Wells Fargo & Co (WFC) Transcription de l'appel des résultats T1 2020

Wells Fargo & Co (WFC) Transcription de l'appel des résultats T1 2020

Source de l'image: The Motley Fool.

Wells Fargo & Co (NYSE: WFC) Appel des résultats du premier trimestre de 2020 14 avril 2020, 10 h 00 HE

Contenu:

  • Remarques préparées
  • Questions et réponses
  • Appeler les participants
  • Remarques préparées:

    Opérateur

    Bonjour. Je m'appelle Catherine et je serai votre opérateur de conférence aujourd'hui. En ce moment, je souhaite la bienvenue à tous à la conférence téléphonique sur les résultats du premier trimestre 2020 de Wells Fargo. Toutes les lignes ont été mises en sourdine pour éviter tout bruit de fond. Après les remarques des orateurs, il y aura une séance de questions-réponses. [Operator Instructions]

    Je vous remercie. J'aimerais maintenant passer la parole à John Campbell, directeur des relations avec les investisseurs. Monsieur, vous pouvez commencer la conférence.

    John M. Campbell – Directeur des relations investisseurs

    Merci, Catherine. Bonjour à tous. Merci d'avoir rejoint notre appel aujourd'hui, où notre PDG, Charlie Scharf et notre directeur financier, John Shrewsberry discuteront des résultats du premier trimestre et répondront à vos questions. Cet appel est en cours d'enregistrement.

    Avant de commencer, je voudrais vous rappeler que notre publication des résultats du premier trimestre et notre supplément trimestriel sont disponibles sur notre site Web à wellsfargo.com. Je voudrais également vous avertir que nous pouvons faire des déclarations prospectives lors de l'appel d'aujourd'hui qui sont sujettes à des risques et des incertitudes. Les facteurs qui peuvent faire en sorte que les résultats réels diffèrent sensiblement des attentes sont détaillés dans nos documents SEC, y compris le formulaire 8-K déposé aujourd'hui contenant notre communiqué de presse et notre supplément trimestriel. Des informations sur les mesures financières non-GAAP référencées, y compris un rapprochement de ces mesures avec les mesures GAAP, peuvent également être trouvées dans nos documents SEC, dans le communiqué de presse et dans le supplément trimestriel disponible sur notre site Web.

    Je donne maintenant la parole à Charlie Scharf.

    Charles W. Scharf – Directeur Général et Président

    Bonjour. Je vais ouvrir l'appel avec des commentaires sur l'environnement actuel, les mesures que nous prenons, notre performance commerciale et le travail en cours pour transformer la société. Et John fournira plus de détails sur les résultats du premier trimestre avant de répondre à vos questions. Permettez-moi de commencer par quelques remarques sur l'environnement actuel. Je veux d'abord commencer par dire que nos pensées vont à celles directement touchées par COVID-19. Cela inclut ceux qui ont contracté le virus, les travailleurs de la santé qui sont en première ligne pour aider les personnes directement touchées et tous ceux qui fournissent des services essentiels pour garantir que le pays continue de fonctionner. Alors que les difficultés persistent, la réponse du gouvernement, des entreprises et des particuliers a été extraordinaire. Nous comprenons que Wells Fargo joue un rôle important en assurant la stabilité du système financier et de l'économie en général. Et bien qu'il reste encore beaucoup à faire, je suis incroyablement fier des efforts déployés dans l'ensemble de l'entreprise, en particulier ceux de première ligne.

    Permettez-moi de commencer par discuter de ce que Wells Fargo a fait. Tout d'abord, je vais commencer par nos clients. Nous avons été agressifs dans nos actions pour nous assurer que nous pouvons mieux servir les clients, tout en priorisant la sécurité des employés et des clients. Tout d'abord sur l'accès, nous avons temporairement fermé environ 1400 succursales, ce qui représente environ un quart de notre réseau à l'échelle nationale, en choisissant des emplacements à fermer en fonction du trafic historique des succursales et de la conception physique de chaque succursale qui permettrait une distanciation sociale appropriée. Les centres de contact pour les consommateurs et les petites entreprises restent ouverts dans tous les autres emplacements aux États-Unis pour servir nos clients, mais les temps d'attente sont plus élevés. Et nous avons déployé des mesures de sécurité sociale et d'éloignement sur tous les sites pour garantir la sécurité de nos employés. Nous avons rapidement étendu l'accès numérique et déployé de nouveaux outils, y compris des limites d'air pour les dépôts et les virements mobiles, de nouveaux outils numériques de report d'hypothèque et un support étendu de signature électronique. Les clients adoptent ces nouveaux outils comme en témoigne une augmentation de 52% du volume en dollars des dépôts mobiles en mars 2020 par rapport à mars 2019.

    Nous accordons un crédit important à nos clients. Rien qu'au mois de mars, nos clients commerciaux ont utilisé plus de 80 milliards de dollars de leurs engagements de prêt, et nous proposons des logements aux clients qui en ont besoin. Jusqu'au 10 avril, nous avons aidé plus de 1,3 million de consommateurs et de petites entreprises en différant les paiements et en supprimant les frais. Nous avons reporté plus d'un million de paiements, ce qui représente près de 2,8 milliards de dollars en paiements de capital et d'intérêts et avons accordé plus de 900 000 dispenses de frais dépassant 30 millions de dollars. Nous avons suspendu les ventes de saisies immobilières, les expulsions et les reprises de possession involontaires. Et nous continuons à travailler avec des hubs, des GSE ou des groupes commerciaux, d'autres acteurs de l'industrie, ainsi que des représentants du gouvernement et des organisations à but non lucratif pour identifier d'autres moyens d'aider les clients confrontés à des défis financiers dans l'environnement actuel.

    Nous avons étendu notre participation au programme PPP et espérons apporter un soulagement significatif à nos clients des petites entreprises. Nous augmentons rapidement notre capacité de traitement pour répondre à la demande importante que nous avons constatée. Jusqu'au 10 avril, nous avons reçu plus de 370 000 indications – des indications d'intérêt de nos clients. Nous travaillons avec des groupes industriels et le Trésor américain en vue de distribuer des millions de paiements à impact économique aux Américains le plus rapidement possible. Pour ceux qui reçoivent des chèques, nous avons apporté des modifications à nos distributeurs automatiques de billets et à notre application mobile afin de rendre plus pratique l'utilisation de ces options de dépôt au lieu d'aller dans une succursale.

    Passons maintenant à la façon dont nous exploitons l'entreprise et nos employés. Nous avons permis à environ 180 000 employés de travailler à distance. Pour les travaux qui ne peuvent pas être effectués à domicile en plus de modifier les formats des succursales, nous avons pris des mesures importantes pour assurer la sécurité, notamment en améliorant les mesures de distanciation sociale, en échelonnant le personnel et les navires et en mettant en œuvre un programme de nettoyage amélioré. Nous continuons de payer tous les employés. Nous avons octroyé une bourse unique à environ 165 000 employés qui gagnent moins de 100 000 $. De plus, afin de reconnaître les contributions de nos employés qui travaillent en première ligne, nous effectuons des paiements supplémentaires à ces employés. Nous avons apporté des modifications à notre régime d'avantages sociaux pour soutenir ceux qui sont testés ou ceux qui ont le virus. Pour aider nos employés qui ont besoin de services de garde, nous avons accordé aux employés admissibles jusqu'à cinq jours ouvrables payés pour qu'ils puissent trouver des services de garde. Nous offrons également un soutien financier aux employés admissibles pour ceux qui recherchent des services de garde par le biais de leurs propres réseaux personnels. Et nous avons accordé une subvention de 10 millions de dollars au We Care Employee Relief Fund, qui est disponible pour les employés touchés par le coronavirus, en particulier ceux qui ont des ressources limitées pour les aider à se remettre sur pied avec les nécessités de base. Et nous soutenons nos communautés en dirigeant 175 millions de dollars en dons de bienfaisance de la Wells Fargo Foundation pour aider à améliorer la stabilité des aliments, des abris, des petites entreprises et des logements, ainsi que pour aider les organisations de santé publique qui luttent pour contenir la propagation du COVID-19 .

    Passons à ce que nous avons vu au cours du dernier mois sur les marchés. Comme vous le savez tous, la crise sanitaire a eu un impact rapide et sévère sur les marchés financiers, mais les banques, y compris Wells Fargo, sont financièrement solides et ont fait un excellent travail comme de nombreuses autres industries et fournissent un service continu tandis que beaucoup de nos employés n'ont pas pu accéder à leurs bureaux. Nous avons également traversé d'énormes perturbations que nous avons vues sur la liquidité dans la plupart des classes d'actifs depuis plusieurs semaines. Les spreads bid-ask HQLA, la volatilité quotidienne et les spreads de crédit ont augmenté de 100% à 500% par rapport aux niveaux normalisés d'avant la crise. L'activité est restée raisonnablement en ordre dans les HQLA, les autres actifs de crédit à distance à perte et les émissions primaires de grande qualité des entreprises, mais la plupart des autres marchés ont vu la vente forcée, la forte volatilité intrajournalière et les offres d'achat se creuser de manière significative. Les programmes d'enchères conçus pour soutenir le fonctionnement harmonieux du marché et les tendances efficaces. La mission de la politique monétaire a immédiatement amélioré la tarification du risque, augmenté la capacité de bilan des courtiers, diminué la volatilité du marché et réduit les coûts de transaction. Les achats d'actifs à grande échelle dans les trésoreries et les MBS d'agences ont amélioré les flux de négociation secondaires dans HQLA, tandis que les actifs sensibles au crédit ont été à la traîne de la reprise. Tout cela, ainsi que la fermeture effective de l'économie, ont eu un impact direct sur nos résultats.

    Passons au trimestre. Vous pouvez constater que les résultats ont été sensiblement affectés par les réserves pour pertes sur prêts, la dépréciation de titres et le rachat de titres privilégiés. Nos résultats comprenaient une constitution de réserves de 3,1 milliards de dollars pour les prêts et titres de créance, 950 millions de dollars de dépréciation de titres, principalement liés aux titres de participation, et un impact négatif de 0,06 $ lié au rachat de nos actions privilégiées de série K. Au sein de notre Community Bank, comme on pouvait s'y attendre, le trafic des succursales a considérablement ralenti à mesure que le mois de mars progressait. Nous avions environ la moitié du volume des caisses à la fin de mars par rapport à la même période il y a un an. Les transactions aux guichets automatiques ont également connu une baisse importante, en baisse d'environ 17% en mars par rapport à il y a un an. Du côté des prêts, nous avons émis 48 milliards de dollars de prêts hypothécaires résidentiels, dont 52% pour le refinancement. Les origines automobiles ont reculé de 5% par rapport au quatrième trimestre avec des origines solides en début de trimestre, plus que compensées par un ralentissement en mars. Le volume des achats par carte de crédit a diminué de 13% par rapport au quatrième trimestre et de 1% par rapport à il y a un an, un fort volume au début du trimestre est plus que compensé par les baisses enregistrées en mars.

    Au sein de Wealth and Investment Management, les soldes des dépôts de fin de période ont augmenté de 30% [Phonetic] au cours du trimestre, tirée par des balayages de courtage de détail plus élevés, reflétant une augmentation des allocations de clientèle et de trésorerie. Les revenus tirés des transactions de courtage de détail ont augmenté de 12% par rapport au trimestre précédent et malgré les baisses du marché, l'actif sous gestion de Wells Fargo Asset Management a encore augmenté de 2% au cours du trimestre, tiré par de fortes entrées dans les fonds du marché monétaire.

    Je me tourne maintenant vers nos grossistes. Dans le domaine du trading, les activités sur les marchés ont été bonnes – elles ont bien progressé d'une année sur l'autre au cours des deux premiers mois du trimestre, mais la performance a été mitigée en mars. Nous avons enregistré de bonnes performances dans le macro-trading ainsi que dans les actions en raison de la volatilité et de l'augmentation des flux. Cependant, nos produits de performance et de spread ont souffert de la dislocation du marché. Les prêts commerciaux ont augmenté de 52 milliards de dollars ou 10% par rapport au quatrième trimestre. Et l'activité globale des marchés mondiaux des capitaux d'emprunt a été la plus forte jamais enregistrée, tirée par les offres de haute qualité d'émetteurs américains dont les volumes ont augmenté de 63% par rapport à il y a un an. Le classement des classements des marchés des capitaux d'emprunt de qualité supérieure de Wells Fargo est passé du quatrième au troisième, avec une part de marché de 9,2% au cours du trimestre.

    Bien que concentrés sur nos efforts autour de COVID, nous continuons d'apporter des changements importants au sein de la Société. Nous continuons d'ajouter du talent à l'équipe de haute direction. Ellen Patterson s'est jointe à nous il y a plusieurs semaines en tant que conseillère juridique, et nous nous attendons à plusieurs autres ajouts à l'équipe au cours du prochain trimestre. Même avec le temps considérable voté pour notre réponse COVID, nous ne réduisons pas nos efforts sur nos engagements réglementaires, et nous continuons à aller de l'avant pour améliorer les processus, la structure et le changement culturel nécessaires pour faire le travail. Pour rappel, au cours du trimestre, nous avons annoncé une nouvelle structure organisationnelle avec cinq secteurs d'activité relevant directement de moi. J'ai également parlé de nos évaluations d'entreprises que nous avions mises en place. Ces agendas ont changé et sont désormais orientés vers les problèmes liés à l'exploitation dans l'environnement actuellement stressé. Alors que nous nous installons dans cet environnement et que nous avons une certaine perspective sur la reprise, nous reprendrons le travail dont j'ai discuté au dernier trimestre.

    Nous passons maintenant au plafond d'actifs. John fournira plus de détails sur la façon dont nous gérons dans cet environnement, compte tenu des contraintes, mais voici quelques points saillants. Nous nous concentrons sur tout ce que nous pouvons faire pour nos clients, tout en satisfaisant aux exigences et pour ce faire, nous prenons chaque jour des décisions sur la répartition du bilan. Pour rappel, le plafond de l'actif est évalué sur une base quotidienne moyenne de deux trimestres et doit être inférieur à 1 952 billions de dollars à la fin du trimestre. Le 31 mars, ce calcul était estimé à 1 943 billions de dollars. À la mi-mars, alors que la crise commençait à évoluer, nous avons d'abord constaté une lente augmentation des dépôts et des retraits des facilités de crédit engagées, et ces deux accélérations à mesure que la crise s'approfondissait. À la fin du trimestre, nous avions 1 981 billions de dollars d'actifs. John en discutera plus en détail, mais nous prenons un certain nombre de mesures pour nous assurer de ne pas dépasser le plafond. Nous avons entamé le trimestre avec une position de capital solide, dont un ratio CET1 de 11,1%. Compte tenu de la forte croissance des actifs au cours du trimestre, des écarts sensiblement plus larges et de la baisse des bénéfices, notre ratio CET1 a baissé à 10,7%, toujours au-dessus du minimum réglementaire de 9% et de notre objectif interne actuel de 10%. Comme vous le savez, nous avons suspendu notre rachat d'actions alors que nous nous efforçions d'aider nos clients à traverser cette période difficile. Je suis sûr que vous avez toujours – vous voudrez discuter de nos plans d'investissement à l'avenir, mais comme vous le savez, nous avons soumis notre plan d'investissement 2020 plus tôt ce mois-ci et les résultats seront publiés par le Federal Reserve Board en juin.

    Alors que je pense à ce que l'avenir nous réserve, voici quelques réflexions. Nous sommes entrés dans un monde que nous n'avions jamais vu auparavant. Une grande partie de l'économie est essentiellement fermée. Les dépenses de consommation ont diminué de plus de 25% en glissement annuel la semaine dernière, la nourriture et les médicaments augmentant et les autres dépenses ayant considérablement baissé. Les ventes de voitures neuves au mois de mars ont baissé de 32% en février, la fabrication a fléchi avec une lecture ISM de 49,1% en mars, les entreprises ayant réduit leurs commandes, les prix des produits de base ont baissé de 24%, ce qui témoigne de la faiblesse de la demande mondiale. Le chômage augmente au-delà de ce que nous avons traditionnellement modélisé, et bien qu'il y ait de l'espoir que cela soit limité dans le temps par des commandes de refuge sur place, nous ne savons pas quel est le délai ni à quelle vitesse l'économie se rétablira lorsque ces commandes sont levées. Ce que nous savons, c'est que la contraction est réelle et nous devons faire tout ce que nous pouvons pour être en sécurité et nous assurer de faire notre part pour aider à récupérer le plus rapidement possible. Il est également important de noter que la réponse dépasse également ce que nous avons vu historiquement. Les banques ont fourni d'importantes liquidités de crédit, les banques ont reporté les paiements sur les prêts, renoncé aux frais, fait de nombreux autres accommodements pour les clients dans le besoin. La réponse de la Réserve fédérale a été rapide, globale et de taille importante. Et la réponse du Congrès a été tout aussi impressionnante et leurs actions commencent à peine à fournir le soutien nécessaire à beaucoup qui se déroulera rapidement.

    Reste à savoir ce que cela signifie pour notre avenir. L'important est de contrôler la propagation du virus, afin que l'économie puisse rouvrir. Nous espérons que nos actions, celles des autres et en particulier le soutien du gouvernement, apporteront le soulagement nécessaire et aideront de nombreux clients à surmonter cette période difficile, mais la durée de l'arrêt déterminera finalement la gravité. Ce que nous savons, c'est que nos niveaux élevés de capital et de liquidité nous permettent de soutenir nos clients et l'économie américaine au sens large. Nous évaluerons de près nos hypothèses concernant notre provision pour pertes sur créances à mesure que nous progressons et le niveau réel des pertes que nous subissons dépendra de la durée de cette période et de l'efficacité du soutien du gouvernement et du secteur privé. Assis ici aujourd'hui, il y a de nombreuses inconnues et l'année sera très différente de ce à quoi nous nous attendions la dernière fois que nous avons parlé, mais comme je l'ai dit, nous nous concentrons sur la livraison pour nos clients et nos communautés pour traverser ces temps sans précédent. Et nous restons attachés aux améliorations financières et de performance dont nous avons discuté au-delà de cette crise. Merci encore à tous mes partenaires de Wells Fargo qui ont travaillé sans relâche.

    Et je vais le transmettre à John.

    John R. Shrewsberry – Premier vice-président exécutif et directeur financier

    Merci, Charlie et bonjour à tous. Charlie a couvert les informations fournies dans les premières pages du supplément concernant les mesures que nous prenons pour soutenir nos clients, nos employés et nos communautés pendant la pandémie.

    Je vais donc commencer à la page 6. Comme nous le soulignons sur cette page, nous avons eu un certain nombre d'éléments importants au premier trimestre qui ont eu une incidence sur nos résultats. Nous avions une charge de provisions de 4 milliards de dollars pour pertes sur créances, reflétant l'impact attendu que ces temps sans précédent pourraient avoir sur la solvabilité de nos clients. Nous avons enregistré une dépréciation de titres de 950 millions de dollars principalement liée aux titres de participation reflétant des évaluations de marché inférieures.

    Bien que les résultats d'investissement des régimes de rémunération différée n'aient pas eu d'impact significatif sur le résultat net, ils ont augmenté les pertes nettes des titres de participation de 621 millions de dollars et réduit les charges liées aux avantages sociaux des employés de 598 millions de dollars. Nous avons enregistré des pertes d'exploitation de 464 millions de dollars, en baisse de 1,5 milliard de dollars par rapport au quatrième trimestre, qui comprenait des charges à payer élevées pour litiges. Nous avions 460 $ – nous avons réalisé un gain de 463 millions de dollars sur la vente de prêts hypothécaires résidentiels, qui étaient auparavant désignés comme détenus en vue de la vente. Le produit bancaire hypothécaire a diminué de 404 millions de dollars par rapport au quatrième trimestre, en raison de pertes à la valeur de marché sur les prêts détenus en vue de la vente et de pertes d'évaluation de l'actif MSR plus élevées en raison de mises à jour d'hypothèses, principalement des estimations de remboursement anticipé. Enfin, nous avons racheté nos actions privilégiées de série K, ce qui a réduit le BPA de 0,06 $ par action, en raison de l'élimination de la décote comptable d'achat enregistrée sur ces actions au moment de l'acquisition de Wachovia.

    Même après prise en compte des impacts liés au COVID-19 rencontrés au cours du premier trimestre, comme nous le soulignons à la page 7, notre ratio CET1 est resté de 170 points de base au-dessus du minimum réglementaire et notre ratio LCR était de 21% supérieur au minimum réglementaire. Ces excédents sont remarquables étant donné que les minimums réglementaires sur lesquels ils sont fondés sont établis pour garantir que les institutions financières maintiennent des ressources suffisantes pour résister à des conditions économiques et de marché très défavorables.

    Passant à la page 8. Je couvrirai les pilotes du compte de résultat tout au long de l'appel. Mais je tiens à souligner que notre taux d'imposition effectif était de 19,5% au premier trimestre et comprenait une charge nette d'impôts discrets de 141 millions de dollars. Je mettrai en évidence la plupart des facteurs de bilan à la page 9 tout au long de l'appel, mais je noterai ici que l'environnement économique auquel nos clients sont confrontés en raison de COVID-19 a entraîné une augmentation de notre bilan, la demande de prêts et les entrées de dépôts ayant augmenté de manière significative. fin du premier trimestre.

    À la page 10, nous soulignons comment nous aidons nos clients tout en gérant sous le plafond d'actifs en place depuis le début de 2018. Tiré par une forte demande de prêts – une croissance des prêts en mars, notre actif total a augmenté de 53,8 milliards de dollars de la fin de l'année à 1,981 billion de dollars. Comme Charlie l'a souligné, même avec cette croissance, nous continuons de fonctionner conformément au plafond d'actifs de 1,952 billion de dollars, la conformité étant mesurée à chaque fin de trimestre sur la base d'une moyenne quotidienne de deux trimestres. Au 31 mars, la moyenne quotidienne sur deux trimestres de nos actifs était de 1 943 billions de dollars.

    En ces temps difficiles, nous prévoyons que la croissance des prêts et des dépôts pourrait se poursuivre, mais nous ne pouvons pas fournir d'indications sur le niveau de croissance. Et nous travaillons activement à créer une capacité de bilan pour aider nos clients. Il convient de noter que le taux de croissance élevé à l'utilisation de la ligne par nos clients commerciaux est freiné depuis la réouverture des marchés du crédit. Nous apprécions les mesures ciblées prises par la Réserve fédérale la semaine dernière, qui nous offriront une flexibilité supplémentaire pour accorder des prêts aux petites entreprises dans le cadre du programme de protection des chèques de paie et du prochain programme de prêts aux entreprises de la rue Main. Nous avons et continuerons de prendre des mesures pour gérer la taille de notre bilan. Par exemple, nous avons quitté les prêts hypothécaires non conformes correspondants, ce qui nous permet de mieux répondre aux besoins de financement hypothécaire de nos clients existants. Et à l'instar des mesures que nous avons prises au début de 2018, nous réduisons les dépôts à faible valeur de liquidité, en particulier les dépôts d'autres institutions financières, et nous avons également réduit notre empreinte financière sur les titres.

    Examinons les moteurs de la croissance du bilan que nous avons connue au premier trimestre, à commencer par les prêts moyens à la page 11. Les prêts moyens ont augmenté de 8,5 milliards de dollars par rapport au quatrième trimestre, tirés par les prêts commerciaux. Étant donné la croissance importante qui s'est produite à la fin du trimestre en raison d'un changement de comportement d'emprunt causé par la pandémie de COVID-19, je vais passer plus de temps à décrire les tendances de fin de période à partir de la page 12. Les prêts de fin de période ont augmenté de 61,6 milliards de dollars ou 6% par rapport à il y a un an et 47,6 milliards de dollars ou 5% par rapport au quatrième trimestre. Les prêts commerciaux ont augmenté de 52 milliards de dollars ou 10% par rapport au quatrième trimestre, car les baisses de bilan au début du premier trimestre ont été plus que compensées par une forte croissance à la fin du trimestre. La croissance des prêts commerciaux au premier trimestre a inclus plus de 80 milliards de dollars d'activités de tirage par les emprunteurs au mois de mars sur les prêts aux banques commerciales et aux services bancaires aux entreprises. L'utilisation renouvelable des prêts dans les services bancaires de gros a atteint 48,6% en mars, en hausse de 860 points de base par rapport à décembre. Et comme je l'ai mentionné, au cours des deux premières semaines d'avril, nous avons vu ces tirages ralentir. Les prêts à la consommation ont diminué de 4,4 milliards de dollars ou 1% par rapport au quatrième trimestre, la baisse des prêts sur cartes de crédit, des prêts immobiliers à la consommation et des autres prêts renouvelables ayant été partiellement compensée par la croissance des prêts automobiles.

    Je vais mettre en évidence les moteurs des tendances des trimestres liés plus en détail à partir de la page 13. Le premier portefeuille de prêts hypothécaires a diminué de 927 millions de dollars par rapport au trimestre précédent, car les remboursements liés au refinancement ont plus que compensé 14,3 milliards de dollars de prêts hypothécaires détenus à des fins d'investissement. origines. Les prêts hypothécaires à privilège subalterne ont diminué de 982 millions de dollars par rapport au quatrième trimestre, car les remboursements continus ont plus que compensé les nouvelles émissions et 1,8 milliard de dollars de tirages sur les lignes existantes, ce qui a sensiblement augmenté à la fin du premier trimestre. Les prêts sur cartes de crédit ont diminué de 2,4 milliards de dollars par rapport au quatrième trimestre, en raison de la saisonnalité et de la diminution des ouvertures de nouveaux comptes. notre portefeuille Auto a continué de croître, tandis que nous avons maintenu notre discipline de crédit avec des soldes en hausse de 695 millions de dollars par rapport au quatrième trimestre. Cependant, comme Charlie l'a souligné, les origines ont diminué de 5% par rapport au quatrième trimestre, avec de fortes origines au premier trimestre – au début du premier trimestre, plus que compensées par un ralentissement en mars en raison de la pandémie.

      Simulation Rachat Crédit Hypothécaire, Rachat De Credit Conso 974

    En ce qui concerne les prêts commerciaux à la page 14. Les prêts C&I ont augmenté de 50,9 milliards de dollars par rapport au quatrième trimestre, avec une croissance généralisée dans tous les secteurs d'activité, principalement tirée par des tirages de lignes renouvelables alors que les clients réagissaient au ralentissement économique associé à la pandémie. Les prêts immobiliers commerciaux ont augmenté de 1,8 milliard de dollars par rapport au quatrième trimestre, avec une croissance des prêts hypothécaires à la CRE et des prêts à la construction. Étant donné l'accent mis sur les retraits de prêts commerciaux et l'exposition aux secteurs qui ont été particulièrement touchés par la pandémie, nous fournissons plus de détails sur certaines de nos expositions sectorielles à partir de la page 15. Nous divulguons généralement la ventilation par secteur de nos C&I. et le portefeuille de financement par crédit-bail dans nos dépôts trimestriels auprès de la SEC, mais fournissent également la ventilation par secteur de nos engagements totaux sur cette diapositive. Je note que tous les engagements de prêts non financés ne peuvent pas être exercés unilatéralement par les emprunteurs. Par exemple, certains revolvers contiennent des fonctionnalités qui obligent le client à déposer des garanties supplémentaires afin d'accéder au montant total de l'engagement.

    Alors que de nombreux secteurs de l'économie sont touchés par la pandémie, les quelques diapositives suivantes fournissent des détails sur les industries soumises à une surveillance renforcée. En commençant par le pétrole et le gaz à la page 16, au 31 mars, nous avions 14,3 milliards de dollars de prêts en cours à l'industrie du pétrole et du gaz. La taille de notre portefeuille a diminué de 20% par rapport à 17,8 milliards de dollars au premier trimestre de 2016, ce qui était également le moment où les prix du pétrole étaient bas. À la fin du premier trimestre, 47% de notre portefeuille étaient des prêts au secteur de l'exploration et de la production; 41% à mi-parcours; et 12% aux services. Je fournirai plus de détails sur les performances de ce portefeuille plus tard lors de l'appel. À la fin du premier trimestre, nous avions 27,8 milliards de dollars de prêts aux particuliers, dont 5,8 milliards de dollars aux restaurants. Cela comprend 3,9 milliards de dollars aux restaurants à service limité communément appelés restaurants de restauration rapide généralement avec le service au volant, qui ont été – qui sont restés largement ouverts à travers le pays, tandis que d'autres formats de restaurant ont été plus touchés par le service limité à la livraison ou ramasser.

    Passons à l'industrie du divertissement et des loisirs à la diapositive 17. Nous avions un total de 16,2 milliards de dollars de prêts en cours à la fin du premier trimestre, avec moins de 1% aux croisiéristes. Nous avions 11,9 milliards de dollars de prêts en cours au secteur des transports au 31 mars, dont 2,4 milliards de dollars pour le transport aérien. Nous surveillons également de près notre portefeuille d'immeubles commerciaux, que nous soulignons à la diapositive 18. À la fin du premier trimestre, nous avions 14,1 milliards de dollars de prêts en cours aux particuliers, excluant les centres commerciaux avec notre hypothèque immobilière commerciale – dans le portefeuille de prêts hypothécaires immobiliers commerciaux et 10,6 milliards de dollars de prêts en cours pour l'industrie hôtelière et motel. Dans notre portefeuille de construction de 20,8 milliards de dollars, nous avions 7,1 milliards de dollars de prêts en cours dans des appartements.

    En ce qui concerne les dépôts à la page 19, les dépôts moyens ont augmenté de 6% par rapport à l'an dernier et de 1% par rapport au quatrième trimestre. En règle générale, nous avons enregistré des baisses saisonnières liées au trimestre dans les dépôts moyens de nos activités de banque de gros et de WIM, mais toutes nos activités de collecte de dépôts ont augmenté au premier trimestre. Cette croissance comprend les effets à la fin du trimestre des dépôts de fuite vers la qualité dans tous les secteurs d'activité après l'émergence de COVID-19, ainsi que l'afflux de dépôts associés aux tirages de prêts aux entreprises et aux entreprises. Nos coûts de dépôt moyens ont diminué de 10 points de base par rapport au quatrième trimestre, avec des baisses dans tous nos principaux – tous nos secteurs d'activité. Nous avons enregistré des baisses plus importantes dans les services bancaires de gros et WIM, tandis que nos coûts de dépôt dans les services bancaires de détail ont diminué à un rythme plus lent, car ils étaient plus faibles au départ et continuent d'être touchés par les prix promotionnels au début de 2019, dont la plupart expireront au deuxième trimestre. .

    À la page 20, nous fournissons des détails sur les dépôts de fin de période, qui reflètent mieux la forte croissance que nous avons connue à la fin du premier trimestre, le total des dépôts ayant augmenté de 53,9 milliards de dollars ou 4% par rapport à la fin de l'exercice. Les dépôts des Services bancaires de gros ont augmenté de 13,5 milliards de dollars par rapport au quatrième trimestre, tirés par les tirages des lignes renouvelables des Services aux entreprises et de l'immobilier commercial, partiellement contrebalancés par la baisse des dépôts des institutions financières, reflétant les mesures prises pour gérer le plafond de l'actif. Les dépôts des Services bancaires aux particuliers et aux petites entreprises ont augmenté de 41,1 milliards de dollars ou 5% par rapport au quatrième trimestre, y compris une augmentation des dépôts des banques de détail, principalement attribuable à la croissance de l'épargne à rendement élevé dans la vérification portant intérêt. La croissance des dépôts de Wealth and Investment Management a été tirée par l'augmentation des soldes de trésorerie des clients du courtage.

    Le revenu net d'intérêts a augmenté de 112 millions de dollars par rapport au quatrième trimestre, reflétant une augmentation de 356 millions de dollars des résultats comptables liés à l'inefficacité de la couverture attribuables au niveau des taux du marché et aux différences de base et de notion sur les swaps couvrant notre dette à long terme; Amortissement des primes MBS inférieur à 84 millions de dollars, résultant d'une baisse des remboursements anticipés réalisés, partiellement compensée par la refixation du bilan, y compris l'impact de la baisse des taux d'intérêt, car nos actifs ont été revus à la baisse plus rapidement que nos passifs et d'un jour de moins au cours du trimestre. L'environnement de taux bas pourrait continuer d'exercer une pression sur nos revenus d'intérêts nets, mais nous gérons notre exposition aux taux d'intérêt afin de minimiser l'impact autant que possible. Compte tenu de la volatilité et de l'incertitude actuelles du marché, nous retirons nos prévisions de revenus d'intérêts nets pour 2020. Bien que nous ne fournissions actuellement aucune indication sur nos prévisions de revenus d'intérêts nets pour cette année, nous fournirons plus d'informations sur les développements tout au long de l'année.

    En ce qui concerne la page 22, les revenus autres que d'intérêts ont diminué de 2,3 milliards de dollars par rapport au quatrième trimestre, en raison d'une baisse de 1,9 milliard de dollars des gains nets tirés des titres de participation et de 404 millions de dollars de produits bancaires hypothécaires moins élevés. Permettez-moi d'expliquer ces baisses plus en détail, en commençant par les services bancaires hypothécaires. La baisse du produit bancaire hypothécaire s'explique par des pertes non réalisées d'environ 143 millions de dollars sur les prêts résidentiels et de 62 millions de dollars sur les prêts commerciaux destinés à la vente en raison de conditions de marché non liquides et d'un élargissement des écarts de crédit. Cet impact est comptabilisé dans le gain net sur les créances de prêts hypothécaires et la perte de 143 millions de dollars a réduit la marge de production que nous déclarons sur les créances résidentielles destinées à la vente. En l'absence de cet impact, notre marge de production aurait augmenté car la demande d'origine a dépassé la capacité au cours du premier trimestre. Les résultats bancaires hypothécaires reflètent également une perte de 192 millions de dollars sur l'évaluation de notre actif MSR en raison de mises à jour d'hypothèses, principalement des estimations de remboursement anticipé. Je note que nous avons terminé le premier trimestre avec un pipeline de demandes de prêts hypothécaires de 62 milliards de dollars, en hausse de 29 milliards de dollars ou 88% par rapport au quatrième trimestre.

    Nous avons fourni des détails sur les pertes nettes de titres de participation à la page 23. Nous avons enregistré des pertes nettes de 1,4 milliard de dollars au titre des titres de participation au cours du trimestre, qui comprenaient 621 millions de dollars de pertes au titre des placements différés du régime d'indemnisation différée en grande partie P&L. Les pertes nettes de titres de participation comprenaient également 935 millions de dollars de dépréciations, reflétant une évaluation de marché inférieure. Les dépréciations du capital-risque, du capital-investissement et de certaines activités de gros représentaient 17% de la valeur comptable des investissements de portefeuille de ces entreprises faisant l'objet d'une évaluation de dépréciation.

    En ce qui concerne les dépenses à la page 24, nos dépenses ont diminué de 2,6 milliards de dollars par rapport au quatrième trimestre. Les pertes d'exploitation ont diminué de 1,5 milliard de dollars par rapport au quatrième trimestre, qui comprenait des charges à payer élevées – élevées. Les charges de personnel, qui sont généralement élevées de façon saisonnière au premier trimestre, ont diminué de 494 millions de dollars par rapport au quatrième trimestre, en raison de la baisse des charges liées aux avantages sociaux. La baisse de la charge au titre des avantages sociaux des employés est attribuable à une baisse de 861 millions de dollars des charges de rémunération différée, qui a été en partie contrebalancée par 544 millions de dollars de charges sociales saisonnièrement plus élevées et 401 (K) de charges correspondantes. Nous avons également enregistré des dépenses moindres dans divers autres domaines, notamment les commissions et les primes d'encouragement, les services professionnels externes, la technologie et l'équipement, et comme vous vous en doutez, les voyages et les divertissements. Les avantages sociaux et les paiements améliorés que nous avons versés aux employés en mars dans le cadre de notre réponse à COVID-19 n'ont pas eu d'impact significatif sur nos dépenses au premier trimestre, mais nous prévoyons actuellement qu'ils auront un impact plus important à partir du deuxième trimestre et jusqu'à le reste de cette année. While these costs will add to our expense base, the actions we took were the right thing to do to support our employees.

    Before discussing our business segment starting on Page 25, I want to note that as a result of the new flatter organizational structure that was announced in February, we will be updating our operating segments when we complete the transition and are managed in accordance with the new five business segment structures. Community Banking earnings declined $274 million from the fourth quarter, reflecting higher provision expense as well as net losses from equity securities. On Page 26, we provide our Community Banking metrics. I'll start by noting that as always our digital, mobile, and primary consuming checking customers are reported on a one-month lag, so the numbers reported here for first quarter, did not capture the change in customer behavior we experienced in March due to COVID-19. For example, our customers have shifted to depositing checks through our mobile app and the dollar volume of mobile checks deposited increased over 40% in March, compared with February.

    Turning to Page 27, teller and ATM transactions are reported through March, which is when we reduced our branch hours and temporarily closed approximately one-fourth of our branches as a result of COVID-19, which resulted in an approximate 50% decline in teller volume during the final weeks of the first quarter, compared with a year ago. Our customers also meaningfully reduced their card spending late in the first quarter due to the impact of the pandemic. During the first two months of the year, credit card volumes were up from a year ago, while March 2020 volumes declined approximately 15% from March 2019, resulting in first quarter credit card purchase volumes being down 1% from a year ago. We also had meaningful shifts in customer spending in March with the grocery and pharmacy spending increasing, while all other categories were down from a year ago. Debit card spending trends were similarly impacted, but the change in spend was less significant with year-over-year growth in January and February and a 5% decline in year-over-year volumes in March. Similar to credit card, debit card spending shifted significantly to grocery in March, but the growth in this category started to slow in the last week of the month.

    Turning to Page 28, Wholesale Banking earnings declined $2.2 billion from the fourth quarter, reflecting a $2.2 billion increase in provision expense. I've already highlighted the strong loan and deposit growth from our commercial customers in the first quarter and we also raised $47 billion of debt capital for our clients. Wealth and Investment Management earnings increased $209 million from the fourth quarter. During the first quarter, we experienced strong demand from clients for liquid products. Period-end deposit balances increased 13% from the fourth quarter, reflecting a higher cash allocation and brokerage client assets. And assets under management in our Wells Fargo Asset Management business grew significantly, driven by over $34 billion of inflows into our money market funds. Despite the market volatility, closed referred investment assets into WIM from the Consumer Bank partnership increased on a linked quarter and year-over-year basis and flows into our retail brokerage advisory business remained positive in the first quarter. As a reminder, retail brokerage advisory assets are priced at the beginning of the quarter. So, first quarter results reflected market valuations as of January 1 and second quarter results will reflect market valuations as of April 1.

    Turning to Page 30, our net charge-off rate was up 6 basis points from the fourth quarter to 38 basis points, predominantly driven by higher C&I losses, primarily related to higher losses in our oil and gas portfolio, reflecting significant declines in oil prices. We had net recoveries in all of our commercial and consumer real estate portfolios and lower losses in our auto portfolio. The increase in credit card losses from the fourth quarter included seasonality. Non-accrual loans increased $810 million from the fourth quarter to 61 basis points of total loans, which was up 5 basis points from the fourth quarter and down 12 basis points from a year ago. Commercial non-accruals increased $621 million, predominantly driven by the economic impact of the pandemic. Consumer non-accrual increased $189 million, predominantly driven by higher non-accruals in the real estate 1-to-4 family first mortgage loan portfolio as the implementation of CECL required PCI loans to be classified as non-accruing based on performance.

    On Page 31, we provide detail on the performance of our oil and gas portfolio. Oil and gas loans outstanding increased 5% linked quarter and 7% from a year ago, reflecting increased utilization rates, driven by the impact of COVID-19 and the decline in oil prices. Total commitments declined, reflecting a weaker credit environment. The significant decline in oil prices in the first quarter resulted in early signs of credit deterioration, particularly in the E&P sector. Total oil and gas net charge-offs increased $112 million in the first quarter to $186 million. Non-accruals declined $66 million from the fourth quarter, due to the higher net charge-offs as well as paydowns, partially offset by new downgrades to non-accrual status in the first quarter. Approximately 84% of non-accrual loans were current on payments during the quarter. Criticized loans increased 23% from the fourth quarter, predominantly reflecting increases in the E&P sector.

    On Page 32, we highlight our adoption of CECL. At the end of the first quarter, the allowance for loans and debt securities was $12.2 billion. $12 billion of this allowance was for loans and unfunded commitments. And our allowance coverage ratio was 1.19% of loans. We added $3.1 billion to our allowance for credit losses since the adoption of CECL on January 1. This increase was driven by a number of factors, including economic sensitivity due to the COVID-19 pandemic, the estimated impact to industries most adversely affected by the pandemic, our exposure to the oil and gas industry, draws on loan commitments during the quarter, which were the primary driver of commercial loan growth, and $141 million reserve build for debt securities reflecting economic and market conditions.

    Turning to capital on Page 33. Even after a multi-year program to return excess capital to shareholders, our CET1 ratio was 10.7% at the end of the first quarter, which continued to be above the regulatory minimum of 9% and our current internal target of 10%. Our period-end common shares outstanding were down 38 million shares from the fourth quarter. On March 15, we, along with the other members of the Financial Services Forum, suspended share repurchases through the end of the second quarter.

    In summary, while our results in the first quarter were impacted by the economic and market uncertainty caused by the pandemic, we maintained strong liquidity and capital. Our priority is to continue to use our financial strength to help the US economy by serving our customers, supporting our employees and delegating to our communities. And Charlie and I will now take your questions.

    Charles W. Scharf — Chief Executive Officer and President

    Operator, do you want to open it up for questions?

    Questions and Answers:

    Opérateur

    [Operator Instructions]

    Charles W. Scharf — Chief Executive Officer and President

    Operator, how are we doing?

    Opérateur

    Your first question comes from the line of Ken Usdin with Jefferies.

    Charles W. Scharf — Chief Executive Officer and President

    Hi, Ken.

    Ken Usdin — Jefferies LLC — Analyst

    Hi, good morning guys. Thanks a lot for the color and the deck today. Can I just ask you — John, can you elaborate a little bit more in terms of — it was good to see the Fed giving you some flexibility to participate in the programs on lending, but can you elaborate a little bit more on — are you truly able to provide all the help that your customers are asking for and how are you balancing that demand function on behalf of clients with the magnitude that you have to dial back and the effects that might have on the Company from an income statement perspective? Merci.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Sûr. Ouais. Je vous remercie. So on the PPP front, which was the targeted action that — where the Fed gave us a little extra flexibility, there, I would describe this as unconstrained and in a position to help everybody who approaches us subject to the program, of course, having sufficient funding from a legislative perspective, but no constraints at Wells Fargo.

    With respect to the other trade-offs, as I mentioned, the first places that we're going to be able to create more capacity to help customers are to reduce non-operational deposits principally in the financial institutions area where we're relatively easily substitutable, and it's a low value use of cap balance sheet because it's a high run-off factor on those types of deposits. And there are tens of billions of dollars of those types of deposits to continue to work down. And then, secondly, our securities financing footprint or I would describe that as — is that plus different sources of wholesale funding, this — we did this in 2018 when the cap was originally put in place, but we've dialed back some of the repo financing and other securities financing that we provide and then, our own utilization of external repo as a financing source to create more room and that — where some of those activities is first and foremost gets us down below the gap on a spot basis, but then we will create some amount of room for us to make choices about how to help our customers and it starts with existing customers and making sure that we can meet their needs, and that's what we're focused on right now.

    Charles W. Scharf — Chief Executive Officer and President

    Ken, this is Charlie. I just — I know you didn't mean it this way. And I just want to make sure that it's clear for everyone else is that we have no restrictions on participating in these programs. What the Fed did is they allowed us to go above the existing balance sheet cap, so that we could participate in a more holistic way without having to adjust other items, which as you know is difficult to do in a shorter period of time. So it provided us the flexibility to do far more than we had chosen to do ourselves based upon our capacity.

    Ken Usdin — Jefferies LLC — Analyst

    Oui exactement. Thank you, Charlie. And second question, John, understanding fully the pulling away from giving full-year guidance, is there a way you can help us understand on the NII front just how you'd expect trajectory at least go from first to second, given the changes and all the moving parts that were in this quarter's results? Merci.

    Charles W. Scharf — Chief Executive Officer and President

    Yeah, it's a fair question, but not quite yet. We've got to the — I think we're all forecasting something like zero in the front-end or with — depending on where LIBOR moves over time and then some number between, call it, 70 basis points and 100 basis points at the long end. What — how the deposit pricing reacts to that and it came down in this quarter and we anticipated coming down rapidly over the course of the remainder of the year will be a big driver. What of these recent balances that we just booked stick versus those that dialed back down, I think, will be a big driver. So, not looking for NII growth, and I'm sure it will be down by some amount, but we're not being any more precise and hopefully by the time we get to either mid or at the end of the second quarter, we'll be in a position to be a little bit more declarative about that.

    Analyst

    Yeah, I appreciate that. Merci les gars.

    Charles W. Scharf — Chief Executive Officer and President

    Je vous remercie.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Merci.

    Opérateur

    Your next question comes from the line of Betsy Graseck with Morgan Stanley.

    Charles W. Scharf — Chief Executive Officer and President

    Hi, Betsy.

    Betsy Graseck — Morgan Stanley — Analyst

    Hi, good morning. A couple of questions. One, just on the outlook for CECL and the CECL charges. I mean, I know you obviously went through in detail what you did this most recent quarter. But I'm just trying to understand what kind of unemployment level you're assuming in that just so, if we see a trajectory differently from your assumptions, we know how to think about reserve builds from here.

    Charles W. Scharf — Chief Executive Officer and President

    Ouais. So, it's a combination of things, including unemployment, but to what level and then for how long and then the same with GDP, obviously, other things that are going to matter are what this stimulus means at the personal level and at the business level and whether that's an effective offset to the impact on consumer credit from unemployment. So, our scenarios and there's a few of them that we're relying on, and we have different weights on each basically are sort of high-single digits sustained down GDP and sustained unemployment really through 2021. Well, I take it back, we get flat to GDP in 2021, but really not much growth. So, quite elongated in terms of the U shape. Hopefully, that's helpful. And we will update as we go along. We're a little less relying on sharp spikes and sharp recoveries and thinking about this a little bit more is a long slow burn over the next couple of years for risk management purposes.

    Betsy Graseck — Morgan Stanley — Analyst

    Je l'ai. And then if I could drill down just on the oil side, I mean, obviously, we went through an oil event several years ago, it was like 2016, and you had some workouts around that, brought down the oil exposure or the gas exposure since then. Maybe you can give us a sense as to how you're thinking about this go round, I mean the price is obviously a little bit lower, but I'm thinking that your book has changed a bit. Maybe you could give us some color on how you're dealing with that portfolio and what your expectations are there.

    Charles W. Scharf — Chief Executive Officer and President

    Merci. And the book does look different. So, on the one hand, it's smaller, on the other hand, it's a little bit — it's more senior. We had a bigger weight on lowering the capital structure activity before going into the 2015/2016 downturn. We are imagining, because of the levels of the resource price, that losses given defaults are substantially worse this time through. In terms of the migration of performing and non-performing, I'd say, in our own credit loss analysis, we're assuming basically across the board full-notch downgrade type of — in our own estimation of default probability. And I think we're approaching it in a pretty sober basis. We've got a good number on it now, both specifically and through our qualitative reserve, and we'll continue I think to up our disclosure around it like we did in 2015/2016 as we work through that.

    Betsy Graseck — Morgan Stanley — Analyst

    D'accord. But that's embedded within your CECL estimate today already. So if it pans out as expected, we wouldn't expect to see any more reserve build on that specific asset class?

    Charles W. Scharf — Chief Executive Officer and President

    Ouais. Well, so yes and no. We always end up reserving more than we end up charging off. So, when I'm thinking about that through this cycle charge-off, my sense is we have a line of sight on how we expect it to perform, but for any number of reasons, we do — and CECL is different than the prior methodology, but I'm not surprised when we lean in a little hard and it turns out that cumulative losses were less than the allocated number. It just seems to work out that way.

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    Betsy Graseck — Morgan Stanley — Analyst

    Merci.

    Opérateur

    Your next question comes from the line of John McDonald with Anonymous [Phonetic] Research.

    John McDonald — Autonomous Research — Analyst

    Hi, John, Charlie. John, I was wondering if you could give any more color on the kind of base case economic scenario that you've baked into the first quarter reserve build and given that, what kind of macro scenario would have to materialize in the second quarter for you to have a similar size provision or to be adding more than you added in the first quarter? And then maybe Charlie could just add some thoughts on the potential path you see for this credit cycle relative to what you've seen in your career trolley. What are some of those similarities and differences you think about how this might play out relative to great financial crisis or stress test scenarios? Je vous remercie.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    So, I'll go first, and John it's still Autonomous Research right, not Anonymous Research?

    John McDonald — Autonomous Research — Analyst

    Yes, thank you.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yeah, make sure we get that right. So, as I mentioned to Betsy, we're taking kind of a longer window approach rather than a quick V or even a quick U when thinking about growth through the rest of the year and into next year being mid- to high-single digits negative this year and flattening out, but not growing really next year and then unemployment in the long and sustained high-single digit range. They may vary — there already have been perhaps spikes that go beyond that, but we're thinking about this as it plays out quarter-after-quarter. So, just to mention it compared to other scenarios thinking about both our performance in the financial crisis as well as our own CCAR severely adverse scenarios, at this point, we see this as not generating that level of loss in our own CCAR severely adverse scenarios. I think we produced nine quarter credit losses of about 2.75% [Phonetic] in total with peak quarterly loss rates expressed on an annualized basis of about 1.7%, 1.75% and an average of about 1.2%. That's got a steeper drop in GDP and a steeper climb in unemployment and importantly no stimulus baked into the severely adverse case, it's — it doesn't anticipate the types of interventions that we've already seen and we're waiting to see materialize.

    And with respect to the financial crisis as a benchmark, importantly, at least for Wells Fargo, it may be true for other banks as well, but loan portfolios were very different than the quality of loans, particularly on the single-family side was worse. I think our auto portfolio was worse then too. And so there, we did produce higher — somewhat higher loss rates, even higher loss rates than we do today in our own CCAR analysis, because the content of the portfolio is different, but I guess I would describe that we're currently imagining now to be, I'll call it, half-ish of an annualized loss rate of the severely adverse version of our own stress test.

    And so, if things play out substantially worse, then there is certainly the possibility that we end up building more or experiencing more charge-offs or both, but we feel good about the approach that we've taken in March, developing our scenarios with our governance around it and coming into the quarter-end.

    And Charlie, you may have comments on the comparability.

    Charles W. Scharf — Chief Executive Officer and President

    Ouais. Listen, I think as I said in my remarks, I think it's — we all know we haven't seen anything like this before. There is no clear path to with a — with any narrow range of outcomes for what unemployment or GDP will be. I mean, when we think about different people's estimates, I mean, you can see GDP differences of 10 points, 20 points across very smart people who do this for a living. Same thing with unemployment, 5 points, 10 points differences. And so, making an analogy of what this environment is to other environments, I just have a very hard time doing. Having said that, I think we feel like the portfolios that we have are stronger than they were at other downturns as I think they certainly are in many banks out there. The real question will ultimately be how long this shutdown actually continues, which again, none of us know, but in addition to that, how our actions, whether it's the forbearance plans that we have or the fee waivers, the things that we're doing very, very actively to help our clients and the huge amount of government intervention, whether those things will actually be able to bridge individuals and small businesses and larger corporations to the other side of this. I personally wouldn't be surprised that as the earning cycle continues and as we start to see these numbers, even though people are talking about big numbers, they'll potentially continue to be surprised by the size of them and that will create additional volatility in the environment that we live in, and it wouldn't surprise me to continue to have to add to reserves as those things impact confidence and ultimately what economic growth looks like. But as I said, I think it's different. And again what we know is, we're strong and the industry is strong to be able to handle this.

    John McDonald — Autonomous Research — Analyst

    Génial. And as a quick follow-up to that, Charlie, the idea of banks maintaining dividend payment is a big debate right now, not just for Wells Fargo, but for the industry overall and you've cut the majority of distributions you and other banks. Two-thirds of it has been buybacks and folks talk about the importance of dividends that are signaling. Can you talk about the pros and cons of keeping the dividends for yourself in the industry?

    Charles W. Scharf — Chief Executive Officer and President

    Well, listen, I think certainly, the dividends are certainly important for all of those that own the stock, and ultimately those that wind up benefiting from stock ownership or for individuals in one way or another, whether it's direct holdings or whether it's pension plans and things like that. And so, I think the income stream that people come to rely on, especially, in times like this is important, but there has to be an underlying ability for companies to be able to pay. And so, to the extent that they have that ability to pay, I certainly think it's the right thing to do for the reason today that I just said.

    We have strong capital ratios. We do all the stress test and whatnot that John referred to and determine our ability to return capital in this severely stressed environment. Also remind you that for us, we are slightly different than others because of the balance sheet cap. So our balance sheet cap does limit our ability to deploy capitally — to deploy capital internally. And so, based on that, that's why we sit here and look at and say that we think the dividends certainly that we're paying makes sense. But as I alluded in my prior comments, we don't know what the future looks like. Based upon the assumptions that we've laid out in these very stressed environments, we do feel good about it, but ultimately, the timing and the pace of the recovery is going to determine earnings capacity for everyone to be able to continue to support the level of dividends.

    John McDonald — Autonomous Research — Analyst

    Merci.

    Opérateur

    Your next question comes from the line of Erika Najarian with Bank of America.

    Charles W. Scharf — Chief Executive Officer and President

    Good morning, Erika.

    Erika Najarian — Bank of America Merrill Lynch — Analyst

    Hi, good morning. I just wanted to ask a clarifying question on John's question on the dividend because it is a question that investors are asking a lot about Wells Fargo specifically. So before you reported earnings, consensus was at $2.35 for this year versus dividends of $2.04. And I just wanted to make sure I'm taking away the right message and that the market should really look at the payout and instead, given that the bright line on capital distributions would be breaking that 9% CET1, we would continue to monitor where your capital levels are relative to the minimum. And because of the balance sheet restriction unlike some peers, you are less able to eat through your capital through RWA growth. Is that the right way to think about the dividend going forward?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    I think that's right. I'd also — I'd add to Charlie's view though that as good quarters unfold and we figure out how long we're going to be in this economic state and what the path forward looks like and we use that to interpret and estimate what our go-forward earnings trajectory looks like, that's the context for understanding what the steady state dividend should look like.

    So in terms of what this year's dividend looks like versus this year's consensus or estimated earnings during a time of stress is less germane I think than then A) the fact that we start with ample capital and B) what we think our run rate, more steady state earnings are on the way out of this and reflects what the dividend is in light of that. So if that's helpful. But yes, the point that Charlie was making about the fact that we're not really in a position to go out and generate substantial incremental RWA through outsized loan origination. There is an important one and a distinguishing one versus others who may be doing that right now and expanding the balance sheet intentionally.

    Erika Najarian — Bank of America Merrill Lynch — Analyst

    Je l'ai. And my second question is on forbearance, and just a clarification question also on something that you said, John. So, if possible, could you give us some update on how many of your clients, if you could give it to us like by mortgage, by auto are in the 90-day or 60-day forbearance period, how April 1st payment behavior was like? And also just clarify what you said John, you said that potentially the losses — the cumulative loss of this cycle would be 50% of this severely adverse, which I think for nine quarters was $26 billion?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Sûr. What I said was that the current loss rates that are in the scenario that we're talking through are in the neighborhood of half of our current severely adverse. I think you're probably looking at last year. And so, I'm not making a call on the cumulative level of losses. I'm just making the point that as a benchmark and answer in response to John's question for contractually like what is bad really look like. In that instance over nine quarters, we generated a calculated 2.75% [Phonetic] aggregate credit loss. And for context in terms of where we are now, these loss rates are lower than that by more than half — roughly half, but I'm not predicting that we're going to go through a cycle like our own severely adverse — stress test cycle that lasts for nine quarters and goes that deep, etc. just providing a benchmark.

    With respect to deferrals, I think we're — and I'm now in deferrals. I'm including both loans on our own books as well as loans that we service for others, because the customers don't distinguish when they call Wells Fargo. And I think at this point, we've had requests for deferring over 1 million payments. It's about $3 billion worth of P&I. I think about 20% of that relates to loans on our own books and 80% of it is loans serviced for others. It's disproportionately auto and mortgage; the dollars of course are mortgage, because the P&I is bigger there than it is on an auto loan.

    I don't have the specifics in front of me beyond that, but that's what it amounts to. And then, it's probably worth mentioning that at least with respect to the loans on our own books that we would be deferring interest into the future and recognizing interest revenue on an effective interest basis, which would reduce the amount of interest income in the current period by some amount. It's not at this point seem to be a large amount. We'll give updates on that at this number flattens out at some point, and we calculate all of the P&I and effective yield, but I don't think it's going to be a huge difference maker in terms of our interest income recognition for the year.

    Erika Najarian — Bank of America Merrill Lynch — Analyst

    Je l'ai. Je vous remercie.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Thanks, Erika.

    Opérateur

    Your next question comes from the line of Scott Siefers with Piper Sandler.

    R. Scott Siefers — Piper Sandler — Analyst

    Good morning, guys. Thanks for taking the question. John, I think you mentioned at one point during the call, there has perhaps been a little bit of a bidding in the pace of line of credit trials. I wonder, if you can just talk to what you've been seeing since the quarter-end. I guess it stands to reason that with the quarter ending and your customers maybe doing some window dressing, there would be less need for line of credit draws, but how is that actually trending and where — how would you expect those balances to behave? Is that cash actually getting used or are you seeing it just indeed and redeposit back into the bank? What are the phenomenon at work there?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. So those daily monitor, those daily draws just to understand what's happening by industry, by customer, by customer type, etc. And they really have flattened out. And they have been negligible for the last several days, more than a week. And so, they peaked probably at the end of the third week in April and then — pardon in March and then came right back down. So, not growing at anything like that pace. So the related question of how long do they stick is a good one. And I guess, it depends on the reason for the drive to begin with, whether it was window dressing, whether it was a need to access credit markets which — some of which had been closed and some of which are more or less open high-grade market wide open obviously.

    But for people who need to go into the syndicated loan market as the high yield market, it's a little bit more by appointment depending on their story. There, where people who drew — because of just a hardcore liquidity preference and they wanted to have quick access to the cash regardless of the messaging that they were sending to their external stakeholders, and they may continue to have that preference for liquidity until told people know when the economy is going to open back up and depending on the nature of the borrower, what it means for their sales forecast. And so, I don't think we've seen any meaningful paydowns yet. And as I've mentioned in response to the question about NII guidance whether or not those balances remain outstanding will have an impact on this quarter one way or the other and currently, they are sticking. So — but they're not really growing.

    R. Scott Siefers — Piper Sandler — Analyst

    Okay, perfect. Je vous remercie. And then if I can ask a second question, just in the — on Slide 15, where you go through this C&I loans by bucket, can you talk a little bit about the financials except banks portfolio? I know you've discussed it in the past, but just given all the turmoil there has been in some of the non-bank areas, just maybe a little color and sort of what we should be thinking about that.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. So the buckets of activity there, there is CLO-related activity, so credit managers, there is subscription finance, where we're providing leverage to alternative asset managers against the commitments of their limited partners to fund when called, there is leasing, there is auto, there is card, there is mortgage, there is commercial mortgage, etc. I'm sure we'll see a little bit more stress in the system. As it relates to the loan balances, they by and large tend to be the highest quality loan balances on a ratings basis — or among the highest quality that we have because they're generally credit-enhanced pools of cross-collateralized receivables of one form or another and that's a huge benefit to us compared to the average portfolio of whole loans, where you have the first dollar of loss if something goes bad in a loan.

    Having said that, these types of customers will have stress often in their origination function, if they're an originator, or in their ongoing capital accumulation, if they're an asset manager. There can be stress on the servicing side of this for those that are residential mortgage-oriented. Their life is going to be a little bit harder presumably as servicing, servicing advances, default servicing and things like that pop up, and so we're managing them in that way.

    On the CLO front, which is a big distinguishing portfolio for Wells Fargo, in addition to what's here, there is a little bit of overlap, but also in our securities portfolio, we have $30-ish billion worth of CLO exposure disproportionately, top of the capital structure, AAA, AA that can withstand an extraordinary, almost a complete level of cumulative default with varying levels of loss given default and we're still very comfortable with that and 80% of that portfolio is externally rated AAA, which I think is a plus. So, haven't been meaningful signs of stress here. We will talk about it. If it [Technical Issues] we actively manage it in our allowance calculations and these are very actively managed borrower relationships as I mentioned.

    Analyst

    D'accord. That's perfect. I appreciate all the color. So thank you for taking the questions.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yeah, you bet.

    Opérateur

    Your next question comes from the line of Saul Martinez with UBS.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Hi, Saul.

    Saul Martinez — UBS — Analyst

    Hey, how are you guys? Thanks for taking my questions. I Wanted to tackle a couple of things really quickly. First, the interplay of credit in CECL. So, you trued up — you took up your reserves, obviously, and your ACL ratio is roughly about 120 basis points. And this is probably oversimplifying it, but one way to think about that ratio under CECL is it's an estimate of what you think you're going to lose on the entirety of your loan book over the life of the loan at any given point in time, and that number is lower than what it is for all — for any other large bank even as of January 1. So, I kind of want to get your perspective on how much of that you think is a reflection of just you guys having lower loss content loans, a better risk profile of it as opposed to maybe some other more idiosyncratic things as I seem to recall that you've marked some loans in the past that were in recovery positions and stuff like that. So — and I ask also just because I do get that question occasionally from investors asking if you're underserved relative to your peers, which I don't think is the case, but I kind of wanted to get your perspective on this.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. I think it's a good question and I think loan mix has a lot to do with it. The question about mark-to-loans historically would have been true, but with the adoption of CECL, most of those marks had to be reversed, which was the source of a portion of our day one adoption of a negative number. So we don't have that to rely on although we used to. I think the biggest difference is probably the weights that we have on jumbo mortgage versus the weight that we have on credit card on a heads-up basis versus other peers, and that's true of both outstanding as well as undrawn and the allowance is there to serve both our credit card portfolio, which under most conditions, we wish was a bigger capability for Wells Fargo at times like this is a little bit of a saving grace, because we expected loss content, both in what's outstanding as well as what might be expected to come through from undrawn is more manageable in the size of our balance sheet. But still, as you'd expect, the higher loss content, higher loss rate exposure, because it's consumer unsecured and unemployment will be a big driver of losses in this cycle or any cycle, but on the first lien mortgage front, because that business has changed so much in between borrower capacity to repay reserves, LTVs, etc., even in stress, our loss estimations for that portfolio are really quite low. And so, as you run down different categories of C&I or commercial real estate, or the various consumer categories, credit cards, the highest and first lien mortgage is the lowest, and there we have the biggest weight on mortgage and probably the lowest weight on card.

    Saul Martinez — UBS — Analyst

    D'accord. And I presume in your Q and in your [Indecipherable], you'll be giving loan loss allowance by lending categories, so we can compare you to your peers by segment, right?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yup.

    Saul Martinez — UBS — Analyst

    And just one final one, do you have a sense or have you disclosed how much you've actually reserved or would you disclose or have a sense of how much you've actually reserved for oil and gas and entertainment and all of the higher risk sectors on I think Slide 28 to 30 just to get a sense of where you stand in terms of reserve levels in those categories?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    We haven't yet, because most of that is still a part of this qualitative top-up of the reserve, which is how the big builds for this quarter went down. This is all estimation and as a result, it's not specifically allocated by loan grade and by portfolio, it will get there. Those are the industries that I mentioned or the categories that I mentioned are the ones where we've leaned in the hardest, and on a qualitative basis, assumed certain levels of downgrade, which lead to the higher reserve factor being attached to them, but it hasn't run through the process yet that way because we haven't had those downgrades. So, we will start to provide more information. I'm not sure if it'll be in the Q, but certainly as the cycle unfolds and these things actually start to appear in the calculated graded reserve for C&I categories in particular.

    Saul Martinez — UBS — Analyst

    Thanks a lot.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yup, thank you.

    Opérateur

    Our next question comes from the line of John Pancari with Evercore ISI.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Hi, John.

    John Pancari — Evercore ISI — Analyst

    Bonjour. Back to the through cycle loss number, your 2.75% [Phonetic] nombre. I know you just indicated that cards would be the highest in that assumption. Do you have what those through cycle numbers are that you have by bucket, for example, commercial real estate and card and C&I that make up the 2.75% [Phonetic]?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Droite. So the 2.75% is the CCAR severely adverse through the cycle cumulative loss level. So, it's not our through the cycle loss level. I know — I'm not sure whether I wasn't clear. I don't want anybody to walk away thinking that that's what we anticipate experiencing through the average cycle. We have not laid all of that out. We — I guess, I would look to the categories of loan loss disclosure with our last stress test. Those come from the Fed, they don't come from — you get to see Wells Fargo's, but we haven't category-by-category laid it out. I can tell you that on the commercial side, it's about 2.5% and on the retail side, it's about 3%. But in terms of the individual components, we haven't run through that with folks.

    John Pancari — Evercore ISI — Analyst

    Okay, got it. Je l'ai. And then regarding the loan loss reserve from here, I believe, Charlie, you indicated in one of your previous answers that you could see incremental loan loss reserve built from here. Is that a fair assumption at this point given the — given your expectation for the ongoing stress on borrowers, etc., that we could have incremental builds or do you think the — we're on an adequate level given the recast of the back book and what you put on this current quarter in terms of where your reserve stands at this point?

    Charles W. Scharf — Chief Executive Officer and President

    Ouais. I guess, let me just — I'm not an economist. And so, I don't pretend to know any more about the future than any one else who's in my position. And I — what I said was I think it's clear that economists are having a difficult time trying to figure out what the trajectory of unemployment and GDP will be. What I was saying was it just — it wouldn't surprise me that people will continue to be surprised by the downside in the numbers. We've not seen anything in our own portfolios to suggest that we will be adding in the future. But if confidence does deteriorate and the shelter in place orders stay on for longer, which is possible, then it wouldn't surprise me that loss estimates would have to go up from this point. Again, I just — it's not based on something that we've seen. We don't know the impact of all the programs that are out there, which we've never seen any things like seen anything like this before, but there is probably, I think it's fair to say, at least in my mind, there is more downside than there is upside at this point, just given the uncertainty of the environment today.

      Frais Rachat Pret Immobilier

    John Pancari — Evercore ISI — Analyst

    Je l'ai. That's helpful. If I can ask just one more, on the drawdown point, I know you had implied that you're seeing a little bit of stability there on the draws. Have drawdown from the commercial side trended as you had expected, or would you have thought that they could have exceeded the current level where they've showed some near-term leveling off?

    Charles W. Scharf — Chief Executive Officer and President

    Ouais. So they came out of the gate fast and furious before borrowers actually experienced meaningful stress. So I would say that was a little faster than we probably would have imagined. In terms of how things have leveled off, the prior question about whether there was window dressing going on through the quarter-end where our borrowers wanted to have cash on their balance sheet, certainly possible that was a part of it. The high grade, well, the CP market being inaccessible for many users and the high-grade market being expensive or closed for a little bit certainly contributed to it too. Both of those things are functioning better now and these balances are still maintained. So it's not crystal clear whether that was a contributor to it, but it seemed a little fast.

    The fact that it — I think that folks are like Charlie mentioned with respect to our own results are trying to understand how long there to the — if they're meaningfully affected from a sales perspective, how long shelter in place is going to change the nature of their business and they're going to make their liquidity determinations along the way. It feels like many people — many business leaders made that determination relatively quickly in the early draws. But it's — as I said, it's flattened out.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    The only thing I'd add is that — this is not — as we say over and over again, this isn't something that we've seen before. And so, did what we have thought that the number of industries and businesses would be shut down as quickly at the same time? No. Does that increase draw levels and the speed at which they draw? Absolument. So — but the fact that we're seeing some stability in those numbers and reductions in terms of where they are says an awful lot about the actions, certainly that the Fed has taken to stabilize the markets and give people the confidence that the markets will function well when they need to access them.

    John Pancari — Evercore ISI — Analyst

    Je l'ai. D'accord. Thanks very much.

    Opérateur

    Your next question comes from the line of Matt O'Connor with Deutsche Bank.

    Charles W. Scharf — Chief Executive Officer and President

    Hey, Matt.

    Matt O'Connor — Deutsche Bank — Analyst

    Bonjour. It seems like expenses in the first quarter came in a bit lower than expected even if we adjust for the deferred comp noise. Any outlook that you can provide on costs for the year?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Not meaningful. We instituted a few programs for our employees in the first quarter that didn't cause much in the first quarter that will probably contribute a little extra throughout the course of the year. On the other hand, there is a range of revenue-related costs that will probably be lower with commissions, incentive comp types of things if that — depending on business conditions of course and our ongoing level of performance. T&E is pretty much down to zero because people are not traveling or sheltering in place. We will have different technology cost that probably get a little bit more expensive as we've enabled 180,000 people who work from home that all has to get factored in. And then, of course, we've got certain types of expense that are levered to where the stock prices, etc. in this environment will probably be cheaper than it was a year ago, but not anything targeted or meaningful in this moment during the public health crisis beyond that.

    Charles W. Scharf — Chief Executive Officer and President

    And the only thing that I would add is as we think about what the future is we were very clear on the last call about our views on our efficiency and the work we had to do. And given the environment that we're in, this is not the kind of environment where we're able to realize any meaningful savings. So we need to see light line of sight pass this crisis in order to continue to get back to the work that we have to do to drive that number down, which we still completely believe is they're doable and the right thing…

    Matt O'Connor — Deutsche Bank — Analyst

    You've made some comments in terms of the regulatory issues and obviously, the flexibility to help small business customers. But I need just kind of broader update on addressing regulatory issues, and there were some headlines that you were missing some deadlines in the media, which doesn't seem surprising since a lot of things are shut down, but anything you want to add from kind of a regulatory perspective that you're able to comment on.

    Charles W. Scharf — Chief Executive Officer and President

    I'm not going to talk about anything specific. It's not the right thing to do. I'll just reiterate, we have a lot of work to do. I've been saying that very, very consistently. Our ability to get beyond some of these regulatory actions is based upon our doing the work properly. There is a bunch of it. We're continuing to devote all the necessary resources toward it even during this crisis. And that's really what I can say at this point.

    Matt O'Connor — Deutsche Bank — Analyst

    Okay, understood. Je vous remercie.

    Opérateur

    Your next question comes from the line of Steven Chubak with Wolfe Research.

    Steven Chubak — Wolfe Research — Analyst

    Hi, good morning. So, John, just wanted to ask a question about how you're managing the securities book. I recognize you guys call the NII guidance, but I'm just trying to understand given the significant declines at the long end of the curve. I was hoping you could help us frame where you are reinvesting today versus roughly 2.8% yield on the securities book. And maybe just bigger picture, what's your appetite to reinvest in other asset classes outside of agency MBS and treasuries to maybe mitigate some of those reinvestment pressures.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. It's a good question. So where we are investing today and I think we're — we've got $6 billion to $9 billion a month of expected prepayment and maturity that needs to get redeployed. We have been and will likely continue to redeploy it into HQLA. There are certainly interesting opportunities in credit-sensitive securities, etc. They were really interesting in March, but they're still interesting today, but for low liquidity value, more risk-weighted types of investment, we're more likely to use our dry powder to — for our customers, so for loan growth rather than on the securities front even though historically, we would have done both. And a portion of that is related to the existence of the asset cap. So it's still likely to be treasuries, Ginnies [Phonetic] and agency mortgages as we redeploy that $6 billion to $9 billion per month for the rest of the year.

    Steven Chubak — Wolfe Research — Analyst

    Je l'ai. And just for my follow-up, I just wanted to try and gauge the near-term outlook for fee income. I know there's a lot of moving pieces this quarter. It looked like, if we adjust for all these specials, it was about a $1.3 billion drag suggesting maybe a core fee run rate somewhere around $7.7 billion. I'm just wondering as we look ahead, just given some of the pressures you cited on service charges, spend volume contracting, lower fees and wealth given the lagged quarter pricing. I guess, we'll have an offset from mortgage. I just wanted to try and frame how we should be thinking about the right jumping-off point for core fee income in 2Q and maybe just speak to your outlook for the remainder of the year.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    So that's complicated for all the reasons we've been describing. I would say that you're right about the stepping off $0.4 million for Wealth and Investment Management, that will be lower. I expect mortgage to be stronger. We have a $60 billion pipeline and a stronger gain on sale on a per pound basis. So the second quarter should be good in that respect. The markets businesses are actually doing really well right now, although investment banking is quieter, high grade is open, but there isn't quite as much going on in non-investment grade or equity issuance. Card fees should be lower because transactional volumes are lower. Deposit service charges, my sense, will be lower because of actions that we're taking on a targeted basis to reverse fees where it's appropriate and it's — it never works to add it all up and give a starting — give a core number, but those are probably the bigger influences on fee income going into Q2.

    Analyst

    That's great, very helpful color. Thanks for taking my questions.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. You're welcome. Je vous remercie.

    Opérateur

    Your next question comes from the line of Charles Peabody with Portales.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Hello, Charles.

    Charles Peabody — Portales — Analyst

    Salut. It's my guess that tail risk events are not over for this economic cycle. So, I was wondering if you could address two different tail risks as they relate to managing your interest rate sensitivity and the impact on your P&L. The first is, if we go into a multi-quarter period of negative rates, what are the actions you can take to manage that and how do you see that impacting your P&L? And then the second is, if bond vigilantes ever do come back and we got a steeping of the yield curve, 125 basis point spread between two's and ten's [Phonetic], what impact does that have on your P&L as it relates to NII, mortgage banking, and equity securities or debt securities?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Sûr. [Speech Overlap] the second one better than the first one.

    Charles Peabody — Portales — Analyst

    Yeah, I know you would, but also, did you take any material actions in the month of March to hedge your interest rate risk going into the second quarter? So that — those are the three separate questions, sorry.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Sûr. So we'll go in reverse order. In the month of March, I would say getting longer duration, not much longer, but continuing to replace and add to duration in this investment portfolio is the most visible activity to defend against going lower in rates in any size. On the second question about what happens if we get a steepener, obviously, there is a hit to capital from OCI when that happens, because our bond portfolio loses value, but with the amount that we have regularly to reinvest with deposits at levels that they are, etc., we are sensitive to the, call, at that seven-year to 10-year point and without putting a specific number on it, it's probably the — it's among the biggest drivers in terms of the way we're positioned for increasing net interest income and the reverse is true as well.

    And then with respect to negative rates, there is a handful of things. I mean, it's obviously looking at Europe or looking at Japan, there is plenty of examples of why that's not a terrific environment to be in for banking, but on the LIBOR-based lending side, I'd make the point that I think substantially all of our C&I loans that are LIBOR-based have floors in them so that we're not worried about eating through margin, still an attractive place to be, but we've protected ourselves in that way. I think there are a range of deposit-related activities that we have where we would begin to institute charging for holding cash. Given our — the existence of the asset cap, we can't overpay for deposits because we were in the business of sending low liquidity value deposits back to bank customers and the like. So, we would probably pretty quick to be managing what we pay for deposits to — so that we didn't have an incremental influx that we didn't have an appetite for.

    And then as I mentioned, adding or maintaining a sort of fixed rate posture, duration — long duration posture on the investment portfolio is a way to abate earning a negative rate as rates go below zero. I don't you're suggesting there's a higher probability of that. I think Fed's been pretty clear. There have been some instances where bills went negative just because of technical factors, but I don't think it's at least currently part of the playbook for the Fed, and in the other jurisdictions around the world, where it has occurred out the curve, it started with a policy decision to do it at the front end. So, I like the steeper curve better than the — better than negative rates among your questions.

    Charles Peabody — Portales — Analyst

    Je vous remercie.

    Opérateur

    Your next question comes from the line of Brian Kleinhanzl with KBW.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Hi, Brian.

    Brian Kleinhanzl — KBW — Analyst

    Hey, good morning. Just a quick question on first maybe the mortgage banking and can you kind of walk through the decision to exit on the non-conforming correspondent? I mean, I heard that expecting loss rates below in residential mortgage. Was this an issue with the asset cap or just credit risk, more broadly?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    It's really shelf space and putting our own retail customers at the front line as one of the leverage that we're using to manage living under the asset cap, not credit risk in particular.

    Brian Kleinhanzl — KBW — Analyst

    D'accord. And then a separate question, I think with a lot of kind of one-off items in the quarter that were due just where markets were at the end of the quarter or where spreads were? I know there was the reserve for debt securities, equity impairments, and then also hedge ineffectiveness. Are any of those expected to reverse, given where markets are at this point in time or where rates are for the hedging activity?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    On hedge ineffectiveness, I wouldn't expect that to reverse or to persist sort of a confluence of events that gave rise to it for the quarter. So that probably goes back to net expectation of call it a net zero expectation and it can drift up or down depending on what happens in the LIBOR OIS basis or for some other reasons. In terms of equity impairments, those [Indecipherable], and there are some measurement alternative activities that actually do get written back up when the situation warrants it, but I wouldn't expect that to happen in the early stages of a recession if that's where we are in the next few quarters. Obviously, there are lots of ways to earn that back over the life of those investments, but it will take a while for that to reveal itself. And what was the last one? There were couple of different examples.

    Brian Kleinhanzl — KBW — Analyst

    The reserve for debt securities.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yeah, I don't anticipate that it will. Those are — that relates to both AFS and held for — held to maturity securities. So presumably, there were some AFS securities that might get sold or mature that release some of that, but I don't think it just comes right back. That is the nature of OTTI.

    Brian Kleinhanzl — KBW — Analyst

    All right, thanks.

    Opérateur

    Your next question comes from the line of Vivek Juneja with JPMorgan.

    Vivek Juneja — JPMorgan Securities — Analyst

    Hi, thanks for taking my questions, Charlie and John. A couple of things, firstly, how the total criticized do the quarter? I know you mentioned oil and gas. Have we seen any — firstly any numbers and have you seen any impact of any of those other industries where this concern? And in — as you look at your commercial loan book, you broke down the drawdowns into CIB, commercial banking, commercial capital, and CRE. Any color on the outstandings in those and also the breakdown of how criticized it in those four categories?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    So criticized loan balances increased about $4 billion in the quarter, almost all of it in March. Trying to do the math here, a big piece of it for those that are in the industries that we mentioned earlier, airlines, for example, you'll see it, you'll see it and energy, for sure. There have been — there is some commercial real estate that has already come through. It's just — it's so early because this all occurred in size in the — in mid- to late-March that we'll probably see more of that realizing itself in Q2, which is part of why our allowance build is really so much from a qualitative perspective. I mean, it's based in math, but it's not driven by loan ratings, etc., which drive the quantitative approach.

    So, I think you'll see it coming from the usual places. We'll have more specifics in the 10-Q when we file it, and then, of course, you'll see the behavior in actual — we'll receive financials, we'll administer loans on a loan-by-loan basis through the second quarter and that will update the quantitative model and the disclosures in Q2.

    Vivek Juneja — JPMorgan Securities — Analyst

    And how do you — how does your commercial loan book breakdown between CIB, Commercial Banking, Commercial Capital, really those are your three biggest categories. And I guess there's a little bit of CRE included in the C&I, any color on that?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    There will be when we publish those segments. What we have in the deck today that shows total C&I outstandings and commitments is a superset of those businesses. So you can see the total that where we draw the lines between what is in which segment. We haven't added up and disclosed it that way, but you will begin to see that way in Q2.

    Vivek Juneja — JPMorgan Securities — Analyst

    D'accord. Another question, you mentioned on the page on deposits that you grew deposits in consumer through high-yield savings. Given any color on why you are growing high-yield savings, you're really not trying — I didn't think you were trying to grow deposits, any color on what what's behind that?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. Well, high yield doesn't — isn't the same today as it was a year ago. Some of where we grow is that — is the preference of the customer choosing where they're going to put their money in this — the label of high-yield savings means something different. As I said a little bit earlier, we are forecasting our deposit cost to come down substantially throughout the remainder of 2020 reflecting what you're suggesting, which is in a flight-to-quality time frame with the liquidity preference by our customers. The deposits are rolling through the door, and we are not overpaying for them. You will see in Q2, I think, substantially all of the incentives from last year as we are building deposits at a slightly more expensive time frame to finally roll off. And then — so through Q2, Q3 and Q4 as we currently forecasted, we're going to be getting back to deposit costs of the, call it, 2014, 2015 era.

    Vivek Juneja — JPMorgan Securities — Analyst

    Great, thank you.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais.

    Opérateur

    And ladies and gentlemen, we do have time for one more question and that last question comes from Gerard Cassidy with RBC.

    Gerard Cassidy — RBC Capital Markets — Analyst

    Je vous remercie. Good morning, gentlemen. John, can you share with us on the Slide 15, you gave us the total outstandings and the total commitments, I think it's about 58% outstandings to commitments. What was that number at the end of the fourth quarter of 2019? And within those categories you gave us, who had the biggest drawdowns?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Well, that's a very specific question you're asking me.

    Gerard Cassidy — RBC Capital Markets — Analyst

    Just save the worst for last.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Yeah, yeah, yeah. Well, so, I don't have that information right in front of me. I can tell you that as a category and this was on Slide 12 in the same deck. Our utilization rate jumped up almost 90% [Phonetic] to 49%. So for the whole universe of wholesale commitments, we have been in the high 30s and now, we're in the high 40s of utilization. I'm going to have our IR folks follow up with you, because we do — we have been tracking utilization or I should say draw request by industry and that might be useful, but I don't have it right in front of me.

    Gerard Cassidy — RBC Capital Markets — Analyst

    No, that's good. Je vous remercie. And someone else complemented you guys the breakout on the portfolios for oil and gas, retail, transportation, entertainment was very helpful. If you could provide then suggestion from the next time for the financial, except banks, I think that would be helpful. One last question for you. It's a technical question. If your assumptions in CECL are correct on the economy that you guys used to build up the CECL reserve this quarter. If they're correct, in the second quarter, do we see the provision being primarily then to cover net charge-offs and loan growth and no more CECL reserve buildup, is that correct, is that the way we should look at it?

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    In theory, if you had perfect foresight, but you also have to kind of know RWA growth in the same time frame because at a minimum, you'd be capturing allowance for the change in the loan portfolio from one quarter to the next. So — but I would discourage anyone from imagining that at this point in time that any bank has got perfect clairvoyance about what the future holds and whether it gets better or gets worse, I'm sure it will be a little bit different.

    Gerard Cassidy — RBC Capital Markets — Analyst

    No doubt. I appreciate that. Thank you for the candor.

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ouais. Terrific, terrific. Well, thank you everybody. That was our last call. And this is the first step on a journey as we go into this cycle. We've been saying for some time that we're late in the cycle. We're going to stop saying that because now we're early in the cycle. And we'll be working with each of you to help understand your — answer your questions where we can and we look forward to talking to you next quarter. Thank you very much.

    Charles W. Scharf — Chief Executive Officer and President

    Thanks everyone.

    Opérateur

    [Operator Closing Remarks]

    Duration: 101 minutes

    Call participants:

    John M. Campbell — Director of Investor Relations

    Charles W. Scharf — Chief Executive Officer and President

    John R. Shrewsberry — Senior Executive Vice President and Chief Financial Officer

    Ken Usdin — Jefferies LLC — Analyst

    Analyst

    Betsy Graseck — Morgan Stanley — Analyst

    John McDonald — Autonomous Research — Analyst

    Erika Najarian — Bank of America Merrill Lynch — Analyst

    R. Scott Siefers — Piper Sandler — Analyst

    Saul Martinez — UBS — Analyst

    John Pancari — Evercore ISI — Analyst

    Matt O'Connor — Deutsche Bank — Analyst

    Steven Chubak — Wolfe Research — Analyst

    Charles Peabody — Portales — Analyst

    Brian Kleinhanzl — KBW — Analyst

    Vivek Juneja — JPMorgan Securities — Analyst

    Gerard Cassidy — RBC Capital Markets — Analyst

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