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CNBC Exclusive: CNBC Excerpts: Wells Fargo CEO Tim Sloan Speaks with CNBC’s Wilfred Frost Today

WHEN: Today, Friday, March 17th

WHERE: CNBC's Business Day programming

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Wells Fargo CEO Tim Sloan and CNBC's Wilfred Frost today, Friday, March 17th. Following are links to the video on CNBC.com:http://video.cnbc.com/gallery/?video=3000602264, http://video.cnbc.com/gallery/?video=3000602278, http://video.cnbc.com/gallery/?video=3000602379 and http://video.cnbc.com/gallery/?video=3000602384.

All references must be sourced to CNBC.

SLOAN ON WARREN BUFFETT

WELL, I DON'T KNOW IF I'M GOING TO BE ABLE TO DO ANYTHING TO REASSURE HIM. I THINK OUR PERFORMANCE IS GOING TO REASSURE HIM AS TO WHETHER OR NOT HE SHOULD CONTINUE TO BE OUR LARGEST SHAREHOLDER. WE HAVE A VERY DIRECT CONVERSATION. I THINK HE'S BEEN VERY DIRECT IN TERMS OF SOME OF THE MISTAKES THAT WE'VE MADE. I AGREE WITH HIM. WE HAD AN INCENTIVE PLAN THAT DROVE THE WRONG BEHAVIOR AND WE DIDN'T GET AT IT FAST ENOUGH. THAT'S WHAT WARREN HAS SAID. IS THAT CORRECT? ABSOLUTELY. BECAUSE THAT'S WHAT WE BELIEVE. AND THAT'S WHAT WE'RE FIXING.

SLOAN ON CROSS-SELLING SCANDAL

TIM SLOAN: WE MADE SOME SIGNIFICANT MISTAKES. WE HAD AN ISSUE AS IT RELATES TO OUR INCENTIVE COMPENSATION PLAN. WE SHOULD HAVE DEALT WITH IT SOONER. WE SHOULD HAVE DEALT WITH IT FASTER. WE HAD TO OWN UP FOR THAT. WE LET OUR STAKEHOLDERS DOWN. IT'S AFFECTED THE REPUTATION. WE'VE GOT TO REBUILD THAT TRUST, AND THAT'S MY PRIMARY RESPONSIBILITY RIGHT NOW.

WILFRED FROST: AND YOU MENTIONED THE POLITICS OF THINGS. THERE WAS AN ELECTION PENDING. THERE WAS LOTS OF ANTI-BANKER RHETORIC AT THE TIME. A DIVIDED NATION, YOU COULD SAY. WERE YOU A LITTLE BIT OF A VICTIM OF THAT AT THE MOMENT?

SLOAN: YOU KNOW WHAT, I WOULDN'T CALL US A VICTIM. BECAUSE AGAIN, WHAT HAPPENED AT WELLS FARGO WAS OUR RESPONSIBILITY. WE NEEDED TO OWN UP TO IT AND WE NEEDED TO FIX IT AND THAT'S WHAT WE'RE DOING RIGHT NOW.

FROST: IN TERMS OF WHEN THE NEWS BROKE ITSELF LAST FALL, WE'VE TALKED ABOUT THE ACTUAL IMPACT OF THE BUSINESS, BUT WAS THERE A SENSE THAT AT WELLS FARGO THE TEAM UNDERESTIMATED THE POTENTIAL PR FALLOUT OF THIS ISSUE AT THE TIME?

SLOAN: YOU KNOW, HINDSIGHT IS A GREAT THING BECAUSE YOU'RE INCREDIBLY INTELLIGENT BECAUSE YOU KNOW EXACTLY WHAT HAPPENED. KNOWING WHAT I KNOW RIGHT NOW, I THINK IT'S FAIR TO SAY THAT WE UNDERESTIMATED THE IMPACT AND WE PROBABLY WOULD DO THINGS DIFFERENTLY. I CAN SAY THAT ABOUT A HUNDRED DECISIONS WE MAKE AT WELLS FARGO EVERY DAY.

FROST: I WANT TO MOVE ON TO THE BOARD REVIEW. I KNOW YOU CAN'T SPECIFICALLY COMMENT ON WHAT'S LIKELY TO COME OUT IN THAT. IT'S ONGOING AND YOU'RE NOT PART OF THE BOARD REVIEW YOURSELF. THERE'S BEEN TWO OFFICIAL RELEASES, THOUGH, FROM THE BOARD REVIEW SO FAR. ONE IN WHICH EIGHT PEOPLE, INCLUDING YOURSELF, WERE ANNOUNCED AS NOT GETTING A CASH BONUS FOR LAST YEAR. THE BOARD REASON SAID WAS PROMOTING ACCOUNTABILITY, PUTTING THE COMPANY FIRST, AND NOT RELATED TO IMPROPER BEHAVIOR. THE OTHER RELEASE THAT WE'VE ALREADY GOT FROM THE BOARD REVIEW IS THAT FOUR PEOPLE LOST THEIR JOBS FOR CAUSE RELATING TO THE SALES PRACTICE SCANDAL. WERE YOU VERY PLEASED WHEN YOU HEARD THAT YOU FELL INTO THAT FIRST GROUP RATHER THAN THE SECOND GROUP?

SLOAN: WELL, IT WASN'T A SURPRISE TO ME BECAUSE I KNOW MY INVOLVEMENT IN THE COMPANY, AND I KNOW THE THINGS I DID AND DIDN'T DO AS IT RELATED TO THE RETAIL SALES PRACTICES ISSUES. FROM MY PERSPECTIVE, I THINK IT WAS ENTIRELY APPROPRIATE THE SENIOR LEADERSHIP TEAM TOOK RESPONSIBILITY. I THINK YOU NEED TO SEE THAT MORE IN CORPORATE AMERICA, WHEN CORPORATIONS DON'T LIVE UP TO THE EXPECTATIONS OF THEIR SHAREHOLDERS. AND AS CEO, A LOT OF WHAT THE BOARD DECIDED WAS ACTUALLY RECOMMENDED BY ME AND WE HAD A VERY GOOD DISCUSSION ABOUT IT. I THINK IT'S ENTIRELY APPROPRIATE.

SLOAN ON FIXING MISTAKES

WE MADE SOME MISTAKES. WE MADE SOME SIGNIFICANT MISTAKES. WE'VE OWNED UP TO THEM. AND WE'RE MAKING A LOT OF PROGRESS… WE APOLOGIZE TO ALL OF OUR STAKE HOLDERS FOR LETTING THEM DOWN. WE ARE MAKING CHANGES TO MAKE IT RIGHT BY OUR CUSTOMERS, BY OUR TEAM MEMBERS, FIXING WHAT WAS BROKEN AND THEN BUILDING A BETTER BANK.

SLOAN ON CAPITAL LEVELS

IT WOULD BE A LITTLE BIT LOWER THAN IT IS RIGHT NOW…OUR MINIMUM CAPITAL REQUIREMENTS BY REGULATION ARE 9%. WE THINK IT'S PRUDENT TO OPERATE WITH A BIT OF A CUSHION, SO THAT BRINGS US UP TO 10%. WE ENDED THE YEAR AT ABOUT 10.7, 8, 9, SOMETHING IN THAT RANGE. SO OVER TIME, WE'D LIKE TO GET DOWN TO THAT 10% LEVEL. WE DON'T NEED TO DO IT DAY ONE, BUT OVER TIME WE WANT TO RETURN MORE OF OUR EXCESS CAPITAL TO OUR SHAREHOLDERS.

SLOAN ON DEREGULATION

THE IMPORTANT THING IS TO LOOK AT WHAT'S GOOD FOR THE ECONOMY. WHAT'S GOOD FOR THE ECONOMY IS ECONOMIC GROWTH AND MORE JOB CREATION. THAT'S THE FOCUS. IF THAT HAPPENS, THAT'S GOOD FOR BANKS, THAT'S GOOD FOR WELLS FARGO, THAT'S GOOD FOR EVERYBODY.

SLOAN ON LIVING WILL TEST

MY GUESS IF WE FAIL IT THREE TIMES IN A ROW I PROBABLY WON'T BE SITTING HERE FOR THE NEXT INTERVIEW. SO I UNDERSTAND THAT. WE WERE VERY DISAPPOINTED THAT WE FAILED. WE LET OUR SHAREHOLDERS DOWN. WE LET OUR REGULATORS DOWN. THAT IS NOT GOING TO HAPPEN. OUR TEAM HAS BEEN WORKING INCREDIBLY HARD TO MAKE SURE THAT WE'RE RESPONDING TO THE CONCERNS ABOUT LEGAL ENTITIES AND SHARED SERVICES THAT WE HEARD FROM THE FDIC AND THE FED. AND I'M CONFIDENT IN OUR TEAM AND I'M CONFIDENT IN THE RESUBMISSION THAT WE'LL BE SENDING IN LATER THIS MONTH.

SLOAN ON THE SALES SCANDAL IMPACT

SLOAN: WE'VE BEEN PUTTING OUT A MONTHLY UPDATE, AS YOU'VE SEEN. AND WHAT YOU SEE IN THAT MONTHLY UPDATE IS THAT OUR CHECKING ACCOUNT GROWTH, PRIMARY CHECKING ACCOUNT GROWTH, A CUSTOMER THAT'S CALLING US THEIR PRIMARY BANK, IS GROWING AT ABOUT 1% YEAR-OVER-YEAR. PRE-CRISIS, WE WERE IN AN ENVIRONMENT WHERE WE WERE GROWING AT ABOUT 4%. SO YOU'RE ABSOLUTELY RIGHT. WE'RE GOING TO WORK VERY HARD TO GET BACK TO THOSE LEVELS. IT'S NOT GOING HAPPEN IMMEDIATELY.

FROST: THE CREDIT CARD NUMBERS, THOUGH, PARTICULARLY SOFT, WOULD YOU SAY?

SLOAN: THEY'RE DOWN. THERE'S NO QUESTION ABOUT THAT, BECAUSE THE AMOUNT OF REFERRALS THAT ARE COMING FROM OUR BRANCHES ARE DOWN. HAVING SAID THAT, WHEN YOU LOOK AT THE FOURTH QUARTER CREDIT CARD RESULTS, WE STILL GREW IN TERMS OF ACTIVITY AND BALANCES IN THE HIGH SINGLE DIGITS, WHICH WE'RE VERY EXCITED ABOUT.

FROST: IN TERMS OF THE OVERALL IMPACT ON SALES THAT THIS SCANDAL HAS HAD FOR YOU, YOU SAID IN THE PAST THAT YOU THOUGHT THINGS WOULD GET WORSE BEFORE THEY GET BETTER. WHERE ARE WE ON THAT SORT OF SCALE OF THINGS? IS THE WORST BEHIND YOU? IS IT IMPROVEMENT IN SALES NUMBERS IN TERMS OF TRENDS FROM HERE?

SLOAN: OH, I THINK SO. I THINK SO. BECAUSE WE'VE ACCOMPLISHED ALL THE BUSINESS CHANGES THAT WE WANTED TO ACCOMPLISH. AND NOW IT'S ABOUT EXECUTION.

FROST: LET'S TALK ABOUT THE SPECIFIC COSTS OF THIS SCANDAL IN TERMS OF THE MONETARY BOTTOM LINE. YOU'VE SAID IN THE PAST IT WOULD COST, "TENS OF MILLIONS OF DOLLARS TO FIX." IS THAT STILL YOUR ESTIMATE, THAT IT'S TENS OF MILLIONS? OR HAVE YOU NOW REALIZED THERE'S MORE SYSTEMS OR WHATEVER YOU'VE GOT TO PUT IN PLACE, AND THAT THAT NUMBER COULD GO UP?

SLOAN: WELL, THE TENS OF MILLIONS NUMBER THAT BOTH OUR CFO, JOHN SHREWSBERRY, AND I HAVE TALKED ABOUT, IS ON A QUARTERLY BASIS. AND IT'S GOING TO COST WHAT IT'S GOING TO COST. SO I DON'T KNOW WHAT IT'S GOING TO COST TOMORROW MORNING OR THE NEXT QUARTER. BUT SO FAR, THAT'S BEEN THE ACTUAL COST.

SLOAN ON BONUS PAY

SLOAN: FROM MY PERSPECTIVE, I THINK IT WAS ENTIRELY APPROPRIATE THE SENIOR LEADERSHIP TEAM TOOK RESPONSIBILITY. I THINK YOU NEED TO SEE THAT MORE IN CORPORATE AMERICA. AND WHEN CORPORATIONS DON'T LIVE UP TO THE EXPECTATIONS OF THEIR SHAREHOLDERS. AND AS A CEO, A LOT OF WHAT THE BOARD DECIDED WAS ACTUALLY RECOMMENDED BY ME. AND WE HAD A VERY GOOD DISCUSSION ABOUT IT. I THINK IT'S ENTIRELY (NOISE) APPROPRIATE.

FROST: AND THE FACT THAT YOU DIDN'T GET A CASH BONUS LAST YEAR, ALTHOUGH YOUR PERFORMANCE WAS NOT IMPROPER, AS WE KNOW, WAS IT THEREFORE NOT SUFFICIENT OR NOT SATISFACTORY?

SLOAN: IN TERMS OF WHY I DIDN'T –

FROST: WHY YOU DIDN'T GET THE CASH BONUS.

SLOAN: WELL, I THINK THE REASON I DIDN'T GET IT IS BECAUSE WE LET OUR SHAREHOLDERS AND A NUMBER OF OUR STAKEHOLDERS DOWN. RIGHT? AND WHEN THAT HAPPENS, IT SHOULD BE THE RESPONSIBILITY OF THE EXECUTIVE TEAM TO OWN UP TO THAT. WOULD I HAVE LIKED TO GET A CASH BONUS? OF COURSE. BUT IN THAT SITUATION, WAS IT APPROPRIATE? ABSOLUTELY NOT.

FROST: AND YOU'LL FORGIVE ME, TIM, FOR ASKING WHETHER YOU CAN UNDERSTAND IF THIS SOUNDS A LITTLE BIT RICH, THIS RHETORIC YOU'RE GIVING ME NOW. BECAUSE YOU DID GET A NET PAY INCREASE OF 17%. OF OVER $2 MILLION. YOUR CASH BONUS IN 2015 WAS $1 MILLION. YOUR STOCK BONUS THIS YEAR WAS $10 MILLION. SO IT DOESN'T REALLY SOUND LIKE MUCH OF A PUNISHMENT WHEN YOU CONSIDER HOW MUCH IN TOTAL YOU GOT PAID, AND THAT YOU GOT A PAY RISE.

SLOAN: SURE. SO THE REASON I GOT A PAY INCREASE LAST YEAR WAS BECAUSE I GOT A NEW JOB. I GOT PROMOTED. RECALL IN NOVEMBER OF 2015 I WAS MADE PRESIDENT AND CHIEF OPERATING OFFICER. AND THEN IN OCTOBER OF THIS YEAR, I WAS MADE CEO. SO I HAD TWO JOB CHANGES THAT OCCURRED DURING THAT PERIOD. THE BOARD DECIDES WHETHER OR NOT MY PAY IS COMPETITIVE. AND THAT'S THEIR DECISION. AND I'LL RESPECT THAT DECISION. HAVING SAID THAT, IN ADDITION TO THE CASH BONUS IMPACT, THE EQUITY THAT WAS VESTING FOR ME THIS YEAR THAT I WAS GRANTED IN 2014 WAS ALSO CUT IN HALF.

FROST: BUT OVERALL, OF COURSE, STILL A SIGNIFICANT AMOUNT OF PAY.

SLOAN: OH, NO QUESTION ABOUT THAT.

FROST: AND A PAY INCREASE, IT'S MIXED MESSAGING.

SLOAN: I DON'T THINK IT'S MIXED MESSAGING. BECAUSE THE PAY THAT I GET IS REFLECTIVE OF MY JOB RESPONSIBILITY, JUST LIKE EVERYBODY. MY JOB IS TO BE CEO OF ONE OF THE MOST VALUABLE FIRMS IN THE WORLD. RIGHT? WE HAVE THE SECOND HIGHEST MARKET CAP IN THE INDUSTRY TODAY. WE HAVE 269,000 EMPLOYEES, TEAM MEMBERS, RIGHT, WHO ARE THE GREATEST PEOPLE ON FACE OF THIS PLANET, IF YOU ASK ME. WE HAVE 72 MILLION CUSTOMERS. AND THE BOARD DECIDES WHETHER OR NOT MY COMPENSATION IS APPROPRIATE. AND THAT'S FINE.

SLOAN ON INTEREST RATES

SLOAN: WELL, IT'S VERY IMPACTFUL, BECAUSE IT'S IMPORTANT FOR OUR CUSTOMERS. THE REASON THE FED INCREASED INTEREST RATES IS BECAUSE WE'RE SEEING A GROWING ECONOMY, WE'RE SEEING THE REDUCTION IN UNEMPLOYMENT, SO MORE PEOPLE ARE EMPLOYED. THERE'S A LITTLE BIT OF CONCERN ABOUT INFLATION. AND SO WHAT THE FED IS REACTING TO IS THE FACT THAT THE ECONOMY'S STRONGER, WE'RE CREATING MORE JOBS. THAT'S GOOD FOR THE COUNTRY. IT'S GOOD FOR OUR CUSTOMERS. AND THEN IT'S GOOD FOR WELLS FARGO.

FROST: AND OF COURSE WE'RE STILL AT THE VERY EARLY STAGES OF THIS RATE HIKE CYCLE WHERE, YOU KNOW, INTEREST RATES HAVEN'T GONE UP MUCH YET.

SLOAN: RIGHT.

FROST: IS THERE A LEVEL YOU HAVE IN YOUR MIND WHEN IT STARTS TO ACTUALLY OFFSET THINGS THE OTHER WAY, WHEN YOUR CUSTOMERS THEN START FINDING IT MUCH HARDER TO MEET THEIR MONTHLY PAYMENTS?

SLOAN: YEAH. THERE IS. BUT IT'S REALLY A FUNCTION OF ECONOMIC GROWTH. SO FOR EXAMPLE, IF YOU SAID, "GOSH, WE'RE GONNA BE IN A 2% GDP ENVIRONMENT, SHOULD WE HAVE RATES INCREASE A LOT MORE FROM HERE?" PROBABLY NOT. BUT IF WE WERE GOING TO BE IN 4 AND 5%, THEN I THINK THE ECONOMY COULD AFFORD HIGHER RATES. HAVING SAID THAT, IN THE SHORT TERM FOR THE COMPANY, THERE'S SOME IMPACT OF HIGHER RATES. WE'RE SEEING A REDUCTION IN MORTGAGE ORIGINATION BECAUSE REFINANCE ACTIVITY IS DOWN. BUT OVERALL, IT IS GOOD FOR OUR CUSTOMERS.

FROST: AND THE RECENT DATA THAT WE'VE SEEN ON LOAN GROWTH FROM VARIOUS SOURCES, INCLUDING THE FED, HAS ACTUALLY BEEN A LITTLE SOFTER THE LAST TWO MONTHS IN PARTICULAR, TO THE TRENDS OF LATE LAST YEAR. YET, ACROSS THE COUNTRY AND IN THE STOCK MARKET, THERE'S THIS ENORMOUS OPTIMISM IN TERMS OF THE GROWTH OUTLOOK. HOW DO YOU SQUARE OFF THOSE TWO THINGS. WHY HAS LOAN GROWTH DIPPED RECENTLY?

SLOAN: WELL FIRST, THERE'S ALWAYS A SEASONAL REDUCTION IN LOAN GROWTH IN THE FIRST QUARTER. ON THE CONSUMER SIDE, YOU SEE THAT IN THE REDUCTION OF CREDIT CARD, FOR EXAMPLE. YOU SEE THAT IN LOWER MORTGAGE DEMAND, JUST FROM A SEASONAL STANDPOINT, THAT FEWER PEOPLE ARE BUYING NEW HOMES. BUT WE HAVE SEEN IN OUR CORPORATE AND COMMERCIAL BUSINESS SLOWER LOAN GROWTH THAN WE'VE HAVE SEEN IN PRIOR QUARTERS. AND SO WE'RE NOT CONCERNED ABOUT THAT, BECAUSE THE FOURTH QUARTER WAS ACTUALLY VERY STRONG. YEAR-OVER-YEAR IN THE FOURTH QUARTER, YOU SAW OUR LOAN GROWTH UP ABOUT 7%, WHICH WE WERE VERY EXCITED ABOUT. SO YOU GOT TO BE CAREFUL, YOU KNOW, WHEN YOU THINK ABOUT THE BEGINNING AND END OF THE QUARTER, AS IF THAT'S, YOU KNOW, DESCRIBING WHAT'S REALLY GOING ON IN THE ECONOMY.

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