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

Operator

You next question comes from Eric Wasserstern with Guggenheim Securities. Eric your line is open.

Eric Wasserstern, Guggenheim Securities

Good Morning. So, just to follow up on the Op Ex for a moment – I understand the discussion of the ratio, but just in terms of absolute level, based on what I’m hearing in terms of your loan growth expectation, it sounds like we should be anticipating an absolute level of expense that is higher than what we saw in 2014. Is that correct?

John Shrewsberry, Chief Financial Officer

It’s really tough to say, which is why we talk in percentages, and think about things in terms of a range. You can see the items that we’re calling out as feeling seasonal in Q-4 and there’s a handful of them and they amount to a few hundred million dollars. And then of course in Q-1, we typically have escalated personnel and benefits expense as well. In terms of the Op Ex or the investments that we are making in Risk Management etc, they will be elevated for some period of time but because of all of the other drivers to the total expense number, it’s possible that we operate and there’s a reasonable expectation that we operate at a lower level than we have in the last couple of quarters because we are always pushing down on things where we can’t. So that’s why we give you the range.

We think we’re going to be in the range, in 2015, like we have been in 2014. One other item I did mention for those that are newer to it, we do have this deferred comp element that shows up in expense even though it’s a P&L neutral item. And that creates 100 or in some cases a couple hundred million dollars worth of noise in any given quarter which is material given the difference that we are talking about here today.

John Stumpf, Chairman and Chief Executive Officer

Eric, even though we are at the high end of the range now, one should not assume that it’s not top of the line around here. It is. It remains top of the line. And it’s always looking for opportunities to be more efficient, but also continue to invest in the future because we do have a long term view.

Eric Wasserstern, Guggenheim Securities

Right. Right. Of course. And the financing that you provided on the student loan sale, what is the expected duration of that?

John Shrewsberry, Chief Financial Officer

So that financing probably comes down over the course of next couple of years on a relatively steep curve as the portfolio gets permanently financed into student loan AVS. And so my expectation, I think the reasonable expectation, is that it’s average life would be, maybe, a little bit more than a year, as it comes down.

Eric Wasserstern, Guggenheim Securities

Got it. And, just quickly one last thing, the tax benefit that you mentioned in the period from the change in federal tax law, is that a permanent benefit and what should we expect for your go forward GAAP tax rate?