Operator: The next question will come from Ebrahim Poonawala of Bank of America.
Ebrahim Poonawala: Just Mike, for you, a follow-up on credit on the C&I side, nonaccrual charge-offs staying relatively flat, I guess, as we look through. Just talk to us in terms of when you look at that C&I book, is the impact of the Fed rate hikes felt by your customers? And how are you seeing that evolve? Is your expectation right now — you talked about the economy being resilient. Are you seeing any soft spots on the C&I book where you’re seeing bankruptcies rise within a vertical or a certain segment?
Michael Santomassimo: Yes. No. Look, I think, first, you’re seeing it come through in utilization of revolvers, right, which are pretty much in check. They aren’t moving much and down in some cases. So people are building less inventory given where rates are. They may be making decisions on like how fast they want to invest in their businesses. And so you’re seeing that come through in loan growth, which is sensible for — from their perspective. I think when you look across the portfolio, there are certainly pockets where you may be seeing margin compression still or different idiosyncratic issues. But across the portfolio, the credit quality is still good.
Ebrahim Poonawala: Got it. And do you think your customers have felt the hit from higher rates already? Or is that on the comp?
Michael Santomassimo: Well, I think they certainly felt it so far, right? I mean most of them have variable rate loan that they service, right? And obviously, the longer rates stay high, they’ll maybe feel it more. But certainly, I think they’ve been impacted.
Ebrahim Poonawala: Got it. And just one separate quick question on the outlook for buybacks. Clearly, big reset lower. When you — like your excess capital, you probably have visibility on the worst case on Basel Endgame. It’s very rare that banks have excess capital when the stocks are actually near lower. You’re creating a tangible book. How do you think about outside of CCAR and SCB in terms of near-term pace of buybacks over the next few quarters relative to what we did this quarter?
Michael Santomassimo: Yes. I mean we’re not going to get into like trying to give you a view on pacing. We’re going to go — we have a process we go through every quarter to look at all of what’s happening. First, it’s like how are we going to support clients, what’s demand we’re seeing, what kind of risks are out there. In the fourth quarter, we have the FDIC special assessment potentially coming. And so there’s a whole — each quarter, there’s going to be a whole range of things that we’re going to go through, and then we’ll decide on pacing.
Operator: [Operator Instructions]. Our next question comes from Gerard Cassidy of RBC.
Gerard Cassidy: Mike, can you share with us — you and your peers as well as investors, we’ve all been surprised with how this deposit trend of moving money into higher-yielding deposits is going slower than expected. Is there any categories within your deposit base, whether it’s just your regular consumer deposits or high net worth deposits or the nonoperational commercial deposits that are moving more slowly? And I know you said you expect it to happen, but is there something that says that it could pick up real quickly in the next 6 months? Or is it just a gradual increase?
Michael Santomassimo: Yes. Gerard, I think you really have to pick it apart by the different businesses. I think in the wealth business, it moved quite quickly, right, in terms of seeing deposits decline from where they were and that is now moderated. So it’s good to see that, that shifting has sort of slowed down quite substantially in the quarter relative to the last couple of quarters. On the consumer side, the majority of the deposits that we’ve got sit in accounts with less than $250,000. And so to some degree, these are — to a large degree, these are operational accounts for folks. And so there’s some portion of those funds that are never going to move into other places because people need it in the accounts to live and operate every day.
And so I think what’s — so I think we’ll see, right? And I think we’re all in a bit of uncharted territory at this point with rates being where they are and the pace at which they got there, quantitative tightening happening. And so I think we need to be prepared for it to change. Exactly at what pace and over what period of time, we’ll see. But we certainly haven’t seen deposit pricing move the way we modeled it a year ago, for sure.
Gerard Cassidy: Very good. And then as a follow-up, since you and Charlie have come on board, Wells has really done a very good job in returning that excess capital. I understand everything that’s going on today, and you guys described it in your comments. Can you share with us, is there a buffer — whenever the final numbers come out, are you guys planning to keep a 100 basis point buffer above that? Or any color there?
Michael Santomassimo: Yes. We haven’t decided exactly what it’ll — what the buffer will look like after Basel III is implemented. But so far, what we’ve said a number of times is that 100 basis points is about where we’ve been targeting. Obviously, we’ve been running above that for a while. But we’ll — as we get a better view of where these rules are going to shake out, we’ll probably talk about that more. But I would think that 100 basis points, at least for now is sort of the bottom end of the range.
Operator: And that was our final question for today. I will now turn it over to your speakers for closing remarks.
Charles Scharf: All righty. Everyone, thank you very much. We look forward to talking to you again next quarter. Take care now.
Operator: Thank you for your participation on today’s conference call. At this time, all parties may disconnect.
