Categories Earnings Call Transcripts

Wells Fargo & Company (WFC) Q3 2023 Earnings Call Transcript

WFC Earnings Call - Final Transcript

Wells Fargo & Company (NYSE: WFC) Q3 2023 Earnings Call dated Oct. 13, 2023

Corporate Participants:

John CampbellInvestor Relations

Charlie ScharfChief Executive Officer

Mike SantomassimoChief Financial Officer

Analysts:

John McDonaldAutonomous Research — Analyst

Steven ChubakWolfe Research — Analyst

Scott SiefersPiper Sandler — Analyst

Matt O’ConnorDeutsche Bank — Analyst

John PancariEvercore ISI — Analyst

Erika NajarianUBS — Analyst

Ebrahim PoonawalaBank of America — Analyst

Gerard CassidyRBC Capital Markets — Analyst

Presentation:

Operator

Welcome and thank you for joining the Wells Fargo third quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

John CampbellInvestor Relations

Good morning everyone. Thank you for joining our call today where our CEO, Charlie Scharf; and our CFO, Mike Santomassimo will discuss 3rd-quarter results and answer your questions. This call is being recorded. Before we get started I would like to remind you that our third-quarter earnings materials, including the release, financial supplement, and presentation deck, are available on our website at wellsfargo.com. I’d also like to caution you that we may make forward-looking statements during today’s call that are subject to risks and uncertainties.

Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings, including the Form eight-K filed today containing our earnings materials. Information about any non-GAAP financial is reference including a reconciliation of those measures to GAAP measures can also be found in our SEC filings and the earnings materials available on our website. I will now turn the call over to Charlie.

Charlie ScharfChief Executive Officer

Thanks very much, John. I’ll make some brief comments about our third-quarter results and update you on our priorities. I’ll then turn the call over to Mike to review third-quarter results in more detail. Before we take your questions. Let me start with some third-quarter highlights. Our results reflected the progress we’re making to improve our financial performance. Revenue, pre-tax provision profit, net income, diluted earnings per common share, and ROTCE were all higher than a year ago. Our revenue reflected strong net interest income growth as well as higher non-interest income as we benefited from higher rates and the investments we’re making in our businesses. Our expenses declined from a year-ago due to lower operating costs.

As expected, net charge-offs have continued to increase from historical low levels and we increased our allowance for credit losses, primarily driven by our office portfolio, as well as growth in our credit card portfolio. Average commercial and consumer loans were both down from the second-quarter as higher rates and a slowing economy, that we can loan demand and we have continued to take some credit tightening actions. Average deposits also declined from the second-quarter and a year-ago, driven by consumer spending as well as customers migrating to higher-yielding alternatives. Consumer spending remains strong with third-quarter year-over-year growth rates for both credit and debit card spending increasing from the second quarter.

Now let me update you on the progress we’re making on our strategic priorities starting with risk and control work, which remains our top priority. As time goes on we continue to make the progress necessary to complete our work. I’ve said that, we have detailed project plans which track interim deliverables, not just the data to work is to be finalized and turn it over to the regulators to validation. The work is not finalized all at once. It’s not as if there is a big bang conversion at the conclusion of a big body of work. It’s just the opposite. Building our risk and control framework is a continuous ongoing effort. We are implementing changes throughout the life of the project and we track effectiveness along the way.

The numerous internal metrics we track, show that the work is clearly improving our control environment, but we will not be satisfied until all of our work is complete. We remain focused on the work ahead, even as we are making progress, but I will repeat what I’ve said in the past. Regulatory pressure on banks with long-standing issues such as ours continues to grow. And until we complete our work and until it is validated by our regulators we remain at risk for further regulatory actions. Additionally, until our work is complete, we could find new issues that need to be remediated and these may result in additional regulatory actions.

We also continued to take steps to advance our business strategy, which includes focusing on our core business and customers. We sold approximately $2 billion of private equity investments and certain Norwest Equity Partners in Northwest mezzanine Partners funds. We are also making a number of investments to better serve our customers. As a leader in US middle-market and asset-based lending we’re focused on finding ways to support our clients with the recently-announced strategic relationship with Centerbridge Partners. Our middle-market clients will have greater access to alternative sources of capital that can be used to pursue a broader set of growth and value-creation initiatives across a variety of market conditions.

Branches continue to play an important role in the way we serve our customers and we continue to optimize our network. But we also look at targeted expansion in markets where we see opportunities for our franchise. Last week, we announced, we are expanding our branch network in Chicago, where we only have seven branches today. We also continued to make enhancements to our mobile app and in the third-quarter, we launched stock fractions giving Wells trade clients the ability to buy fractions of company’s stocks to help build a diversified portfolio regardless, the stock price. Just yesterday, we announced the expanded availability of licensing to all consumer customers, available on the mobile app.

Licensing is our personalized, digital approach to aligning customers goals with their money and was launched to all Wealth and Investment Management clients earlier this year. Customers goals entered in licensing will be visible to bankers to enhance needs-based conversations. We also expanded the capabilities of Fargo our AI-powered virtual assistant and recently added the ability for customers to communicate with Fargo in Spanish. These enhanced capabilities are just the latest of our ongoing investments to deliver seamless and consistent experiences across all our channels.

We are seeing more mobile adoption momentum, adding over 520,000 mobile active users in the third-quarter, our best quarterly growth since first-quarter of 2021. We’ve also continued to make important hires who bring in expertise to Wells Fargo in businesses we are looking to grow. Before I highlight some of our new leaders, I’d like to take this opportunity to thank Bill Daley, Vice-Chairman of Public Affairs, who is retiring at the end of this year for all he has accomplished since he joined the company in 2019. Bill has been an invaluable asset to company and we benefited from his long experience in both the public and private sectors. During his time at Wells Fargo, he helped strengthen our relationships with the communities we serve, establish new programs in housing and small-business and work to rebuild our reputation, both net locally and nationally.

I’m pleased to announce that Tom Nides, joined Wells Fargo as Vice-Chairman earlier this month. Tom will be a close adviser to the senior management team on a range of issues and we will work alongside our business leaders as we continue to expand our relationships with clients. The breadth of Tom’s experience across the public and private sectors will be an important asset to us as we continue to move the Company ahead. We continue to invest in our corporate investment banking business with new Co-heads of Equity Capital Markets. These new hires complement the other important hires in making over the past year. We also hired a new Head of Trust Services and Chief Fiduciary Officer in our Wealth and Investment Management segment and a new Head of affluent premier banking in consumer, small, and business banking.

We also continued to focus on better serving our communities. During the third quarter we published three reports that provide an overview of the work we’re doing to build a sustainable inclusive future in the communities we serve, outline our strategic approach to managing the risks associated with climate change and deploying capital to support the transition to a low-carbon economy and describe our methodology for aligning our financial portfolios with pathways to net zero greenhouse gas emissions by 2050 and for setting interim ambitions based targets to track that alignment. We continue to make progress on our special-purpose credit program initiative we announced last year to help drive economic growth, sustainable homeownership, and neighborhood stability in minority communities.

We recently extended our special purpose refinance offers to pre-qualify the standard customers with Wells Fargo mortgages to refinance at a lower than market rate. The program launched last year for black or African-American customers has seen strong results and the Hispanic — and the Hispanic offer has shown similar levels of customer engagement. We also announced that we’re offering a $10,000 home buyer access brand that will be applied towards down payment for eligible homebuyers who currently live in or purchasing homes in certain underserved communities in eight metropolitan areas.

And we now have 14 HOPE Inside centers in Wells Fargo branches, including the first focusing on serving the Navajo community. The centers help engage and empower communities to achieve their financial goals through financial education workshops and free one-on-one coaching. Looking ahead, the US economy has continued to be resilient with key support from the labor constraints — from the labor market and strengthening consumer sentiment. Delinquencies continued to deteriorate[phonetic] at a relatively slow consistent rate, without signs of acceleration across our portfolios. Our base case remains a continued sluggish[phonetic] economy. But we remain prepared for a wide range of scenarios given there is still significant uncertainty ahead.

Regarding capital. The Basel III Endgame proposal included higher capital requirements as we expected. It’s a complicated set of rules, but at this point. If nothing changed and we didn’t take actions we estimate that our RWA will increase by approximately 20%. There are some items that increased our capital requirements that we’re hopeful will be adjusted. And we will be participating and sharing our perspectives on the proposed rules during the 120-day comment period. Additionally, we are evaluating changes, we may make based on the proposed rules. Fortunately, we’ve come into this from a strong position as our current capital levels are above the estimated regulatory minimum plus buffers. However, we still need to decide how much of an additional buffer, we want to maintain and what mitigating actions we may want to take to reduce the impact of the new rules.

At this point, we still see a path to concurrently increasing our level of CET1 as appropriate. Increasing our dividend and repurchasing common stock. Levels of each will be influenced by CCAR, the finalization of the proposed rules, and economic conditions. I’ll now turn the call over to Mike.

Mike SantomassimoChief Financial Officer

Thank you, Charlie, and good morning everyone. Net income for the third-quarter was $5.8 billion or $1.48 per diluted common share both up from the second-quarter a year-ago. Our third-quarter results included $349 million or $0.09 per share of discrete tax benefits related to the resolution of prior-period tax matters. Turning to capital and liquidity on slide 3. Our CET1 ratio increased to 11% in the third-quarter, 2.1% points above our new regulatory minimum plus buffers, effective on October first. This was up from 10.7% in the second quarter as higher earnings to be approximately 14 basis-point benefit from the sale of certain private-equity investments and lower-risk weighted assets were only partially offset by share repurchases, and dividends.

During the third-quarter, we repurchased $1.5 billion in common stock. Our strong capital levels position us well for the anticipated increases related to the Basel III Endgame proposal released in the third-quarter. Based on where we end the quarter, we estimate that our CET1 ratio would be 50 basis-points above the fully phased in and require minimum if the proposed rules implemented as written after factoring the growth in RWAs and the resulting decline in our stress capital buffer as well as the impact of the new G-SIB buffer calculation changes. Importantly, this is an early estimate subject to change and is before any actions we may take to mitigate the impact of the new rules.

Looking-forward, we expect to continue to have capacity to increase our CET1 ratio while we plan to continue to repurchase shares as we wait for the capital rules to finalize. Turning to credit quality on slide five. As we expected, net loan charge-offs continued to increase, up 4 basis points from the second quarter to 36 basis points of average loans. Commercial net loan charge-offs declined modestly from the second quarter to 13 basis points of average loans, as lower losses in our commercial and industrial portfolio were partially offset by $14 million of higher losses in commercial real estate. We had $32.2 billion of office loans, down 3% from the second quarter, which represented 3% of our total loans outstanding.

Vacancy rates continue to be high and the office market remains weak. Our CRE teams continue to focus on monitoring and derisking the portfolio, which includes reducing exposures. As we highlighted in the past, each property situation is different and there are many variables that can determine performance, which is why we regularly review this portfolio. As expected, consumer net loan charge-offs continued to increase and were up $98 million in the second quarter to 67 basis points of average loans.

Residential mortgage loans continued to have net recoveries, while our other consumer portfolios all have higher losses with the largest increase in our auto portfolio, which was up from the second quarter seasonal lows. Non-performing assets increased 17% in the second quarter as growth in commercial real estate non-accrual loans more than offset the decline in commercial and industrial, as well as modest declines across all consumer portfolios. The decline in commercial and industrial non-accrual loans was primarily due to pay offs and pay downs, which is a good reminder that the resolution of non-performing assets doesn’t always result in charge offs.

The increase in commercial real estate non-accrual loans was driven by a $1.3 billion increase in the office non-accrual loan. Moving to Slide 6. Our allowance for credit losses increased to $333 million in the third quarter primarily for commercial real estate office loans as well as for higher credit card loan balances which was partially offset by a lower allowance for auto loans. Since the composition of our office portfolio is relatively consistent with what we shared with you in the past few quarters we did not include a separate commercial real estate slide this quarter. However, we did update the table showing the allowance for credit losses coverage ratio for commercial real estate, including the breakdown of the office portfolio. We have not seen significant increases in charge-offs in our commercial real estate office portfolio yet. However, we do expect higher losses over-time and we continue to increase the coverage ratio in our commercial — in our CIB commercial real estate office portfolio from 8.8% at the end of the second quarter to 10.8% at the end of the third quarter. On Slide 7, we highlight loans and deposits. Average loans were down modestly from both the second quarter and a year ago. While we continued to have good growth in credit card loans from the second quarter, most other portfolios declined.

I’ll highlight specific drivers when discussing our operating segment results. Average loan yields increased to 195 basis points from a year ago and 24 basis points from the second quarter due to the higher interest rate environment. Average deposits declined 5% from a year ago, predominantly driven by deposit outflows in our Consumer and Wealth businesses, reflecting continued consumer spending and customers reallocating cash into higher-yielding alternatives. Average deposits also declined in Commercial Banking, while they stabilized in corporate and investment banking. As expected, our average deposit costs continued to increase, up 23 basis points from the second quarter to 136 basis points with higher deposit costs across all operating segments in response to rising interest rates.

However, the pace of the increase has slowed and our percentage of average non-interest-bearing deposits decreased modestly from the second quarter to 29%, but remained above pre-pandemic levels. Turning to net interest income on Slide 8. Third quarter net interest income was $13.1 billion, up 8% from a year ago as we continued to benefit from the impact of higher rates. The $58 million decline from the second quarter was due to lower average deposit balances, partially offset by one additional day in the quarter and the impact of higher interest rates. Last quarter, we increased our expectations for full year 2023 net interest income growth to approximately 14% compared with 2022, which was up from our expectation of 10% growth at the beginning of the year.

We now expect full-year 2023 net interest income growth to grow by approximately 16% compared with 2022, with the fourth quarter 2023 net interest income expected to be approximately $12.7 billion. We expect a decline in net interest income in the fourth quarter is primarily driven by our assumption for additional deposit outflows and migration from non-interest-bearing to interest-bearing deposits, as well as continued deposit repricing, including continued competitive pricing on commercial deposits.

Turning to expenses on Slide 9. Non-interest expense declined from a year ago, driven by lower operating losses and increased 1% in the second quarter driven by higher operating losses, severance expense, and revenue-related comp. Last quarter we updated our expectations for full-year 2023 non-interest expense, excluding operating losses to approximately $51 billion. We now expect it to be approximately $51.5 billion, or approximately $12.6 billion in fourth quarter. The increase reflects additional severance and other one-time costs, revenue-related compensation and some lags and realized inefficiency [indecipherable].

We reduced headcount every quarter since the third quarter of 2020, it was down 3% in the second quarter and 5% from a year ago. We believe we still have additional opportunities to reduce headcount and attrition has remained low, which will likely result in additional severance expenses for actions in 2024. We are working through our efficiency plans now as part of the budget process. Additionally, the FDIC deposit special assessment related to the events from earlier in the year is finalized in the fourth quarter, it would increase our expected fourth quarter expenses.

And finally, as a reminder, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating results.

Turning to our operating segments, starting with consumer banking and lending on Slide 10. Consumer, small and business Banking revenue increased 7% from a year ago, as higher net interest income, driven by the impact of higher interest rates was partially offset by lower deposit-related fees, driven by the overdraft policy changes we rolled out last year. Charlie highlighted the investments we’re making in our Chicago branch network, we’re also making investments in refurbishing branches across our existing network.

Additionally, we are bringing our digital onboarding experience through our branches, creating a fast and easy experience for our customers. At the same time, we have reduced our whole number of branches by 6% from year ago. Home lending revenue declined 14% from a year ago due to a decline in mortgage banking income, driven by lower originations and servicing income, which included the impact of sales and mortgage servicing rights. We continue to reduce headcount in home lending in the third quarter, down 37% from a year ago, and we expect staffing levels will continue to decline. Credit card revenue increased 2% from a year ago due to higher loan balances, partially offset by introductory promotional rates and higher credit card rewards expenses.

Payment rates have been relatively stable over the past year and remained above pre-pandemic levels. New account growth continued to be strong, up 22%[phonetic] from a year ago, reflecting the continued success of our new products and increased marketing. Importantly, the quality of the new accounts continued to be better than what we were booking historically, while the majority of new cards were to existing Wells Fargo customers, we are increasingly attracting more customers that are new to Wells Fargo. Auto revenue declined 15% from a year ago, driven by continued loan spread compression and lower loan balances.

Personal lending revenues up 14% from a year ago due to higher loan balances. Turning to some key business drivers on Slide 11. Mortgage originations declined 70% from a year ago and 18% in the second quarter. We continued to make progress on strategic plans we announced earlier this year, including focusing on serving Wells Fargo Bank customers as well as borrowers in minority communities. We did not originate or fund any corresponding mortgages in the third quarter. The size of our auto portfolio has declined for six consecutive quarters and balances were down 9% at the end of the third quarter compared to a year ago.

Origination volume declined 24% from a year ago, reflecting credit-tightening actions as well as continued price competition. Our origination mix continued to shift towards higher FICO scores, reflecting the credit-tightening actions we’ve taken over the past year. Debit card spend increased 2% from a year ago, with growth in those categories offsetting clients in fuel, home improvement, and travel. Credit card spending continues to be strong, it was up 15% from a year ago, all categories grew from a year — a year ago, including fuel, which rebounded after declining in the second quarter.

Turning to commercial banking results on Slide 12, middle market banking revenue increased 23% from a year ago due to the impact of higher interest rates and higher loan balances. Asset-based lending and leasing revenue increased 3% year-over-year due to higher loan balances as well as higher revenue from renewable energy investments. Loan balances were up 7% in the third quarter compared to a year ago, driven by growth in asset-based lending and leasing. Average loans were down 1% in the second quarter due to declines in middle-market banking. After the increase in the first half of the year, revolver utilization rates declined in the third quarter to level — to levels similar to a year ago.

Turning to corporate investment banking on Slide 13, banking revenue increased 20% from a year ago, driven by higher lending revenue, stronger treasury management results, reflecting the impact of higher interest rates, and higher investment banking revenue, reflecting increased activity across all products. As Charlie highlighted, we continued to hire experienced bankers helping us deliver for our clients and positioning us well when markets improve. Commercial real estate revenue grew 14% from a year ago, reflecting the impact of higher interest rates, and higher revenue in our loans and housing business, partially offset by lower loan and deposit balances.

Markets revenue increased 33% from a year ago, driven by higher revenue in structured products, equities, credit products, and foreign exchange. We’ve had strong trading results for three consecutive quarters, as we benefited from market volatility and the investments we’ve made in technology and talent to grow this business. Average loans were down 5% from a year ago, driven by Banking, reflecting a combination of slower demand, payoffs, and modestly lower line utilization, average loan balances were stable with the second quarter. On Slide 14, Wealth and Investment Management revenue increased 1% compared to a year ago, driven by higher asset-based fees due to the increased market valuations.

Net interest income declined from a year ago, driven by lower deposit balances as customers continued to reallocate cash into higher-yielding alternatives as well as lower loan balances. While average deposits were down compared with both the second quarter and a year ago, the pace of decline slowed in the third quarter. As a reminder, the majority has been — Wealth and Investment Management advisory assets were priced at the beginning of the quarter so third quarter results reflected market valuations as of July 1st, which were higher from a year ago. Asset-based fees in the fourth quarter will reflect market valuations as of October 1st, which were also higher from a year ago, but were lower from the third quarter pricing date.

Average loans were down 4% from a year ago, primarily due to a decline in securities-based lending. Slide 15 highlights our Corporate results. This segment includes venture capital and private equity investments, including investments in funds that we sold in the third quarter. The sale had a nominal impact on the third quarter net income. Revenue declined $345 million from the year ago, reflecting assumption changes related to the valuation of our B2B common stock exposure as well as lower venture capital revenue.

In summary, our results in the third quarter reflect a continued improvement in our financial performance. During the first nine months of this year, we had strong growth in revenue, pre-tax provision profit and diluted earnings per share compared to a year ago. As expected, our net charge-offs have continued to slowly increase from historical lows and we increased our allowance for credit losses by over $1.9 billion this year, primarily for CRE office loans and higher credit card loan balances. We are closely monitoring our portfolios and taking credit-tightening actions where we believe are appropriate. Our capital levels have increased and we expect to continue to return excess capital to shareholders. We will now take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And we will take our first question from John McDonald of Autonomous Research. Your line is open, sir.

John McDonaldAutonomous Research — Analyst

Hi. Good morning. I wanted to ask about the expenses, Mike. Obviously, improving efficiency has been a big goal of yours. You’ve made progress, even while investing in the regulatory. What are the additional opportunities to improve efficiency from here as we head into 2024? I know you’re probably not ready to give a guidance for ’24 yet, but going into the budget planning with the mindset that it should be roughly flattish? And any comments you can give on that would be helpful. Thanks.

Mike SantomassimoChief Financial Officer

Yeah, sure. Thanks, John. And, you know, first, you know, let’s just make sure we keep it all in context, right? We set out a program, you know, almost three years ago now to cut, you know, roughly $10 billion and I think that’s all still on track. We’ve brought headcount down 40,000, you know, from — or closer to 50,000 from the — the peak back in 2025, so sort of, you know, very — very good progress to date, you know. And I think, as Charlie and I have both said over the last couple of — couple of quarters, we still have more to do to make it more efficient. And I would say there are very few parts of the Company that we would say are optimized at this point. Now, some have more opportunity than others, some require investment in terms of automation and technology, some don’t. But I do think that we go into the budget process and even just how we operate every quarter with a very disciplined approach to every single area of the Company saying, what are we going to do to continue to drive more efficiency there. While we make investments as well and we highlighted some of those that we’ve been making on — in the prepared remarks, but I think it’s — it’s — it’s the same mindset we’ve been bringing to it now for the last few years, and I think we’re going to continue to do that. Where that ultimately ends up, we’ll share for next year, we’ll share with you in January like we always do.

John McDonaldAutonomous Research — Analyst

Okay, fair enough. And then on the net interest income outlook for the fourth quarter, are you building in assumptions, you mentioned deposit outflows and mix-shift assumptions? Are they assuming that things accelerate from here, or similar to what you’ve seen this quarter? It seems like a pretty big sequential decline, just kind of wondering what some of the assumptions are there. Thanks.

Mike SantomassimoChief Financial Officer

Yeah. No, look, I think, as you can — as we’ve talked about over the last — it feels like forever, but last — certainly last four, five, six quarters now, there’s still a lot of uncertainty out there in terms of how the path of both deposits and pricing will shape up, whether it’s all the quantitative tightening, all of the, you know, any competitive reactions we may see from others and so. So I think we continue to think that we’re going to see these trends appear at some point. Now, we’ve been — we’ve been pleasantly surprised, you know, this — to date this year that it hasn’t progressed as fast as we thought it would, but at some point it will.

And so hopefully we’ll find ourselves in a position where it doesn’t move as — as maybe fast as we’ve modeled in terms of pricing. But we still — all those trends are going to happen and are happening. As you look out shifts between non-interest-bearing and interest-bearing, you’re seeing deposit costs continue to increase, and on the consumer side, you see people spending their money. And so exactly at what pace those things are all going to keep going is — we certainly modeled — modeled it but we try to give you a base case forecast so we can hit under a bunch of different scenarios and this is the same.

John McDonaldAutonomous Research — Analyst

Okay, got it. Thank you.

Operator

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

Steven ChubakWolfe Research — Analyst

Hi. Good morning.

Charlie ScharfChief Executive Officer

Hi, Steve.

Steven ChubakWolfe Research — Analyst

So I wanted to start, Charlie because you had made some comments about capital targets and those potentially evolving. The inflation RWA from Basel III endgame that you guided to, does bring your CET1 minimum to 8.5%. You alluded suddenly, mind you, to the possibility of managing to a lower target. Since 150 bps management cushion does feel excessive, what are some of the factors that would compel you to maintain a larger cushion than peers and maybe continue to run at or above 10%?

Charlie ScharfChief Executive Officer

Well, let me just — I’ll start and then I’ll hand it over to Mike. We were not trying to or I was not trying to give any direction about where we thought the appropriate buffer would be. We’re just trying to be very factual about where we are. And once everything is finalized, we’ll determine what the right buffers are and we’ll communicate those. So please don’t try and read any more into what I said other than just that.

Mike SantomassimoChief Financial Officer

Yeah. And I think as Steve, I know — I know your estimate might be 150 basis points, but I think what we’ve talked about over time is that, you know, at least in — at least at this point, we’ve been saying our buffer is probably closer to 100% — 100 basis points over — over where the — wherever the right minimum might be, and that may evolve as Charlie said. I think — as you look at — as you look at Basel III, the increase in RWA is driven by the things that are probably pretty obvious, whether it’s operational risk plus, you know, the — some of the other factors, but operational risk is certainly going to be one of the bigger pieces of it and so I really do think that we have to see how the final rule shakes out next year. We’re hopeful that there’ll be some changes to areas that we think just makes sense from aligning sort of capital requirements to the risk, while also maybe moderating some of the operational risk increases as well.

And so we’re going to engage as we go there. But one of the factors that we’ve talked about now for a while in terms of how big our buffer should be is, is that — we needed the rule to be finalized. And so could that lead you to having a slightly smaller buffer than what we would have had in the past, potentially. But I think we have to get there and get these finalized and then will also take actions once we have good clarity on what’s going to change or not change as we go over the next year. So — I mean we’re probably nine months to 12 months away from getting a final rule and so we still have a little bit of time for this to play out.

Steven ChubakWolfe Research — Analyst

Thanks for the color and Mike for a follow-up just on the trading business. It continues to surprise positively versus expectations. You cited some of the investments that you’ve made, the benefits of volatility. But with revenues running multiples above what we’ve seen in prior years and that $1 billion-plus bogey being reached for three consecutive quarters, I was hoping you could just speak to whether we should be underwriting $1 billion-plus as a new normal, or if there were any cyclical benefits or anomalous benefits that maybe we shouldn’t be underwriting going forward. Just try and think about what the normalized level of trading revenue should be given some of the investments you’ve made scaling in that business?

Mike SantomassimoChief Financial Officer

Yeah. I’ll take that. Look, I think we’ve — as you’ve said, we’ve just been methodically investing in the capabilities with a focus on supporting our core clients more than — more — with more capabilities versus like trying to expand the scope of what we do in a way that just doesn’t fit, who we are. And so I think that’s what you’ve seen us try to do there in those businesses. So businesses like FX and rates and just — you know, it’s sort of methodically sort of adding people in a couple of slots for improving technology. And we’ve certainly been — we’ve certainly been the benefit of some volatility in the market this year. So as you know, that could change pretty quickly one way or the other.

But I think as we look at some of these businesses what we’re focused on is just — is — is just adding more clients, more — more flows, more incrementally each month and each quarter. And so whether it ends up being $1 billion plus or minus a quarter — per quarter, I think we’ll see as we go, but we’re pretty pleased with what we’ve seen so far. And there isn’t — there isn’t a big one-time event that happened in the quarter that drove the results and so, that’s good to see as well. And you also not seeing big growth in market risk RWA as we do this as well and so that’s part of what we’ve been trying to do as well. It has kind of sweat the balance sheet more and make sure that we’re getting paid for the exposure and the risk we’ve got there. And so we’re happy to see that it’s starting to come together and we’re under no illusions, though, that three quarters is like success, right? We’ve got to do this over a long period of time and continue to add capabilities and clients.

Steven ChubakWolfe Research — Analyst

That’s great.

Operator

The next question will come from Scott Siefers of Piper Sandler. Your line is open.

Scott SiefersPiper Sandler — Analyst

Hi all, thanks for taking the question. So maybe Mike, you could spend another moment sort of discussing RWA mitigation in light of the capital proposal. I guess specifically was hoping for maybe a little more color. I know you touched on in some of the earlier remarks, but you know, the — the sale of the $2 billion in private equity and then maybe if you could also discuss the new agreement with Centerbridge for direct lending? Just sort of how all these factor into your thinking here?

Mike SantomassimoChief Financial Officer

Sure, when you — when you look at mitigation, I’ll just give you some examples of the types of things we’re thinking about. So, when you look at securities finance transactions, you have haircuts — collateral haircut floors that get implemented and I don’t want to get too technical on it, but there’s some technical requirements there that just don’t seem to make sense to us. And so, but if they do get implemented as written, we’ll adapt. It will change the way we — what collateral we require from clients to do trades or will reprice them and so it will be a number of things that we can do like on transactions like that, that it gets very, very technical for each of the underlying deals. There’ll be I know others who have talked about this too. We’ll have to decide how much tax equity investing we do in renewables.

If the risk-weights hold there, it’s just — the math just doesn’t make sense from a return perspective and so we’ll probably have to do less — we’ll probably do less of those. And so there’s a number of things like that as you go through each of the underlying portfolios, just don’t make sense. And we’re going to continue — we’ll — we’ll make the adjustments as we need to. Now, we’re also in a position where we’ve got plenty of flexibility as we talked about in the prepared remarks, right. Our capital levels today are there and with a buffer already and so we have the flexibility to handle it. However, we think makes sense to for each of the underlying businesses and what we want to make sure we do is like we’re building real businesses and client relationships over a long period of time.

So it’s not about necessarily walking away from clients, it’s about finding ways to serve them in ways that both makes sense for them and from a return perspective for us. But it’s going to be a very, very granular conversation. Some of it would be repricing. You got 364-day revolvers that will need to be repriced. You’ve got — there’s a whole bunch of very technical things like that, that will get done over — over time once the rules finalize. Switching to the — the partnership we have with Centerbridge, like, it’s — we have been getting demand from clients for a while now in the middle-market kind of mid-corporate space for solutions to help them in financing that they need, where it likely wouldn’t make sense for us to put on our balance sheet anyway.

And so instead of having, you know, telling clients, we can’t help them or having them go direct to somebody else, we’ve built the — we built the partnership with Centerbridge, that allows us to remain an advisor to a client and help them solve the problem they may have. And so that’s the way we’re thinking about it and we’re excited to work with Centerbridge, and that team and they’re a very high-quality team and have done a lot over time. And I think this gives us another arrow in the quiver to help us provide solutions for clients. And so, it’s early and it will grow over time hopefully, and hopefully clients will see it in the same way.

Scott SiefersPiper Sandler — Analyst

Okay, perfect. Thank you. And then maybe as a follow-up might want to revisit — I was hoping to revisit the NII discussion for — for a bit. I certainly appreciate all the comments on continued mix-shift and deposit pricing pressure, but I guess as we get to this level at the end of the year, is the thought that there would still be unbalanced downward pressure on NII beyond there or is — as you see it — is there enough kind of asset repricing opportunity that would ultimately allow things to settle out, maybe sooner as opposed to later?

Mike SantomassimoChief Financial Officer

Yeah. I mean, we’ll see. I think we — I think we do need to wait till we get towards the end of the year and into January for us to give you a real view on 2024. I mean I think look, the last number of quarters have to show over and over and over that, there’s a lot still to play out here and to get too far ahead of ourselves on that for next year I think would be a mistake at this point. So — but look the same — it’s the same drivers we’ve been talking about for a while, right. It’s like what’s going to happen with deposits, the mix, the pricing, and then to a lesser degree, right now, is loan growth, but that still matters over a long period of time as well.

Scott SiefersPiper Sandler — Analyst

Yeah. Perfect. Thank you very much.

Operator

The next question comes from Matt O’Connor of Deutsche Bank. Your line is open sir.

Matt O’ConnorDeutsche Bank — Analyst

Good morning. Can you just elaborate on the comment of tightening the credit box a bit, and then I guess specifically in credit card thoughts there? I know you’ve been leaning into it and have had a real good growth. And I think it’s still only about 5% of your loan book but wondering your thoughts of — is this really the right time to be leaning into credit card, you know, maybe elsewhere kind of later cycle?

Mike SantomassimoChief Financial Officer

Yeah. I’ll start with the credit card and come back to the broader — broader point. So we started on a journey to transform that — the card business back in the fourth quarter of ’19, so right after really Charlie started. And what we’ve done since then is really refreshed — almost completely refreshed the product line. We still have a little bit more to do there. And so part of what you’re seeing come through in the results is actually putting out good products that people want to buy and you’re seeing really — we had really good new account growth in the quarter, probably our best quarter in quite some time and so it starts with just having a good product and good service behind it, and that’s the key driver, I think, of what — what you’re seeing here.

On the credit side, on the new originations, the new accounts we’re adding are really good relative to the backbook. And when you look at both — and — and even — even when you dig a little bit deeper there, there is a — the majority of them are still Wells Fargo Bank customers, but we’re seeing more and more traction with non-Wells Fargo customers so first-time customers. And when you look at those first-time to Wells’ customers, the credit profile is really good. And so we feel — we feel comfortable with like the risks that’s being added there, and we’re going to continue to look for pockets of risk, and if we see them, we’ll tighten it down. But in terms of what we’re seeing in originations, we feel good about what we’re seeing so far. Just more broadly on credit, we’ve said now for probably the last four or five quarters, we’ve been kind of incrementally tightening the credit box on the consumer side for a while, whether it’s really across-the-board in home lending, auto, card, personal loans.

Really every single one of them had — had some credit — credit tightening, and it’s a bit — it’s been a bit incremental over the last four or five quarters. And so I would still sort of think of that as like taking that last 1% or 2% or 3% of origination out that doesn’t make sense in what could be a more difficult economic environment. It’s not who sails ships in sort of the approach or the underlying box that we’re operating in. It’s really sort of modest and incremental and then on the.

Charlie ScharfChief Executive Officer

Just on — and just to be clear, I mean it’s — and it’s the very basic stuff. It’s just — it’s just upping the lower FICO boundaries. It’s layered risks. And so it’s just as you continue to make these changes, you’re just continuing to do the same types of things without just wholesale exits or anything like that. It’s just — it’s just kind of the smart tightening.

Mike SantomassimoChief Financial Officer

Yeah. And then outside the consumer — outside of consumer, really the only place that we’ve meaningfully tightened credit over the last couple of years or a few years is commercial real estate, and other than that, I think there’s — there’s probably some minor tinkering, but we haven’t really changed the appetite much outside of commercial real estate.

Matt O’ConnorDeutsche Bank — Analyst

Okay, that’s helpful. And then just clarification on the severance cost. Can you give us what the absolute amount was this quarter? I think you gave us some change versus a year ago and linked quarter, but what was the absolute level this quarter?

Mike SantomassimoChief Financial Officer

Yeah. There wasn’t a lot a year ago, so it’s not far off of the total. So a small difference but it’s — there wasn’t a lot.

Matt O’ConnorDeutsche Bank — Analyst

Okay. So, that is $200 million.

Mike SantomassimoChief Financial Officer

Yeah. And again, that’ll sort of evolve as we go. I mentioned that in my — in my script, as we look at next year and the attrition rates that we’re seeing.

Matt O’ConnorDeutsche Bank — Analyst

Yeah. Okay. Thank you.

Operator

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

John PancariEvercore ISI — Analyst

Good morning. On the commercial real estate front, I know you cited the increase in the office loan loss reserve from — in the CIB from 8.8 to 10.8. Can you just comment there in terms of what were some of the anecdotal drivers for the loan loss reserve increase? Do you think you could have incremental increases here? Maybe cite some of the office reevaluations you’ve seen as you have seen the underlying collateral change hands or reappraisals, if you can give us some color there as well? Thanks.

Mike SantomassimoChief Financial Officer

Yeah, sure. Yeah, when you — the hard part of office right now is that there aren’t a lot of trades happening yet, right? There’s a few in certain cities and they’re all a little bit different in their complexion. So you still have somewhat limited information and price discovery in a lot of — in a lot of places. And so we’re doing — we do a lot of our own work to try to evaluate each of the underlying properties and what they could be worth in a bunch of different scenarios. And then — and then it’s stuck — it’s feeling like the appraisal market is starting to kind of catch up, where there we’re seeing appraisals that are more realistic and more updated.

So that’s certainly bringing in different data points as we look at it. And as we look at the quarter and we sort of look at all those data points and the underlying loans and try to do our best to come up what we think the different range of loss could look like here, and that’s what’s embedded in the results. Hopefully, we end up being conservative, but — but nonetheless, it’s — it’s possible that this plays out this way. And so we haven’t really seen any losses of significant yet — significance yet, but we will. And it just takes some time for it to play out for each of these underlying situations probably longer than any of us would — would — would hope to — you’d hope to you could bring some of this stuff to resolution maybe faster than it really takes in real life. But it’s really looking at all the data points, the limited sales, the new appraisals that are coming through and then our own analysis for each of the underlying properties.

John PancariEvercore ISI — Analyst

Got it. All right. Thanks, Mike. And then separately, but also within commercial real estate, we’re getting more and more questions around multifamily exposures and just how well they really are holding up given some supply issues in certain markets. Can you just comment there? Are you seeing any noteworthy stress or any changes to underlying reserve for that book?

Mike SantomassimoChief Financial Officer

Yeah. Not a lot. I mean, you certainly see certain markets that might appear to have some oversupply in condos in certain places, but it feels like that will work itself out over a period of time. And we’re not seeing real systematic stress in the portfolio at this point.

John PancariEvercore ISI — Analyst

Got it. If I could ask one just one last — one on the headcount cut that you mentioned, you’re looking at every business pretty much. Are any headcount cuts occurring yet in the risk area or anything? Or any changes with contracts with consultants in the — in the risk overhaul area at all? Thanks.

Mike SantomassimoChief Financial Officer

Yeah. No, look, the only thing I’d say on the risk and reg work is that we’re going to spend whatever we need to spend and put the resources we need against it to get it done. And we’re going to continue to do that until.

Charlie ScharfChief Executive Officer

And just to be clear, like, we’re not cutting headcount related to that. In fact, it’s probably the opposite. When you look over the past bunch of quarters, the only thing which goes up and down is depending on where we are with work with outside consultants, that number will go up or down in a given quarter. But we’ve also said if we can use outside resources to help get the work done sooner, we’re going to. So as we think about — as we think about our efficiencies, that is just not in scope at this point or for the foreseeable future.

John PancariEvercore ISI — Analyst

Got it. All right. Thanks, Charlie.

Charlie ScharfChief Executive Officer

Sure, of course.

Operator

The next question comes from Erika Najarian of UBS. Your line is open.

Erika NajarianUBS — Analyst

Hi. Good morning. My first question is on the revenue side, as a follow-up to [indecipherable] line of questioning. You know, I think not only the trading numbers come better this year, but also investment banking. And so, I hear you loud and clear about the cyclicality of the trading business but I guess help us get a sense of, you know, if the industry wallet, for example, returned to 2019 levels, do you think that you’re going to have generally a higher share of revenues in capital markets versus 2019? And sort of the sub-question to that is, as you think about the investments you have already made, what are the other businesses that could potentially surprise us to the upside, where it’s not quite optimized yet in terms of its revenue production, and obviously, everybody is thinking about you mentioned card and also everybody is also thinking about wealth management and investment advisory revenues?

Charlie ScharfChief Executive Officer

Yeah. Well, let me take a shot at that. I think listen, I think the answer is to your question on share without like getting overly specific. Yes, we think, you know, when you look at where we stand on our growth in our corporate investment banking share, whether it’s on the trading side or whether it’s on the fee-related side, our shares have grown, and certainly on the — within the fee-based side of the business, we do hope they continue to grow. That’s driven by the investments that we’re making in and investments meaning people in terms of growing our capabilities. And we’ve got clear goals and targets by person that we bring on in terms of what we expect and we’re going to be tracking to that and just a reminder, certainly when we brought some of the people on, they bring some — a lot of clients with them.

Some do transactions in the short term and we’ve been beneficiaries of that over the last couple of quarters just as we brought some people on. But these are relationship-based businesses and transactions don’t occur every single quarter. So we would expect our share to continue to grow. And I just — as a reminder, without taking any additional risk overall because we’re taking the risk today relative to the exposures that we have. When we look at where we can see growth coming overall across the entire company, we just go business by business, absolutely, in our consumer small business — small and business banking segment because we’ve — we’ve basically been treading water there as we stabilize that business, going back to the issues that we had there, which was an incredibly difficult thing to do, and we did and we’ve not been our — we’ve not been on our front foot in that business.

We’re going to do it in a very different way than this company did it historically. But there are opportunities to be on the front foot and actually grow share on an organic basis. And so incredibly excited about that opportunity. Not excited as I’ve said about growing share and mortgage. That’s not where we’re after and it’s — we’ve talked about where we’re going there. Auto, it’s about returns, not growth. So don’t look for a lot of growth there unless the dynamics change in the business. Mike spoke about card. We’re incredibly energized by the evidence that shows with our brand and our relationships. When you put a great product out there, we get positive selection and real growth.

And by the way, look at our spend numbers. I mean, you want to see like the impact of what it means, just look at the spend that we’re seeing, which is much higher than the industry levels. Our wealth business, as you pointed out, no question, also, treaded water for a long period of time. We’re attracting people and teams. We’re rolling out new products. So we feel really good about the opportunities that are there. And in the middle market segment, where it’s a little bit more business as usual because it is such a strong franchise for us. Even there, we look back at our asset-based lending businesses and the things that we acquired from GE.

They ran as standalone businesses here for a long period of time, and we didn’t bring the entire product set of Wells Fargo to those customer bases. Under Kyle Hranicky, Kristin Lesher, and M.K. DuBose — or Mary Katherine DuBose are diligently working through that, and bringing the investment banking product to that — the entire commercial banking product. So I could go on. I just — it should be broad-based. Most of it, by the way, I’ll point out in terms of when we see opportunities, it is fee-based growth. Not because we’ve dictated that, but just because we focused a lot on NII as a company historically, and we just have a lot of opportunities that we get excited about that’ll play out over a period of time.

Erika NajarianUBS — Analyst

Got it. And I think that excitement is clear, Charlie. And my second question is, given all of that and taking a step back, you know, I totally think it’s too early, I agree with you, to give any — anything on ’24 expenses. But more broadly discussing, you know, do you feel like the Company is in a little bit of an inflection point because on one hand, Mike, was saying that very few parts of the bank are optimized. On the other, I think you guys mentioned that the headcount is not going the other way, and perhaps it’s really some of the outside consulting fees that could go up and down. But I’m wondering if you get asked about expenses in a framework of flat, but then all of this momentum on the revenue side seems to be on the comp. And I’m wondering how you think about as you — you know, budget for the Company, and as you think about just getting to that 15% ROTCE, you know, let’s just put Basel III endgame aside in terms of the denominator, you know, how do you balance some of the shareholders and the analysts that are asking you about expenses in the context of flat versus the revenue momentum that obviously would need expenses to keep sustaining versus that revenue momentum that you seem to be so excited about?

Charlie ScharfChief Executive Officer

Let me start and Mike you either come in at the end or just make your comments along the way as well. So I think, first of all, we think about it as two separate exercises that we go through. And — and it’s very timely because we’re in the middle of going through the exercise for next year as most other companies are, which is this company is not efficient. Like, period, end of story. And I’ve described this, even with all of the reductions that we’ve made, it’s not surprising because as you peel the onion back, other things present themselves. And so, as you go in order of things that are more obvious and things like that. But when we sit around as a management team, we feel great about the progress and there’s no clearer way to see that than in the headcount numbers, which ultimately drive the expense of the company.

And if we stood here and told you we were going to drive the headcount down that much in this period of time, I’m not sure you would have believed us. And so when we say we’re going to do something, we really do mean it. And so when we sit around as a team, there are many more efficiencies to get and we’re diligently working through those. And then separately from that, it’s when we talk about making investments in the place, are we getting the payoff for it? And so whether it’s the marketing in the card business, where we’re spending more money on marketing than we had in the past, and we feel great about, as Mike pointed out, not just the volumes that we’re getting, but the underlying quality relative to how we had modeled that.

And so, you know, we’ll do that with each and everything. And ultimately, we need to make a decision as we finalize the process of the budget on just much more of a tactical basis of how those things net out. We’re well aware of what shareholders are looking for. We’re well aware of that the expense side of this company is an important equation in what investors look at us in terms of where unlocking value and we hear it and we see it. And whatever — wherever we come out when we talk to you about our guidance for next year, we will explain why we got to where we are. It’s going to include efficiencies, it’s going to include investments, you know, whether it — where that turns out, we’ll explain it.

And I think so far we’ve been as clear and as transparent as we can be and if it makes sense, you’ll like it, and if it doesn’t, you won’t — you’ll tell us. But so far we’ve been able to have alignment there. But overall, I would just — it’s a long way of saying it’s not lost on us that we have opportunities, both to reduce expenses and to invest. But making sure that the overall expense level stays in check at this place is incredibly important to us. And we have to prove that there’s revenue growth there, supporting investments that we make.

Erika NajarianUBS — Analyst

Thank you for that.

Operator

The next question will come from Ebrahim Poonawala of Bank of America. Your line is open.

Ebrahim PoonawalaBank of America — Analyst

Hey, good morning. Just a — Mike for you, a follow-up on credit on the CNI side, non-accrual charge-offs staying relatively flat, I guess, as we look through. Just talk to us in terms of when you look at that CNI book, is the impact of the Fed rate hikes felt by your customers? And how are you seeing that evolve? Is your expectation right now? You talked about the economy being resilient. Are you seeing any soft spots from the CNI book where you’re seeing bankruptcies rise within a vertical or a certain segment?

Mike SantomassimoChief Financial Officer

Yeah. No, look, I think first you’re seeing it come through in utilization of revolvers, right, which are — which are pretty much in check, that aren’t moving much and down in some cases. So people are building less inventory, given where rates are, they may be making decisions on like how fast they want to invest in their businesses. And so you’re seeing that come through in loan growth, which is — which is sensible for — from their perspective. I think when you look across the portfolio, there are certainly pockets where you may be seeing margin compression still or different idiosyncratic issues but across the portfolio, the credit quality is still good.

Ebrahim PoonawalaBank of America — Analyst

Got it. And do you think your customers have felt the hit from higher rates already or is that on the comp?

Mike SantomassimoChief Financial Officer

Well, I think they’ve certainly felt it so far, right? I mean, most of them have variable-rate loans that they service, right? And then — and obviously the longer — the longer rates stay high, they’ll maybe feel it more, but certainly I think they’ve been impacted.

Ebrahim PoonawalaBank of America — Analyst

Got it. And just one separate quick question on the outlook for buybacks. Clearly, big reset lower when you — like you have excess capital, you probably have visibility on the worst case on Basel endgame, it’s very rare that banks have excess capital when the stocks are actually near lows. You’re trading a tangible book. How do you think about outside of CCAR and SCB, in terms of near-term pace of buybacks over the next few quarters, relative to what we did this quarter?

Mike SantomassimoChief Financial Officer

Yeah. We’re not — we’re not going to get into like trying to give you a view on a tasting. We’re going to go — we have a — we have a process we go through every quarter to look at all of what’s happening. First, it’s like how are we going to support clients, what’s demand we’re seeing, what kind of risks are out there? In the fourth quarter, we have the FDIC special assessment potentially coming. And so the whole — each quarter there’s going to be a whole range of things that we’re going to go through and then we’ll decide on pacing.

Ebrahim PoonawalaBank of America — Analyst

All right. Thank you.

Operator

[Operator Instructions]. Our next question comes from Gerard Cassidy of RBC. Your line is open sir.

Gerard CassidyRBC Capital Markets — Analyst

Good morning. Thank you. Mike, can you share with us you and your peers as well as investors, we’ve all been surprised with how this deposit trend of moving money into higher-yielding deposits is going slower than expected. Is there any categories within your deposit base, whether it’s just your regular consumer deposits or high net worth deposits, or the non-operational commercial deposits that are moving more slowly? And I know you said you expect it to happen, but is there something that says that it could pick up real quickly in the next six months, or is it just a gradual increase?

Mike SantomassimoChief Financial Officer

Yeah, Gerard. I think you really have to pick it apart by the different businesses. I think in the wealth business, it moved quite quickly, right? In terms of seeing deposits decline from where they were, and that is now moderated. So it’s good to see that, that shifting has sort of slowed down quite substantially in the quarter relative to the last couple of quarters. On the consumer side, the majority of the deposits that we’ve got sit in accounts with less than 250 — $250,000. And so to some degree, to a large degree, these are operational accounts for folks. And so there’s some portion of those funds that are never going to move into other places because people need it in the accounts to live and operate every day. And so, I think what’s — so, I think we’ll see, right? And I think we’re all in a bit of uncharted territory at this point, with rates being where they are and the pace at which they got there, quantitative tightening happening. And so — and so — so, I think we need to be prepared for it to change exactly at what pace and over what period of time we’ll see, but — but we certainly — we certainly haven’t seen deposit pricing move the way we modeled it a year ago for sure.

Gerard CassidyRBC Capital Markets — Analyst

Very good. And as a follow-up, since you and Charlie have come on board, Wells has really done a very good job in returning that excess capital. I understand everything that’s going on today, and you guys described it in your comments. Can you share with us, is there a buffer, whenever the final numbers come out? Are you guys planning to keep 100 basis point buffer above that or any color there?

Mike SantomassimoChief Financial Officer

Yeah, we haven’t — we haven’t decided exactly what the buffer will look like after Basel III is implemented, but so far what we’ve said a number of times is that 100 basis points is about where we’ve been targeting. Obviously, we’ve been running above that for a while, but as we get a better view of where these rules are going to shake out, we’ll probably talk about that more. But I would think that 100 basis points, at least for now is sort of the bottom end of the range.

Gerard CassidyRBC Capital Markets — Analyst

Very good. Much appreciate it. Thank you.

Operator

And that was our final question for today. I will now turn it over to your speakers for closing remarks.

Charlie ScharfChief Executive Officer

All right. Everyone, thank you very much. We look forward to talking to you again next quarter. Take care now.

Operator

[Operator Closing Remarks]

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