Wells Fargo and Co (WFC)’s 4th Quarter 2014 Earnings Conference Call Transcript

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Ken Usdin, Jefferies

Okay. And the last one. Maybe can you talk a little bit about the momentum in the trust business and what type of outlook you see just for asset gathering and after a really strong year, in that part of the business. Do you see, how is the pipeline for the asset growth looking?

John Stumpf, Chairman and Chief Executive Officer

You know, we are very happy and pleased with the progress we’ve made in that area. One of the biggest opportunities we have is relationship between David Carroll’s Wealth Brokerage Retirement Group and Carrie Tolstedt’s Community Banking Group. We have as many assets away from customers who call us their bank as we do under management right now, so, the relationship and the working here to there to bring those assets home, if you will, has been a big opportunity for us.

But I still view this, of all the opportunities we have had in the company in all of our businesses, probably that is our biggest opportunity to jump a curve or to even do to show some incremental growth above what you would see in other more mature businesses. So, a lot of opportunity there. Pleased with where we are. A lot more to do.

Ken Usdin, Jefferies

Thanks, guys. Appreciate it.

Operator

You next question will come from the line of Paul Miller with FBR. Please go ahead.

Paul Miller, FBR

Yeah. Thank you very much. There’s been a lot of news flow out today but on, if you mentioned this in the prepared marks I apologize, but your C&I loans jumped up. Is that where Ginnie Mae financing came through, on your balance sheet?

John Stumpf, Chairman and Chief Executive Officer

No. That’s not that Paul.

Paul Miller, FBR

So, that’s just pure, you know?

John Shrewsberry, Chief Financial Officer

The biggest thing to call out is the student loan financing that we did. We sold the portfolio of student loans and we provided some financing to the company who bought those loans. So, if one item that stands out in the quarter as outsized, it would be that. But those are all commercial loans.

Paul Miller, FBR

Yes. Is it any particular industry that’s doing well in, or across the board, and across geographic, that this line item picked up? This is one of the line items we have been waiting to see pick up, in general, among the bigger banks.

John Shrewsberry, Chief Financial Officer

Very broad based. Very broad.

Paul Miller, FBR

And you’re not seeing – the questions that I get is that everybody’s concerned about the energy credits but you are just not seeing – I know you made some opening comments about that – but you are not seeing anything on the negative side on energy credits at this point?
John Shrewsberry, Chief Financial Officer

Well, this drop in crude is very recent and the companies are taking the appropriate evasive actions to preserve cash, to deliver, to reduce their expense base etc. But it hasn’t worked its way into loan quality. Loan demand, certainly be down in that area I assume, but in the 4th Quarter, you can see what the change in net outstanding was, which more than makes up for whatever reduced demand there is in the energy space.

Paul Miller, FBR

Okay guys. Thank you very much.

Operator

The next question will come from the line of Bill Carcache with Nomura Securities.

 

Bill Carcache, Nomura Securities

Thank you. Good Morning. I had a question on your credit card growth strategy. I think most would agree that credit card asset yields have held up quite well in this low rate environment relative to other asset classes. Would you consider competing more aggressively on rates in an effort to grow your share of outstanding balances particularly since the high returned business where you arguably have room to give up a bit on pricing while still generating returns that are attractive relative to other lower returns or lower yielding asset classes?

John Stumpf, Chairman and Chief Executive Officer

Well, let me say it this way. First of all, we love the card business especially for our community bank customers and we have grown from the low to mid twenties penetration to now to 42% of our customers carry our credit card. And we like that business a whole lot. Not only from the balances we get, but to be relevant to our customers, as far as handling their payments, providing them services that are even around payments, and so forth for them. We want to provide great value, pricing, sure is part of that. You’ve seen recently where we have partnered with American Express. We do a ton of business with Visa on the higher and higher value cards. So, this is really a strategy about getting more cards top of wallet with our customers and pricing rewards, the whole value proposition is part of that. I wouldn’t say it’s just any one thing around price, per se, but it’s around value.

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