富國銀行 (WFC) 2017 Q4 法說會逐字稿

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wells Fargo Fourth Quarter 2017 Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

Thank you, Regina. Good morning. Thank you for joining our call today where our CEO and President, Tim Sloan; and our CFO, John Shrewsberry, will discuss fourth quarter results and answer your questions. This call is being recorded.

Before we get started, I would like to remind you that our fourth quarter earnings release and quarterly supplement 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 8-K filed today containing our earnings release and quarterly supplement.

Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings, in the earnings release and in the quarterly supplement available on our website.

I will now turn the call over to our CEO and President, Tim Sloan.

Thank you, John. Good morning, everyone, and thank you for joining us today. 2017 was a transformational year for Wells Fargo as we made significant progress on our efforts to build a better bank. Our vision of satisfying our customers' financial needs remains unchanged, but how we execute this vision has evolved. This evolution includes developing new ways to more efficiently serve our customers and create a better customer experience, which includes investments in innovation; streamlining and centralizing processes and organizational structures; strengthening the foundations of the way we manage risk; and building a robust and more modern data and technology infrastructure.

Pages (inaudible) highlight a few of the actions we've taken to make Wells Fargo better for our customers, our team members, our shareholders and our communities. Starting with our customers. In order to help those impacted by the hurricanes last year, we provided payment relief and proactively waived fees to approximately 100,000 customers. We've also made a number of customer-friendly changes to help all of our customers better manage their accounts. For example, in March, we introduced automatic 0 balance alerts, and we now send over 18 million real-time alerts a month, enabling our customers to make a deposit or a transfer so they don't overdraw their account.

In November, we introduced Overdraft Rewind, which has already helped over 350,000 customers avoid overdraft charges. We believe that using data and technology to help our customers better manage their finances will enable us to grow and build more long-term relationships.

In 2017, we accelerated the pace of innovation and launched value-added technologies, including card-free ATM access, which our customers have used more than 5 million times since March. And since June, our customers have sent more than $10 billion through Zelle for P2P payments.

As our customers have increased their use of online and mobile channels, we've made it easier for them to interact with us digitally. For example, digital credit card account openings were up 47% from a year ago. In November, we launched Intuitive Investor, our digital brokerage advisory offering. And later this quarter, we will fully roll out our digital mortgage application, which combines the power of Wells Fargo data with a you-know-me customer experience. In 2018, we expect additional innovations, including instant issuance of debit cards to customers' mobile wallets; and Control Tower, a central hub for customers to view and manage the places where their Wells Fargo cards and account information is stored.

In addition to these innovations, we rely on our team members to help drive an exceptional customer experience, and in 2017, we took a number of steps to enhance team member benefits, including adding 4 additional paid holidays, announcing plans to grant restricted stock rights to approximately 250,000 team members and increasing the minimum base pay for all U.S.-based team members. We increased the minimum hourly rate to $13.50 in 2017, which impacted 31,000 team members. After the passage of the Tax Cuts and Jobs Act, we announced another increase to $15 an hour, starting in March 2018. And we are also reviewing team members who were already making $15 an hour or slightly above to ensure that they are paid appropriately based on their role. We estimate that approximately 70,000 team members will receive a pay increase related to these changes.

Our goal is to deliver long-term value for our shareholders through a balanced business model, strong risk discipline, efficient execution and a world-class team. In 2017, we generated $22.2 billion of net income with an 11.35% return on equity. From that, we returned $14.5 billion to our shareholders through common stock dividends and net share repurchases. This is up 16% from 2016. Returning more capital to our shareholders remains a top priority.

Another goal is to make positive contributions to the communities we serve. And in 2017, we donated $286 million, including more than $4 million to areas that were impacted by hurricanes, California wildfires and other natural disasters. We also announced that we are targeting $400 million in donations to nonprofits and community organizations in 2018, an increase of approximately 40% from last year. And beginning in 2019, we are targeting 2% of our after-tax net profits for corporate philanthropy.

Our results in the fourth quarter were strong, and they included a net benefit from the Tax Cuts and Job Act. While it's too early to determine the full impact, it appears that tax reform will benefit our customers and help grow the U.S. economy, and surveys indicate business confidence has increased.

Other items that impacted our results in the fourth quarter included the gain on the sale of Wells Fargo Insurance Services and higher litigation accruals. Our efforts to transform Wells Fargo were evident in our results in 2017, including record deposit balances; improved Retail Banking household retention; increased brand satisfaction with most recent visit scores, which are now back to the levels we had prior to the sales practice settlements; growth in debit card and credit card purchase volume, both up 6% in the fourth quarter from a year ago; record levels of client assets in Wealth and Investment Management; historically low credit losses; exceptionally strong capital and liquidity levels. And while our expenses increased, driven by higher litigation accruals and investments in our businesses and capabilities, we're on track with our expense initiatives and we remain committed to our target of $4 billion in expense reductions. John will provide more details on this later in the call.

In summary, Wells Fargo is a much better company today than we were a year ago, and notwithstanding our challenges, I am confident that the hard work, dedication and resiliency of our team members demonstrated throughout 2017 will make Wells Fargo even better in 2018 as we continue our transformation.

John will now discuss our financial results in more detail.

Thanks, Tim, and good morning, everyone. We earned $6.2 billion or $1.16 per share in the fourth quarter, and as Tim mentioned, our results included 3 noteworthy items I'll describe in a minute. First, I want to quickly highlight the impact from our election to early adopt a new hedge accounting standard, which was mentioned on the call last quarter and we discussed in our third quarter 10-Q filing. It's described in the note on slide -- the highlights, Slide 4. As a result of this early adoption, our previously reported EPS for prior quarters in 2017 was revised, resulting in a net $0.03 per share increase in EPS for the first 9 months of the year. We have more information on this accounting standard in the appendix.

On Page 5, we summarize the noteworthy items, which included a $3.35 billion after-tax benefit or $0.67 per share from the Tax Cuts and Jobs Act. I'll be providing more details about this on the next page. Our results also include an $848 million gain on the sale of Wells Fargo Insurance Services, which benefited EPS by $0.11. And we had a $3.25 billion litigation accrual in the quarter for a variety of matters, including mortgage-related regulatory investigations, sales practices and other consumer-related matters. The majority of this expense was not tax deductible and it reduced EPS by $0.59.

On Page 6, we provide more details on the impacts of the Tax Act. The estimated tax benefit from the reduction to net deferred income taxes was $3.89 billion. We're somewhat unique in that the tax effect of our temporary differences results in a net deferred tax liability, which is primarily driven by differences between the book and tax treatment of our leasing and mortgage servicing businesses and mark-to-market timing differences. In addition, we have not had big historic net operating losses, which are now less valuable under the Tax Act. And we earn substantially all of our income in the U.S., so we have lower amounts of foreign cash subject to deemed repatriation. This benefit was partially offset by a $370 million after-tax loss from valuation adjustments related to leveraged leases, low income housing and tax-advantaged renewable energy investments. In addition, there was a $173 million tax expense from the estimated deemed repatriation of undistributed foreign earnings. We currently expect our full year 2018 effective income tax rate to be approximately 19%.

I'm going to highlight much of what's on Page 7 later on the call, so let me just point out on the asset side, we purchased $20.9 billion of securities in the fourth quarter, which were largely offset by runoff in sales. On the liability side, our long-term debt balances declined $14.2 billion, primarily driven by lower federal home loan bank debt.

I'll be highlighting our income statement drivers on Page 8 later on the call. So turning to Page 9. Average loans declined $521 million from the third quarter, with commercial loans down $692 million, partially offset by $171 million of higher average consumer loans. However, we did have some positive momentum in our loan growth during the quarter with period-end loans up $4.9 billion from the third quarter.

Let me highlight the drivers, starting on Page 10. Commercial loans increased $3.2 billion from the third quarter, with C&I loans up $5.2 billion. C&I growth was broad-based and included seasonal growth in Financial Institutions and Commercial Distribution Finance as well as growth in Asset Backed Finance and Corporate Banking. Commercial Real Estate loans declined $2.1 billion from the third quarter, reflecting our continued credit discipline in a very competitive market.

Consumer loans grew $1.7 billion from the third quarter. Similar to trends we've highlighted throughout the year, we had growth in first mortgage loans and credit card balances and declines in junior lien mortgages, auto and other revolving and installment loans. As a reminder, growth in the first quarter will be impacted by seasonally lower mortgage origination and credit card balances.

Auto originations were relatively flat linked quarter and were down 33% from a year ago. We've reduced volumes while strengthening the credit profile of this portfolio, and our origination volume with a FICO score above 640 grew to 85% of total originations in the fourth quarter, up from 76% a year ago. We expect balances will continue to decline throughout 2018 given the transformational changes we're making in the business.

Our deposits reached a record high in the fourth quarter, and our average deposits increased 2% from a year ago. Our average deposit cost increased 2 basis points from the third quarter and was up 16 basis points from a year ago. The market hasn't made changes to the rates paid on consumer and small business banking deposits and neither have we. As Fed funds and LIBOR have increased, we've had incremental deposit repricing for Commercial and Wealth and Investment Management customers. If the Tax Act drives stronger industry loan growth this year, deposit betas could be impacted somewhat as market demand for deposits increases to fund this growth.

Our full year 2017 net interest income increased 4%, consistent with the expectation we provided at Investor Day. Net interest income in the fourth quarter declined $136 million from the third quarter, primarily driven by the $183 million reduction to net interest income from adjustments related to leveraged leases due to the Tax Act, which reduced loan yields in the quarter.

Similarly, our NIM was down 2 basis points to 2.84% as the negative impacts from the adjustment related to leveraged leases and growth in average deposits was partially offset by lower average long-term debt and a modest benefit from all other growth, repricing and variable terms.

Investors often ask us about our loan swaps, so let me provide some additional details on our position. As we've previously disclosed, between 2014 and 2016, we entered into receive fixed rate swaps to hedge some of our LIBOR-based commercial loans when the expectation was for interest rates to be lower for longer. We converted lower-yielding floating rate loans into higher-yielding fixed rate loans. At the peak, we had $86 billion worth of loan swaps. We actively manage these positions, and starting in the third quarter, we began to unwind some of them. At year-end, we had $51 billion of notional outstanding and we've unwound more earlier this year, leaving us with the current notional value closer to $30 billion. The reduction in swaps will reduce interest income from these loans in 2018, but it's increased our interest rate sensitivity from the low end back to near the midpoint of our range of 5 to 15 basis points for a 100 basis point parallel shift in the yield curve. Being modestly more asset sensitive at this point in the rate cycle should be beneficial. However, it's important to note that during the extended period of low interest rates since the swaps were entered into, they generated incremental revenue of approximately $3 billion for Wells Fargo. The cost of unwinding these swaps, which is approximately $700 million, will be amortized over the remaining life of the original derivative, which averages approximately 3 years. Our net interest income for full year 2018 will be dependent on a variety of factors, including the level and slope of the yield curve as well as deposit betas and earning asset growth trends.

Noninterest income grew $337 million from the third quarter. This increase included the benefit of the $848 million gain on the sale of Wells Fargo Insurance Services, which was partially offset by a $414 million reduction from impairments on low income housing and renewable energy investments resulting from the Tax Act.

Deposit service charges declined $30 million from the third quarter, driven by customer-friendly changes, including the launch of Overdraft Rewind in November, which Tim highlighted at the start of the call.

Trust and investment fees increased $78 million on higher asset-based fees and retail brokerage transaction activity.

Mortgage banking noninterest income declined $118 million from the third quarter, largely due to a $71 million decline in residential mortgage origination revenue, driven by a 10% reduction in origination volumes, primarily from seasonality in the purchase market. The gain on sale margin in the fourth quarter was 125 basis points, relatively flat from the third quarter. And based on current pricing trends and channel mix in our held-for-sale pipeline, we expect the margin to decline in the first quarter.

Servicing income declined $47 million, primarily from lower net hedge results due to the impact of changes in MSR valuation assumptions, including the impact of increasingly competitive industry pricing, lower carry on our MSR hedge and a flatter yield curve environment and increased customer payment deferrals in areas impacted by recent hurricanes.

On Page 15, we provide details on our trading-related revenue, which declined $49 million from the third quarter, primarily driven by declines in customer trading activity from lower volatility and compressed spreads.

Turning to the expenses on Page 16. Expenses increased $2.4 billion from the third quarter, largely driven by the $2.2 billion higher operating losses. On Page 17, I'll highlight the other drivers of the increase.

The $142 million increase from the third quarter in compensation and benefits expense reflected higher stock award expense, primarily from stock price and performance impacts on prior period awards. Higher salaries expense was largely driven by higher costs from the additional paid holidays we granted our team members in 2017. Increases in running the business discretionary and infrastructure costs were driven by typically higher advertising and equipment spending in the quarter.

On Page 18, we show the drivers of the year-over-year increase in expenses, which was also primarily driven by higher operating losses. Compensation and benefits expense increased $475 million, primarily due to annual salary adjustments and higher benefit costs, which were partially offset by lower FTE. Our FTE were down 2% from a year ago, reflecting the sale of our Insurance Services business as well as declines in Consumer Lending and Community Banking. Higher compensation and benefits expense also reflected $115 million of higher deferred comp expense, which is P&L neutral.

On Page 19, we highlight the progress we made in 2017 on our expense initiatives, which was primarily driven by the efforts we've made through centralization and optimization. We've centralized enterprise functions that were previously distributed across our organization. In addition, we realigned businesses to eliminate redundancy and leverage customer synergies, and we've continued to make transformational changes to our operating models, including in contact centers, technology and operations.

We also saved money through a continued improvement in vendor leverage and contract pricing. We've done this by using our centralized contract team to negotiate rates based on the aggregated volume of the entire company.

We reduced travel and entertainment expense by 2% by enhancing our travel policy standards and leveraging technology.

We also exceeded our target of 200 branch closures in 2017. And to date, the closures have had minimal impact on household retention and growth. Based on customer channel usage, we currently expect to close 250 branches or more in 2018. Branches play an important part in serving our customers, and we will have as many branches as our customers want for as long as they want them. Based on our current assumptions regarding consumer channel behavior and our own technology advances as well as other factors, we could see our total branch network declining to approximately 5,000 by the end of 2020. We're also reducing properties in other businesses, including stand-alone mortgage locations, which is down by over 10% in 2017. We're also transitioning operational activities in our auto business from 57 regional banking centers into 3 larger regional sites. We expect to complete the consolidation in the first half of 2018, helping us further standardize process in the business. As we pursue these reductions, we will continue to support team members by helping them find other positions while we also consider the banking needs of the communities we serve.

We're on track to achieve our targeted $4 billion of expense reductions, which have been identified and assigned to the business leaders who have specific responsibility for achieving them. As a reminder, the first $2 billion of targeted expense saves by year-end 2018 supports our ongoing investment in the businesses, which includes a number of key areas such as enhancing our compliance and risk management capability, building a better bank and strengthening our core infrastructure. We expect the additional $2 billion target of annual expense reductions by the end of 2019 to go to the bottom line and be fully recognized in 2020. These expected savings do not include the completion of core deposit intangible amortization expense at the end of this year, which will amount to $769 million in full year 2018. It also doesn't include the completion of the FDIC special assessment, which we expect should happen by the end of 2018. Finally, it doesn't include expense savings due to business divestitures, which we highlight on Page 22.

As part of our efforts to be more transparent and in response to investor requests, we're providing more detail on our expense expectations for 2018 on Page 21. We currently expect the full year 2018 total expenses to be in the range of $53.5 billion to $54.5 billion. This expectation includes approximately $600 million of typical operating losses this year and excludes any outside litigation and remediation accruals or penalties.

As I mentioned on the call last quarter, we expect to achieve a quarterly efficiency ratio with a 59% handle by the end of 2018, not including any outside litigation accruals. 2018 revenue, which will impact the efficiency ratio, will be influenced by a number of factors, including the absolute level of rates, the shape of the yield curve, loan growth, deposit betas, credit spreads, cash redeployment and the absolute level of the equity markets. And just as a point of reference, we estimate our efficiency ratio sensitivity to be plus or minus 60 basis points for every 1% increase or decrease in revenue from the $88.4 billion we earned in 2017. We will provide guidance on the expenses for 2019 at our Investor Day in May.

For the past couple of years, we've been taking a hard look at all of our businesses and their contributions, and as a result, we've had multiple divestitures. We thought it would be helpful to share the revenue and direct expense associated with the businesses we sold over the past 2 years, which we provide on Page 22. As you can see, there was a revenue impact from selling these businesses, but they were sold for sound economic reasons and generated nice returns for our shareholders. As a reminder, Wells Fargo Insurance Services was sold at the end of November, and the sale of Shareowner Services is expected to close later in the first quarter.

Turning to our segments, starting on Slide 23. The majority of the impacts from the Tax Act as well as the litigation accruals in the quarter were included in our Community Banking results.

On Page 24, we highlight that customers continued to actively use their accounts. We had strong growth in digital secure sessions, up 8% from a year ago, and we continue to have declines in branch and ATM interactions, reflecting the increased use of digital channels by our customers.

On Page 25, we highlight balance and activity growth, which included an increase of 6% in both credit and debit card purchase volume from a year ago. As Tim mentioned, branch satisfaction with most recent visit scores are now back to the levels we had prior to the sales practice settlement. I believe the transformational changes we're making to better meet our customers' financial needs, including providing bankers with innovative tools to enable more meaningful financial conversations with our customers, not only improves customer service but will also drive growth.

Turning to Page 26. Wholesale Banking results in the fourth quarter included the gain on the sale of our Insurance Services business. Total Wealth and Investment Management client assets reached a record high of $1.9 trillion, and average closed referral investment assets were up 12% from a year ago.

Turning to Page 28. Our credit quality remained exceptionally strong. Our loss rate for the full year was among the lowest in our history, and in the fourth quarter, our loss rate was 31 basis points of average loans. All of our commercial and consumer real estate loan portfolios were in a net recovery position in the quarter, including our home equity portfolio.

Nonperforming assets have declined for 7 consecutive quarters and were less than 1% of total loans for the second consecutive quarter. Continued improvement in the oil and gas portfolio have benefited this trend. During the oil and gas cycle over the last 3 years, we established a peak oil and gas reserve of $1.7 billion in the first quarter of 2016 and incurred through the cycle losses of $1.2 billion. We believe we've largely put this issue behind us, and we'll no longer provide credit updates on this portfolio in future quarters unless factors change, but we will continue to include the size of the portfolio in our 10-Q filings. We had a $100 million reserve release in the quarter, reflecting continued strong credit performance.

Turning to Page 29. Our estimated Common Equity Tier 1 ratio, fully phased-in, increased to 11.9% in the fourth quarter, remaining well above our internal target level of 10%. We remain focused on returning more capital to shareholders and returned a record $14.5 billion through common stock dividends and net share repurchases in 2017, up 16% from 2016. We had net share repurchases of $6.8 billion in 2017, up 42% from 2016, and period-end common shares outstanding declined 2% to 4.9 billion shares.

In summary, we begin 2018 with exceptionally strong asset quality, liquidity and capital. We're on track to achieve our expense targets, and the transformational changes we are making throughout Wells Fargo will help us achieve our 6 goals and drive our long-term success.

We'll now take your questions.

(Operator Instructions) Our first question comes from the line of Erika Najarian with Bank of America.

So I expect you to defer me to Investor Day, but I'm going to try anyway. I'm sure that your investors are going to refine their 2019 and 2020 outlook for the company following your results. And as they think about your new guidance for dollar expenses in 2018, and again, fully acknowledging that we will get more color in May, is it fair to take that $53.5 billion to $54.5 billion range, assume a growth rate -- and this is for 2020, assume a normal growth rate over the next 2 years and then take out the $2 billion in cost savings, the $769 million in CDI expense and the $573 million in sold business expense that isn't included?

Yes. Erika, I think that's a fair description of what could happen. I think the -- one of the big impacts, that could be what revenues look like in 2020. But I think that's fair.

The one thing I'd add that we'll be -- we've been talking about -- we'll talk about more at Investor Day, as you mentioned, is the arc of the ongoing reinvestment or investment in the various programs that we have to transform Wells Fargo. Some of them are regulatory in nature. Some of them are [probation] in nature, but there are a variety of them. Each of them has their own arc. They're in place today, and so how they come off the total is going to be the missing link for what happens in 2019 and maybe even to 2020 for some of it.

Got it. And my follow-up question is on the consumer loan side, it was up $1.7 billion on a linked quarter basis. Two of your peers were relatively upbeat in terms of the consumer outlook for 2018, especially relative to tax reform. And the question for you is, has the attrition in the consumer book bottomed in 2017? And on the mortgage side, as we think about nonconforming loan growth and loan originations, is there still a gap between what your underwriting standards are today and what you think they could go down to if we had better guidance or reformed guidance from the agencies on mortgage?

So Erika, good question. I think -- let me respond in a couple of ways. First, I think it's absolutely fair, and the feedback that we've been getting from our customers is that we should all be cautiously optimistic on the impact of the Tax Reform Act on consumers. I mean, there have been millions of employed folks across the country that have gotten pay raises and bonuses and the like, and I think that's a net positive for economic growth. As it relates specifically to our consumer loan growth, we believe that we'll grow mortgage loans this year. We believe that we will grow credit cards this year, but we believe that it's likely that the home equity book will continue to decline, not -- if you look at the home equity book and you divide it into kind of the postcrisis and precrisis book, the precrisis book just continues to decline, as we've been talking about for years. But we expect the postcrisis book to grow. But I don't think that growth will offset the decline in the home equity book for 2018. And then likewise, as John mentioned, as it relates to auto, we believe that with all the changes that are going on in the auto portfolio, notwithstanding the underlying credit improvement in new originations, that we will see a continued decline in that portfolio throughout 2018. And no, our current estimates is maybe that the lines will start to cross there fourth quarter this year, maybe first quarter 2019. It's -- we'll find out. But that's how I would think about our consumer portfolio. We're optimistic about -- again, about the impact of the Tax Act on consumers.

Follow-up on the underwriting side?

Yes. We don't anticipate making any changes to our underwriting. And our underwriting as it relates to mortgage, that we look at those every day and we're going to be competitive from a market standpoint. But we're also going to take the long-term view and not get too aggressive at any one point in time.

Our next question comes from the line of Matt O'Connor with Deutsche Bank.

Congratulations, Matt.

You were right, we needed to provide dollar expense guidance. We listened to you. Can you mark that down in your calendar?

I do think it's a good first step given it's [dilutive] to (inaudible) the '19 and 2020 trajectory, I think very important, so I appreciate that that's coming in a few months. The only thing I've really been focused on and, obviously, the market as well is just the legacy issues. And at this point, a year and a quarter after taking over as CEO and, obviously, being in various senior roles for many years before, do you feel like you've identified, Tim, all of the legacy issues and they've been all disclosed and now you're at the point where you're just finishing up working through them internally and hoping to reach settlements this year where applicable?

Well, Matt, it's a very fair question, particularly with the accrual that we took this quarter. And my answer continues to be very consistent, and that is I think we've made a lot of progress in terms of looking at the operations of the company. But I can't provide you with a guarantee or absolute assurance that we won't be making additional changes in the future to anything that we might find. But again, we've made a lot of progress.

I mean, I guess I wonder why you can't because I feel like you've been there a long time, John's been there a long time. I appreciate it's a big company, and any company can have issues that arise, so I'm not trying to kind of get the all clear on everything for forever. But it does feel like there's a number of issues that are probably legacy in nature that you've identified and I would assume you've reviewed and rereviewed and triple checked things or doing that now. And I do still think it's very important to be able to turn the page, whether it's for the investors, the employees, I would think it's relevant, too. So that's why I just continue to push on this as well.

Well, yes -- no, Matt, look, it's a very reasonable question, and I'd love to live in a world where I can give you an absolute guarantee and certainty, but it's just not the world we live in. I mean, we've been working very hard at looking at operations across the company. We have invested a significant amount of money in doing that. We've been very transparent when we have issues for all of you. I know that sometimes it's disappointing, but that was the promise that we made. And when we find that we've made any sort of mistakes, we fix them. And if there's a customer on the other end that's been harmed, we'll remediate them. But I just can't provide you with that absolute guarantee at this moment in time. Maybe someday I will, but I think it's going to be something we look at, at the rear-view mirror over a longer period of time as opposed to having some inflection point today or tomorrow or the week after that.

Are -- just the last thing on this. Are there certain businesses or regions or customer segments that you're still reviewing? I mean, maybe they're not as close customers to you like if they're -- those third-party relationships that can be a little trickier. Like are there still segments that you're reviewing that you're just not 100% sure there's not issues or...

Yes. Matt, again, a fair question. I would say that we're continuing to look across the entire company as opposed to in any specific area. Again, we've made a lot of progress. But as I reflect on my first year and a quarter in this role, I think it's fair to say that one of the mistakes that we made at the company was that we didn't have a thorough enough review of the businesses on an ongoing basis. So our review will be continuing. We're never going to declare victory. We're always going to make sure that we've got the right checks and balances from a corporate risk standpoint and an audit standpoint, and we're making even more investments in the infrastructure and collecting data in a different way. So we want to continue to make improvement. So again, the punchline, Matt, is that we've made a lot of progress and we've been very disclosive, but I can't provide you with absolute certainty.

Your next question comes from the line of Ken Usdin with Jefferies.

Questions on the fee side of the business. Maybe just to start with, nice to see that trust side directionally moving the right way. I'm just wondering, how much of that is any improvement in transaction side? How much of it is the higher markets? And what's your just basic outlook for how that business can do going ahead?

Well, we're optimistic, and we've seen growth in that business for the last few years. We've had a nice transition...

Referrals are coming in nice.

Referrals, that's a good point, John. We've had a nice transition in the senior leadership from David Carroll, who did a terrific job, to Jon Weiss. I think Jon mentioned in the fourth quarter that he thought we'd see kind of 4% to 5% type revenue growth this year, and so we continue to be optimistic. A large part of the increase in the fourth quarter, to your point, was related to higher underlying values. But again, that tends to drive revenues in the future, too. But we continue to be optimistic about that business and to reinforce John's point about the improvement in referrals from Community Banking to Wealth and Investment Management.

Okay. And I guess I'm just wondering, the markets are up a lot and your referrals are up a lot, but obviously, the revenues are up but not as much, so that whole underlying shift to fees and fee compression, does that start to stabilize or it's just an ongoing burden you always just have to overcome with volume?

Well, your point is fair because there have been some changes in the business that affected the entire market because of the DOL rule and implementation last year. And it's a competitive business. But again, I think Jon was clear that he -- Jon Weiss was clear that he thought that we'd see 4%, 5%, and I'd even say 6% growth on the top line. So we're comfortable with that.

I also think this secular shift, this intentional shift to emphasize recurring asset management relationships over transactional revenue means you've got the mean -- the outcome that you're describing but less volatility around it because you're less relying on people trading stocks and more aligned with a managed solution, which is a more stable form of revenue.

Got it. Okay. And then just to keep on another big area of fees. Just on the mortgage business, you got your new platform rolling out, and there's, obviously, this major potential transition happening just with rates and tax in the housing market. So what's your expectation for just your size of the mortgage market and what you think share can be? And within that, you've got a big mix still of correspondent versus retail as a percentage. And can your new platform start to change that mix?

Yes. So the -- I think the MBA is calling for the overall mortgage market size to be down a little bit. They can't -- haven't fully factored in what might happen with more economic expansion as a result of the Tax Act. But call it -- call the size of the market unchanged to down. It's probably going to continue to be a little bit more of a purchase market from a refi market or trending more in that direction, which is a more competitive market for us to operate in as a big servicer. We have an advantage in the refi market. As a result, we -- our retail share may end up being a little bit lower, but we do a lot of correspondent lending and servicing. And so our volumes represent the aggregate of what we originate directly and what we fund and service for correspondent. So that's part of why margin is down because that mix from retail to correspondent means we're -- our costs are less but our revenue opportunity is less, too. So I think it's our expectation that the market is flat to down a little bit. Again, unless tax reform does something remarkable, which would be great, I think it's our expectation that it gets -- it stays competitive. I mentioned in my comments we think the first quarter is going to be a lower-margin quarter than the fourth quarter based on what we can see. Some of that is specific behavior on the part of the agencies because of programs that they run in the fourth quarter to get things done. And as it relates to our competitiveness, whether it's our feet on the street or our technological innovation that is rolling out right now, we anticipate being as competitive as we can possibly be in every market and maintaining our leading share. And so it's a big point of emphasis for Michael DeVito and the folks who manage that team, but we don't want to cede that position.

Your next question comes from the line of Brian Kleinhanzl with KBW.

Quick question on the loan growth. I mean, it looks like CRE was -- saw negative loan growth again this quarter. I mean, you did mention that you saw refocusing on continued credit discipline. But can you maybe break down kind of what you're seeing in that market currently? How much farther do you have to kind of wind down this book? I mean, how much lower can it go?

Brian, we don't want to wind down this book. I mean, we're the largest commercial real estate lender by far, and not only in total but in almost every product type. And we have the most diverse and broadest commercial real estate platform in the market. We are committed to this business long term. But to be committed to the real estate business long term, you need to also make important and disciplined decisions when you see that you're at a period in the cycle that doesn't last forever but a period in the cycle where I think that credit -- underwriting standards or pricing might be a little bit out of balance. I mean, that's how you get to stay in this business through cycles because you make good decisions. So we want to grow this book, but we want to grow it in a way that is -- makes the right decision for our shareholders. So what we've seen this year is an increase in competition, slightly lower in credit spreads -- or standards, excuse me, and a little bit more aggressive pricing, and that's meant that our book has declined a little bit. But again, we've got a balanced business here, and so our real estate capital markets business has absolutely been on fire, and you can see that in other parts of the -- of revenues in the company. So I wouldn't look at this as we're kind of purposely rolling down this book because we don't like the business. We love the business. We want to grow it. We want to grow it so that we are ready for next year and the next cycle.

And then maybe a separate question on the retail bank metrics. If you look at the primary consumer checking account growth, it was just barely positive year-over-year. If you look at where it was last December, you were up 3% year-on-year. Maybe you could break down what you're seeing with regards to new customer acquisition versus the attrition because I thought you said the attrition had slowed. Did you see an acceleration in the fourth quarter?

No, I don't think we saw acceleration. I think that Mary Mack and team are doing a terrific job in terms of fundamentally changing that platform. It takes time to make changes in a business that has 5,800 branches and call centers and tens of thousands of team members who are working very hard today. We made changes in terms of the incentive plan. We've made changes in terms of the management team to streamline that. We've improved training, and we've also delegated responsibilities so that our folks and branches can address customer opportunities and needs more quickly. That takes time. But I'm pleased with the progress, and our expectation for 2018 is that we're going to see checking account growth. I would also say -- primary checking account growth. I'd also say -- and an improvement over what you saw in the fourth quarter. But I'd also say that the underlying value of those accounts has increased. I mean, we talked about that at Investor Day last year, and we're continuing to see that trend.

One thing I would add is that the 2015, '16 primary checking account growth numbers were also benefited by a major attempt to convert people who weren't primary, they were customers of Wells Fargo but they weren't at that point primary, into primary customers. And so we had a backlog of relationships to convert to primary that we've -- I'd say we basically worked through. And now it's really about net new customers to the bank and making them primary customers. And so it's tough to comp over.

Your next question comes from the line of John Pancari with Evercore ISI.

On the -- back to the loan growth front. Thanks for the color on the areas you've commented on already. I know you're seeing some of the attrition still in auto and declines in home equity and you're being selective in CRE. So given that, as you look at 2018, can we see growth in '18 in average loans versus full year '17? And is it commercial that can really drive that growth despite the headwinds?

Yes, I hope so. I mean, that's what -- our plan is to do that, John. I think being a wildcard is just the pace of underlying economic growth. And we're the largest lender in the country, and so we're not dependent not only on the hard work and effort of a great team of relationship managers, but it's also a function of economic growth. So if we see an increase in economic growth, that should be a net positive. Just anecdotally, I would tell you that I spent a lot of time in the last 1.5 weeks with our commercial and corporate customers, and there's a lot of optimism out there.

But C&I loans, credit card and first mortgage is likely where net loan growth is going to come from in 2018, and similar to the quarter that we just finished.

Got it. Got it. And then secondly on capital. I know we've seen that article recently in the Journal in the CAMELS ratings and everything. And assuming -- I know you haven't commented on it, but want to see if you have anything to say about the ratings. And then secondly, if that is true and everything, is there an implication in terms of capital deployment? And if you can just talk about how you're thinking about deployment as you look at '18.

So fair question given the media coverage. We can't comment on confidential supervisory information from our regulators, and so we won't. But as it relates to capital return, I think that I said it early in the call and John repeated it that we're pleased to have increased the amount of capital return to our shareholders by 16% year-over-year, and our expectation is that we will continue to increase capital return because we have excess capital at the company that -- to fund our growth. And so our goal is to reduce our 11.9% Tier 1 common equity number over the next few years to something closer to 10%. I don't know exactly what that means in terms of what our submission for CCAR is this year or next year for that matter, but we're certainly going in that direction. John, I don't know if you have any other comment.

No, I think that's right. The -- I guess I was interpreting the question also to mean deployment for growth in loan portfolio. That would be the first call of our capital, to make loans for our customers. There's no M&A in our future that would be a use of capital that we could possibly imagine at this point. And thus, the high starting point and the ongoing relatively high level of capital generation should lead to attempting to return more of that to shareholders.

Your next question comes from the line of John McDonald with Bernstein.

I just want to clarify the outlook on expenses, the range for 2018. That would include the community contribution stuff that you list on Page 3, the $400 million in donations and the other things there?

Yes, it does, and the higher base pay for our -- for the roughly 70,000 team members.

Yes. Okay. And then, John, you also mentioned hoping to get to 59% handle on the efficiency ratio by late 2018. I guess you have to kind of make some assumptions about kind of the economy and rate hikes there. Could you just give us some sense of what it would take to kind of get there?

Yes. I mean, I think we're imagining 3 rate hikes built into our baseline scenario. We don't have a lot of impact -- economic impact from tax reform built into our current forecast for 2018. To the extent that it achieves its desired goals, there could be some upside there. I think those would be the big drivers. And then there's -- one of the key estimations we have to make is what's going to happen with deposit pricing throughout the course of the year. I think we're anticipating normalizing betas over the course of the year. That feeds into that range.

Okay. And how do you evaluate further reduction in the swaps? What's kind of the calculus that you go through and as -- that remaining 30 that you've got?

Sure. The calculus is what is our outlook for rates over the next couple of years versus what the forward curve implies because that's where swap pricing comes from. And if we think that there's a chance that we're going to be earning more over the next couple of years, then it might make sense to get out of the -- today's fixed rate to get back into a floating rate scenario. Then we do the math to figure out what the swap mark is and the amortization cost is and the benefit of increased asset sensitivity. And we've been doing that, and it's made sense to us to reduce that position.

Okay. And then just on the expense outlook and efficiencies. I know you don't want to get into 2019 and 2020 too much, but just maybe broader thoughts. I'm not sure if this came up before, I think it might have. But with all the tailwinds that you have in '19 and '20, is there any reason that directionally, the 2019 expenses wouldn't be down absent a material pickup in business operations? And then -- maybe, John, you can address that. And Tim, are you holding the team -- is there any reason you wouldn't be holding the team to getting back to that efficiency ratio, middle of that range, the 55% to 59%, by 2019 and further deeper into the range in 2020? Is that broadly a goal that you're going to hold folks to?

I'll take that. That's a goal that I hold myself to as well as the senior management team. So you're spot on there, John. But, John...

And there's no reason -- for the reasons that are -- that we've laid out, the expectation is that those incremental costs would be coming off in '19 and '20 and expenses would continue to trend lower. The caveat, I guess, I would give is if there's some -- we -- several years ago, we went through a period like this where we gave specific expense guidance, and then there was a wild mortgage refi where the revenue opportunity was used and expenses -- direct expenses grew to reflect -- to take advantage of it. So absent something like that, which we'd all be happy about if it occurred, then as you say, there's no reason to believe the expenses shouldn't keep coming down based on these structural items that we're talking about that will fall off.

Okay. And then again, just to clarify, Tim, how would you phrase the efficiency ratio goal over the next 2 to 3 years?

As we said, our expectation is to get -- by the end of this year, to get down to the 59% handle and then continue to make progress year after year after year. We should be within the 55% to 59%. That's a goal to get in there. And then once we're in that range, we're going to continue to make progress. We've got to improve the efficiency of this company.

Your next question comes from the line of Betsy Graseck with Morgan Stanley.

A couple of follow-ups. One, the $53.5 billion to $54.5 billion expense targets that you put out for this next year, what is the relative number that we're assessing that against in 2017? I know there's a lot of onetimers here and there, so I just wanted to get what your view on 2017 like-for-like is.

We're not -- we don't really normalize our 2017 expenses. I think many people would, obviously, look to take out the larger operating losses that we experienced. But beyond that, I wouldn't do much more normalization for you just because it's a slippery slope.

Okay. And then the second question is just on liquidity. I know there was a couple of questions already on that. But I think if I heard you correctly, if loan growth accelerates beyond what we're generating today, your expectation is that you might need to reset deposit rates. Did I hear you right on that?

Actually, my reference there is more to the market. I don't think people appreciate how much folk -- the industry holding the line on retail and small business deposit prices might be as a result of the fact that there's been lackluster loan demand. And if the economy heats up because of tax reform and everybody's got higher loan growth, then somebody is going to -- may very well begin to defend their deposit franchise in order to fund it or to attract deposits in order to fund it. So that's more of an industry comment than a Wells Fargo comment specifically.

Okay. Do you mind giving us your view on your situation? I just raised the question because your LDR looks like it's around 73% or 74%, so seems like there might be...

I would say -- we don't think that we have to do much, although, again, if there is a big cyclical change that causes betas to catch up to where people might have previously imagined they should be looking at prior cycles of rate increases, then if that case -- if we're looking for a catalyst or imagining one that could cause that, one of the things that could cause it is a big pickup in loan demand. It hasn't been there, and we've been studying deposit response as an industry without that loan demand. If you were to add loan demand, it could change things. That's my point. Your point is right. Our loan-to-deposit ratio is very modest. We've got a lot of liquidity. We're not in a position where we think we need to attract a lot of incremental deposits to fund the next $10 billion of loans. But the industry overall is -- should be thinking about whether an increase in loan demand overall changes the calculus for deposit pricing.

Betsy, just on deposit pricing for a minute. I would just also make an observation separate from John's point, which I completely agree with on loan demand and the potential impact, is that when you think about the interaction and the relationship that we have with consumers, it's not just about deposit pricing. It's about how much firms are spending from a marketing standpoint, which doesn't go into deposit pricing line. And I think there's been a lot of discussion about that this year that that's may be ramped up for some firms more than others. It's also about the massive investment that we've been making in technology to improve innovation so that we're not at the margin just competing on price. We're competing upon the value of the relationship and the convenience and the service that we can provide. And when you look at the pace of innovation, particularly for us, I think that's been one of the drivers and some of the reasons why we've been able to continue to attract deposits. We're providing real value to all of our customers because of the massive increase in innovation, and we're going to continue to do that. So we're not just competing on price.

Your next question comes from the line of Scott Siefers with Sandler O'Neill.

Scott, thank you very much for those comments on CNBC this morning. My mother thinks -- you're now her favorite analyst.

At least I'm somebody's favorite analyst.

You got a fan out there.

Thank you. Please pass along my gratitude. Tim, just -- or I guess, John, it's a better question for you. On the NII outlook for ATM. Appreciate the comments earlier on the rate outlook that gets you there. Are you still thinking kind of a low single-digit number for NII growth year-on-year is good for '18?

I think it's a little early to fully forecast it. There's a lot going on, and we were just talking about deposit pricing and what that means. That could be a huge driver of this year that wasn't really as much of a topic last year. We're shaving some NII off the top for the -- on the tax equivalency front for our tax-exempt investments. That's probably worth $400-and-change million in '18 versus '17. And then the pace of loan growth and cash deployment is going to matter, too. So our -- it is a stated goal that we're trying to grow net interest income period-over-period, year-over-year, and so that's what we're vectoring toward. But at this point in the year, maybe at Investor Day, it will be easier to think about the year as a whole because we'll have a quarter and some change behind us. But I wouldn't pencil in last year's growth rate this year until we get a little bit further into it and we know what tax reform means and a couple other things.

Okay. All right. Perfect. I think you hit my next FTE question on there as well, so appreciate it. And then, actually, just on the effective tax rate guidance. When you look at sort of gap between your effective tax rate and the FTE tax rate, any noticeable change that we should expect now that the tax reform is done in there?

No. No, I don't think so. And we'll probably continue to give -- well, we certainly could call out changes in our guidance on the effective tax rate overall if conditions change throughout the course of the year. It will be impacted by a couple of things, most notably how much money we're making. But that's the number for now.

Your next question comes from the line of Saul Martinez with UBS.

On fees, on the Overdraft Rewind product, forgive me if I missed it, but did you quantify how much that adversely impacted deposit fees in 4Q and how much more it could linger on into the 1Q '18 results?

So it was $19 million in the quarter, although it came in during the quarter, and so it will be -- it will probably be more in the first quarter. And we'll see how customers adapt to that capability over time. And just for anybody who isn't familiar with the product, essentially, if you overdraft a payment tonight and your direct deposit hits in the morning, we don't charge you for the overdraft that happened the night before. That's where the rewind comes from. So we'll see a full quarter of it in Q1. We'll call it out at the end of the quarter and make it transparent so that people can model it in. But we think it's a very useful capability to help folks who are, generally speaking, right at the end of the pay cycle when they have an overdraft situation and then rectify it the next day.

Okay. That's helpful. And secondly on, John, your comments on deposit betas and the possibility of sort of a -- maybe a nonlinear type of increase in deposit betas if you start to get loan growth. Is there any way to -- I know you're probably going to say it's difficult to put numbers around it, but I'll ask anyway. If you were to see loan growth pick up and let's just say loan growth picks up the mid-single digits, is there any way to think through the parameters about how much deposit betas can move up maybe based on history or some assumptions of consumer behavior? But is there any way to think about sort of the parameters around which you might see deposit competition and deposit betas move up in that type of scenario?

I don't have a silver bullet for you, but I can tell you that you could stress or model some sort of a catch-up to historically normal levels, the -- call it, the 40-ish percent level, and then ask yourself, by bank, who might go first and why? And as Tim mentioned, there are a lot of noneconomic reasons for customers to want to maintain relationships, maintain balances, et cetera, with one bank over another, call it the very full service with the less full service. All of those things matter. But everybody's deposit franchise is going to look a little bit different. Some people have more core primary types of transactional account relationships, and some people are funded with hotter money that's seeking the highest yield at any point in time. And that's going to -- so different banks sort of going to behave differently. My general guess is that within the relevant range for likely loan growth for Wells Fargo that if we achieve the higher end of that range and the impact on our deposit price isn't really going to be because we think that we need to go out and raise more money and jack up our deposit costs but rather that it's happening to others and they're doing it and we're -- and if we feel we need to, we would be responding to what's happening in the market.

Our next question will come from the line of Nancy Bush with NAB Research.

I have a couple of questions for you. Back -- and this is -- this probably folds into the last question as well. For many years, you were the lowest ratepayer in the nation and you were able to maintain that through the location of branches, et cetera, et cetera. From a competitive standpoint and given the issues of the last couple of years, do you need to kind of get into the middle of the pack or the top? I mean, how do you feel competitively where you need to be positioned with deposit pricing in a rising rate environment?

Yes, Nancy, it's a very fair question. I don't think our view, particularly as it relates to retail consumer customers, has really changed. And what you've seen in our deposit pricing so far this year is that we're one of the lowest, if not the lowest, in the industry, and our expectation is that we'll continue to be able to do that because of the franchise that we have, not only the physical franchise but also the digital franchise that we've continued to invest in based upon the innovation and the convenience that we're providing to our customers. I think when you move from traditional retail deposit customers to wealth customers, it's more competitive, and you've seen the higher beta there. And we're kind of in the middle, and that's fine with us. I think we're comfortable there. And then as you move to kind of larger corporate customers or financial institutions and the like, it's very competitive where your deposit betas are about as close to 100% as you can get. And I think that's been pretty consistent through cycles for us as well as the rest of the industry. So that's how I would break it down.

On that last point, I would just add that we've been a little bit more active with some of the financial institution customers to get their deposits because we don't have a leverage ratio problem, so we can afford to have a slightly bigger balance sheet. We can use the liquidity from time to time. So if we weren't doing that, because that is the highest cost deposit in our book, we'd probably look on a weighted average basis like a lower deposit cost payer. But it's really some purpose to do more business of various types with those customers by having that deposit relationship.

Okay. And also, the follow-on I have is about branch closures. And I'm sure you guys have seen the articles over the past couple of months. So there was a series, I think, in the Wall Street Journal a few weeks ago about how rural America is being impacted by branch closures, that there are many small towns now that basically have no bank branches. And I'm wondering if this is becoming a bigger regulatory issue or is coming more onto the regulatory radar screen. And do you guys anticipate that you may, in the future, have to not close branches that you would have closed otherwise because of their locations?

Well, Nancy, again, it's a fair question. I think that when we look at our branch network, we include a number of factors beyond just a P&L for the branch with a likely expectation for growth or quality of customers. There's also CRA-type requirements and other reasons that we want to keep branches open in certain markets. But to your specific question about regulatory interaction, we haven't had any increase in regulatory interaction related to -- a significant increase of regulatory interaction related to rural branches as of this point.

I would say this big investment in digital capability that allows people to bank from anywhere, including opening accounts, including applying for and having credit granted, including deposit taking, eases the burden. It doesn't completely remove it, but it makes it easier for people who live far from branches. Even if there is a branch there, it may be 30 miles away but it would still be in the county. We're making it easier for people to do that from home. So it's a better situation than it was 20 years ago or 40 years ago when that same calculus was being weighed.

Our final question will come from the line of Gerard Cassidy with RBC.

Can you guys share with us -- you talked about bringing this efficiency ratio down with a 59% handle on it by the end of the year and then further improvement in following periods. What percentage of that improvement comes from revenue versus expenses or vice versa? How much is going to come from expenses versus revenues?

Well, you can see the range that we're talking about for expenses for the year. And while that's an annual number and not a quarterly number, we show some sensitivity around our 2017 revenue item. So right now, we're very focused on specific actions that are being taken on the expense side. And we have to make some assumptions about what's happening to revenues to estimate what the handle, what the range will be on efficiency later in the year. And very importantly, I'd remind everybody that Q1 is a very -- is high for seasonal expense. I know you guys know that, this is your business, but that's something to account for. So John asked a question earlier about what's going to happen with -- I forgot who asked a question about NII in 2018. It's a range of estimates depending on the drivers that I mentioned similarly on the noninterest income front. We've got a lot of things that are core and easier to forecast, but there will be other items as well. So we're always trying to grow revenue. We have control over expense and it's the expense which we're specifically pointing to in terms of what's driving the outcome.

Okay. And then in your Community Banking metrics in Slide 24, you obviously give us good data around the digital customers and such. And you guys have alluded to on the call about opening up new accounts and selling products for these lines, and that seems to be where the industry is going and you're going. Can you share with us what kind of penetration you have, whether it's credit cards or other types of consumer loan products that you're actually opening up through the online channel versus people having to come into a branch?

So right now, I'd say credit card is probably the easiest one to point to. I think we're at 43% of card originations in 2017 were digital. Now to be fair, we -- it's not so important to us what that percentage is. We want more of our customers to have our card in their wallet. And if they get it digitally or they get it in person, either will work. But 43%, trending toward half of our card openings were digitally transacted in 2017. That's an interesting metric. That's up from a very small percentage in prior years. Mortgage will be -- this will be the year to see what the trend is there as we fully roll out the digital mortgage application to people who aren't -- including people who aren't already customers of Wells Fargo. And then in Wealth, we have the digital account opening process for Intuitive Investor, which is something that we'll be measuring all year to figure out how much benefit our customers and prospects derive from interacting with us in that way.

And just on the mortgage, when do you guys go live with that again? I knew it was this year, but is it first, second quarter?

Well, it's live now. For people who are already customers of Wells Fargo, you can enter through -- I know you all are customers of Wells Fargo. When you log on to our online banking or digital banking platform, you can see it there. But it will be available for all comers in the first quarter.

Okay. And then just my final question, in your Wholesale Banking slide, you talked about investment banking market share dropped to 3.6% versus 4.4%, your -- the narrow scope focus. Can you give us some background or color on what you mean by -- what you did where the market share came down?

In any given quarter, that's going to reflect some large deal volume, could be some leveraged finance volume. It could be cross-border activity, some of which are probably a higher beta for us depending on whether we get it or not. I think on an annual basis, we probably assume that we're still going to trend toward the 5%, 6-plus percent market share range, which is where we've been recently. But I don't think of anything terribly different.

Yes, just to reinforce John's point, I think what we saw in the fourth quarter was -- were more leveraged buyout-type transactions in -- just because of our underlying credit discipline. We tend to have a lower percent market share in those types of deals, and so that would -- the margin probably had driven most of that decline.

Again, thank you all for joining us this morning. I know it's always a busy morning the first day of earnings for the industry. I want to reiterate the fact that 2017 was a very transformational year for Wells Fargo. And I also want to emphasize the hard work, dedication and resiliency of our team members who made the company a better bank today than it was a year ago. And again, notwithstanding the challenges we have had, I'm optimistic that Wells Fargo will be a better bank a year from now. So again, thank you for your support.

Ladies and gentlemen, that concludes today's conference. Thank you all for participating. You may now disconnect.