Ladies and gentlemen, thank you for standing by, and welcome to the Wells Fargo Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I would now like to hand the call over to John Campbell, Director of Investor Relations. Thank you.
Please go ahead, sir.
Thank you, Regina. Good morning, everyone. Thank you for joining our call today where Betsy Duke, our Board Chair and Charlie Scharf will discuss today's announcement of new role as the CEO, President and Board Member of Wells Fargo. They will also be available to answer a few of your questions. This call is being recorded.
Our news release is available on our website at wellsfargo.com, and I'd 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 our Form 10 ks for the year ended December 31, 2018. 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 available on our website. I will now turn the call over to Betsy Duke.
Thank you, John. I want to thank all of you for joining us today. On behalf of the entire Board, I'm delighted to announce that Charlie Scharf will become Wells Fargo's new CEO and President effective October 21. Until then, Alan Parker will continue in his role as Interim CEO. I want to thank the members of the Board search committee who are committed to finding a candidate who can address our near term priorities, but also successfully position Wells Fargo for future growth.
Charlie received a unanimous vote from the independent directors of the Board and a supervisory non objection from our primary regulator, the OCC, as required by their April 2018 consent order. Charlie is a proven leader and an experienced CEO ready to advance Wells Fargo's continued transformation. With over 24 years in leadership roles in the banking and payments industries, including as CEO of Visa Inc. And Bank of New York Mellon, Charlie has demonstrated a strong track record in strategic leadership and execution. This has included initiating and leading change, strengthening operational risk and compliance and innovating in a rapidly evolving digital landscape.
Charlie's financial and business acumen, integrity, passion for diversity and inclusion and commitment to strong talent management were important qualities considered by the search committee. The Board and I would especially like to recognize Alan Parker for his exemplary leadership and dedication as Interim CEO and President these past 6 months. He has continued to move the company forward on our top priorities in a focused and transparent way. His leadership through this time has been invaluable for our stakeholders and particularly our 263,000 team members. Alan is committed to ensuring an effective transition to a permanent CEO and he will continue to serve as a key member of the leadership team remained committed to delivering for our customers while working to drive transformational change throughout the company.
The work they have accomplished and their commitment to further improvement will drive our future success. Charlie will be leading a company that has many extraordinary strengths, including a diversified business model that has proven its value through a variety of economic and business cycles, industry leading positions in many key businesses, strong capital and liquidity positions along with exceptional credit discipline and a world class team dedicated to excellence every day, bringing value to our customers and communities. We are confident that Charlie will build on these strengths to best position Wells Fargo for a successful future. Now I'll turn it over to Charlie for a few comments.
Thank you, Betsy. I'm so excited to assume the role of CEO of Wells Fargo. I've admired the company from afar for many years, and I'm honored and energized by the opportunity to assume leadership this great institution, which is going through fundamental change and I appreciate all the work that has already taken place to begin the transformation of Wells Fargo. Clearly, there have been challenges, but as Betsy mentioned, Wells Fargo has many enduring strengths and those will serve as the foundation as we improve our business. We must execute on the company's strategic priorities to ensure we are meeting the expectations of all of our stakeholders, including our team members, our 70,000,000 customers, our shareholders, our regulators and the communities we serve.
The opportunity to lead Wells Fargo, an institution that plays such an important role in the financial system, was one that I could not pass up and I look forward to actively engaging with the management team and team members across the country as we move the company forward. Alan Parker and I have spent some time together and I'm looking forward to learning from his experiences since he joined Wells Fargo, but especially during his tenure as Interim CEO. From the outside, it's clear he's done a wonderful job in providing strong leadership during a time of uncertainty. I look forward to leading this great enterprise and to all the opportunities ahead. Betsy and I would now love to take your questions.
Our first question will come from the line of Scott Siefers with Sandler O'Neill.
Good morning, everybody. Good morning, Scott. Congratulations.
Thank you.
I think just maybe the first question. So Wells has gone from, of course, one of the most highly respected companies in the country, much less banks, to one one with some pretty well publicized cultural issues. Just Charlie, as you look at the direction of the company going forward, is your sense that we'll just need to sort of stay the course on fixing some specific but kind of widespread issues? Or do you see a need for like a broader strategic overhaul?
No, I think listen, I think the company itself is I mean obviously has just a series of just extraordinary franchises and that was always the case and that's no different. There are clearly challenges. The company is clearly focused on dealing with the challenges and putting them behind us. And so from my perspective, just doing everything that I can to ensure that all that work continues to get done. At the same time, that we continue to build upon the strengths of the business, as it is.
Like anything, you'll take a look at what's there and when you get on the inside, you learn a whole series of things. But the business model and the businesses that exist are extraordinary and I'm excited to be part of it.
Okay, perfect. Thank you. And then maybe just one quick question. It sounds like you're going to be staying in New York. Do you have sort of top level impressions for how much time you'll spend in San Francisco?
And then I guess just initial thoughts on affecting cultural change remotely?
Sure. So listen, these jobs, whether it's the Wells Fargo job or any other job I had, you spend very little time actually in your office. This is a broad national franchise. We have over 25,000 or 26,000 people in Charlotte. We have thousands of people in New York.
We have thousands of people in Des Moines, thousands of people in St. Louis, thousands of people in Minneapolis, thousands of people in San Francisco. And so, I don't think anyone would ever say in the places I've worked that I've not been present. I think it's just the opposite. And so I'm looking forward to be present in all of those places, including San Francisco, which is obviously a very important place for us.
And I think relative to affecting change, you do it with the rest of the members of the team. And so I'm looking forward to just spending the time wherever it's necessary for me to be.
Okay, perfect. That all sounds great. Thank you very much. Thank you.
Your next question comes from the line of Ken Usdin with Jefferies.
Hi, good morning and thank you. First question for Betsy. Betsy, now that the process is complete and Charlie is here and in place, can you just round out the discussion for us on the process and to what extent you've already gone to also please speak with other stakeholders of the firm, whether it's regulators and shareholders and other market participants or people care about the company, and how this kind of fully came together? Thanks.
Thanks. So the process that we followed was pretty much what we laid out initially. We formed a search committee. They engaged a search firm. We spent a lot of time looking at and defining what were the characteristics that were most important for us, what the level of experience that were most important for us.
We, as you would expect, we identified who we thought would be the top candidates, the top talent. When you think about filling a role like this, you've got you can look at people who have operated at scale in our large peer competitors. You can also look at people who maybe have operated in regional banks in a CEO role. And so we just weighed all of the various experiences that would be important for us. And then as you talk to potential CEOs, you begin to think about how would that person mesh with the needs of Wells Fargo.
But the most important thing as you do as you go through this is confidentiality because the people we were talking to had very important jobs already. If you think about talking to Charlie, he was already the CEO of a public company. And so confidentiality is the most important part of the process. It just doesn't lend itself to interim updates for any of our stakeholders. And I know it was frustrating for all of our stakeholders.
I talked to them all along the way, everybody going, when can you tell us something? And the truth about a process like this is you can't tell them something until you're complete. I had somebody ask me to grade our progress and I said, this is a pass fail exercise and I think we have passed with flying colors. But so that's why we are here today. I know 6 months sounds like a long time when you're not hearing anything.
But when we first started, we were advised that 6 months is about a normal or average time for a search like this.
Okay. And then Charlie for you, you're coming from a company with complicated business model and we're enacting a lot of change inside BK. Can you talk about how you start to assess your immediate priorities here with another even more arguably even more complex company on top of just the obvious points that have been made already about what the company has been through. But how do you start to think about your immediate priorities? What do you have to knock down first?
Sure. Well, listen, first of all, I think just to reiterate the obvious, we know we have a series of regulatory issues that we need to complete the work on. And so that is clearly the first priority. It's been the first priority and we're going to make sure we don't miss a beat on that. It's clear that there is a huge amount of work going on and hopefully I'll be additive to the process of moving that forward.
When you come into a new organization and I've done this twice now showing up at Visa and showing up at Bank of New York, You certainly come with a series of experiences and a series of opinions. But having said that, it's incredibly important to make sure that you understand the organization that you're joining. So I'm looking forward to spending time with the management team and getting to meet people more broadly, understanding what I don't know from the outside about Wells Fargo. And then along with that management team, figure out what the priorities are beyond just the obvious of moving beyond the regulatory issues and continuing to grow the business and driving that to a level of specificity. But that will take a little bit of time and I'm sure we'll spend plenty of time talking about that after I'm at the company for a little bit.
All right. Thanks and good luck.
Thank you.
Your next question comes from the line of Erika Najarian with Bank of America.
Hi, good morning. Congratulations. My first question is for Charlie. As we think about your experience in terms of initiating transformation at both Visa and Bank of New York, I like to opportunities for Wells in terms of improvement in 3 buckets. 1 is compliance and risk and regulatory.
2nd is operational excellence. And 3rd, digitization. And I'm wondering as you think about your previous experience, is there room you think to work on all those on all of those 3 together? Or are the challenges at a magnitude where you really just need to work on bucket 1 first before really digging deeply into the 2nd buckets of operational excellence and digitization?
I'm just making sure you have the 3 here. No, I actually think these things are all related. I mean, when we think about the work that we're doing on the regulatory side and on the risk side, that work is designed around making sure that the company is just run operationally effective. I mean that is what it is though. So those two things are very much related.
Our jobs, whether it's at this bank or any other banks, are to ensure that we're running the best institution we possibly can. The rules in which we live by are very, very clear. And they're designed to ensure that, the company is just as controlled as it needs to be given the size and scope of our activities. And so as we finish that work, that just continues to reinforce, the operational platforms that we have. Those strong operational platforms provide the core for us to be able to go and do the really interesting things in life, which people love to talk about, whether it's the digitization of our businesses, things that relate to data, information and all those things.
So it is a virtue circle. You can't just say you're going to do one and not do the other. They all fit together. They are all three of them are priorities. And while certainly we the cornerstone of the work we have to do is the regulatory work, it's all part of the path to continuing to build out the franchise.
That's great. Totally get it. And just as a follow-up to that, Charlie, as we think about the investors waiting for the transformation to fall to the bottom line, Is the message that we should take away from this is that you're really thinking about the long term transformation of Wells Fargo? In other words, there could be potentially resets in terms of expectations as you think about investing into the company and really long term sustainable earnings power?
Listen, I don't have a point of view yet. But obviously, when I arrive at the company, which will be in the 21st, I'll spend more time on that. So I really can't comment on it. Great. Thank you.
But I should say, I don't come in with any preconceived notions one way or another. So I'm not trying to lead you one way or the other on that.
Understood. Thank you so much.
Thanks.
Your next question comes from the line of Betsy Graseck with Morgan Stanley.
Yes.
Hi, good morning.
Betsy.
A question for Betsy first. Betsy, could you give us a sense of how the Board is thinking about the strategy that Wells Fargo has in place right now today? And if you're expecting Charlie to deliver an update to that strategy at any point? Or is it just the keys are locked and loaded and the vehicles moving forward?
Well, I think he's definitely going to have a point of view. We would have made a bad choice if he didn't have a point of view on the strategy. But I think our overall strategy is pretty well laid out there. I think Charlie is exactly right when he talks about the work we need to do for our regulators, the work we need to do to make the company easier to operate in for our team members, for our customers, to integrate new technology solutions, to move things from a distributed model into an enterprise model and the way we run things. All of that work is part and parcel of the same thing.
So I don't think it's going to be a huge difference in the company. I mean this company at its core is a Main Street top bank in America, top position in many, many markets. So that part will continue, but we will always be refining and there are a lot of decisions, just individual decisions that need to get made every single day. And a lot of those decisions need to be made with a single eye toward a vision for the future. And that's what we will be for Charlie to begin to synthesize and express.
And do you expect that the majority of the position is at least initially regulatory driven that there's a lot that has to be do with regulators or that piece of it is down the path very significantly and it's just keep moving on the same path. Just wondering your thoughts on that Betsy?
Well, we're pretty well along in a lot of the work and we've defined out the work for each individual piece of it, each individual agreement with a regulator and those are all on somewhat different tracks, although a lot of the themes are parallel. And so that work will continue to the extent that Charlie can use his experience and his insights to get through some of the pieces and accelerate that work, that will be terrific. But I think we have a good understanding with our regulators on what they are looking for. And that's a conversation that we had quite a bit with Charlie when we were talking about him coming here. So he wanted to understand what the work was that we needed to do and how far along it was and what else was left to be done.
Okay, thanks. And then Charlie, this has been viewed as one of the most difficult positions yet at the same time, one of the positions with the most opportunity in have the ability or the interest to change it the most to put your footprint and your stamp on it the most?
Listen, I think I would say a couple of things. I think first of all, we have to start with the fact that the franchises that exist today are no different than the franchises that exist before some of the issues came out. And as I've said several times on the call and in my prepared remarks, the franchises are extraordinary and the performance of the company over a long period of time was exceptional. That doesn't mean that the problems that came to light aren't real. They were very real and the company recognizes that and is dealing with that.
And so I just provide that as context because again when I think of what has to get done from day 1, we have to deal with those issues as we have said. Those are they're not just regulatory issues, they help us become a better company and form the foundation to be the kind of company that we want to be going forward. But the work that the 260 some odd 1,000 team members have done to continue to preserve those franchises is extraordinary. What it actually means and what
the priority is going to
be, it's just too early to know. And again, it's from the outside and I could make some stuff up, but I think the reality is the banking business is extraordinary, the wholesale business is extraordinary, the wealth management business is extraordinary and more to come on that. But 1 by 1, it's just a damn good base to build from.
Okay. Thanks.
Your next question comes from the line of Matt O'Connor with Deutsche Bank.
Good morning.
Good morning.
So first question, Charlie, for you. I realize you haven't started yet. And there have been a couple of questions trying to tease out things like financial targets and the strategy going forward, which is obviously too early to discuss now. But do you have a thought on the timeline when you'll be able to come to us and say, this is the strategy, these are the targets that we're aiming for?
No. No, I mean, seriously. My focus has been on up to this point on learning everything I can about the company, deciding whether it was something I wanted to do as the Board was deciding whether this was something they wanted me to do. So over the next bunch of weeks and when I start on 21st, in consultation with John Shrewsbury and Alan and the other members of the team and the Board, we'll figure out exactly what the appropriate timing for all of that is, but they're very reasonable requests and we will absolutely engage.
Okay. And then I guess a question for both of you. Betsy, you mentioned kind of a sharing of information in terms of the regulatory challenges to help get Charlie comfortable and kind of, so to speak, up to speed. Like how much information sharing is there in a situation like this? Like this all the consent orders that supposedly Wells is under that may not be public, are those shared?
I guess I'm trying to figure out like can Charlie see all the challenges that Wells is dealing and these are the way that you're attacking them now, just given that it's behind the scenes, is there kind of full sharing of information there or is there still some ramping up that needs to be done when he's kind of officially on board? Thank you.
So the thing about confidential supervisory information is that you're just not allowed to share it with anyone, including someone that you're talking to about joining the company. But a lot of our regulatory orders are public. And, Charlie had read them, had studied them. And we just had conversations about what was underway at the company. And the work that we're doing is really focused on our operations and on consolidating and bringing everything into, sort of one way of doing things.
We have identified it between 9, 10000 business processes and we're in the process of looking at each one of those, identifying the controls and also looking at them to see where can we consolidate processes and find one way to do things that makes the most sense. And so we can talk about that work, which is underway in the company and how we're approaching it. We can talk about the extraordinary management team and the way they have continued to just move forward with this company, regardless of the uncertainty about who would be the permanent CEO. Alan has made sure that nobody put their pencils down. Everybody had eyes clearly focused on the work.
So you don't get into the very specifics of what those conversations are, but you talk about the nature of the work that's going on at the company. And I think we were able to give him a full picture of what we were looking at and the fact that all of this is absolutely totally doable.
That's helpful color. Thank you.
Your next question comes from the line of John Pancari with Evercore.
Good morning. Good morning. Just back to on the regulatory front, just one another way to ask it. When you look at the asset cap and the number of consent orders, but also the investigations more importantly, the few of the major ones there. Does I guess, Betsy, for you, does having Charlie in place advance your ability to reach these settlements, any quicker?
Thanks.
I'm not sure what you're talking about in terms of settlements particularly. But having Charlie in place lets our regulators know that as we talk about this is how we're solving for this, that there's not going to be somebody new coming in and taking another look at it and changing that so that it's not a moving target in that sense. So in that case, it makes a difference perhaps. But I think, again, the work is a lot of work. It's a significant amount of work.
It's well underway and will continue.
Okay. Thank you. That's helpful. And then, I guess this would be for both of you. Do you expect additional management changes that could come along with this once you get in place, Charlie?
Listen, I'm looking forward to meeting the management team and spending time with them. There's several that I know through various interactions I've had at my prior companies, and just through industry dealings. I obviously know a bunch of them by reputation, heard a whole a lot about the group, spent some time with Alan just getting a deeper understanding, Know that there have been a series of newcomers complementing people who've been at the company a long time. And I come in looking forward to getting to know everyone. And certainly, those that I do know and that I've heard of have very strong reputations and I'm excited to work with them.
Got it. Okay. Thank you.
Your next question comes from the line of Steven Chubak with Wolfe Research.
Hey, good morning. Good morning. So, Charlie, you didn't give any indication as to how you might look to effect change, implement the strategy. And I certainly understand it's early days. But presumably, when you were vying for the role, you must have pitched your vision for the company.
I was hoping you could give us some insight in terms of what's the long term vision you have for Wells and why you view yourself as a really strong candidate or arguably the best candidate
for the role today? Yes. So let me hate talking about my own resume, but I think I've been lucky enough in my career to touch so many different parts of the Financial Services business. Obviously, if you look back at my background, if you go back to I've been involved in the wealth management business back when I was the CFO at Solomon's with Barney. There obviously was a trading and investment banking business there as well.
CFO of the Global Corporate Investment Bank at Citi, we got deep into the wholesale side of the business. Went on to Bank 1 as the CFO, which was a large regional bank, which then merged into JPMorgan where I ran all of the retail financial services businesses, and then on to Visa and the payments businesses before BNY. So I've had the opportunity to not just touch, but I think go pretty deep into the consumer businesses, the wholesale businesses and the wealth businesses. And so I come in with an understanding and a perspective. But again, as I've said, you don't know what you don't know about the franchises until you get inside.
And I know there's a tremendous amount of information. I think the business model is a great business model. And so in addition to being great franchises, the fact that these businesses are under one roof is a wonderful thing. And they were for wells for a long period of time as they are for some other large institutions that run themselves really, really well. So again, I don't come in with a preconceived notion of that there's got to be some kind of dramatic change.
1st priority is to be repetitive. First priority is to make sure we get the regulatory issues behind us to help create the foundation that we need to continue to build the company. At the same time, as I get up to speed working with the rest of the management team, make sure I understand exactly things. Those are conversations we'll obviously have with the Board and we'll get back to you on. But I think the business model itself is fundamentally sound and it's a question of how we go about driving the business.
Thanks, Charlie. And just one follow-up for me. You spent the last 2 years trying to reinvigorate growth, affect cultural change at a large complex GSIB. I was hoping you can grade your performance given that seems to be most analogous to what you might try to do in terms of enacting change at Wells Fargo. And ultimately, why did you decide to leave after a relatively short tenure at the firm?
Yes. Well, I'll leave it to you and the others to do the grading. I do feel very, very good about what was accomplished there. It's a wonderful group of people, including the Board, the management team and the 50,000 some odd people. If you look back at just the progress that's been made in building the company, building the business, I feel great about the team that's in place and where they stand as they continue to move forward.
And the second part of your question was?
Just on why you had such a short tenure at the firm?
Listen, I went to Bank of New York because I thought that's where I would be the rest of my career. You don't join a GCIB in a leadership position because you think you're going to go do something else. That to me was it. I certainly didn't anticipate this opportunity coming along. And Wells Fargo is just a completely unique franchise and the opportunity to lead it.
As I've said many times on the call, it is just an unbelievable franchise that I'm just thrilled to be a part of and to take it forward. And it's just a fundamentally different enterprise than anything else I've ever been associated with and I'm thrilled to be here.
Great. Thanks very much, Charlie, and congratulations. Thank you.
Your final question will come from the line of Marty Mosby with Fining Sparks.
Good morning. Betsy, first, I wanted to tell you congratulations. And I really liked what you said earlier in that pass fail. It is tough to kind of keep your head down and get through the end, but the persistence, I think, has paid off and you've ended up with the right answer. But what I wanted to ask you is in this process, you had to reengage with the company a lot more than what you probably imagined as you eventually as you came on the Board several years ago.
So are you going to continue to be engaged like this? And or do you feel like Charlie comes in and you kind of drift off? Or is it really a partnership now with you 2 really addressing these issues and taking Wells Fargo into the future?
Marty, we've done each other well enough. You know I'm not going to drift off anywhere. But it has been yes, you mentioned persistence in this search process. And I would say persistence and patience and really solving for the right answer is what this search committee did and they've done a huge service to this company and the Board. And, I want to again thank them for that.
The Board has been and is always very engaged with the management of the company. The management of the company has been super focused and engaged all the way through this process. I mean, Alan had the title of interim CEO, but he ran it as if he were the CEO for the long term. He never did anything in sort of a temporary or short term way. And so I was regularly engaged with Tim.
I was regularly engaged with Alan and look forward to be regularly engaged with Charlie. But the CEO of the company is the CEO of the company and we understand the difference between the Board's role and the CEO's role.
Can I just add to that for a second just to give you a little bit of my perspective, which is in a first, I think it's fair in any institution, but certainly specifically for a large financial institution, Boards have to be actively engaged? This one absolutely is just as the Board, the company that I came from is actively engaged. And my point of view just as a CEO is that's a wonderful thing, not just because they have their fiduciary responsibility to fulfill, but engaged Board members make the company a better place. People with different experiences who aren't dealing with the same issues that we're dealing with every single day that don't get into the same kind of group think that we all can get into, people that have these different perspectives, that is extremely valuable for management team and they obviously have their responsibility to fulfill. So, I have worked very closely with the Board at Visa, very closely with the Board at BNY.
Betsy and I have gotten to know each other very well through this process and I'm looking forward to working closely with the Board.
And then Charlie, a different tack on a question. When Wells Fargo was at its height, Dick had everybody engaged and that led to its own problems and the culture in the things that we just saw. But you have to reengage the franchise. So when you think about the employees, you have the technological advancements already going, you have the business and the franchise that you talked about, but to bring the employees from where they're at, that motivation has to be one of the key things that you have to accomplish. What in your experience and background, how do you kind of see reengaging those customers and get on that that high peak again?
Sure. Well, listen, first of all, I think it's important we should start with let's not the presumption shouldn't be that people aren't engaged. I've had the opportunity to talk to a bunch of the members of the management team. You obviously do your own due diligence by talking to people broadly. And the management team led by Alan during this period has done a wonderful job of not just keeping the company stable, but continuing to run the franchise and to move the company forward.
And I think it's the wrong thing to suggest that that's not the case. And there's just a lot of work done at the company through surveys and touch points with the team members, we actually see that. Now having said that, a permanent CEO does create the ability to move the company forward in a different way. And so as I said earlier, I'm just I'm look I the way I go about doing my business is to work really closely with the management team. I think about it like a partnership.
You need to engage the entire company around a common set of goals, understandings, the way you want to do business. And that's something I think that was lucky enough to do successfully at both Visa and BNY and I'm looking forward to doing here as well. Thanks. All righty.
At this time, I'll turn the conference back over to Betsy for any further remarks.
Thank you, Regina, and thanks to everyone for joining the call today and of course for your continued interest in Wells Fargo. Thank you, everyone.
Ladies and gentlemen, this will conclude today's call. Thank you all for joining and you may now disconnect.