Please note that today's call is being recorded. I would now like to turn the call over to John Campbell, Director of Investor Relations. Sir, you may begin the conference.

Thank you, Brad. Good morning, everyone. Thank you for joining our call today where our CEO, Charlie Scharf; and our CFO, Mike Santomassimo, will discuss fourth quarter results and answer your questions. This call is being recorded. Before we get started, I would like to remind you that our fourth quarter earnings materials, including the release, financial supplement and presentation deck are available on our website at wellsfargo.com. I'd also like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings including the Form 8-K filed today containing our earnings materials. Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings and the earnings materials available on our website. I will now turn the call over to Charlie.

Thanks very much, John, and good morning, everyone. I'll make some brief comments about our 2021 results, the operating environment, and update you on our priorities. I'll then turn the call over to Mike to review fourth quarter results and some of our expectations for 2022 before we take your questions. Let me start with some 2021 highlights. We earned $21.5 billion or $4.95 per common share in 2021. Expenses declined 7% from a year ago, reflecting lower operating losses and progress on our efficiency initiatives. Revenue increased 6% as we benefited from strong gains from equity securities and gain from sales of our student lending, asset management, and corporate trust businesses. We also have broad-based revenue growth across our businesses, including home lending, consumer and small business banking, credit card, auto, commercial real estate, banking and wealth and investment management. Credit quality improved significantly as the economy improved and our customers had high levels of liquidity. Our loan charge-off ratio declined from 35 basis points in 2020 to 18 basis points in 2021, and our allowance for credit losses declined by $5.7 billion. Deposits increased $78 billion or 6%, and loans grew 1% with declines in the first half of the year offset by a 5% increase in the second half. We also returned significant amount of capital to our shareholders, including increasing our common stock dividend from $0.10 per share to $0.20 per share in the third quarter, and we repurchased $14.5 billion of common stock, predominantly in the second half of the year after the return to the SCB framework. Our results in the fourth quarter also showed continued broad-based momentum. We earned $5.8 billion or $1.38 per common share. We grew loans by $32.6 billion or 4% and deposits by $12.1 billion or 1% from the…

Great. Thanks, Charlie, and good morning, everybody. Charlie summarized how we helped our customers, communities and employees last year on Slides 2 and 3, so I'm going to start with our fourth quarter financial results on Slide 4. Net income for the quarter was $5.8 billion or $1.38 per share -- common share. Our fourth quarter results included a $943 million net gain on the sales of our Corporate Trust Services business and Wells Fargo Asset Management. There could be future gains related to these sales due to post-closing adjustments and earn-out provisions; an $875 million decrease in allowance for credit losses as credit trends continue to be strong; and a $260 million impairment of certain leased railcars due to changes in demand for these cars. We also had $2.5 billion or $1.9 billion after non-controlling interest of equity gains, primarily from our affiliated venture capital and private equity businesses, the third consecutive quarter of strong returns in these businesses. Our effective income tax rate in the fourth quarter was approximately 23%, including the discrete impacts related to business divestitures. Our CET1 ratio declined to 11.4% in the fourth quarter, reflecting share repurchases and an increase in risk-weighted assets primarily from loan growth in the quarter. We repurchased $7 billion of common stock in the fourth quarter, partially offset by $1.4 billion of new issuances, predominantly for the annual matching contribution for our 401(k) plans. As a reminder, the regulatory minimum for our CET1 ratio will be 9.1% in the first quarter of 2022, reflecting a lower G-SIB capital surcharge. Turning to Credit Quality on Slide 6. Our net charge-off ratio was 19 basis points in the fourth quarter. Commercial credit performance continued to be strong with net loan charge-offs declining $10 million from the third quarter to 2 basis…

[Operator Instructions] Our first question of the day will come from John McDonald of Autonomous Research. Sir, your line is open.

Mike, I was wondering if you could give us some sense of if the asset cap remains in place, how much capacity do you have to grow loans? Obviously, the H8 data is picking up. It feels like loan growth is getting better for the industry. I just want to make sure that you're invited to that party and you guys can grow loans while staying under the asset cap.

Yes. John, thanks for the question. So just as you know, and I think it's implicit in what you asked, but the constraint for us on the asset cap is really on the deposit side. And so that's the part where we're actively taking action to make sure we've got the room we need particularly for our retail clients, and we're continuing to do that. On the loan side, we still have -- we're not constrained on growth on the loan side, so we still have plenty of room to continue to grow with our clients.

And could you give us some sense, in your NII outlook, what kind of loan growth you're building in and also liquidity deployment assumptions? And how you're thinking about liquidity deployment given where the curve is here?

Yes, sure. Embedded in -- on Slide 16, we've assumed kind of low to mid-single-digit growth when you compare fourth quarter '21 to fourth quarter '22. And so hopefully, we're optimistic that we'll be able to get there and maybe there's certainly some scenarios where it could be -- it could grow faster than that, but that's the assumption that we use there. Embedded in that column too on the chart in the loan growth and other balance sheet stuff is some modest redeployment into the securities portfolio, I'd say modest so sort of single -- kind of mid- to low-single digit sort of increases in the securities portfolio as well. And so, those are the assumptions embedded there. And I think as we look at where the curve is today, we're still being, overall, pretty prudent and patient, but we are in a very kind of small way, beginning to buy some securities in the portfolio.

The next question will come from Ken Usdin of Jefferies. Sir, your line is open.

Mike, you had mentioned that where you did a little bit better last year, $4 billion of gross saves versus what you originally thought at $3.6 billion, and you just commented that you still have a good line of sight as far as efficiency initiatives. Can you help us understand, like $3.3 billion for this year, how you're feeling about that? But more importantly, that line of sight, how far out do you have that? And do you continue to see an ability to take out this type of cost as you go forward even past this year?

Yes. No. And Ken, what we're really trying to do is make sure we embed this in the DNA of how we operate the place, and so that's ultimately what's going to be really important for us over the long run. And I think you're seeing that. The portfolio grew from 8 billion to 10 billion in terms of the initiatives that we've either executed on or in the process of executing. And so, I think you're seeing sort of that progress and growth there. So, you can sort of do the math of what we've accomplished so far, what we've identified for this year and what's left for next year. And I continue to believe that we've got more to do that we haven't sort of built into that portfolio yet. And so, the team continues to work on that every day. As you look at our confidence level on the $3.3 billion that we put into the forecast, we feel good. We've got really good line of sight. And I think given what the team was able to do last year, we have confidence that we'll be able to execute on that.

Let me just add to something that Mike said, which is I'm always -- I'm a firm believer on these efficiency initiatives, especially in a company like this. Even if you go back over a decade, one of the strengths of this company was never efficiency. It was far more on the revenue side. And so, as we get the efficiencies that we're starting to see, it is like peeling the onion back, where then the next set of opportunities become even clearer. And so, we're ginning up the same process that we did at the beginning of this venture where we came up with initial $8 billion to back and say, okay, now what's next in a very methodical way across the Company. So we feel -- I feel really good about what's in our numbers for next year. And we're going to continue to pursue this. And I think it's, just as you've seen in our numbers, it gives us the ability to spend our investments and to become more efficient overall as a company. So, I personally don't feel like we're close to done.

Got it. And if I could just ask the other side of that question too, which is that you're doing a little less than incremental investments versus what you did last year, how do you get comfortable that you're doing enough, especially what we're hearing from the industry pressures, not just inflation but just on the need to continue to, and you mentioned this, Charlie, about all the new things you're rolling out? But how do you land on that number? And how do you get the confidence that it's the right amount that you're reinvesting?

Yes, it's a good question. I think we do I think what most good companies do, which is they sit around tables and they ask everyone to come back with what you want to spend money on and then figure out what you can actually do. I think we've accomplished a tremendous amount on the technology side since Saul Van Beurden, who runs technology for us, was brought in. And I think we're going to try and spend as much as we physically can get done. But I think we're always asking the question of what's next. But I think the different position that we're in versus others is we're still in the ramping-up stage, which I also look at as opportunity because we have moved slower historically investing in some of these areas. And to the extent that we find more efficiency money, it gives us the opportunity to spend more broadly. But I do feel -- I think we as a company, we as a management team do feel good about what we're investing next year relative to where we stand as a company.

The next question comes from Betsy Graseck of Morgan Stanley. Your line is open.

I had two questions. One was on the overdraft fees that you mentioned. I think you said that it was like a $700 million impact, but we look at the regulatory filings and the regulatory filings show a higher level of overdraft fee run rate like in the $1 billion kind of range. So I'm just trying to understand what -- why would it be only $700 million?

Well, first of all, I mean, we're not eliminating overdraft fees. We're making a series of changes that we think makes sense for the consumer. We have an account that doesn't allow overdraft but we have an account that does allow overdraft. And so we think it's got -- it's more consumer-friendly than it was in the past, but we do continue to believe that there are a substantial number of customers out there that want us to pay overdraft on their behalf after they've worked through a bunch of the buffers and benefits we're giving them, and they're willing to pay for that.

Got it, okay. So the NSF fees will be eliminated but you'll have a different product that comes in?

Well, no, it's the same -- NSF fees will be eliminated entirely. Our overdraft fee will stay, but we've added a series of things such as we'll give you availability on direct deposits two days in advance. We'll give you an additional 24 hours after you otherwise would have been charged for an overdraft to cure it. So our overdraft fees will go down, but we're still going to be providing the overdraft product and we'll still be charging for it.

Okay. All right. So my bad because I thought overdraft and NSF were pretty similar, but that's not...

Yes, I think -- Betsy, think of the NSF fees as when you don't pay something into overdraft like a check and you return it, then historically, you would have charged a fee for that returned item. That's an NSF fee. The overdraft fees come into play when you actually pay something in overdraft.

Yes. Yes, I got it. Okay. So I was using too much jargon and that's my bad. All right. And then the second question is on the loan growth that you were talking about earlier in the prepared remarks and with John. LIBOR is no longer able to be used as a reference rate for C&I or CRE or any loan or any product rights starting Jan 1. How does that impact you? Is that -- could that be a benefit to your loan growth in C&I and CRE? And how are you thinking about shifting the reference rate that you're going to be using with your clients?

Well, I mean, we've started that shift already as you would imagine, right? And we started -- we stopped offering new -- effectively stopped offering new LIBOR-based loan products in the -- at some point in the fourth quarter. We've probably done, in the wholesale side, maybe including WIM, so take out the consumer mortgage business, we've done something like 4,500 or just under that new facilities based on SOFR, with the large majority -- and obviously, there's different ways to calculate SOFR, the large majority of those are using sort of a daily simple rate. So if SOFR moves, obviously, that will adjust. And so I think we're seeing clients start to get used to it and start to use it. Complementing what we're doing on the wholesale side is we've got -- we've stopped offering LIBOR-based ARMs last year. And so we've got, I don't know, tens of thousands -- a couple of tens of thousands at this point in terms of ARMs on the books using using SOFR there as well. And so I think it's starting to take hold.

Yes, I was just thinking like the capital markets might not be deep enough yet to be competitive against SOFR or product at least for the first half of this year. So could that give you a little advantage here in originating?

I don't see that having a huge impact on loan growth but maybe we'll be surprised a little bit, but I don't see that happening.

All right, because I didn't think the CLO bid was there yet for SOFR.

Yes. I guess I don't see that happening. I think there are starting to be some CLOs and SOFR, but like I don't see that happen being a big driver.

The next question comes from Erika Najarian of UBS. Your line is open.

Mike, my first question is for you. Could you give us a sense of what deposit growth or runoff assumption you have in your 2022 NII simulation? And similarly, what kind of deposit repricing you presume?

Yes. No, thanks, Erika. Look, as you can guess, like we're in a bit of a different spot than others, right, given our asset cap. And so, we're already constrained on deposits and so we're pushing away deposits every week now. And so, I don't expect this year to have much of a runoff in deposits. And if we start to see deposit levels going down, we'll stop pushing others off. And so I don't see that going to be a big driver for 2022. As you think about betas and deposit pricing assumptions, it's largely similar to what we saw the last rate cycle. But I would say that over the last three, four, five years, our deposit base has changed quite a bit. If you look at just based on the segments we are in, as a shorthand, where 57% of our deposits are in our consumer and small business banking business today. If you go back a number of years, that was probably closer to 43% or 45%. And so the remixing of sort of our deposits as a result of some of the actions we've had to take will kind of lower the overall beta for the first number of rate hikes. But I think it will look pretty similar to what we saw. And as you can imagine, since we're constrained on growing deposits, we're not going to be the leader on pricing likely as we go over the next number of quarters.

And just to clarify, so the betas in the last cycle, if I remember, were driven by a handful of CIB deposits, right? Clearly, that has been pushed out, given assets -- some of that has been pushed out, given asset cap restrictions. So embedded in this NII number is the experience of the last cycle that included the betas contributed by those deposits, whereas as we actually look out today, you have a much better and less rate-sensitive deposit base.

For sure. And the betas might be similar on the CIB deposits. We just have less of them as a percentage of the overall book, which lowers our overall beta.

Just the mix.

Yes, so -- but we'll see. And a lot of that will be driven by what we see in the competitive environment, right? So particularly on those wholesale deposits, but it will have a smaller impact on us than it did in the past, just given the mix.

Understood. And my last question is for Charlie. I think your investors are receiving very warmly what you and Mike have said about you're trying to change how this bank is thinking by constantly identifying cost saves to fund future investments. And as we look out in what looks like a more favorable rate backdrop and revenue backdrop, from a growth perspective for banks, do you see yourself reinvesting more of the identified savings as we enter a more favorable revenue backdrop?

I don't think -- I guess the way I'd put it is we don't think about it relative to what the rate scenario is or how much we're making in NII. I think, again, just think about where we are in the stage of our evolution, which is we're limiting our investments based upon just what can physically be done, not based upon how much we actually want to spend. I mean, there are always a couple of small places around the place where people want to spend and you do have to prioritize. I think a lot of the answer to your question will have to do, as we continue to do our work strategically, to determine where we want to create additional capabilities across the Company, we would expect the investment number to grow for sure. But also, as you know, we're spending a lot of money on infrastructure. And I'm not talking about the risk build-out. I'm just talking about the basic infrastructure of the Company. So I think as we sit here today, we still think that we have an opportunity to both become much more efficient and to continue to grow the level of investments that are going to drive business results inside the Company. And that's I would say, is focused upon where we think we need to get to relative to how much money we should be spending as a company as opposed to any upside that we had because of just the change in rates at this point.

Got it. That's clear. Thank you.

And no reason I would add, I just think for us, that just -- it takes the pressure off of us to think that if we were to think that way. If we were to say, okay, because if nothing we've done, rates have gone up, we then start spending a lot more money. We're still in this -- as I said earlier, we're still in this phase of challenging ourselves to become as efficient as we should be. And that -- having that pressure across the Company at this stage for us is still a good thing, just as it is to challenge people to come up with where we should be investing.

The next question comes from Matt O'Connor of Deutsche Bank. Your line is open.

So I wanted to ask about the cap. And can you just remind us like where you are in the process from your perspective? Have you implemented everything that you submitted in your proposal and it's just a matter of consistently executing on those changes? Or are there still, call it, material changes that you're making to address those issues?

Matt, I understand you're very consistent in wanting to know the answer and I certainly appreciate that. We have, across all of this regulatory work. We still have a substantial amount to do. It's really not right for me to talk about under any specific consent order where we think we are in the process because, again, what I said ultimately is what's going to matter is whether our regulators believe it's done to their satisfaction. And it's really unhealthy to get into the game of do we think we're done? Do we think they're making the right conclusions? I think it's on us to continue to do all that's necessary. And when they're comfortable that we've satisfied those obligations, they will make that determination. And so I just -- again, I'm sorry. I understand why you seek more detail, but it's just a difficult thing and probably not the right thing for us to get to that level of specificity.

I appreciate that. And I know I ask this line of question kind of every quarter, but obviously, it's such a key part for the stock. And I know I've also asked this kind of follow-up question. I think you have like a slew of local regulators on site or at least on site virtually. But I think there's a perception that it's kind of more of the central regulators that are kind of going to be the ones that make the call. And just remind us, in general, what is like the frequency of the dialogue with some more of those central regulators? And just any flavor you can add on the communication there?

I think it's fair that I think I would speak for most big banks that the level of dialogue with both local staff and with D.C. is substantial and meaningful. I mean, I can just tell you, even from my last role, it's the right thing to do. Again, we certainly have increased, I think, the level of dialogue that we have since the new team has gotten here. And it's hard to put specific how often we do it. But it's very, very regular. And I think it's true that all of the big banks, both the local staff as well as the staff in D.C. are both extremely important in their monitoring and the way they draw conclusions about the Company. And we worked hard to treat both extremely respectfully. There's a very direct and open communication on their side as far as I can tell. And as I said, we say the same to the local people as we do to the D.C. staff. But again, they're a very, very important part of the journey that we're on. And we want them to be as knowledgeable about what's going on here on all of these important issues. And we're always available and willing to have those conversations with them.

The next question comes from Scott Siefers of Piper Sandler. Your line is open.

Mike, I wanted to ask in a little bit more detail about rate positioning. I think I can figure this out mostly from your guidance disclosures but would still be curious to hear your thoughts. Just with your significant asset sensitivity, can you talk a little bit about sort of where you're most sensitive on the curve and sort of when and how you'll benefit like, put simply, is the first hike, the same benefit as the third and so on? Or where is it more -- where or when is it more or less powerful?

Yes. And to state the obvious, probably the short end of the curve is most meaningful, right? So when you look at just the whole curve shifting up, something like 2/3 of the benefit ends up being on the short end. And so that's going to be by far the most meaningful piece of it. I think for the first number of rate rises, it's hard to say exactly how many. I think the first three or four, though, it's pretty linear. And you can use our disclosures as a way to sort of model that. You get it earlier in the -- you get it in March, it's worth a quarter or more than if you get it in June and so forth. And so it's a pretty good guide at this point to use it that way.

Okay, perfect. And then just separately, so one of the criticisms on the story over the past few years is been that there are a number of competitors, a lot of smaller banks out there that sort of suggest that it's still pretty easy to steal talent and business from Wells Fargo. Your emerging loan growth seems to be running kind of contrary to what's been that argument for the last couple of years. Can you just sort of touch on that criticism and sort of where you are in terms of comfort with sort of stability and growth of the workforce?

Yes. Listen, I feel -- we feel great about the people that we have here. And I've listened to that for quite a while since I've been here. And when I ask people for specifics, very little seems to come back. Listen, it's a very, very competitive workplace. We lose people to competition. We hire people from competition of all sizes. I think I would say, as I've said before, when you look at the team that we have in place, both at a senior level all the way down to people that we cover customers, I feel great about it. And I can honestly tell you, we -- I'm trying to remember, Mike, keep me honest here, if we sat around a room and talked about, "Gee. Oh my God, look at all the people that we're losing to these smaller competitors and what are we going to do about it?" That conversation hasn't happened. And we're very knowledgeable about attrition that's happening at the Company. So if a small company hires a banker, it might be a big deal for them. We're lucky enough to have a very broad set of coverage officers. But that's not to say it's not competitive. So maybe they're right, but we feel good about the people that are here, and we're going to work hard to keep the people that are here.

Yes. And I would just add a little color. We've been happy at what we've been able to recruit in places like the investment bank. We've hired almost a few like two to three dozen sort of relatively senior investment bankers. We've hired a bunch of people in the commercial bank on the front line. And so I think as Charlie said, it's definitely competitive. And you could always find an anecdotal story of where somebody left to go do a bigger job at a smaller place or so forth. But we feel -- I think the teams feel good about being able to attract good people into the roles. And so obviously, we've got to be competitive on pay. We've got to be -- but I think people are attracted to the franchise and attracted to the sort of direction. And so far, it's been constructive there.

Yes. And I just want to say one other thing, which is especially when you get down into places like the Commercial Bank and different businesses that cover consumers. As we've talked about having to improve the talent in some parts of the Company, the talent that we have in those areas is really exceptional and it's really deep. And it's a huge strength of the Company. It's been a strength of the Company for a very long time. So again, I think that might tell you just how we think about the people that we have. And again, we never want to lose good people, but it happens. But it's not something that we worry about hurting the franchise at this point.

The next question will come from John Pancari of Evercore ISI. Your line is open.

On the low single-digit to mid-single-digit loan growth assumption, can you give us a little more detail on how that breaks out among the products, either in core C&I versus commercial real estate and consumer? And then separately, are there any areas of the loan book that you're really emphasizing at this point or seeing opportunities to ramp your activity similar to what you've been doing on the credit card side?

Yes. Look, it's a little bit of growth really across the board, John. And I think we're seeing opportunity really everywhere. And I think if you look at -- on the card side, we are expecting to see some growth in the card side. Some of that will be like through revolve balances. Some of that will be some of the intro balances coming off the new products, which will start to really pay off at the end of next year into the year after. We've been really happy with what we've seen in the auto space, which in this environment are pretty good assets, pretty short-lived assets and high quality in terms of what we've seen there. So we see some continued opportunity to grow there. And then on the consumer side, you have to go a little bit -- I'm sorry, on the mortgage side, you have to go a little bit below the covers. And if you look at the nonconforming space, we are seeing some growth there, which we think will continue as we go into the year. That's offset by these EPBO loans going away. But nonetheless, we see some growth there. So it's really -- and I gave some color on the Commercial Banking stuff in my comments. And we do expect some more opportunity in the multifamily and apartments and asset classes like that in commercial real estate. So in places like commercial real estate, we're being really targeted about it. And even where you see a little limited growth in places like office in the quarter, and even in places like that, cash to equity ratios are up, structures are better, spreads are better, given sort of what we've -- the way we're managing that. So we're being really cautious in that space. But I do think it will be a little bit of growth across the board if we're successful.

Okay, great. That's helpful. And then separately, on the buyback front, buybacks came a little bit better than we had expected in the fourth quarter. Maybe if you can just give us your thoughts on the outlook there and your appetite buybacks and also the -- how you're thinking about the dividend here in terms of deployment?

Yes. Look, I think we've talked about this before, and we're maybe in a different spot than others, just given some of the constraints we have on the asset cap. But we still feel like we've got excess capital. You can see that in the numbers yourself. We do expect that we'll continue to see some loan growth. So that will drive some RWA and so that -- we've got to be thoughtful about that. And so, as we laid out earlier last year, we said we would do at least $18 billion of buybacks through the four-quarter period ending next -- in the second quarter. That still is achievable and we potentially have the opportunity to go above that if we decide that's the right path either this quarter or next quarter. So we'll look at sort of how we feel with all the things we got to think about and make that decision. As you sort of think about the dividend, I think Charlie covered this a couple of times last year is, you think about a payout ratio that we hope to get to on a normalized basis to take out some of the onetime things that you see in the results, it's really kind of a 30% to 40% payout ratio is what we target over time. And that just takes some time to get there. And so I think we'll -- ultimately, that's a Board decision in terms of when and how much we increase the dividend. But we'll -- we're still marching down that path and -- but it takes some time to get there.

The next question comes from David Long of Raymond James. Your line is open.

You've talked in the past about the operating expense savings being a multiyear plan and/or initiative. And so with your guidance this year in the $51.5 billion range, should we be expecting 2023 operating expenses to still be below that level?

Yes. Look, at this point, as we think about it, our goal would be to see a net reduction next year. I think we'll obviously give you more guidance on how that's progressing as we get towards the end of the year. And that will be a function of what we think we can invest properly and what inflation looks like and a whole bunch of factors. But we're certainly given what our view on the efficiency side is targeting that, but we'll give you more guidance on that later in the year. I don't know if you have anything to add.

Okay. Great. And then as a follow-up, a little bit longer down the road, once the consent orders are mostly in the past, if you replace the cost today to improve and upgrade your internal operations with the expected cost to sort of just maintain proper controls and risk management for efforts, how much savings do you see there?

Yes. Look, I think there is some savings there, but that's -- our focus now is getting the work done and getting all the stuff in place and making sure it's operating properly. And so we're focused a little bit -- we're being thoughtful about how we implement that stuff, but our focus is a little bit less on making it the most efficient and optimized process. So we will get there when that stuff is all done and running for a while, but it -- that's a few years off, I think, in terms of really optimizing the risk and compliance.

The next question comes from Steven Chubak of Wolfe Research. Your line is open.

So just wanted to squeeze one more question in here just on the fee outlook. A fair amount of noise in the fee line this quarter, I know you didn't give an explicit fee guide for 2022. But as we reflect the impact of business sales, the overdraft change, some weaker mortgage banking and normalization equity gains, how should we be thinking about the right jumping-off point for fee income, just looking ahead to next quarter and '22, just more broadly?

Well, I think you just outlined it, to be honest. I think you just have to take the lines, right? And I know we've talked about this on calls before. Like if you look at one of the biggest fee lines, you take the investment advisory and other asset-based fees, that's a function of our client assets and what the equity market is doing primarily. And so that's probably something that you can model. And we've got -- that grew a bit as we went through the year last year. And then I think as you said, we're in the mortgage space, we'll see some -- the fourth quarter number in the consumer side is probably a good place to start your jumping-off point and modeling. And as I think others have spoken about too is we all expect the mortgage market to be down with refinancings really driving that. And how well we do will be a function of how well we're able to sort of penetrate on the purchase side. So hopefully, we're down a little less than what the market is, but that will be a function of what we can deliver. And so I think you just got to take each of those lines and sort of model it forward.

And maybe I'll just squeeze one more in, if I can. Just on the earlier discussion around excess liquidity deployment. It looked like you deployed some of that excess in the quarter. And yet, if I look relative to pre-pandemic levels, you've still seen a doubling of excess reserves and those deposits that you guys have on balance sheet, as you noted earlier, should be stickier as the Fed initiates QT just given some of the changes in deposit mix. I was hoping you could just size the amount of excess liquidity available for deployment today. And if the long end continues to grind higher, is there any appetite or willingness to deploy more aggressively than that mid-single-digit growth that's contemplated in the NII walk?

Yes. I mean, the first thing we'll be looking at is how fast loans are growing, right? So obviously, that's like the place you'd want to -- you'd see that liquidity get deployed first to support customers. And so that will be a function of what we think is going to happen over a series of quarters. But -- and I think when you look at the securities portfolio, we have done a lot in the last year, both in increasing our mortgage exposure, increasing our structured product CLO exposure. The place that you saw the decline was really in the treasury side. And so given sort of what's happening in the rate environment. And so I think you will see us start deploying more. And as I mentioned earlier, we've started in a very small way already given sort of what we've seen over the last couple of weeks. And I think really how much -- how fast we go or how much we go will be both a function of what we think is going to happen with rates but also how fast we think loans will grow. And so those two things, I think, will drive sort of the pace. And at this point, embedded in our outlook or considerations there, we do expect a modest increase in the portfolio. And so we'll see how -- but we'll make that determination based on all the factors there that I mentioned.

The final question for today will come from Gerard Cassidy of RBC Capital Markets. Your line is open.

Charlie, you talked about joining the Net-Zero Alliance as with some of your peers. Can you frame out for us, as you guys get deeper into that and your peers do as well? How should we try to estimate what types of risks you might be coming up against? And how do you guys monitor those risks?

Listen, I think it's a great question. I think it's the question that everyone is asking. And I think the whole point about joining these alliances is to ensure that we're all benefiting from each other's experiences, and those that have experienced this in other parts of the world to understand how to actually think about that. What we're doing is we're going through how we think the impact of climate on a much longer-term basis can impact all of the different businesses from a risk perspective but also understanding where the opportunities for us are. And so whenever we talk about where we're going on climate with our goal to get to net zero, I think people too often jump to that means we're going to stop doing things. First of all, what we're trying to do is to assure that we're doing everything we can to help all of our clients transition. And that doesn't mean walking away from clients. It means helping them invest in areas, whether it is -- and we can do that in lots of different ways across the Company with our own balance sheet or the public markets to invest in very, very different ways. And I think what you'll start to see from us and others is a lot more disclosure on what the embedded risks are, but also all the different things that we're doing to play our part in reducing emissions more broadly. So I just think it's a question that I think we should continue to ask as we all continue to provide more significant disclosures than we've all done in the past on the topic.

I appreciate that. Thank you. And pivoting to the follow-up question on credit, obviously, your guys' credit is fantastic like the industry, considering what we just came through. Can you give us some color on the reserve? I assume as we normalize credit, you and your peers, how should we be looking at the reserve building over the next -- in 2022 going into 2023, the loan loss reserve building, that is?

Well, let me start, Mike, and then you just pick up. I think the one thing I obviously, I think you guys all know this is not everyone starts at the same position when you look across what people have done with reserving across the industry. I think we feel very good about where we are relative to what we're seeing. We all have to make determinations. Remember, on a forward-looking basis as to what the embedded losses are. And I think everyone's got a different point of view on that on the way that looks. And I think we're at the -- we're doing the right thing, but I still think it's our assumptions are appropriate and conservative. And beyond that, remember, the idea of looking forward in terms of what's going to change in addition to just loan growth and making sure that we provide for growth in the balance sheet. It's going to depend on the ultimate outcome of the performance of the economy. And so as we sit here today, we feel very, very good about it. But it can take lots of different turns. And hopefully, we're still insulated from some level of downturn from where we sit today, given the assumptions that we've made because of the uncertainty that exists in the environment. So I'm not worried about where we are in 2022 personally, but I think as we look beyond that, it's a living breathing calculation.

Listen, thank you very much, everyone, for the time, and we appreciate it, and we will talk to you over the next quarter. Take care. Bye-bye.

Thanks, everyone, for your participation on today's conference call. At this time, all parties may disconnect.