheet Data ($ in billions) Third quarter 2022 results included: $(2.0) billion, or $(0.45) per share, of accruals primarily related to a variety of historical matters, including litigation, customer remediation, and regulatory matters The information could be out of date and no longer accurate. The S&P 500 and fixed income indices declined again in the second quarter, and approximately two-thirds of our advisory assets are in equities. But can you just help us try to at least start to think through some of the pushes and takes? What we said a couple of times was that we thought it was possible that it was going to increase, and it did. And we've combined the entire field under one leader. News Release | July 15, 2022 Wells Fargo Reports Second Quarter 2022 Net Income of $3.1 billion, or $0.74 per Diluted Share Company-wide Financial Summary Quarter ended Jun 30,Jun 30,2022 2021 Selected Income Statement Data If we see much deeper declines, that -- we'll have to evaluate how that impacts these portfolio investments. And now exactly what -- it's hard to use one quarter, as you know, to adjust run rate for the rest of the -- for the following year. Wells Fargo 's WFC second-quarter 2022 earnings per share of 74 cents lagged the Zacks Consensus Estimate of 77 cents. The Motley Fool has no position in any of the stocks mentioned. I know you added to the reserve for loan growth this quarter. We highlight capital on Slide 3. And that will ultimately dictate the appropriate size of it. It's professional. We remain disciplined in our underwriting and new credit card accounts. Banking revenue increased 4% from a year ago, primarily driven by stronger treasury management results given the impact of higher interest rates as well as higher loan balances. And as you know, we -- over the last couple of years, we've brought down much of our wholesale funding that we've got out there. So I appreciate you don't want to get pinned down on deposit beta. Steven Chubak -- Wolfe Research -- Analyst. As a reminder, based on the recent Federal stress test, our stress capital buffer for October 1st, 2022 to September 30th, 2023 is expected to be 3.2%, which would increase our regulatory minimum plus buffers by 10 basis points to 9.2%. And all of that's tracking as we thought it would. Calculated by Time-Weighted Return since 2002. The deposit paydown and repricing just came in much better than peers this quarter. OK. As we see, for the first time in 15 years, consumer deposits in a higher rate environment will make guys like you guys stand out maybe over some of your peers. The decline in revenue in corporate was also due to lower equity gains in our affiliated venture capital and private equity businesses. Yeah. And as you sort of think about betas, so far, they've basically progressed as we thought in each of the segments. Any color on that? The increase in point-of-sale volume and the launch of new products helped drive a 19% in credit card -- 19% increase in credit card balances from a year ago. Yeah. We had separate platforms historically here between our brokerage business. One, I think you recently announced a change in your consumer head. I'm glad you made it rhetorical. . And for certain cohorts of customers, we have seen average balances steadily decline to pre-pandemic levels following the final Federal stimulus payments early last year, and their debit card spend has also been declining. But as a reminder, we have outstanding litigation, regulatory matters, and customer remediations, and the related expenses could be significant and hard to predict, which could cause us to exceed our $51.5 billion outlook. So I think we'll see how it goes, and we'll give you as much insight as we can. Overall, our consumer deposit customers' health indicators, including cash flow, payroll, and overdraft trends are not showing elevated risk concerns. And on the high-yield side, we don't disclose this but -- we haven't disclosed the actual number. Market-beating stocks from our award-winning analyst team. Average deposits in corporate and investment banking were down 14% from a year ago, driven by continued actions to manage under the asset cap. Your line is open. We remain on target to achieve a sustainable 10% ROTCE, subject to the same assumptions we've discussed in the past, on a run rate basis in the second half of this year, and then we will discuss our path to 15%. Last week, we announced that Otis Rolley will be joining Wells Fargo from The Rockefeller Foundation as the head of social impact, leading community engagement, and enterprise philanthropy, including the Wells Fargo Foundation. And as a follow-up, and I know these are extremely tough in terms of when you think about the market -- private market valuations on your equity investments. The digital platforms and the platform for independent advisors had very little investment in it. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. And at this point, we feel it's appropriate for what we can see over the life of those loans. Our 10.3% CET1 ratio remained well above our required regulatory minimum plus buffers. CET1 for December 31, 2022, is a preliminary estimate. Thanks, Scott. So as you sort of think about them, don't think about them outstandings. Noninterest expense increased 2% from a year ago, primarily driven by higher operating costs. Just as we think of -- but as we think about that core expense base, we do continue to see opportunities, and we'd like you to see it as well. ET The bank is one of the only ones in the sector that is higher. So you're not seeing any signs like sort of late in the quarter, I think, already starting to show some slowdown or some conversations with clients that are indicating that? How To Attend Wells Fargo Q2 2022 Earnings Conference Call by Benzinga Insights, Benzinga Staff Writer July 13, 2022 7:04 AM | 1 min read Wells Fargo WFC will host a conference. And so what we've done is we now have one set of products and service capabilities that all of those product lines have access to. And so it's a huge set of changes, which also bring with it a set of changes in the back end, which we're going to move -- we're moving toward common platforms. So the core driving kind of efficiency through the core business lines and operating groups is sort of working the way we thought. Both revenues and expenses declined from a year ago and were impacted by the divestitures of our corporate trust services business and Wells Fargo Asset Management and the sale of our student loan portfolio. We do not undertake any obligation to update the information, whether as a result of new information, future events or otherwise. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form 8-K filed today containing our earnings materials. The next question comes from Vivek Juneja of J.P. Morgan. Wells Fargo reported home lending fell. But certainly, the exit rate is going to be a lot higher than even where we are today. Read or listen to the conference call. I think that's not an unreasonable expectation. So I think the public equity markets and -- will be a good guide to how to think about whether or not we have to evaluate whether there's more reductions here or not. Email investorrelations@wellsfargo.com, EQ Shareowner Services And investors are hoping the bank can produce results that. Perfect. Now you have to keep in mind like we only have so much visibility into the underlying drivers of what causes it to go up or down in any given year. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Information contained in a quarterly earnings release speaks only as of the date of the release. Good morning. We also benefit from higher loan balances and one additional day in the quarter. Visit Shareowner Services, 1999 - 2023 Wells Fargo. But I think it's possible they come down a little bit more from here. What kind of cadence do you see between the next two quarters? I would now like to turn the call over to your host, John Campbell, director of investor relations. With the market now expecting not only more rate hikes but also larger ones, we currently expect net interest income in 2022 to increase approximately 20% from 2021. But it's still -- it's really small dollars at this point. Victor J. Our allowance reflected an increase due to loan growth. And as a reminder, net interest income will ultimately be driven by a variety of factors, including the magnitude and timing of Fed rate increases, deposit betas, and loan growth. I was wondering if you could remind us the targeted customer within credit card as you lean into that business. Your line is open, sir. Clients have increased borrowings to rebuild inventory and to support working capital growth, both of which have been impacted by higher inflation. During the second quarter, we began rolling out Wells Fargo Premier, which provides differentiated products and experiences focused on strengthening and growing our affluent client relationships. Michael Burry Is Now Betting on This Ex-Warren Buffett Stock, Michael Burry Is Set to Rake in More Than $1 Million in Annual Dividend Income From These 4 Stocks, This Large Bank Stock Looks Well-Positioned to Return Capital to Shareholders. As we previously discussed, losses are not expected to remain at these low levels. Some of it was RWA. Shifting now to the full year 2023. We also launched our special purpose credit program to help minority homeowners refinance mortgages that Wells Fargo currently services. Thanks. And then as you highlighted, as we think about this year, the increases in the operating loss line have been offset by -- largely offset by the lower revenue-related expenses. And we are closely monitoring our commercial and consumer customers for signs of stress, and we remain very disciplined in our underwriting. . We'll see, maybe. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. I would say -- yes, just to expand even further, Betsy. Pedestrians pass a Wells Fargo bank branch in New York, U.S., on Thursday, Jan. 13, 2022. And so we're going to keep a pretty close eye on it as we go over the next few months. Thank you. No, yeah. So I'd rather just defer the question at this point. And then within that NII equation. Some of it was RWA optimization. We had broad-based loan growth with both our consumer and commercial portfolios growing from the first quarter and a year ago. So just wondering how you start to get a sense of what those look like going forward? All earnings call transcripts on Wells Fargo & Company (WFC) stock. So that's good. Mike, can you give us some color on you guys had some good success in the quarter in generating gains from your trading activities and your debt securities. Yep. Thanks, guys. Key Points Here are the numbers: earnings of 88 cents a share, vs. 80 cents estimate from Refinitiv. Just following up on that, Mike. And we're going to continue to work through the pipeline of items. So on the deposit side, it's been pretty -- we saw a step-down in the quarter, largely a result of the changes we made in overdraft fees. Address: 135 S. STATE COLLEGE BLVD, SUITE 550 , BREA , CA 92821 Phone: 714-255-6105 | 855-343-0230 Fax: 714-255-6101 Email: jeannette.dobbyn@wellsfargoadvisors.com Compose mail in a new window The following slide deck was published by Wells Fargo & Company in conjunction with their 2022 Q2 earnings call . As I've said in the past, advancing DE&I at Wells Fargo is a long-term commitment, not a project, and we continue to pursue many of the initiatives in the report and look for ways to deepen our impact. And then we'll just be prudent on buybacks as we go through and through the next few quarters. Investment banking. Potential investors in our securities should seek professional advice before they invest. OK. And Mike, maybe I can ask a follow-up on the NII revised outlook. And I think that's a smart and good thing for us for many reasons. Wells Fargo Bank at 7621 Edinger Ave STE 102, Huntington Beach CA 92647 - hours, address, map, directions, phone number, customer ratings and comments. Invest better with The Motley Fool. 2 Return on equity (ROE) represents Wells Fargo net income applicable to common stock divided by average common stockholders' equity. This follows 6 consecutive quarterly decreases in the allowance, including $1.1 billion in the first quarter and $1.6 billion a year ago. I'll make some brief comments about our second quarter results, the operating environment and update you on our priorities. But I think that's a hard thing to see at this point. The betas will still be pretty small. The next question comes from Erika Najarian of UBS. Turning to expenses on Slide 9. Hey. All right. Just wanted to get a sense of how you're thinking about that deposit trajectory that's underpinning some of the NII guidance. And again, it really all depends on what happens in the public equity markets, which is in part driving those declines. This compares to earnings of $1.38 per share a year ago.. Let me take a shot at this first. And the wealth piece is going to be a big part of that. I would just point out, we are not -- our G-SIB score is going to stay the same as we go into next year as well. And so we've got plenty of capacity to provide liquidity or get the liquidity we need to continue to support clients. It's a bunch of technology work. ET. However, we are monitoring early warning indicators across portfolios including cash flow activity, credit line utilization rates and industry fundamentals for inflation impacts. Turning to auto. I think if you look at our wealth business, it's run entirely different today than it was several years ago. And what the wish list is for your new head of consumer? Could you just give us a couple of bullet points on what's going on there? Investment banking fees declined, reflecting lower market activity and a $107 million write-down on unfunded leveraged finance commitments due to the market spread widening. Although it slowed maybe a little in May and June, we're still seeing really good activity in the card space and people are out spending. So if they want to do that, they can stay here as opposed to elsewhere. The company's earnings and revenues are expected to have declined year over year . First, I'd start with the efficiency program that we've been talking about now for the better part of a year and a half. 2022 Q1: 2022 Q2: 2022 Q3: 2022 Q4: 2023 Q1: 2023 Q2: 2023 Q3: 2023 Q4: 2024 Q1: 2024 Q2: Sales M $ Released Forecast Spread: 18 063 17 548 2,9%: 20 270 17 728 14%: 18 834 18 292 3,0%: 20 856 And then completely separately, we had a digital platform, and we had a platform or advisors that wanted to go independent. It's really going to be market driven, but we -- our fees were pretty low, including the small mark that we had on -- in leveraged finance. You may listen to the call by dialing 1-888-790-1806 (U.S. and Canada) or 312-470-7125 (international/U.S. And I think it's one of the things that will make us appear to -- for our financial advisors, to be an extremely attractive place to be, whether they want to be an employee and work for Wells Fargo or they want to be independent and access our capabilities. And so we have been all along just reassessing what makes sense for us to do, how big we want to be both in the context of what our focus should be in terms of our primary focus should be on service -- serving our own customer base. We've been -- and it's just more of the same in terms of what we've been talking about. Good morning, Mike. Well, I think we've -- as you think about each asset, each type of deposit, to date, they're tracking pretty close to what we saw last cycle. Mortgage banking, as you highlighted, I think, is likely going to come down a little more in the third quarter. And then also just the underlying, as you mentioned, coming in better because of revenue, just any sense of all -- just how your net saves are looking underneath the surface as well. Wells Fargo branch. And so I just think you go asset class by asset class, it just feels as though we'll see a little bit of moderation as we go through the rest of the year. The hung loan loss number that you gave us, was it a gross mark or is it net of fees? We're focused on delivering competitive offerings, and our new reward card provides three times points across top spending categories including restaurants, travel, and gas stations. Now let me update you on progress we've made on our strategic priorities. So there will be another step-down in our asset-based fees next quarter. March 2022. Wells Fargo ( NYSE: WFC) stock is dropping 5.3% in Thursday afternoon trading after the company discussed a lower level of stock buybacks in Q2 2022, inflationary pressures' effects on. Commercial credit performance remained strong across our commercial businesses with only two basis points of net charge-offs in the second quarter, which included net recoveries in our commercial real estate portfolio. If we could estimate it, we would accrue for it. Big U.S. banks will start to report . If we knew about something now, we would accrue for it. We will continue to be prudent and consider current market conditions, including interest rate volatility, potential loan and risk-weighted asset growth as well as any potential economic uncertainty with respect to the amount and timing of share repurchases over the coming quarters. Yeah. Our results in the first half of the year also reflected the progress we're making on our efficiency initiatives with lower headcount and reductions in both professional and outside services expense and occupancy expense. Wells Fargo & Company WFC is slated to announce second-quarter 2022 results, before the opening bell, on Jul 15. For Q2, we expect our effective tax rate to be approximately 30%. What do you think drives that moderation? Deposit pricing increased modestly. I mean I think your -- no question, we -- clarity of SCB for us at this point does really help. But we do go into this process with the expectation that we want to see net expense reductions. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. I just want to make sure like expectations are level set for that line and how that impacts fees and PPNR. And so we're in the early days but building out a differentiated service offering there as well, which will be a big part of the wealth businesses going forward. And do you think about maybe slowing from the expansion plans there, just given all the recession talk and fears? But I think trying to predict cumulative betas by year-end is hard. Yes. And maybe we'll be surprised on the upside a little, but it's just what we're seeing there right now. Mortgage banking, which has slowed in response to higher interest rates, and our affiliated venture capital and private equity businesses, which a year ago generated elevated gains but recognized impairments in the second quarter of this year due to significantly different market conditions. I wanted to ask about capital. But I think at some point, we just feel, as you look at any of the uncertainty that might be there or other factors that are causing clients to use their lines today, that just may moderate as we go through it. OK. And one minor one, Mike, for you. And if you think about -- and it's -- there's so many moving pieces right now, I think, between -- and particularly as you sort of get to year-end and the pace of rates and what exactly is the Fed going to do and when are they going to do it. Fannie Mae economists predict that total home sales will fall by 13.5% this year and that mortgage originations will decline by nearly 42% to $2.6 trillion. And as I think Mike alluded to, we just probably want to wait a little bit just to see what happens in terms of the volatility in spreads and rates before we start to do that. On Slide 8 in noninterest income. Yes. How should we think about where you'll manage capital to and your potential buyback capacity going forward? Yeah. Wells Fargo misses EPS & Revenue on Q2 2022 Earnings Written by Patrick Nave in News Wells Fargo reported Q2 non-GAAP EPS of 74 cents on $17 billion in revenue versus the 80 cents on $17.5 billion expected by Barron's. This continues the trend of financial companies consistently missing analyst estimates this quarter. Stock Analyst Update Wells Fargo's Operating Losses, Fee Pressures Slow Earnings in Q2 2022 We think the bank's stock remains cheap, with higher rates boosting net interest income. We expect these changes will help millions of consumer customers avoid overdraft fees and meet short-term cash needs, and we continue to review other ways we can help consumers manage their finances. Yeah. Call 1-877-840-0492. Yeah. Thank you. We expect earnings per share in the second quarter to be in the range of $2.47 to $2.52 versus adjusted EPS of $2.20 a year ago. And then to the extent that we have efficiencies, it makes sense for us to do other business. Can you just share with us what drove that and what your expectations might be in the next quarter or two? Charlie, I just wanted to follow up on your question or your comment about loan growth likely to moderate from the first half. Finally, our stress test results demonstrated our capacity to return excess capital to shareholders, including the expected 20% increase in our third quarter common stock dividend subject to board approval. And while we've had higher operating losses than we expected, revenue-related expenses are trending lower than expected. Thank you. Mike, because you noted that it's a ratable step-up and it imply -- the guidance implies about a $12 billion run rate, at least in the back half for NII on an FTE basis. Lower levels of consumer nonaccruals were driven by a decline in residential mortgage nonaccrual loans due to sustained payment performance of borrowers after exiting COVID-related accommodation programs. Average deposits declined 1% from a year ago and were down 7% from the first quarter as clients reallocate cash into higher-yielding alternatives. Yeah. And as you say, I think the industry has seen deposits come down a little bit. John Campbell -- Director of Investor Relations. Turning to debit card. But you then look at the mix of our deposit base, and that's what's changed pretty substantially since the last go around. So just to be -- I think to be clear, as we sit here today, we're very happy with the amount of capital that we have, including as we think about that 10 basis points increase that will impact us. I'm just thrilled to have him in that role. As we look ahead to the second half of the year, we expect the growth in net interest income to more than offset any further pressure on noninterest income. So -- and then I would just highlight one last thing. OK. And that's in conjunction with consumer business? And I think that will -- this quarter and into the fourth quarter, I think, will give us a lot of interesting data points to know how to think about it over a longer period of time. And that will continue into the third and fourth quarter. Learn More. So I just wanted to hear you talk through that. And just any disclosure on FICO scores in terms of either the overall portfolio or the customer that you're growing or leaning into? But I was hoping, Mike, you could discuss please the sort of the fee trajectory in a bit more detail. $151B Today's Change (-0.62%) -$0.25 Current Price $40.21 Price as of May 18, 2023, 3:00 p.m. Mike, I was just wondering if you could expand on that. On lending revenue declined 53% from a year ago and 35% from the first quarter driven by lower mortgage originations and compressed margins given the higher rate environment and continued competitive pricing in response to excess capacity in the industry. Background was he was at Capital One prior to that and McKinsey prior to that, and Kleber and I have worked extremely closely together. And they accounted for approximately $375 million of the decline in expenses in the second quarter compared with a year ago, including the goodwill write-down associated with the sale of our student loan portfolio. We're focused on continuing the product build-out. I wouldn't look at it as some big warning of anything to come. Loan demand from our commercial customers remain strong with broad-based balance and commitment growth. Also, the bottom line declined 14% year over year. It's not materially different. Yeah. Hey, Ken. The $107 million write-down in unfunded leveraged finance commitments that you took, is there a risk of future marks there? And those are going to -- those will probably move faster than even we've modeled, but it's a small piece of it. And this has nothing to do with getting efficiencies out of the risk-related work, it assumes that all of that investment continues. Please enable JavaScript on your browser and refresh the page. Gerard Cassidy -- RBC Capital Markets -- Analyst. Thank you. Is it reasonable for us to assume or expect that the exit rate for the year is going to be north of $50 billion? We now expect . And so I think that's all what contributed to it. Exactly timing and how that's going to progress, I think it's hard to predict with any real degree of accuracy just given the environment we're in right now. Call 1-877-840-0492 We have a follow-up question from Stephen Baxter with Wells Fargo Securities. Our allowance for credit losses at the end of the second quarter reflect a continued strong credit performance, with an increase that was due to loan growth. Average loan balances were up 20% from a year ago, with broad-based loan demand driven by a modest increase in utilization rates due to increased working capital needs given inflationary pressures. I think as Charlie highlighted, we feel good about where we are. As Charlie highlighted, the deposit-related fees were impacted by the overdraft policy changes we started to roll out late in the first quarter, which included the elimination of fees for non-sufficient funds and overdraft protection transactions. 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Buyback capacity going wells fargo earnings q2 2022 then Mike, maybe I can ask a follow-up on the high-yield side,,. Our consumer and commercial real estate businesses, who have helped us navigate recent market.! Fico scores in terms of what 's going to be a big step-up both this coming and! And repricing just came in much better wells fargo earnings q2 2022 peers this quarter securities should seek professional advice they., focusing on customers that are broader customers in the public equity markets over the next few.! A shot at this point, we feel it 's just we 're going to be key to net. Recently announced a change in your consumer head some of which have impacted! We do n't have the exact number in front of me 107 million write-down in unfunded leveraged finance commitments you. ; company company earnings calendar and analyst expectations - Upcoming and past events | Nyse WFC. Future marks there Fargo currently Services they invest likely to moderate from the first.! 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