Can I read a Morgan Stanley disclosure? Should I read now? Can I read it now? Or do I have to wait?
You can do whatever.
Okay. For important disclosures, please see Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Okay. With that out of the way, we are so delighted to have with us today Mike Santomassimo, Chief Financial Officer of Wells Fargo. Mike, thank you so much for joining us today, and congratulations on exiting the asset cap.
Great. Thanks for having me. We're excited.
How did that feel?
Yeah. It was, you know, it's great, right? Like, look, it's the culmination of, you know, just years and years' worth of work across thousands of people across the company. You know, we're proud of all the work everyone did, and we're thankful for all the effort that people put in over a long period of time. Hopefully, now, with all of, you know, the other consent orders that were terminated throughout the year and over the last number of years, you know, it feels like a very different sort of place. I think that we're a very different company than we were five, six years ago. We're excited about what's next.
Okay. The asset cap was in place for seven years, right?
Mm-hmm.
This just came off last week.
Yeah. Tuesday, yeah.
Right.
I think. Yeah.
Can you talk a little bit about what opportunities it opens up for Wells in the near and medium term, call it over the next, you know, two and five years?
Yeah. You know, look, I think, you know, while the last, like, five years or so, you know, the risk and control work was by far the top priority that we all had. There was a significant amount of time that we all had to spend on that, you know, and all of the broader regulatory work. You know, we started the path, and we've been talking about a lot of the priorities and where the growth's gonna form, but we started this journey, you know, five years ago.
If you look across each of the businesses, you know, the same priorities that we've been talking about are the places that we're gonna see growth on from, you know, not just in the next year or two, but in the next five or ten years, you know, as you sort of look at each of them. When you start, you know, just start on the consumer side, you know, in the branch banking, you know, business, you know, we've been investing in the branches now for the last number of years. We're refurbishing them. We're through 1,500 or close to 2,000 of them. I think we've refurbished, or will refurbish something like 750 of them this year alone.
W e're gonna work our way through that just to, you know, change, change the look, change the feel. We're investing in the people in those branches, y ou know, we're adding wealth advisors to, to service the, affluent opportunity, which we'll, we can come back to, you know, in terms of, you know, the opportunity that's there. And so, you know, the growth that we should see coming out of the branches should be, you know, significant over a long, long, long period of time. That was somewhat impacted by not only, you know, the asset cap, but also sort of the sales practices, consent order that went away, you know, a year or so ago, a nd after that consent order was terminated, we've reintroduced the incentive plans.
We've reintroduced, you know, a lot of the priorities, you know, growth priorities that, you know, come through that, through that channel. Over a very long period of time, we should continue to see, you know, good growth over that, you know, from that business, not only sort of in, you know, growing the core checking accounts and banking business, but also cards, wealth, and the other things that we can do with clients coming out of that channel. When you start looking at consumer lending, where card business is another great example. You know, that started back in the end of 2019. You know, new leadership team. You know, we've replatformed every single product that we have. We've launched 11 new products since then. We've seen good growth in new accounts.
It starts with just, like, really good products, simple propositions, simple value propositions for clients, you know, good service. We continue to kinda refine the business as we go. You know, there will likely be a few more card offerings over time as we can continue to complete the product set. We should see, again, good sustainable growth coming through there as well. You know, the auto business is something we've been investing in as well to become a bit more of a full-spectrum lender across the platform there. We also signed up an agreement with Volkswagen and Audi that went operational just in the last, you know, 30-45 days. We should start to see that portfolio trough and grow a little bit over time.
The one place that we don't really think of as a growth business is the mortgage business. You know, it's still a very important business to clients and for us, but it's not something that we wanna be really big in. It's something we wanna be really good at for our clients. We're still in the process of right-sizing the servicing component of that business. That'll take a little bit more time to do. That's probably the one exception on the consumer side. You then go to wealth. You know, if you go back five, six, seven years ago, we had lots of attrition in that business as a result of, you know, some of the sales practice and other issues. That's really started, that's really stemmed. We're starting to see growth in advisors.
You know, we feel like we're seeing every big team that moves across the industry now where that wasn't the case years ago. We also have a couple, you know, kind of unique, you know, characteristics of that business as well. We've got the bank channel, which I talked about, which we call Wells Fargo Premier. It's the offering we've been building out for the last couple, you know, couple years. You know, we've got, you know, a couple thousand advisors that sit in the branches today already that are going after that opportunity. If we can do a good job in going after the wealth, the wealth management business there, it also brings more banking and lending, you know, from those clients as well.
That is that, and we are just in the early days to really see that start to build. We also service registered investment independent advisors in that business. That is unique to us in terms of the top number of wealth management franchises, fastest-growing piece of the market in terms of advisors. That should give us an ability to grow with that piece as well. You go to the commercial side. We have been adding hundreds of bankers in the commercial bank over the last couple years. While we have good national share in the commercial bank, I think in many markets across the country, we just do not have the share that we think we should have.
I think, you know, we've been just methodically going market by market, segment by segment within them in those markets and adding people there. That momentum should continue to build over a long period of time. In the corporate investment bank, there are three businesses within there. In the investment banking side, we've talked a lot about that. We've added dozens of senior investment bankers over the last few years. We're continually just executing the plan we've got there to fill in coverage gaps, to fill in gaps across segments within, whether it's equity or debt capital markets or the M&A teams. We're starting to see a little bit of share growth there.
We're certainly seeing lots of green shoots in terms of deals that we just wouldn't have been part of if we didn't have those folks come into the firm. Our markets business is, you know, the most constrained of the businesses given the asset cap. We just haven't been able to allocate the balance sheet we would like to that business. That business will have more flexibility now that the asset cap's gone. They are just systematically investing in technology and people to sort of build out the right capabilities there. We believe there's a lot of demand there for what we can offer.
And then commercial real estate, you know, again, you know, big business for us, important business for us, and will be as we look forward. When you look across the, you know, the businesses, there should be really good growth opportunities in, in really all of them, mortgage aside. That'll, this'll play out over a long, long period of time. You know, we always are a little bit cautious here to say, "Look, it's not a light switch moment. Like, it doesn't happen Tuesday, the asset cap's on. Wednesday, the growth just accelerates," right? These are plans that we've been executing now, you know, methodically for a number of years, and growth should happen over a period of time.
One question is, when the asset cap has been in place, capital is an even more scarce resource, right, than it is the day after the asset cap comes off. Is there any change to how you consider or think about allocating capital in a post-asset cap world?
Yeah, sure. I mean, initially where you have more flexibility that you did not have, you know, a week ago is in the markets business, you know, and that is where you can do more financing-type activity with clients that then will ultimately drive other business you can do with them. There is certainly more flexibility there that starts right away. You can be a little bit more front-footed on going after different types of deposits across the commercial side of the business. I just caution you, it does take some time to grow. It does not happen in a week. W e are pretty excited about what the opportunity looks like across each of those businesses. I think clients want alternatives.
I think we've got a full set of capabilities. There really are just a few of us across, you know, across the banking space that have this full set of capabilities that we can bring to bear. You know, we're largely U.S.-focused, but that can bring to bear with clients. We think there's a lot of opportunity to do that.
One of the questions I've gotten is, "How will you be funding this incremental growth, given the fact that you did have to pull back on deposits?" Could you tell us a little bit about how you're thinking about the deposit side of the equation?
Yeah. Look, I think in the market side of things, you know, we know we'll get back to a place where a lot of that growth is funded through, like, like all other, you know, markets businesses across the street, funded through wholesale markets. You know, some of that was funded through our deposit franchise in the past. It doesn't, you know, that was a little bit different and a little bit because of the asset cap. On the deposit side, you know, it comes back to just basic blocking and tackling. O n the consumer side, it's about growing core checking accounts, you know, across the consumer business. In wealth management, same thing. We're underpenetrated in the banking side of the wallet for our wealth management clients, a nd that's been a focus for us.
On the commercial side, you know, we, again, we can be just a little bit more front-footed, a little bit more competitive as we go out there to compete for different types of deposits that are different clients.
Okay. Great. What about on the expense side? And the reason I'm asking is, you know, does the asset cap removal spur any incremental expense saves?
Yeah. Look, you know, we still, you know, outside of the risk and control work, and the expenses associated with that, there's still a lot of opportunity to drive efficiency across everything else, a nd our mentality as we go into, whether it's budgeting or just normal, you know, business reviews as we go through each of the parts of the firm is that there needs to be more efficiency-driven across, you know, each area, a nd there really is opportunity just about everywhere still. It just takes some time as you sort of go through on, you know, unpeeling the onion to really find those opportunities, doing it in a methodical way, doing it in a sustainable way. Really across the whole company, I think there's more. On the risk and control work, for sure, there'll be opportunities to streamline to make it more efficient.
It hasn't been anything we've focused on in any significant way at this point. That will happen over a longer period of time. As you go through the last five years of building all of this, all these capabilities, and you look back and you sort of, you start to operate it with, you know, operate every day with it, there's, you know, there's tons of opportunities to do that as well. That'll take a little bit longer to get at.
Okay. And one somewhat technical question about the asset cap removal. The regulators removed the asset cap, but they left in place a consent order that requires you to maintain and improve your risk management program?
The asset cap was always phase one of the consent order.
Right.
That was just, that was the way it, you know, the order was constructed. As part of phase one, you adopt and implement all the things you need to do. As phase two, you see it sustain itself over a slightly longer period of time. That was always the plan. We'll continue to see that one through as well.
This doesn't change the.
Nope.
Expense profile at all?
Nope.
I don't know, maintaining and improving a risk management program to me sounds like business as usual.
Yeah. I mean, it really is, right? It's, and it, it's, it's something that you should be doing all the time anyway, right? I think, you know, all the, a lot of other, all the other big firms, you know, across the industry have done this over time. I think over a period of time, you, you'll look back and, you know, we started this journey, you know, five years ago. Technology's different today than you could, you can deploy, you know, you find lots of different interconnections, way to simplify things, way to, you know, and it's just natural course of the way we approach not only the risk and control work, but really just about everything else you do too, right?
You should be, you know, constantly sort of reevaluating how you go about executing what you do every day for clients or internally and looking for ways to, you know, bring technology to bear in different ways or just look for ways to simplify things. In a lot of cases, that'll save you money. Most importantly, it'll actually make the client experience better too. You can be faster. You can be nimbler. You can sort of deal with, you know, client inquiries in a different way, as well. I think it all comes together to hopefully, you know, be a win-win for us and our clients as we go through that.
Okay. One of the other questions we've been getting from investors is, "What about that ROTCE goal of 15% post-asset cap environment?" In 2024, you generated 14%, a nd you've got a 64% expense ratio that's, you know, a subset of that result. Can you talk us through what you're thinking about with regard to the expense ratio, the ROTCE, and a post-asset cap environment?
Yeah. I mean, you know, we started this journey back, I guess at the end of 2020, 2021, where our ROTCE was 8%, a nd so we've made a lot of progress to get to kind of where we are. You know, we set out the goal, you know, first at 10%, now 15%. You know, what we wanted to make sure those goals were, were something that we could achieve in a reasonable period of time, you know, and were also kind of respectable targets, I think, overall. We've never thought of it as, like, the end goal.
I think when you look at each of the underlying business segments we have, there's really no reason why they shouldn't have returns and efficiency ratios that are comparable to the best-in-class peers over some, you know, period of time by segment, right? I think, you know, reasonable people can do different math. I think that would lead you to, you know, an end goal that would be potentially higher than 15%. You know, once we get to the, you know, 15% goal and we feel like it's sustainable, then we'll kind of reset expectations from there. I think, you know, it was never meant to be sort of the end goal of where we would, you know, where we'd sustain for a long period of time.
I think there's more to do. Again, everybody can have maybe a slightly different view on what that should be. We'll talk about it when we get to the, when we feel like we're there.
Okay. Let's wait a few more quarters for that. That's what I'm hearing, given that you're already at 14% for 2024. Just turning a little bit to some of the nuts and bolts here on loan growth. You did have positive loan growth, momentum in loan growth, I should say, in Q1 ahead of the asset cap removal, a nd part of this is coming from non-depository financial institution lending. Maybe you could give us a sense of how we should be thinking about your loan growth over the course of the rest of this year, and how important NDFI lending is to that.
Sure. You know, you know, look, through the first quarter, we saw a little bit of loan growth, not a lot, very little.
Positive.
It was positive for the first time in a while. It still wasn't a lot, and so, and then, you know, what's changed since the end of the first quarter is all the uncertainty that was sort of injected into the environment. When you look across the different portfolios, you really shouldn't expect much, right, for the rest of the year. When you go through each, on the consumer side, with rates where they are, mortgages likely continue to decline just a little bit. Credit card growth, we'll see where it ultimately sort of ends up each quarter. That'll move around a little bit.
Auto is pretty small in the scheme of things. I wouldn't expect, you know, large growth on the consumer side in any way, and likely potentially a net, you know, decline as you sort of look, you know, across the quarters. Then when you look at, you know, the commercial side, what's hard to predict is just what's gonna happen for the rest of the year. I think the uncertainty that's been there has caused people to, you know, pause a little bit on investment, on inventory builds, of being really thoughtful about sort of borrowing, you know, particularly given how expensive, you know, it can be. That's just hard to predict exactly what's gonna happen.
You know, we haven't seen in the, in the commercial industrial book, we haven't really seen, you know, a big change. You know, you can see that through, you know, the Fed, you know, data that comes out. There really hasn't been much. You know, people haven't been drawing to build liquidity. They're not making those investments. I think they need to see more of what's gonna play out for the rest of the year, you know, before they get that confidence to kind of make those investments. It's a little hard to predict, but I wouldn't expect too much as you sort of go into the rest of the year. You know, there's certainly some opportunities, you know, in some of the other portfolios, like the NDFI book, as you mentioned, which I can dig into.
You know, you look at what's happening in commercial real estate. You'll continue to see office declined a bit, but there's opportunities in other parts of that book. We'll see how it plays out. As you look at the rest of the year, it's hard to get too excited about seeing big changes in loans as you look forward. On the non-bank financial book, it is an important portfolio for us. It's been that way for a long time. The largest piece of that portfolio are lines that are capital call facilities that we provide to largely bigger private equity, private credit funds.
The risk return there is quite good, you know. We focus that exposure on the more established, bigger firms. You know, I think when you look across that portfolio over a very long period of time, the risk return is quite good. We feel really good about that part of the portfolio. As you look at the rest of it, you know, we lend against a bunch of different kinds of assets. You know, we lend against corporate and kind of middle -market corporate debt, corporate loans. In those portfolios, we approach it, we think in a little bit of a different way maybe than some others at least, where we're underwriting every single loan.
We underwrite, you know, close to 25 to 100 to 3,000 loans underneath that portfolio. We're not lending to a portfolio. We're lending loan by loan. We evaluate them each quarter. We look at, you know, we mark them. We've got attachment points that are quite good, relative to, you know, lending directly to those underlying borrowers. Again, we've got a very experienced team and feel good about kind of the risk that's underneath that. There is a whole bunch of other different asset classes, you know, whether it's, you know, mortgages of, you know, residential or commercial mortgages or other types of assets we have underneath that. All that come with attachment points and risk that we feel is quite good relative to the return we're getting.
One question I've got from folks is, when we think about NDFI loss content, is that similar to CNI? Is it higher? Is it lower?
I mean, you know, look, I think the loss content in there has been quite, quite low, actually, over a long period of time in our portfolio. It is hard to make a general statement like that. I think, you know, as you look across the different portfolios, it has actually been very, very low. We feel good about the risk that is there. Again, you get different attachment points than you would if you are lending directly to a lot of these borrowers.
Which reduces the risk.
Reduces the risk, yeah.
Right. It seems to me, based on everything you've said, that NDFI loan losses are at or lower than CNI.
Yeah. I mean, you can, we don't dis— I don't think we disclose that in that level of detail.
Right.
We feel really good about that. There's been very low losses in that portfolio.
Yeah. I'm interpreting really good.
Yeah. Yeah.
Okay. Very excellent. M aybe you could give us a sense, since we're on the topic of credit, how is credit just generally trending in the quarter?
Yeah. Look, the shorter answer is pretty good, right? I mean, it's like trends are consistent to what we've seen over the last, you know, quarters, last number of quarters. You know, when you look on the consumer side, we're not seeing deterioration of any, of any note come across the portfolios there. If anything, payment rates in the credit card business are a little bit higher maybe than, marginally than we sort of would've modeled, which is good from a credit perspective, obviously. T hen, when you look across the different portfolios, it's been, it's been pretty, trends have been pretty consistent on the commercial side. Really not seeing systematic themes emerge that are causing, you know, near-term credit issues really, really at all across any of the underlying portfolios, which is quite good.
Even with all of the, you know, volatility that's been there now the last, I guess it's two months, you know, we're not seeing that really change the trends in any significant way at this point.
How do you think about reserving for these tariff risk, which seems to be on again, off again, or high, low, medium?
Yeah.
How do you deal with that in the reserving?
Yeah. Look, I mean, I think, you know, with any, with the whole process around the allowance and CECL requires a lot of judgment in any quarter, certainly in a quarter where there's lots of headlines that you sort of need to digest. That is certainly the case. You know, but underpinning it is that there's multiple scenarios that you look at all the time, right? As you look at our process, you know, we have three, four, five scenarios, b ut really, all of our weighting is either on a base case scenario or downside scenarios at this point. You know, we've had significant weighting on those downside scenarios for a while. That's not changing.
That in essence incorporates, you know, a potential, you know, volatility or, like, negative impacts from lots of different, you know, potential, you know, reasons. A lot of that is sitting in sort of the reserving process already. Then as you look forward today, you know, is there more uncertainty? Yes, b ut, you know, as we come back to what we were just talking about, what we're actually seeing in performance is still quite good.
If there are some guardrails in terms of where the public policy ends up, trade policy and other things, then it feels like, you know, you get to a place where the base case scenario is pretty manageable, and maybe not as bad as people feared, you know, two months ago. We will see how it plays out. A lot of that uncertainty was largely baked into the way we were thinking about the allowance. It has been that way for a while. You always get the reason why it could be negative wrong.
Mm-hmm.
You know, that's just like the reality. Nonetheless, you sort of, you need to, you need to sort of think about, like, a lot of different scenarios each quarter, a nd that's the way we've been thinking about it for a while.
The loss content that's being generated this quarter is more similar to last quarter? No real big changes?
Yeah. We're not, I mean, there's always some seasonality in some of the portfolios, like card and stuff. W e're not seeing, you know, trends change in any significant way, you know, across really any of the portfolios at this point.
While we're on the quarter, can we talk a little bit about NII and, just generally speaking, your overall guide for NII +1% to +3% year- on- year, for the full year, right?
Mm-hmm.
Maybe you could talk about how that's holding up this quarter and if there's no rate cuts, does that matter? You've got a steeper curve, does that matter?
Yeah. When you look at, like, rates, you know, if you go back to the expectations from the beginning of the year, you know, long-term, like the 10-year or longer-term rates are still lower than, you know, what we anticipated in the beginning of the year. Although they're up maybe from the prior quarter, they're actually lower than where we started the year. T hen short-term rates, you know, they're close, right? It's really a second half story in terms of what's gonna happen, you know, ultimately with the Fed. The later you get, the later you get in the year, the less, you know, the less impactful it is for the calendar year.
We'll see, you know, obviously rate expectations in terms of what's gonna happen have been, you know, I guess maybe the understatement is probably volatile, right, over the last, you know, but it's been that way now for a couple of years, right? Two or three years where I feel like every time we get into a conference like this, like three days ago, something happened, or three days from now, something's gonna happen. The expectations just keep, you know, keep evolving, quite a bit. You know, as you get later in the year, obviously they're gonna be less impactful, you know, for this year. The things we continue to, you know, focus on, you know, for the rest of the year and watch are obviously deposit levels, deposit mix.
You know, we're not seeing, again, big changes in trend there at all. You know, pricing, we're not seeing pressure on pricing, you know, on the consumer side. You know, the commercial side's always more competitive, but that's just the reality of that market. We're not seeing, you know, again, any real pressure there. We'll see how it goes. We'll provide, you know, a more fulsome update as we sort of get to earnings. We talked about loan growth, right, which is we didn't expect a lot as we go through the year. I think, you know, as the year progresses, we'll see what that brings. Obviously, you know, trading NII is becoming a little bit of a bigger driver.
We'll probably talk more about that in the future. That can, you know, move things around a little bit in different periods as we go. We'll see how it goes. I'd say there's no big changes in trend than what we talked about in July.
Could I just ask you to explain a little bit, the trading NII has been a bigger driver? Could you just unpack that?
It starts to become, you know, as our trading business just gets bigger, you know, it'll be a bigger driver of NII, a nd so we'll talk more about that as we go in the coming quarters.
Which benefits if rates come down?
Certainly, you know, certainly NII benefits, a nd then in different environments, you have more fees than you have NII or vice versa. It is just, you know, in a lot of cases, just geography.
Right.
That moves around a little bit, so.
Just on trading and investment banking, the whole capital markets business that Wells Fargo has, could you speak a little bit about how the year's been progressing? I mean, I think we started off a little lighter. Is there any inflection?
You know, inflections are hard to predict, hard to predict. Like, you only know them after the fact. Sometimes they do not last very long. We will see. You know, certainly as you look at different, you know, different parts of the investment banking side, you know, the M&A fee pool is up a little bit in the U.S., but like announced volume is down, right? You look at some of the equity capital markets year to date, down, right? I think you have seen, you know, somewhat muted in terms of what maybe people hoped they would see, you know, as you came into the year. Those things can change pretty quickly. You know, the debt capital markets are wide open, you know, for issuers. I think that is really good.
I think you can get lots done there. You know, hopefully the equity side is starting, you know, equity for IPOs and other things, it's starting to, you know, open up there more. I think we saw obviously a pretty successful IPO or a couple of them over the last couple weeks or so. Hopefully that continues. I think you're starting to see more deal activity. Again, I think that maybe got put, you know, got a little bit muted in the quarter given what happened earlier in the quarter. I think hopefully that'll start to pick back up. You know, and I think, as you know, the investment banking game is, it's a long game, right?
A lot of the investments we're making are really intended to drive growth and market share over a long period of time. What happens sometimes quarter to quarter can be a little out of your control. I think the opportunity there is going to be huge. I think the activity level with clients is pretty high. Now we need to see that translate into more activity. We will see where it goes.
Okay. And then, on expenses, any key drivers for getting that expense ratio down? Does AI factor at all? What's really behind expectation that you can get expenses, the expense ratio improved?
Yeah. I think, again, I come back to what we were talking about earlier on the efficiency side. You know, we really feel like just about every part of the company still has more to do on efficiency, and sometimes that's technology-driven, sometimes not. I think as you look at AI, I think certainly AI is gonna help drive some of that efficiency in a different way and maybe faster pace than you could have done three, four, five years ago, for sure. We've got a whole set of use cases that are focused on the efficiency side of it, everything from call center agents and making that experience better for customers to, and we're, you know, that's live, piloting for internal call centers already.
You know, it's, using AI, you know, either, you know, agentic AI or sort of regular AI to sort of automate, a lot of processes, across different, you know, parts of the company. It makes digesting the, like, numerous research, you know, analyst reports we get, like, much more efficient, like throw them in, throw an AI .
Oh, you only have to pay attention to one.
One, only one. Yep. And so we can compare and contrast your tone versus somebody else, you know. S o you can do lots of different things now, in a much, much more efficient way, so I do think AI is gonna help drive, you know, efficiency for really everybody, not just our industry, but certainly across banks, maybe at a different pace than you saw, you know, historically. It's, but a lot of the efficiency agenda is, it really is hundreds and hundreds of different projects at any given time across the whole company that drive it. There really are no, like, one or two that I would sort of highlight that are the ones that are gonna be the thing.
T hat's what we've seen now for the last, you know, three, four years, right? We've seen headcount come down significantly from the peaks. We've seen, you know, us generate $12 billion of gross saves across the company, reinvest those back, much of that back into the businesses. T hat's still, you know, the same mindset we bring each time we go through it.
As you go through the process of thinking about what the ROTCE target could be as you hit 15% over the coming quarters, years, it would be really helpful to understand what you think you can get that expense ratio to?
Yeah. Yeah. I mean, they're like part and parcel, right? They come together.
Sure.
Like, they sort of move, in some ways, move together, right?
Absolutely.
I think that that's certainly important.
Super. Last topic I wanted to touch on here is capital. C learly you have significant excess capital with a CET1 of 11.1%, which is well above your minimum of 9.8%, a nd we've got a regulatory environment that looks like it's going to be reassessing, and we get the CCAR soon. This will all be exciting. The question I have for you is, how do you think about what the right capital level is for Wells? Because I'm sure the regulators will be asking you that at their confab in July, right? Michelle Bowman's putting together.
Yeah. Yep.
Industry confab on this. How are you thinking about what the right level of capital is? And how are you thinking about capital deployment in this new world?
Yeah. I mean, look, I think there's a lot to that. I know we're running out of time, but I think the thing I'd say is, you know, the rules hopefully will become a little clearer over time in terms of where the Basel III ends up. That's positive. Hopefully the stress test reform gets us to a more reasonable place in terms of where that ends up for us and the broader industry. As we look forward, you know, from a capital perspective, it's great that we have a lot of excess capital. We have more flexibility to deploy it now that we have an asset cap, which is great.
Approval.
That'll help drive the growth. I think, you know, we've been pretty active in sort of giving some back to shareholders as well. We'll look at that, and then we'll assess sort of where our buffer needs to be over the regulatory minimums and buffers over a period of time. That potentially can get a little bit smaller. I think the good news is we come into an environment where we've got a lot more balance sheet and growth flexibility with a lot of capital. We can deploy that to help clients and grow over a long period of time. I think we feel really good about where we are.
Super. Mike, thanks so much for joining us this morning.
Yeah. Thank you.