00:00I want to talk a little bit about the consumer and then we can get to what you're doing operationally.
00:03But let's start with the consumer if we can.
00:05What are you noticing and how is that different to what we've seen previously over the past few years?
00:11Well, the consumer appears to be continuing to spend.
00:16They're very healthy.
00:18And you had the headline.
00:20They spent in April at a rate of about 1% and that's our credit and debit data.
00:26And that was just slightly cooler than they spent in March at 1.1% growth year over year.
00:34So they have momentum, but it's moderating a little bit.
00:38And I think the driver of that is that they're supported by continued wage growth.
00:43So we saw good wage growth in April, both in higher income and lower income, though it is moderating a little bit.
00:51So that theme is still healthy, but moderating.
00:54Holly, I'm pleased you broke up the income groups because we sit on that just for a beat.
00:58The low income group have been squeezed for a while.
01:00We've seen that in data repeatedly throughout this cycle coming out of the pandemic.
01:04Do you see any stress going up to the upper income cohorts?
01:08No.
01:09So the lower income household wage growth, just to give you the numbers, picked up by about 1.5% in April.
01:15And that was stronger than March.
01:18So March was 1.4%.
01:19So that wage growth in the lower income cohort increased a little bit.
01:25And I think that that wage growth is continuing to support the consumer and the consumer spending.
01:31When you get deeper into the data, some of the credit data, as an example, the lower income households are continuing to hold up.
01:39Overall, we've seen 30-day delinquencies come down a tad.
01:43So I think that consumer still is showing signs of good health.
01:49This really raises a question, Holly, about how much we can really count on some of the soft data, which indicated an incredible amount of nervousness and pessimism among consumers in the United States during the month of April, in particular after April 2nd.
02:03Are you saying you're just not seeing it, that, frankly, people can go out and gripe about how concerned they are about the future of the world, but then they go out in a spending spree?
02:14We're not seeing it.
02:15And I think we often talk internally about, you know, you have to separate what consumers are saying versus what they're doing, what we're seeing in our data.
02:24And that data is telling us that they're continuing to spend, although it is moderating.
02:31And so we saw in April restaurants, good spending there, but we did see a dip down in airline and lodging, leisure travel a little bit.
02:41So consumers are adjusting slightly, which leads to that, you know, the momentum is dipping just slightly.
02:48But you really do have to separate what consumers are saying and many of the confidence and sentiment numbers versus what they're doing, what we're seeing in our data, whether it's spending data, payment data or credit data.
03:02Holly, I want to congratulate you.
03:04You have basically just received a pretty big promotion.
03:07You're running much more of the consumer bank and you come at a time when there's a real question around how different the scenario is in different parts of the United States,
03:17how it's not a monolithic story at all and how different regions are feeling very different realities depending on what their local economies really depend on.
03:25How different is the scenario that you're looking at in the United States right now depending on which region you're in?
03:34So we obviously have across the country footprint.
03:39We have 3,700 financial centers in all of these local communities.
03:43So, you know, our goal is to really deliver for our consumer clients, you know, approximately 70 million of them uniquely to what their situation is, whether that's geographic or that's individual.
03:55So, you know, we are there to adjust and course correct based on what our clients are telling us and based on what they need.
04:04Holly, how are the interactions changing between customers?
04:07How different are they now and how does that change what you need out of your physical footprint?
04:11So our physical, our strategy is all about physical footprints supported by digital.
04:18And it's really the combination of the both that I think lead to the power of how we can deliver for the consumer client.
04:25So those 3,700 financial centers in local communities coupled with world-class digital capabilities, those digital capabilities continue to grow.
04:36They continue to advance and consumers love them.
04:40At the same time, it does not substitute for face-to-face interaction that we get in our financial centers when a consumer client really wants advice and guidance in their financial position.
04:54So it's the combination of the two that I think really deliver the power for our consumer clients.
05:00Holly, how much have you been able to expand the physical footprint in part because of the turmoil that happened?
05:04It feels like 10 years ago, but not that long ago, I guess March 2023, in terms of some of the regional banking turmoil.
05:13How much of this has just accelerated since then as you look to take market share?
05:18So we continue to expand into new markets.
05:22We continue to build new financial centers in communities where we need them.
05:26So we will continue to advance that agenda across the country.
05:33New markets.
05:35Idaho is a recent new market that we've entered, and we've got more coming.
05:41So we will continue to expand in new markets.
05:44We'll adjust our footprint in existing markets, opening new financial centers.
05:48Over the last decade, we've opened roughly more than 200 financial centers.
05:53And as we look forward, we expect to continue to open 150 more over the next two to three years.
06:00Holly, I was dead wrong about all this.
06:01I thought as we change these interactions, we'd end up with a smaller footprint, that it would give banks a reason to cut costs and reduce their physical footprint.
06:10Holly, why is that not happening?
06:12And is there space for that to happen in the future?
06:15Yeah, no, you're not wrong.
06:17It has happened.
06:18If you look over the last decade, we started with 6,000 financial centers.
06:23We are down to 3,700.
06:25That may tick down slightly overall as we do things like consolidate, you know, close two financial centers in a local community and open one new financial center.
06:36So you will continue to see at the margins some reductions, but that physical footprint, that engagement with our clients in their local community is incredibly important as a complement to the digital reach that we have with our clients.
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