Diluted EPS of $0.84 included the impact of
a discrete litigation accrual of $(0.20) per share for previously
disclosed mortgage-related regulatory investigations
Wells Fargo & Company (NYSE:WFC):
- Financial results:
- Revenue of $21.9 billion, down 2
percent from third quarter 2016
- Net interest income of $12.5 billion,
up $524 million, or 4 percent
- Noninterest income of
$9.5 billion, down $926 million, or 9 percent
- Noninterest expense of
$14.4 billion, up $1.1 billion, or 8 percent, including
$752 million higher operating losses
- Third quarter 2017 included a $1
billion discrete litigation accrual (not tax-deductible), or
$(0.20) per share, for previously disclosed mortgage-related
regulatory investigations
- Total average deposits of $1.3
trillion, up $44.8 billion, or 4 percent
- Total average loans of $952.3 billion,
down $5.1 billion, or 1 percent
- Return on assets (ROA) of 0.94 percent
and return on equity (ROE) of 9.06 percent
- Solid credit quality:
- Net charge-offs of $717 million, down
$88 million from third quarter 2016
- Net charge-offs were 0.30 percent of
average loans (annualized), down from 0.33 percent
- Nonaccrual loans of $8.6 billion,
down $2.4 billion, or 22 percent
- No reserve build or release1,
consistent with third quarter 2016
- Strong capital position while returning
more capital to shareholders:
- Common Equity Tier 1 ratio (fully
phased-in) of 11.8 percent2
- Returned $4.0 billion to
shareholders in the third quarter through common stock dividends
and net share repurchases
- Net share repurchases of $2.0 billion,
up 59 percent from third quarter 2016
- Period-end common shares outstanding
down 96.0 million shares from third quarter 2016
- Quarterly common stock dividend of
$0.39 per share, up from $0.38 per share in third quarter 2016
Final financial results and other disclosures will be reported
in our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017, and may differ materially from the results
and disclosures in this document due to, among other things, the
completion of final review procedures, the occurrence of subsequent
events, or the discovery of additional information.
Selected Financial Information
Quarter ended
Sep 30, Jun
30, Sep 30,
2017
2017 2016
Earnings Diluted
earnings per common share
$ 0.84 1.07 1.03 Wells
Fargo net income (in billions)
4.60 5.81 5.64 Return on
assets (ROA)
0.94 % 1.21 1.17 Return on equity (ROE)
9.06 11.95 11.60 Return on average tangible common equity
(ROTCE)(a)
10.79 14.26 13.96
Asset Quality Net
charge-offs (annualized) as a % of average total loans
0.30
%
0.27 0.33 Allowance for credit losses as a % of total loans
1.27 1.27 1.32 Allowance for credit losses as a % of
annualized net charge-offs
426 462 396
Other Revenue
(in billions)
$ 21.9 22.2 22.3 Efficiency ratio (b)
65.5 % 61.1 59.4 Average loans (in billions)
$
952.3 956.9 957.5 Average deposits (in billions)
1,306.4 1,301.2 1,261.5 Net interest margin
2.87 % 2.90 2.82
(a) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity, which utilizes tangible
common equity, is a useful financial measure because it enables
investors and others to assess the Company's use of equity. For
additional information, including a corresponding reconciliation to
GAAP financial measures, see the "Tangible Common Equity" tables on
page 35.
(b) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
Wells Fargo & Company (NYSE:WFC) reported net income of
$4.6 billion, or $0.84 per diluted common share, for third
quarter 2017, compared with $5.6 billion, or $1.03 per share,
for third quarter 2016, and $5.8 billion, or $1.07 per
share, for second quarter 2017.
Chief Executive Officer Tim Sloan said, “Over the past year we
have made fundamental changes to transform Wells Fargo as part of
our effort to rebuild trust and build a better bank. While our
financial performance in the third quarter included the impact of a
litigation accrual for previously disclosed, pre-crisis
mortgage-related regulatory investigations, I am proud of the
commitment of our 268,000 team members who put our customers first.
We saw total average deposit growth; loan growth in our residential
mortgage, credit card and subscription finance portfolios; as well
as higher assets under management in Wealth and Investment
Management. We also continued to invest in customer-focused
innovation and have begun the rollout of our online mortgage
application and “Intuitive Investor,” our online platform for
digital investing and professional advice. We’re also committed to
helping our communities recover from the devastation of the recent
hurricanes by providing payment relief and proactively waiving fees
for impacted customers, and our foundation donated
$2.6 million for hurricane relief efforts.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo
reported $4.6 billion of net income in the third quarter, which
included the impact of the $1 billion, or $(0.20) per share,
discrete litigation accrual. We continued to see good credit
performance and our liquidity and capital remained exceptionally
strong. During the quarter, our first under our 2017 Capital
Plan, we returned $4.0 billion to shareholders through common
stock dividends and net share repurchases, up from $3.4 billion in
the second quarter. We remain committed to our target of $2
billion of expense reductions by the end of 2018 which will be
reinvested in the business and an additional $2 billion by the end
of 2019 intended to go to the bottom line.”
Net Interest Income
Net interest income in third quarter 2017 was $12.5 billion, in
line with second quarter 2017, as the impacts of lower investment
portfolio yields driven by accelerated prepayments and lower
average loan balances were offset by the impact of one additional
day and a modest benefit from all other growth and repricing.
Net interest margin was 2.87 percent, down 3 basis points from
second quarter 2017. The impacts of lower investment portfolio
yields driven by accelerated prepayments, lower average loan
balances, growth in average deposits, and growth in trading assets
and related funding were partially offset by lower average
long-term debt and a modest benefit from all other growth and
repricing.
Noninterest Income
Noninterest income in the third quarter was $9.5 billion,
compared with $9.7 billion in second quarter 2017. Third
quarter noninterest income reflected lower mortgage banking and
other income, partially offset by higher market sensitive
revenue3.
- Mortgage banking noninterest income was
$1.0 billion, compared with $1.1 billion in second quarter
2017. Residential mortgage loan originations were $59 billion in
the third quarter, up from $56 billion in the second quarter.
The production margin on residential held-for-sale mortgage loan
originations4 was 1.24 percent, consistent with the second
quarter. Mortgage servicing income was $309 million in the
third quarter, down from $400 million in the second quarter,
primarily due to higher unreimbursed servicing costs.
- Other income was $97 million,
compared with $249 million in the second quarter. Second
quarter 2017 included a $309 million gain on the sale of a
Pick-a-Pay purchased credit-impaired (PCI) loan portfolio. Third
quarter 2017 included a net hedge ineffectiveness gain of $93
million, up from $21 million in the prior quarter.
Noninterest Expense
Noninterest expense in the third quarter was $14.4 billion,
compared with $13.5 billion in the prior quarter. Third
quarter expenses included operating losses of $1.3 billion,
which included the $1 billion litigation accrual for previously
disclosed mortgage-related regulatory investigations. This increase
in noninterest expense was partially offset by lower charitable
donations, outside professional services, employee benefits, and
travel and entertainment expenses. The efficiency ratio was
65.5 percent in third quarter 2017, which included a 456 basis
point impact from the $1 billion litigation accrual.
Income Taxes
The Company’s effective income tax rate was 32.4 percent for
third quarter 2017, and included net discrete tax expense totaling
$186 million, primarily resulting from the non-deductible treatment
of the $1 billion litigation accrual, partially offset by discrete
tax benefits arising from favorable resolutions of prior period
matters with certain state tax authorities.
Loans
Total average loans were $952.3 billion in the third
quarter, down $4.5 billion from the second quarter. Period-end loan
balances were $951.9 billion at September 30, 2017, down
$5.6 billion from June 30, 2017. Consumer loans increased
$201 million from the prior quarter as growth in real estate 1-4
family first mortgage loans and consumer credit card loans was
largely offset by expected declines in automobile loans and the
legacy junior lien mortgage portfolio. Commercial loans were down
$5.8 billion from June 30, 2017 reflecting paydowns and continued
underwriting discipline.
Period-End Loan Balances
Sep 30, Jun 30, Mar 31,
Dec 31, Sep 30, (in millions)
2017 2017 2017
2016 2016 Commercial
$ 500,150 505,901
505,004 506,536 496,454 Consumer
451,723
451,522 453,401 461,068
464,872 Total loans
$
951,873 957,423 958,405
967,604 961,326
Change from prior quarter
$
(5,550
)
(982
)
(9,199
)
6,278
4,169
Investment Securities
Investment securities were $414.6 billion at September 30,
2017, up $5.0 billion from the second quarter, as approximately
$31.2 billion of purchases, mostly federal agency mortgage-backed
securities (MBS) in the available-for-sale portfolio, were
partially offset by run-off and sales.
Net unrealized gains on available-for-sale securities were $1.8
billion at September 30, 2017, compared with $1.1 billion
at June 30, 2017, primarily due to tighter credit and agency
MBS spreads during the quarter.
Deposits
Total average deposits for third quarter 2017 were $1.3
trillion, up $5.2 billion from the prior quarter. The average
deposit cost for third quarter 2017 was 26 basis points, up 5
basis points from the prior quarter and 15 basis points from a year
ago, primarily driven by an increase in commercial and Wealth and
Investment Management deposit rates.
Capital
Capital levels remained strong in the third quarter, with a
Common Equity Tier 1 ratio (fully phased-in) of 11.8 percent2,
compared with 11.6 percent in the prior quarter. In third quarter
2017, the Company repurchased 49.0 million shares of its
common stock, which reduced period-end common shares outstanding by
38.9 million. The Company paid a quarterly common stock
dividend of $0.39 per share, up from $0.38 per share a year
ago.
Credit Quality
“Credit results remained strong in the third quarter," said
Chief Risk Officer Mike Loughlin. “The loan portfolio continued to
perform well, led by strong performance in consumer real estate and
continued solid performance in the commercial portfolio.
Separately, while it is still early in the process, we have
reviewed our portfolio for potential losses from recent hurricanes
and have reflected that initial estimate in our
allowance. After accounting for all these factors, the
allowance for credit losses in the third quarter remained
relatively unchanged from the second quarter.”
Net Loan Charge-offs
The quarterly loss rate was 0.30 percent (annualized), compared
with 0.27 percent in the prior quarter. Commercial and consumer
losses were 0.09 percent and 0.53 percent, respectively. Credit
losses were $717 million in third quarter 2017, up $62 million
from second quarter 2017. Commercial losses were up
$38 million on higher losses in the commercial and industrial
portfolio. Consumer losses increased $24 million as higher
automobile losses from typically low second quarter levels more
than offset lower credit card losses.
Net Loan Charge-Offs
Quarter ended
September 30, 2017 June 30, 2017
March 31, 2017 Net loan As a
% of Net loan As a % of Net
loan As a % of charge-
average charge- average charge-
average ($ in millions) offs
loans (a) offs
loans (a) offs
loans (a) Commercial: Commercial and industrial $ 125
0.15 % $ 78 0.10 % $ 171 0.21 % Real estate mortgage (3 ) (0.01 )
(6 ) (0.02 ) (25 ) (0.08 ) Real estate construction (15 ) (0.24 )
(4 ) (0.05 ) (8 ) (0.15 ) Lease financing 6
0.12 7 0.15 5 0.11
Total commercial
113 0.09 75 0.06
143 0.11 Consumer: Real estate 1-4
family first mortgage (16 ) (0.02 ) (16 ) (0.02 ) 7 0.01 Real
estate 1-4 family junior lien mortgage 1 — (4 ) (0.03 ) 23 0.21
Credit card 277 3.08 320 3.67 309 3.54 Automobile 202 1.41 126 0.86
167 1.10 Other revolving credit and installment 140
1.44 154 1.58 156 1.60
Total consumer
604 0.53 580
0.51 662 0.59 Total
$ 717 0.30 % $
655 0.27 % $ 805
0.34 %
(a) Quarterly net charge-offs as a
percentage of average loans are annualized. See explanation on page
31 of the accounting for purchased credit-impaired (PCI) loans and
the impact on selected financial ratios.
Nonperforming Assets
Nonperforming assets decreased $512 million from second quarter
2017 to $9.3 billion. Nonaccrual loans decreased $437 million from
second quarter 2017 to $8.6 billion primarily driven by declines in
commercial and industrial nonaccruals, as well as continued lower
consumer real estate nonaccruals.
Nonperforming Assets (Nonaccrual Loans
and Foreclosed Assets)
September 30, 2017
June 30, 2017 March 31, 2017
As a
As a
As a
% of
% of % of Total total Total
total Total total ($ in millions)
balances loans
balances loans
balances loans Commercial:
Commercial and industrial $ 2,397 0.73 % $ 2,632 0.79 % $ 2,898
0.88 % Real estate mortgage 593 0.46 630 0.48 672 0.51 Real estate
construction 38 0.15 34 0.13 40 0.16 Lease financing
81 0.42 89 0.46 96 0.50
Total
commercial 3,109 0.62
3,385 0.67 3,706 0.73
Consumer: Real estate 1-4 family first mortgage 4,213 1.50
4,413 1.60 4,743 1.73 Real estate 1-4 family junior lien mortgage
1,101 2.68 1,095 2.56 1,153 2.60 Automobile 137 0.25 104 0.18 101
0.17 Other revolving credit and installment 59
0.15 59 0.15 56 0.14
Total consumer
5,510 1.22 5,671
1.26 6,053 1.34 Total nonaccrual
loans 8,619 0.91
9,056 0.95 9,759 1.02
Foreclosed assets: Government insured/guaranteed 137 149 179
Non-government insured/guaranteed 569 632
726
Total foreclosed assets
706 781 905 Total
nonperforming assets $ 9,325
0.98 % $ 9,837 1.03
% $ 10,664 1.11 % Change
from prior quarter: Total nonaccrual loans $ (437 ) $ (703 ) $ (625
) Total nonperforming assets (512 )
(827 ) (698
)
Allowance for Credit Losses
The allowance for credit losses, including the allowance for
unfunded commitments, totaled $12.1 billion at September 30,
2017, in line with June 30, 2017. The third quarter 2017
allowance for credit losses reflected strong credit performance due
to continued improvement in consumer real estate as well as
strength in the commercial loan portfolio, including improvement in
the oil and gas portfolio. These factors were offset by $450
million for coverage of our preliminary estimate of potential
hurricane-related losses. The allowance coverage for total loans of
1.27 percent was stable from second quarter 2017. The
allowance covered 4.3 times annualized third quarter net
charge-offs, compared with 4.6 times in the prior quarter. The
allowance coverage for nonaccrual loans was 141 percent at
September 30, 2017, compared with 134 percent at
June 30, 2017. The Company believes the allowance was
appropriate for losses inherent in the loan portfolio at
September 30, 2017.
Business Segment Performance
Wells Fargo defines its operating segments by product type and
customer segment. Segment net income for each of the three business
segments was:
Quarter ended
Sep
30, Jun 30, Sep 30, (in millions)
2017 2017 2016
Community Banking
$ 2,229 2,993 3,227 Wholesale
Banking
2,046 2,388 2,047 Wealth and Investment Management
710 682 677
Community Banking offers a
complete line of diversified financial products and services for
consumers and small businesses including checking and savings
accounts, credit and debit cards, and automobile, student,
mortgage, home equity and small business lending, as well as
referrals to Wholesale Banking and Wealth and Investment Management
business partners. The Community Banking segment also includes the
results of our Corporate Treasury activities net of allocations in
support of the other operating segments and results of investments
in our affiliated venture capital partnerships.
Selected Financial Information
Quarter ended
Sep 30, Jun 30,
Sep 30, (in millions)
2017
2017 2016 Total revenue
$
12,060 12,289 12,387 Provision for credit losses
650
623 651 Noninterest expense
7,834 7,223 6,953 Segment net
income
2,229 2,993 3,227 (in billions) Average loans
473.5 477.2 489.2 Average assets
988.9 983.5 993.6
Average deposits
734.5 727.2
708.0
Community Banking reported net income of $2.2 billion, down
$764 million, or 26 percent, from second quarter 2017, and
included the $1 billion litigation accrual (not tax-deductible) for
previously disclosed mortgage-related regulatory investigations.
Revenue of $12.1 billion decreased $229 million, or 2 percent,
from second quarter 2017, primarily due to a gain on the sale of a
Pick-a-Pay PCI loan portfolio in the prior quarter. The decline in
revenue from the second quarter was also driven by lower mortgage
banking revenue, partially offset by higher net interest income and
the favorable accounting impact of net hedge ineffectiveness.
Noninterest expense increased $611 million, or 8 percent,
compared with second quarter 2017, due to higher operating losses
and personnel expense, partially offset by lower charitable
donations, lower professional services expense and the favorable
impact of updated intra-segment allocations to Wholesale Banking
and Wealth and Investment Management for regulatory, risk, cyber
and technology expenses. The provision for credit losses increased
$27 million from the prior quarter.
Net income was down $1.0 billion, or 31 percent, from third
quarter 2016, and included the $1 billion litigation accrual (not
tax-deductible) for previously disclosed mortgage-related
regulatory investigations. Revenue decreased $327 million, or
3 percent, compared with a year ago due to lower mortgage
banking revenue and deposit service charges, partially offset by
higher net interest income and market sensitive revenue.
Noninterest expense increased $881 million, or 13 percent,
from a year ago due to higher operating losses, higher professional
services expense and the favorable impact of updated intra-segment
allocations to Wholesale Banking and Wealth and Investment
Management for regulatory, risk, cyber and technology expenses.
Retail Banking and Consumer Payments, Virtual Solutions and
Innovation
- With nearly 400,000 branch customer
experience surveys completed during the third quarter, ‘Loyalty’
and ‘Overall Satisfaction with Most Recent Visit’ scores declined
in September after our announcement of the expanded third party
account review, which followed post-sales practice settlement highs
for ‘Loyalty’ in July of 58.8 percent and ‘Overall Satisfaction
with Most Recent Visit’ in August of 78.2 percent
- 5,927 retail bank branches as of the
end of third quarter 2017, reflecting 145 branch consolidations
year-to-date through September 30, 2017
- Wells Fargo was the nation’s #1 SBA
7(a) lender in dollars and units for full year 20175
- Primary consumer checking
customers6,7down 0.2 percent year-over-year
- Debit card point-of-sale purchase
volume8 of $80.0 billion in third quarter, up 5 percent
year-over-year
- Credit card point-of-sale purchase
volume of $18.2 billion in third quarter, up 4 percent
year-over-year
- Credit card penetration in retail
banking households of 45.4 percent9
- 27.8 million digital (online and
mobile) active customers, including 20.9 million mobile active
users7,10
- According to BI Intelligence’s Mobile
Banking Competitive Edge study, Wells Fargo scored top marks in the
transfers, wallets, and security categories of our scorecard, and
ranked first overall
- For the fourth consecutive time,
Dynatrace (formerly Keynote) ranked Wells Fargo #1 overall in
online performance (August 2017)
- In Javelin Strategy's recent 2017
Account Safety in Banking Scorecard, Wells Fargo was recognized as
a leader in fraud prevention, detection, and resolution
Consumer Lending
- Home Lending
- Originations of $59 billion, up
from $56 billion in prior quarter
- Applications of $73 billion, down
from $83 billion in prior quarter
- Application pipeline of
$29 billion at quarter end, down from $34 billion at June 30,
2017
- Automobile originations of $4.3 billion
in third quarter, down 6 percent from prior quarter and down
47 percent from prior year, as proactive steps to tighten
underwriting standards resulted in lower origination volume
Wholesale Banking provides
financial solutions to businesses across the United States and
globally with annual sales generally in excess of $5 million.
Products and businesses include Business Banking, Commercial Real
Estate, Corporate Banking, Financial Institutions Group, Government
and Institutional Banking, Insurance, Middle Market Banking,
Principal Investments, Treasury Management, Wells Fargo Commercial
Capital, and Wells Fargo Securities.
Selected Financial Information
Quarter ended
Sep 30, Jun 30,
Sep 30, (in millions)
2017
2017 2016 Total revenue
$
7,085 6,951 7,147 Provision (reversal of provision) for
credit losses
69 (65 ) 157 Noninterest expense
4,248
4,078 4,120 Segment net income
2,046 2,388 2,047 (in
billions) Average loans
463.8 464.9 454.3 Average assets
824.3 817.3 794.2 Average deposits
463.4 463.0 441.2
Wholesale Banking reported net income of $2.0 billion, down
$342 million, or 14 percent, from second quarter 2017 which
included a tax benefit resulting from our agreement to sell Wells
Fargo Insurance Services USA and related businesses. Revenue of
$7.1 billion increased $134 million, or 2 percent, from
the prior quarter. Net interest income increased $75 million,
or 2 percent, on higher trading related income and one additional
business day in the quarter. Noninterest income increased
$59 million, or 2 percent, on higher gains on equity
investments and debt securities. Noninterest expense increased
$170 million, or 4 percent, from the prior quarter reflecting
updated intra-segment allocations from Community Banking for
regulatory, risk, cyber and technology expenses. The provision for
credit losses increased $134 million from the prior quarter,
primarily due to a reserve release in the second quarter as well as
higher losses in the third quarter.
Net income of $2.0 billion was in line with third quarter
2016. Revenue decreased $62 million, or 1 percent, from
third quarter 2016, as higher net interest income was more than
offset by lower noninterest income. Net interest income increased
$291 million, or 7 percent, from third quarter 2016 on deposit
and loan growth, including the GE Capital portfolio acquisitions in
the second half of 2016, as well as the impact of rising interest
rates. Noninterest income decreased $353 million, or 11
percent, from a year ago primarily due to lower customer
accommodation trading and lower commercial mortgage banking
results. Noninterest expense increased $128 million, or
3 percent, from a year ago reflecting updated intra-segment
allocations from Community Banking for regulatory, risk, cyber and
technology expenses. The provision for credit losses decreased
$88 million from a year ago primarily due to improvements in
the oil and gas portfolio.
- Launched CEO Mobile Token which allows
Treasury Management customers a secure, convenient way to provide
secondary authentication anytime they need to complete a
transaction (August 2017)
Wealth and Investment
Management (WIM) provides a full range of personalized
wealth management, investment and retirement products and services
to clients across U.S. based businesses including Wells Fargo
Advisors, The Private Bank, Abbot Downing, Wells Fargo
Institutional Retirement and Trust, and Wells Fargo Asset
Management. We deliver financial planning, private banking, credit,
investment management and fiduciary services to high-net worth and
ultra-high-net worth individuals and families. We also serve
customers’ brokerage needs, supply retirement and trust services to
institutional clients and provide investment management
capabilities delivered to global institutional clients through
separate accounts and the Wells Fargo Funds.
Selected Financial Information
Quarter ended
Sep 30, Jun 30,
Sep 30, (in millions)
2017
2017 2016 Total revenue
$
4,246 4,182 4,099 Provision (reversal of provision) for
credit losses
(1 ) 7 4 Noninterest expense
3,106 3,075 2,999 Segment net income
710 682 677 (in
billions) Average loans
72.4 71.7 68.4 Average assets
213.4 213.1 212.1 Average deposits
188.1 188.2 189.2
Wealth and Investment Management reported net income of
$710 million, up $28 million, or 4 percent, from second
quarter 2017. Revenue of $4.2 billion increased
$64 million from the prior quarter, primarily due to higher
net interest income, asset-based fees, and gains on deferred
compensation plan investments (offset in employee benefits
expense), partially offset by lower transaction revenue.
Noninterest expense increased $31 million, or 1 percent,
from the prior quarter, reflecting updated intra-segment
allocations from Community Banking for regulatory, risk, cyber and
technology expenses and higher deferred compensation plan expense
(offset in trading revenue).
Net income was up $33 million, or 5 percent, from third quarter
2016. Revenue increased $147 million, or 4 percent, from
a year ago primarily driven by higher net interest income and
asset-based fees, partially offset by lower transaction revenue.
Noninterest expense increased $107 million, or 4 percent,
from a year ago, reflecting updated intra-segment allocations from
Community Banking for regulatory, risk, cyber and technology
expenses and higher personnel expense, partially offset by lower
professional services expense.
- WIM total client assets reached a
record-high of $1.9 trillion, up 8 percent from a year ago, driven
by higher market valuations and continued positive net flows
- Third quarter 2017 average closed
referred investment assets (referrals resulting from the
WIM/Community Banking partnership) were down 12 percent from the
prior quarter
Retail Brokerage
- Client assets of $1.6 trillion, up 9
percent from prior year
- Advisory assets of $522 billion, up 14
percent from prior year, primarily driven by higher market
valuations and positive net flows
- Strong loan growth, with average
balances up 10 percent from prior year largely due to continued
growth in non-conforming mortgage loans
Wealth Management
- Client assets of $241 billion, up 5
percent from prior year
- Average loan balances up 4 percent from
prior year primarily driven by continued growth in non-conforming
mortgage loans
Asset Management
- Total assets under management of $496
billion, flat from prior year as equity and money market net
outflows were offset by higher market valuations, positive fixed
income net flows and assets acquired during the prior year
Retirement
- IRA assets of $400 billion, up 6
percent from prior year
- Institutional Retirement plan assets of
$387 billion, up 11 percent from prior year
Conference Call
The Company will host a live conference call on Friday, October
13, at 7:00 a.m. PT (10:00 a.m. ET). You may participate by dialing
866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The
call will also be available online at
https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/
and https://engage.vevent.com/rt/wells_fargo_ao~88580303.
A replay of the conference call will be available beginning at
10:00 a.m. PT (1:00 p.m. ET) on Friday, October 13 through Friday,
October 27. Please dial 855-859-2056 (U.S. and Canada) or
404-537-3406 (International) and enter Conference ID #88580303. The
replay will also be available online at
https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/
and https://engage.vevent.com/rt/wells_fargo_ao~88580303.
Endnotes 1 Reserve build represents the amount by
which the provision for credit losses exceeds net charge-offs,
while reserve release represents the amount by which net
charge-offs exceed the provision for credit losses. 2 See table on
page 36 for more information on Common Equity Tier 1. Common Equity
Tier 1 (fully phased-in) is a preliminary estimate and is
calculated assuming the full phase-in of the Basel III capital
rules. 3 Market sensitive revenue represents net gains from trading
activities, debt securities and equity investments. 4 Production
margin represents net gains on residential mortgage loan
origination/sales activities divided by total residential
held-for-sale mortgage originations. See the Selected Five Quarter
Residential Mortgage Production Data table on page 41 for more
information. 5 U.S. SBA data, federal fiscal year ended September
30, 2017. 6 Customers who actively use their checking account with
transactions such as debit card purchases, online bill payments,
and direct deposit. 7 Data as of August 2017, comparisons with
August 2016. 8 Combined consumer and business debit card purchase
volume dollars. 9 Penetration defined as the percentage of Retail
Banking households that have a credit card with Wells Fargo. Retail
Banking households reflect only those households that maintain a
retail checking account, which we believe provides the foundation
for long-term retail banking relationships. Credit card household
penetration rates have not been adjusted to reflect the impact of
the potentially unauthorized accounts (determined principally based
on whether the account was activated by the customer) identified by
a third party consulting firm in August 2017 because the maximum
impact in any one quarter was not greater than 127 bps. 10
Primarily includes retail banking,
consumer lending, small business and business banking
customers.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. In
addition, we may make forward-looking statements in our other
documents filed or furnished with the SEC, and our management may
make forward-looking statements orally to analysts, investors,
representatives of the media and others. Forward-looking statements
can be identified by words such as “anticipates,” “intends,”
“plans,” “seeks,” “believes,” “estimates,” “expects,” “target,”
“projects,” “outlook,” “forecast,” “will,” “may,” “could,”
“should,” “can” and similar references to future periods. In
particular, forward-looking statements include, but are not limited
to, statements we make about: (i) the future operating or
financial performance of the Company, including our outlook for
future growth; (ii) our noninterest expense and efficiency
ratio; (iii) future credit quality and performance, including
our expectations regarding future loan losses and allowance levels;
(iv) the appropriateness of the allowance for credit losses;
(v) our expectations regarding net interest income and net
interest margin; (vi) loan growth or the reduction or
mitigation of risk in our loan portfolios; (vii) future
capital or liquidity levels or targets and our estimated Common
Equity Tier 1 ratio under Basel III capital standards;
(viii) the performance of our mortgage business and any
related exposures; (ix) the expected outcome and impact of
legal, regulatory and legislative developments, as well as our
expectations regarding compliance therewith; (x) future common
stock dividends, common share repurchases and other uses of
capital; (xi) our targeted range for return on assets and
return on equity; (xii) the outcome of contingencies, such as
legal proceedings; and (xiii) the Company’s plans, objectives
and strategies.
Forward-looking statements are not based on historical facts but
instead represent our current expectations and assumptions
regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you, therefore, against relying on any of
these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that
could cause actual results to differ materially from those in the
forward-looking statements include the following, without
limitation:
- current and future economic and market
conditions, including the effects of declines in housing prices,
high unemployment rates, U.S. fiscal debt, budget and tax matters,
geopolitical matters, and the overall slowdown in global economic
growth;
- our capital and liquidity requirements
(including under regulatory capital standards, such as the Basel
III capital standards) and our ability to generate capital
internally or raise capital on favorable terms;
- financial services reform and other
current, pending or future legislation or regulation that could
have a negative effect on our revenue and businesses, including the
Dodd-Frank Act and other legislation and regulation relating to
bank products and services;
- the extent of our success in our loan
modification efforts, as well as the effects of regulatory
requirements or guidance regarding loan modifications;
- the amount of mortgage loan repurchase
demands that we receive and our ability to satisfy any such demands
without having to repurchase loans related thereto or otherwise
indemnify or reimburse third parties, and the credit quality of or
losses on such repurchased mortgage loans;
- negative effects relating to our
mortgage servicing and foreclosure practices, as well as changes in
industry standards or practices, regulatory or judicial
requirements, penalties or fines, increased servicing and other
costs or obligations, including loan modification requirements, or
delays or moratoriums on foreclosures;
- our ability to realize our efficiency
ratio target as part of our expense management initiatives,
including as a result of business and economic cyclicality,
seasonality, changes in our business composition and operating
environment, growth in our businesses and/or acquisitions, and
unexpected expenses relating to, among other things, litigation and
regulatory matters;
- losses related to recent hurricanes,
which primarily impacted Texas, Florida and Puerto Rico, including
from damage or loss to our collateral for loans in our consumer and
commercial loan portfolios and from the impact on the ability of
our borrowers to repay their loans;
- the effect of the current low interest
rate environment or changes in interest rates on our net interest
income, net interest margin and our mortgage originations, mortgage
servicing rights and mortgages held for sale;
- significant turbulence or a disruption
in the capital or financial markets, which could result in, among
other things, reduced investor demand for mortgage loans, a
reduction in the availability of funding or increased funding
costs, and declines in asset values and/or recognition of
other-than-temporary impairment on securities held in our
investment securities portfolio;
- the effect of a fall in stock market
prices on our investment banking business and our fee income from
our brokerage, asset and wealth management businesses;
- negative effects from the retail
banking sales practices matter, including on our legal, operational
and compliance costs, our ability to engage in certain business
activities or offer certain products or services, our ability to
keep and attract customers, our ability to attract and retain
qualified team members, and our reputation;
- reputational damage from negative
publicity, protests, fines, penalties and other negative
consequences from regulatory violations and legal actions;
- a failure in or breach of our
operational or security systems or infrastructure, or those of our
third party vendors or other service providers, including as a
result of cyber attacks;
- the effect of changes in the level of
checking or savings account deposits on our funding costs and net
interest margin;
- fiscal and monetary policies of the
Federal Reserve Board; and
- the other risk factors and
uncertainties described under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2016.
In addition to the above factors, we also caution that the
amount and timing of any future common stock dividends or
repurchases will depend on the earnings, cash requirements and
financial condition of the Company, market conditions, capital
requirements (including under Basel capital standards), common
stock issuance requirements, applicable law and regulations
(including federal securities laws and federal banking
regulations), and other factors deemed relevant by the Company’s
Board of Directors, and may be subject to regulatory approval or
conditions.
For more information about factors that could cause actual
results to differ materially from our expectations, refer to our
reports filed with the Securities and Exchange Commission,
including the discussion under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2016, as
filed with the Securities and Exchange Commission and available on
its website at www.sec.gov.
Any forward-looking statement made by us speaks only as of the
date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or
otherwise, except as may be required by law.
About Wells Fargo
Wells Fargo & Company (NYSE:WFC) is a diversified,
community-based financial services company with $1.9 trillion
in assets. Wells Fargo’s vision is to satisfy our customers’
financial needs and help them succeed financially. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial
finance through more than 8,400 locations, 13,000 ATMs, the
internet (wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 268,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations.
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA TABLE OF CONTENTS
Pages
Summary
Information
Summary Financial Data
16
Income
Consolidated Statement of Income 18 Consolidated Statement of
Comprehensive Income 20 Condensed Consolidated Statement of Changes
in Total Equity 20 Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis) 21 Five Quarter Average Balances, Yields
and Rates Paid (Taxable-Equivalent Basis) 23 Noninterest Income and
Noninterest Expense 24
Balance
Sheet
Consolidated Balance Sheet 26 Investment Securities 28
Loans
Loans 28 Nonperforming Assets 29 Loans 90 Days or More Past Due and
Still Accruing 30 Purchased Credit-Impaired Loans 31 Pick-A-Pay
Portfolio 32 Changes in Allowance for Credit Losses 34
Equity
Tangible Common Equity 35 Common Equity Tier 1 Under Basel III 36
Operating
Segments
Operating Segment Results 37
Other
Mortgage Servicing and other related data 39
Wells Fargo & Company and
Subsidiaries
SUMMARY FINANCIAL DATA
% Change
Quarter ended
Sep 30, 2017 from
Nine months ended
Sep 30, Jun 30, Sep 30, Jun 30, Sep 30,
Sep 30, Sep 30, %
($ in millions, except per share
amounts)
2017 2017 2016
2017 2016
2017 2016
Change
For the Period Wells Fargo net income
$
4,596 5,810 5,644 (21 )% (19 )
$ 15,863 16,664
(5 )% Wells Fargo net income applicable to common stock
4,185 5,404 5,243 (23 ) (20 )
14,645 15,501 (6 )
Diluted earnings per common share
0.84 1.07 1.03 (21 ) (18 )
2.91 3.03 (4 ) Profitability ratios (annualized): Wells
Fargo net income to average assets (ROA)
0.94 % 1.21
1.17 (22 ) (20 )
1.10 % 1.19 (8 ) Wells Fargo net
income applicable to common stock to average Wells Fargo common
stockholders’ equity (ROE)
9.06 11.95 11.60 (24 ) (22 )
10.83 11.68 (7 ) Return on average tangible common equity
(ROTCE)(1)
10.79 14.26 13.96 (24 ) (23 )
12.94 14.08
(8 ) Efficiency ratio (2)
65.5 61.1 59.4 7 10
63.1
58.7 7 Total revenue
$ 21,926 22,169 22,328 (1 ) (2 )
$ 66,097 66,685 (1 ) Pre-tax pre-provision profit
(PTPP) (3)
7,575 8,628 9,060 (12 ) (16 )
24,413
27,523 (11 ) Dividends declared per common share
0.390 0.380
0.380 3 3
1.150 1.135 1 Average common shares outstanding
4,948.6 4,989.9 5,043.4 (1 ) (2 )
4,982.1 5,061.9 (2
) Diluted average common shares outstanding
4,996.8 5,037.7
5,094.6 (1 ) (2 )
5,035.4 5,118.2 (2 ) Average loans
$ 952,343 956,879 957,484 — (1 )
$
957,581 945,197 1 Average assets
1,938,523 1,927,079
1,914,586 1 1
1,932,242 1,865,694 4 Average total deposits
1,306,356 1,301,195 1,261,527 — 4
1,302,273 1,239,287
5 Average consumer and small business banking deposits (4)
755,094 760,149 739,066 (1 ) 2
758,443 726,798 4 Net
interest margin
2.87 % 2.90 2.82 (1 ) 2
2.88
% 2.86 1
At Period End Investment securities
$
414,633 409,594 390,832 1 6
$ 414,633 390,832
6 Loans
951,873 957,423 961,326 (1 ) (1 )
951,873
961,326 (1 ) Allowance for loan losses
11,078 11,073 11,583
— (4 )
11,078 11,583 (4 ) Goodwill
26,581 26,573
26,688 — —
26,581 26,688 — Assets
1,934,939 1,930,871
1,942,124 — —
1,934,939 1,942,124 — Deposits
1,306,706 1,305,830 1,275,894 — 2
1,306,706 1,275,894
2 Common stockholders' equity
182,128 181,428 179,916 — 1
182,128 179,916 1 Wells Fargo stockholders’ equity
205,929 205,230 203,028 — 1
205,929 203,028 1 Total
equity
206,824 206,145 203,958 — 1
206,824 203,958 1
Tangible common equity (1)
152,901 152,064 149,829 1 2
152,901 149,829 2 Common shares outstanding
4,927.9
4,966.8 5,023.9 (1 ) (2 )
4,927.9 5,023.9 (2 ) Book value
per common share (5)
$ 36.96 36.53 35.81 1 3
$
36.96 35.81 3 Tangible book value per common share (1)(5)
31.03 30.62 29.82 1 4
31.03 29.82 4 Common stock
price: High
56.45 56.60 51.00 — 11
59.99 53.27 13 Low
49.28 50.84 44.10 (3 ) 12
49.28 44.10 12 Period end
55.15 55.41 44.28 — 25
55.15 44.28 25 Team members
(active, full-time equivalent)
268,000
270,600 268,800 (1 )
—
268,000 268,800
—
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 35.
(2) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is
total revenue less noninterest expense. Management believes that
PTPP is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
(4) Consumer and small business banking
deposits are total deposits excluding mortgage escrow and wholesale
deposits.
(5) Book value per common share is common
stockholders' equity divided by common shares outstanding. Tangible
book value per common share is tangible common equity divided by
common shares outstanding.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA Quarter
ended
Sep 30, Jun 30, Mar 31,
Dec 31, Sep 30, ($ in millions, except
per share amounts)
2017 2017
2017 2016 2016
For the
Quarter Wells Fargo net income
$ 4,596 5,810
5,457 5,274 5,644 Wells Fargo net income applicable to common stock
4,185 5,404 5,056 4,872 5,243 Diluted earnings per common
share
0.84 1.07 1.00 0.96 1.03 Profitability ratios
(annualized): Wells Fargo net income to average assets (ROA)
0.94 % 1.21 1.15 1.08 1.17 Wells Fargo net income
applicable to common stock to average Wells Fargo common
stockholders’ equity (ROE)
9.06 11.95 11.54 10.94 11.60
Return on average tangible common equity (ROTCE)(1)
10.79
14.26 13.85 13.16 13.96 Efficiency ratio (2)
65.5 61.1 62.7
61.2 59.4 Total revenue
$ 21,926 22,169 22,002 21,582
22,328 Pre-tax pre-provision profit (PTPP) (3)
7,575 8,628
8,210 8,367 9,060 Dividends declared per common share
0.39
0.38 0.38 0.38 0.38 Average common shares outstanding
4,948.6 4,989.9 5,008.6 5,025.6 5,043.4 Diluted average
common shares outstanding
4,996.8 5,037.7 5,070.4 5,078.2
5,094.6 Average loans
$ 952,343 956,879 963,645
964,147 957,484 Average assets
1,938,523 1,927,079 1,931,041
1,944,250 1,914,586 Average total deposits
1,306,356
1,301,195 1,299,191 1,284,158 1,261,527 Average consumer and small
business banking deposits (4)
755,094 760,149 758,754
749,946 739,066 Net interest margin
2.87 % 2.90 2.87
2.87 2.82
At Quarter End Investment securities
$
414,633 409,594 407,560 407,947 390,832 Loans
951,873
957,423 958,405 967,604 961,326 Allowance for loan losses
11,078 11,073 11,168 11,419 11,583 Goodwill
26,581
26,573 26,666 26,693 26,688 Assets
1,934,939 1,930,871
1,951,564 1,930,115 1,942,124 Deposits
1,306,706 1,305,830
1,325,444 1,306,079 1,275,894 Common stockholders' equity
182,128 181,428 178,388 176,469 179,916 Wells Fargo
stockholders’ equity
205,929 205,230 201,500 199,581 203,028
Total equity
206,824 206,145 202,489 200,497 203,958
Tangible common equity (1)
152,901 152,064 148,850 146,737
149,829 Common shares outstanding
4,927.9 4,966.8 4,996.7
5,016.1 5,023.9 Book value per common share (5)
$
36.96 36.53 35.70 35.18 35.81 Tangible book value per common
share (1)(5)
31.03 30.62 29.79 29.25 29.82 Common stock
price: High
56.45 56.60 59.99 58.02 51.00 Low
49.28
50.84 53.35 43.55 44.10 Period end
55.15 55.41 55.66 55.11
44.28 Team members (active, full-time equivalent)
268,000 270,600
272,800 269,100 268,800
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 35.
(2) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is
total revenue less noninterest expense. Management believes that
PTPP is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
(4) Consumer and small business banking
deposits are total deposits excluding mortgage escrow and wholesale
deposits.
(5) Book value per common share is common
stockholders' equity divided by common shares outstanding. Tangible
book value per common share is tangible common equity divided by
common shares outstanding.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF INCOME Quarter ended
September 30, % Nine months ended
September 30, % (in millions, except per share
amounts)
2017 2016
Change
2017 2016
Change
Interest income Trading
assets
$ 754 593 27 %
$ 2,107 1,761 20
% Investment securities
2,662 2,298 16
8,035 6,736 19
Mortgages held for sale
219 207 6
598 549 9 Loans
held for sale
5 2 150
10 7 43 Loans
10,522
9,978 5
31,021 29,377 6 Other interest income
896 409 119
2,228
1,175 90 Total interest income
15,058 13,487 12
43,999
39,605 11
Interest expense
Deposits
870 356 144
2,090 995 110 Short-term
borrowings
226 85 166
503 229 120 Long-term debt
1,377 1,006 37
3,838 2,769 39 Other interest expense
109 88 24
309 260 19 Total interest
expense
2,582 1,535
68
6,740 4,253 58
Net
interest income 12,476 11,952 4
37,259 35,352 5
Provision for credit losses
717
805 (11 )
1,877 2,965
(37 ) Net interest income after provision for credit losses
11,759 11,147 5
35,382 32,387 9
Noninterest
income Service charges on deposit accounts
1,276 1,370
(7 )
3,865 4,015 (4 ) Trust and investment fees
3,609
3,613 —
10,808 10,545 2 Card fees
1,000 997 —
2,964 2,935 1 Other fees
877 926 (5 )
2,644
2,765 (4 ) Mortgage banking
1,046 1,667 (37 )
3,422
4,679 (27 ) Insurance
269 293 (8 )
826 1,006 (18 )
Net gains from trading activities
245 415 (41 )
921
943 (2 ) Net gains on debt securities
166 106 57
322
797 (60 ) Net gains from equity investments
238 140 70
829 573 45 Lease income
475 534 (11 )
1,449
1,404 3 Other
249 315
(21 )
788 1,671 (53 )
Total noninterest income
9,450
10,376 (9 )
28,838 31,333
(8 )
Noninterest expense Salaries
4,356 4,224
3
12,960 12,359 5 Commission and incentive compensation
2,553 2,520 1
7,777 7,769 — Employee benefits
1,279 1,223 5
4,273 3,993 7 Equipment
523 491
7
1,629 1,512 8 Net occupancy
716 718 —
2,134
2,145 (1 ) Core deposit and other intangibles
288 299 (4 )
864 891 (3 ) FDIC and other deposit assessments
314
310 1
975 815 20 Other
4,322
3,483 24
11,072
9,678 14 Total noninterest expense
14,351 13,268 8
41,684
39,162 6
Income before income tax
expense 6,858 8,255 (17 )
22,536
24,558 (8 ) Income tax expense
2,204 2,601 (15 )
6,486
7,817 (17 )
Net income before
noncontrolling interests 4,654 5,654 (18 )
16,050
16,741 (4 ) Less: Net income from noncontrolling interests
58 10 480
187
77 143
Wells Fargo net income
$ 4,596 5,644
(19 )
$ 15,863 16,664
(5 ) Less: Preferred stock dividends and other
411 401 2
1,218
1,163 5
Wells Fargo net income applicable
to common stock $ 4,185
5,243 (20 )
$ 14,645
15,501 (6 )
Per share information
Earnings per common share
$ 0.85 1.04 (18 )
$
2.94 3.06 (4 ) Diluted earnings per common share
0.84
1.03 (18 )
2.91 3.03 (4 ) Dividends declared per common
share
0.390 0.380 3
1.150 1.135 1
Average common
shares outstanding 4,948.6 5,043.4 (2 )
4,982.1
5,061.9 (2 )
Diluted average common shares outstanding
4,996.8 5,094.6
(2 )
5,035.4
5,118.2 (2 )
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
Sep 30, Jun 30,
Mar 31, Dec 31, Sep 30, (in millions,
except per share amounts)
2017
2017 2017 2016 2016
Interest income Trading assets
$ 754 710 643
745 593 Investment securities
2,662 2,698 2,675 2,512 2,298
Mortgages held for sale
219 195 184 235 207 Loans held for
sale
5 4 1 2 2 Loans
10,522 10,358 10,141 10,128
9,978 Other interest income
896
750 582 436
409 Total interest income
15,058
14,715 14,226
14,058 13,487
Interest
expense Deposits
870 683 537 400 356 Short-term
borrowings
226 163 114 101 85 Long-term debt
1,377
1,278 1,183 1,061 1,006 Other interest expense
109 108 92
94 88 Total interest expense
2,582 2,232
1,926 1,656 1,535
Net interest income 12,476 12,483 12,300 12,402
11,952 Provision for credit losses
717
555 605 805
805 Net interest income after provision for
credit losses
11,759
11,928 11,695 11,597
11,147
Noninterest income Service
charges on deposit accounts
1,276 1,276 1,313 1,357 1,370
Trust and investment fees
3,609 3,629 3,570 3,698 3,613 Card
fees
1,000 1,019 945 1,001 997 Other fees
877 902 865
962 926 Mortgage banking
1,046 1,148 1,228 1,417 1,667
Insurance
269 280 277 262 293 Net gains (losses) from
trading activities
245 237 439 (109 ) 415 Net gains on debt
securities
166 120 36 145 106 Net gains from equity
investments
238 188 403 306 140 Lease income
475 493
481 523 534 Other
249 394
145 (382 )
315 Total noninterest income
9,450
9,686 9,702
9,180 10,376
Noninterest expense
Salaries
4,356 4,343 4,261 4,193 4,224 Commission and
incentive compensation
2,553 2,499 2,725 2,478 2,520
Employee benefits
1,279 1,308 1,686 1,101 1,223 Equipment
523 529 577 642 491 Net occupancy
716 706 712 710 718
Core deposit and other intangibles
288 287 289 301 299 FDIC
and other deposit assessments
314 328 333 353 310 Other
4,322 3,541
3,209 3,437 3,483
Total noninterest expense
14,351
13,541 13,792
13,215 13,268
Income before income tax
expense 6,858 8,073 7,605 7,562 8,255 Income tax expense
2,204 2,225
2,057 2,258 2,601
Net income before noncontrolling interests 4,654
5,848 5,548 5,304 5,654 Less: Net income from noncontrolling
interests
58 38
91 30 10
Wells Fargo net income $ 4,596
5,810 5,457
5,274 5,644 Less: Preferred stock
dividends and other
411
406 401 402
401
Wells Fargo net income applicable to common stock
$ 4,185 5,404
5,056 4,872
5,243
Per share information Earnings per common share
$ 0.85 1.08 1.01 0.97 1.04 Diluted earnings per
common share
0.84 1.07 1.00 0.96 1.03 Dividends declared per
common share
0.390 0.380 0.380 0.380 0.380
Average common
shares outstanding 4,948.6 4,989.9 5,008.6 5,025.6
5,043.4
Diluted average common shares outstanding
4,996.8 5,037.7
5,070.4 5,078.2
5,094.6
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended September 30,
%
Nine months ended September 30,
% (in millions)
2017 2016
Change
2017 2016
Change Wells Fargo net income
$
4,596 5,644 (19)%
$
15,863 16,664 (5)% Other
comprehensive income (loss), before tax:
Investment securities: Net unrealized gains arising during
the period
891 112 696
2,825 2,478 14
Reclassification of net gains to net income
(200 )
(193 ) 4
(522 ) (1,001 ) (48) Derivatives and hedging
activities: Net unrealized gains (losses) arising during the period
36 (445 ) NM
279 2,611 (89) Reclassification of net
gains on cash flow hedges to net income
(105 ) (262 )
(60)
(460 ) (783 ) (41) Defined benefit plans
adjustments: Net actuarial and prior service gains (losses) arising
during the period
11 (447 ) NM
4 (474 ) NM
Amortization of net actuarial loss, settlements and other to net
income
41 39 5
120 115 4 Foreign currency translation
adjustments: Net unrealized gains (losses) arising during the
period
40 (10 ) NM
87 27 222
Other comprehensive
income (loss), before tax 714 (1,206 ) NM
2,333
2,973 (22) Income tax benefit (expense) related to other
comprehensive income
(265 )
461 NM
(852 ) (1,110 )
(23)
Other comprehensive income (loss), net of tax
449 (745 ) NM
1,481 1,863 (21) Less: Other
comprehensive income (loss) from noncontrolling interests
(34 ) 19 NM
(29
) (24 ) 21
Wells Fargo other comprehensive
income (loss), net of tax 483
(764 ) NM
1,510 1,887
(20)
Wells Fargo comprehensive income 5,079
4,880 4
17,373 18,551 (6) Comprehensive income from
noncontrolling interests
24
29 (17)
158 53 198
Total comprehensive income $
5,103 4,909 4
$ 17,531 18,604
(6)
NM – Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN TOTAL EQUITY
Quarter ended
Sep 30, Jun 30,
Mar 31, Dec 31, Sep 30,
(in millions)
2017 2017
2017 2016 2016
Balance,
beginning of period $ 206,145 202,489 200,497
203,958 202,661 Wells Fargo net income
4,596 5,810 5,457
5,274 5,644 Wells Fargo other comprehensive income (loss), net of
tax
483 1,068 (41 ) (5,321 ) (764 ) Noncontrolling interests
(20 ) (75 ) 75 (13 ) 14 Common stock issued
254 252 1,406 610 300 Common stock repurchased (1)
(2,601 ) (2,287 ) (2,175 ) (2,034 ) (1,839 )
Preferred stock released by ESOP
209 406 — 43 236 Common
stock warrants repurchased/exercised
(19 ) (24 ) (44
) — (17 ) Preferred stock issued
— 677 — — — Common stock
dividends
(1,936 ) (1,899 ) (1,903 ) (1,909 ) (1,918
) Preferred stock dividends
(411 ) (406 ) (401 ) (401
) (401 ) Tax benefit from stock incentive compensation (2)
—
— — 74 31 Stock incentive compensation expense
135 145 389
232 39 Net change in deferred compensation and related plans
(11 ) (11 ) (771 )
(16 ) (28 )
Balance, end of
period $ 206,824
206,145 202,489
200,497 203,958
(1) For the quarter ended December 31,
2016, includes $750 million related to a private forward repurchase
transaction that settled in first quarter 2017 for 14.7 million
shares of common stock.
(2) Effective January 1, 2017, we adopted
Accounting Standards Update 2016-09 (Improvements to Employee
Share-Based Payment Accounting). Accordingly, tax benefit from
stock incentive compensation is reported in income tax expense in
the consolidated statement of income.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended September 30,
2017
2016 (in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Federal funds sold, securities purchased under resale
agreements and other short-term investments
$ 276,129
1.20 % $ 832 299,351 0.50 % $ 373
Trading assets
103,589 2.96 767 88,838 2.72
605 Investment securities (3): Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
14,529
1.31 48 25,817 1.52 99 Securities of U.S. states and
political subdivisions
52,500 4.16 546 55,170
4.28 590 Mortgage-backed securities: Federal agencies
139,781 2.58 903 105,780 2.39 631 Residential
and commercial
11,013 5.43
149 18,080 5.54 250 Total mortgage-backed
securities
150,794 2.79 1,052 123,860 2.85 881
Other debt and equity securities
48,082
3.75 453 54,176 3.37 459 Total
available-for-sale securities
265,905
3.15 2,099 259,023 3.13 2,029
Held-to-maturity securities: Securities of U.S. Treasury and
federal agencies
44,708 2.18 246 44,678 2.19
246 Securities of U.S. states and political subdivisions
6,266 5.44 85 2,507 5.24 33 Federal agency and
other mortgage-backed securities
88,272 2.26
498 47,971 1.97 236 Other debt securities
1,488 3.05 12 3,909 1.98
19 Total held-to-maturity securities
140,734
2.38 841 99,065 2.15 534 Total
investment securities
406,639 2.89 2,940
358,088 2.86 2,563 Mortgages held for sale (4)
22,923
3.82 219 24,060 3.44 207 Loans held for sale (4)
152 13.35 5 199 3.04 2 Loans: Commercial:
Commercial and industrial - U.S.
270,091 3.81
2,590 271,226 3.48 2,369 Commercial and industrial - Non
U.S.
57,738 2.90 421 51,261 2.40 309 Real
estate mortgage
129,087 3.83 1,245 128,809
3.48 1,127 Real estate construction
24,981 4.18
263 23,212 3.50 205 Lease financing
19,155 4.59 220 18,896
4.70 223 Total commercial
501,052
3.76 4,739 493,404 3.42 4,233 Consumer:
Real estate 1-4 family first mortgage
278,371 4.03
2,809 278,509 3.97 2,764 Real estate 1-4 family junior lien
mortgage
41,916 4.95 521 48,927 4.37 537
Credit card
35,657 12.41 1,114 34,578 11.60
1,008 Automobile
56,746 5.34 764 62,461 5.60
880 Other revolving credit and installment
38,601 6.31 615 39,605
5.92 590 Total consumer
451,291
5.14 5,823 464,080 4.97 5,779 Total
loans (4)
952,343 4.41 10,562 957,484 4.17
10,012 Other
15,007 1.69
65 6,488 2.30 36 Total earning assets
$ 1,776,782 3.45 %
$ 15,390 1,734,508 3.17 % $ 13,798
Funding sources Deposits: Interest-bearing checking
$
48,278 0.57 % $ 69 44,056 0.15 %
$ 17 Market rate and other savings
681,187 0.17
293 667,185 0.07 110 Savings certificates
21,806
0.31 16 25,185 0.30 19 Other time deposits
66,046 1.51 252 54,921 0.93 128 Deposits in
foreign offices
124,746 0.76
240 107,072 0.30 82 Total interest-bearing
deposits
942,063 0.37 870 898,419 0.16 356
Short-term borrowings
99,193 0.91 226 116,228
0.29 86 Long-term debt
243,137 2.26 1,377
252,400 1.59 1,006 Other liabilities
24,851
1.74 109 16,771 2.11 88 Total
interest-bearing liabilities
1,309,244 0.79
2,582 1,283,818 0.48 1,536 Portion of noninterest-bearing
funding sources
467,538 —
— 450,690 — — Total funding sources
$ 1,776,782 0.58
2,582 1,734,508 0.35 1,536
Net
interest margin and net interest income on a taxable-equivalent
basis (5) 2.87 % $
12,808 2.82 % $ 12,262
Noninterest-earning assets Cash and due from banks
$
18,456 18,682 Goodwill
26,600 26,979 Other
116,685 134,417 Total
noninterest-earning assets
$ 161,741
180,078
Noninterest-bearing funding sources
Deposits
$ 364,293 363,108 Other liabilities
57,052 63,777 Total equity
207,934 203,883
Noninterest-bearing funding sources used to fund earning assets
(467,538 ) (450,690 ) Net
noninterest-bearing funding sources
$
161,741 180,078
Total assets
$ 1,938,523 1,914,586
(1) Our average prime rate was 4.25% and 3.50%
for the quarters ended September 30, 2017 and 2016, respectively.
The average three-month London Interbank Offered Rate (LIBOR) was
1.31% and 0.79% for the same quarters, respectively. (2)
Yields/rates and amounts include the effects of hedge and risk
management activities associated with the respective asset and
liability categories. (3) Yields and rates are based on interest
income/expense amounts for the period, annualized based on the
accrual basis for the respective accounts. The average balance
amounts represent amortized cost for the periods presented. (4)
Nonaccrual loans and related income are included in their
respective loan categories.
(5) Includes taxable-equivalent
adjustments of $332 million and $310 million for the quarters ended
September 30, 2017 and 2016, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate was 35% for the periods presented.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2) Nine months ended September 30,
2017
2016 (in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Federal funds sold, securities purchased under resale
agreements and other short-term investments
$ 280,477
0.98 % $ 2,062 292,635 0.49 % $ 1,076
Trading assets
98,516 2.90 2,144 83,580 2.86
1,792 Investment securities (3): Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
19,182
1.48 212 30,588 1.56 358 Securities of U.S. states
and political subdivisions
52,748 4.07 1,612
52,637 4.25 1,678 Mortgage-backed securities: Federal agencies
142,748 2.60 2,782 98,099 2.57 1,889
Residential and commercial
12,671
5.44 516 19,488 5.39 787 Total
mortgage-backed securities
155,419 2.83 3,298
117,587 3.03 2,676 Other debt and equity securities
49,212 3.74 1,377 53,680
3.36 1,349 Total available-for-sale securities
276,561 3.13 6,499 254,492
3.18 6,061 Held-to-maturity securities: Securities of U.S.
Treasury and federal agencies
44,701 2.19 733
44,671 2.19 733 Securities of U.S. states and political
subdivisions
6,270 5.35 251 2,274 5.34 91
Federal agency and other mortgage-backed securities
74,525
2.38 1,329 37,087 2.08 577 Other debt securities
2,531 2.48 47
4,193 1.94 61 Total held-to-maturity securities
128,027 2.46 2,360 88,225
2.21 1,462 Total investment securities
404,588
2.92 8,859 342,717 2.93 7,523 Mortgages held for sale
(4)
20,869 3.82 598 20,702 3.53 549 Loans held
for sale (4)
158 8.44 10 240 3.71 7 Loans:
Commercial: Commercial and industrial - U.S.
272,621
3.70 7,547 266,622 3.44 6,874 Commercial and
industrial - Non U.S.
56,512 2.83 1,196 50,658
2.29 867 Real estate mortgage
130,931 3.69
3,615 125,902 3.43 3,236 Real estate construction
24,949 4.00 747 22,978 3.53 608 Lease
financing
19,094 4.78 685
17,629 4.86 643 Total commercial
504,107 3.66 13,790 483,789
3.38 12,228 Consumer: Real estate 1-4 family first mortgage
276,330 4.04 8,380 276,369 4.01 8,311 Real
estate 1-4 family junior lien mortgage
43,589 4.77
1,557 50,585 4.38 1,659 Credit card
35,322
12.19 3,219 33,774 11.58 2,927 Automobile
59,105 5.41 2,392 61,246 5.64 2,588 Other
revolving credit and installment
39,128
6.15 1,801 39,434 5.94 1,755 Total
consumer
453,474 5.11
17,349 461,408 4.99 17,240 Total loans (4)
957,581 4.34 31,139 945,197 4.16 29,468 Other
10,892 2.06 169
6,104 2.23 101 Total earning assets
$
1,773,081 3.39 % $ 44,981
1,691,175 3.20 % $ 40,516
Funding sources
Deposits: Interest-bearing checking
$ 49,134
0.43 % $ 156 40,858 0.13 % $ 41 Market
rate and other savings
682,780 0.13 664
659,257 0.07 327 Savings certificates
22,618 0.30
50 26,432 0.37 73 Other time deposits
59,414
1.42 633 58,087 0.84 364 Deposits in foreign offices
123,553 0.64 587
100,783 0.25 190 Total interest-bearing deposits
937,499 0.30 2,090 885,417 0.15 995 Short-term
borrowings
97,837 0.69 505 111,993 0.28 231
Long-term debt
250,755 2.04 3,838 235,209 1.57
2,769 Other liabilities
20,910
1.97 309 16,534 2.10 260 Total
interest-bearing liabilities
1,307,001 0.69
6,742 1,249,153 0.45 4,255 Portion of noninterest-bearing
funding sources
466,080 —
— 442,022 — — Total funding sources
$ 1,773,081 0.51
6,742 1,691,175 0.34 4,255
Net
interest margin and net interest income on a taxable-equivalent
basis (5) 2.88 % $
38,239 2.86 % $ 36,261
Noninterest-earning assets Cash and due from banks
$
18,443 18,499 Goodwill
26,645 26,696 Other
114,073 129,324 Total
noninterest-earning assets
$ 159,161
174,519
Noninterest-bearing funding sources
Deposits
$ 364,774 353,870 Other liabilities
55,221 62,169 Total equity
205,246 200,502
Noninterest-bearing funding sources used to fund earning assets
(466,080 ) (442,022 ) Net
noninterest-bearing funding sources
$
159,161 174,519
Total assets
$ 1,932,242 1,865,694
(1) Our average prime rate was 4.03% and 3.50%
for the first nine months of 2017 and 2016, respectively. The
average three-month London Interbank Offered Rate (LIBOR) was 1.20%
and 0.69% for the same periods, respectively. (2) Yields/rates and
amounts include the effects of hedge and risk management activities
associated with the respective asset and liability categories. (3)
Yields and rates are based on interest income/expense amounts for
the period, annualized based on the accrual basis for the
respective accounts. The average balance amounts represent
amortized cost for the periods presented. (4) Nonaccrual loans and
related income are included in their respective loan categories.
(5) Includes taxable-equivalent
adjustments of $980 million and $909 million for the first nine
months of 2017 and 2016, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate was 35% for the periods presented.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2) Quarter ended
Sep 30, 2017 Jun 30, 2017
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016
($ in billions)
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Earning assets
Federal funds sold, securities purchased under
resale agreements and other short-term investments
$
276.1 1.20 % $ 281.6 0.99 % $ 283.8 0.76 % $
273.1 0.56 % $ 299.4 0.50 % Trading assets
103.6 2.96
98.1 2.95 93.8 2.80 102.8 2.96 88.8 2.72 Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
14.5
1.31 18.1 1.53 25.0 1.54 25.9 1.53 25.8 1.52 Securities of
U.S. states and political subdivisions
52.5 4.16 53.5
4.03 52.2 4.03 53.9 4.06 55.2 4.28 Mortgage-backed securities:
Federal agencies
139.8 2.58 132.0 2.63 156.6 2.58
148.0 2.37 105.8 2.39 Residential and commercial
11.0 5.43 12.6 5.55 14.5 5.32
16.5 5.87 18.1 5.54 Total mortgage-backed securities
150.8 2.79 144.6 2.89 171.1 2.81 164.5 2.72 123.9
2.85 Other debt and equity securities
48.1
3.75 49.0 3.87 50.7 3.60 52.7
3.71 54.2 3.37 Total available-for-sale securities
265.9 3.15 265.2 3.21 299.0
3.05 297.0 3.03 259.1 3.13 Held-to-maturity
securities: Securities of U.S. Treasury and federal agencies
44.7 2.18 44.7 2.19 44.7 2.20 44.7 2.20 44.6 2.19
Securities of U.S. states and political subdivisions
6.3
5.44 6.3 5.29 6.3 5.30 4.7 5.31 2.5 5.24 Federal agency and
other mortgage-backed securities
88.3 2.26 83.1 2.44
51.8 2.51 46.0 1.81 48.0 1.97 Other debt securities
1.4 3.05 2.8 2.34 3.3 2.34 3.6
2.26 3.9 1.98 Total held-to-maturity securities
140.7 2.38 136.9 2.49
106.1 2.54 99.0 2.17 99.0 2.15 Total
investment securities
406.6 2.89 402.1 2.96 405.1
2.92 396.0 2.82 358.1 2.86 Mortgages held for sale
22.9
3.82 19.8 3.94 19.9 3.70 27.5 3.43 24.1 3.44 Loans held for
sale
0.2 13.35 0.2 6.95 0.1 4.44 0.2 5.42 0.2 3.04
Loans: Commercial: Commercial and industrial - U.S.
270.1
3.81 273.1 3.70 274.8 3.59 272.8 3.46 271.2 3.48 Commercial
and industrial - Non U.S.
57.7 2.90 56.4 2.86 55.3
2.73 54.4 2.58 51.3 2.40 Real estate mortgage
129.1
3.83 131.3 3.68 132.4 3.56 131.2 3.44 128.8 3.48 Real estate
construction
25.0 4.18 25.3 4.10 24.6 3.72 23.9 3.61
23.2 3.50 Lease financing
19.2
4.59 19.0 4.82 19.1 4.94 18.9 5.78 18.9
4.70 Total commercial
501.1
3.76 505.1 3.67 506.2 3.54 501.2 3.45
493.4 3.42 Consumer: Real estate 1-4 family first mortgage
278.4 4.03 275.1 4.08 275.5 4.02 277.7 4.01 278.5
3.97 Real estate 1-4 family junior lien mortgage
41.9
4.95 43.6 4.78 45.3 4.60 47.2 4.42 48.9 4.37 Credit card
35.6 12.41 34.9 12.18 35.4 11.97 35.4 11.73 34.6
11.60 Automobile
56.7 5.34 59.1 5.43 61.5 5.46 62.5
5.54 62.5 5.60 Other revolving credit and installment
38.6 6.31 39.1 6.13 39.7 6.02
40.1 5.91 39.6 5.92 Total consumer
451.2 5.14 451.8 5.13 457.4 5.06
462.9 5.01 464.1 4.97 Total loans
952.3
4.41 956.9 4.36 963.6 4.26 964.1 4.20 957.5 4.17 Other
15.1 1.69 10.6 2.00 6.8
2.96 6.7 3.27 6.4 2.30 Total earning assets
$ 1,776.8 3.45
%
$ 1,769.3 3.41 % $ 1,773.1 3.31 % $ 1,770.4
3.24 % $ 1,734.5 3.17 %
Funding sources Deposits:
Interest-bearing checking
$ 48.3 0.57 %
$ 48.5 0.41 % $ 50.7 0.29 % $ 46.9 0.17 % $ 44.0 0.15 % Market rate
and other savings
681.2 0.17 683.0 0.13 684.2 0.09
676.4 0.07 667.2 0.07 Savings certificates
21.8 0.31
22.6 0.30 23.5 0.29 24.4 0.30 25.2 0.30 Other time deposits
66.1 1.51 57.1 1.43 54.9 1.31 49.2 1.16 54.9 0.93
Deposits in foreign offices
124.7
0.76 123.7 0.65 122.2 0.49 110.4 0.35
107.1 0.30 Total interest-bearing deposits
942.1
0.37 934.9 0.29 935.5 0.23 907.3 0.18 898.4 0.16 Short-term
borrowings
99.2 0.91 95.8 0.69 98.5 0.47 124.7 0.33
116.2 0.29 Long-term debt
243.1 2.26 249.5 2.05 259.8
1.83 252.2 1.68 252.4 1.59 Other liabilities
24.8 1.74 21.0 2.05 16.8 2.22
17.1 2.15 16.8 2.11 Total interest-bearing
liabilities
1,309.2 0.79 1,301.2 0.69 1,310.6 0.59
1,301.3 0.51 1,283.8 0.48 Portion of noninterest-bearing funding
sources
467.6 — 468.1 —
462.5 — 469.1 — 450.7 — Total funding sources
$ 1,776.8 0.58 $
1,769.3 0.51 $ 1,773.1 0.44 $ 1,770.4
0.37 $ 1,734.5 0.35
Net interest
margin on a taxable-equivalent basis 2.87 % 2.90
% 2.87 % 2.87 % 2.82 %
Noninterest-earning assets Cash and
due from banks
$ 18.5 18.2 18.7 19.0 18.7 Goodwill
26.6 26.7 26.7 26.7 27.0 Other
116.6
112.9 112.5 128.2 134.4 Total
noninterest-earnings assets
$ 161.7
157.8 157.9 173.9 180.1
Noninterest-bearing funding sources Deposits
$
364.3 366.3 363.7 376.9 363.1 Other liabilities
57.0
53.6 54.9 64.9 63.8 Total equity
207.9 206.0 201.8 201.2
203.9 Noninterest-bearing funding sources used to fund earning
assets
(467.5 ) (468.1 ) (462.5 )
(469.1 ) (450.7 ) Net noninterest-bearing funding sources
$ 161.7 157.8 157.9 173.9
180.1
Total assets $
1,938.5 1,927.1 1,931.0 1,944.3
1,914.6
(1) Our average prime rate was 4.25% for
the quarter ended September 30, 2017, 4.05% for the quarter ended
June 30, 2017, 3.80% for the quarter ended March 31, 2017, 3.54%
for the quarter ended December 31, 2016 and 3.50% for the quarter
ended September 30, 2016. The average three-month London Interbank
Offered Rate (LIBOR) was 1.31%, 1.21%, 1.07%, 0.92% and 0.79% for
the same quarters, respectively.
(2) Yields/rates include the effects of hedge and risk management
activities associated with the respective asset and liability
categories. (3) Yields and rates are based on interest
income/expense amounts for the period, annualized based on the
accrual basis for the respective accounts. The average balance
amounts represent amortized cost for the periods presented.
Wells Fargo & Company and
Subsidiaries
NONINTEREST INCOME Quarter ended Sep 30, % Nine months ended
Sep 30, % (in millions)
2017
2016 Change
2017
2016 Change Service charges on deposit accounts
$ 1,276 1,370 (7 )%
$
3,865 4,015 (4 )% Trust and investment fees:
Brokerage advisory, commissions and other fees
2,304 2,344
(2 )
6,957 6,874 1 Trust and investment management
840 849 (1 )
2,506 2,499 — Investment banking
465 420 11
1,345
1,172 15 Total trust and investment
fees
3,609 3,613 —
10,808 10,545 2 Card fees
1,000 997 —
2,964 2,935 1 Other fees: Charges and
fees on loans
318 306 4
950 936 1 Cash network fees
126 138 (9 )
386 407 (5 ) Commercial real estate
brokerage commissions
120 119 1
303 322 (6 ) Letters
of credit fees
77 81 (5 )
227 242 (6 ) Wire transfer
and other remittance fees
114 103 11
333 296 13 All
other fees
122 179
(32 )
445 562 (21 ) Total other
fees
877 926 (5 )
2,644 2,765 (4 ) Mortgage
banking: Servicing income, net
309 359 (14 )
1,165
1,569 (26 ) Net gains on mortgage loan origination/sales activities
737 1,308 (44 )
2,257 3,110 (27 ) Total mortgage
banking
1,046 1,667
(37 )
3,422 4,679 (27 )
Insurance
269 293 (8 )
826 1,006 (18 ) Net gains from
trading activities
245 415 (41 )
921 943 (2 ) Net
gains on debt securities
166 106 57
322 797 (60 ) Net
gains from equity investments
238 140 70
829 573 45
Lease income
475 534 (11 )
1,449 1,404 3 Life
insurance investment income
152 152 —
441 455 (3 )
All other
97 163
(40 )
347 1,216 (71 ) Total
$ 9,450 10,376
(9 )
$ 28,838
31,333 (8 )
NONINTEREST EXPENSE
Quarter ended Sep
30,
%
Nine months ended Sep 30, % (in millions)
2017
2016 Change
2017
2016 Change Salaries
$
4,356 4,224 3
%
$
12,960
12,359
5
%
Commission and incentive compensation
2,553 2,520 1
7,777 7,769 — Employee benefits
1,279 1,223 5
4,273 3,993 7 Equipment
523 491 7
1,629 1,512
8 Net occupancy
716 718 —
2,134 2,145 (1 ) Core
deposit and other intangibles
288 299 (4 )
864 891 (3
) FDIC and other deposit assessments
314 310 1
975
815 20 Outside professional services
955 802 19
2,788
2,154 29 Operating losses
1,329 577 130
1,961 1,365
44 Operating leases
347 363 (4 )
1,026 950 8 Contract
services
351 313 12
1,025 878 17 Outside data
processing
227 233 (3 )
683 666 3 Travel and
entertainment
154 144 7
504 509 (1 ) Postage,
stationery and supplies
128 150 (15 )
407 466 (13 )
Advertising and promotion
137 117 17
414 417 (1 )
Telecommunications
90 101 (11 )
272 287 (5 )
Foreclosed assets
66 (17 ) NM
204 127 61 Insurance
24 23 4
72 156 (54 ) All other
514 677 (24 )
1,716
1,703 1 Total
$ 14,351
13,268 8
$
41,684
39,162
6
NM – Not meaningful
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONINTEREST INCOME Quarter ended (in millions)
Sep 30, 2017 Jun 30,2017
Mar 31,2017 Dec 31,2016 Sep 30,2016 Service charges
on deposit accounts
$ 1,276 1,276 1,313
1,357 1,370 Trust and investment fees: Brokerage
advisory, commissions and other fees
2,304 2,329 2,324 2,342
2,344 Trust and investment management
840 837 829 837 849
Investment banking
465 463
417 519 420 Total
trust and investment fees
3,609
3,629 3,570 3,698 3,613
Card fees
1,000 1,019 945 1,001 997 Other fees:
Charges and fees on loans
318 325 307 305 306 Cash network
fees
126 134 126 130 138 Commercial real estate brokerage
commissions
120 102 81 172 119 Letters of credit fees
77 76 74 79 81 Wire transfer and other remittance fees
114 112 107 105 103 All other fees
122
153 170 171
179 Total other fees
877
902 865 962 926
Mortgage banking: Servicing income, net
309 400 456 196 359
Net gains on mortgage loan origination/sales activities
737 748 772
1,221 1,308 Total mortgage banking
1,046 1,148 1,228
1,417 1,667 Insurance
269 280
277 262 293 Net gains (losses) from trading activities
245
237 439 (109 ) 415 Net gains on debt securities
166 120 36
145 106 Net gains from equity investments
238 188 403 306
140 Lease income
475 493 481 523 534 Life insurance
investment income
152 145 144 132 152 All other
97 249 1
(514 ) 163 Total
$ 9,450
9,686 9,702 9,180
10,376
FIVE QUARTER NONINTEREST
EXPENSE
Quarter ended (in millions)
Sep 30,
2017 Jun 30,2017 Mar 31,2017 Dec
31,2016 Sep 30,2016 Salaries
$ 4,356 4,343
4,261 4,193 4,224 Commission and incentive compensation
2,553 2,499 2,725 2,478 2,520 Employee benefits
1,279
1,308 1,686 1,101 1,223 Equipment
523 529 577 642 491 Net
occupancy
716 706 712 710 718 Core deposit and other
intangibles
288 287 289 301 299 FDIC and other deposit
assessments
314 328 333 353 310 Outside professional
services
955 1,029 804 984 802 Operating losses
1,329
350 282 243 577 Operating leases
347 334 345 379 363
Contract services
351 349 325 325 313 Outside data
processing
227 236 220 222 233 Travel and entertainment
154 171 179 195 144 Postage, stationery and supplies
128 134 145 156 150 Advertising and promotion
137 150
127 178 117 Telecommunications
90 91 91 96 101 Foreclosed
assets
66 52 86 75 (17 ) Insurance
24 24 24 23 23 All
other
514 621 581
561 677 Total
$ 14,351 13,541 13,792
13,215 13,268
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED BALANCE SHEET (in millions, except shares)
Sep 30, 2017 Dec 31,2016
%
Change
Assets Cash and due from banks
$ 19,206 20,729
(7 )% Federal funds sold, securities purchased under resale
agreements and other short-term investments
273,105 266,038
3 Trading assets
88,404 74,397 19 Investment securities:
Available-for-sale, at fair value
272,210 308,364 (12 )
Held-to-maturity, at cost
142,423 99,583 43 Mortgages held
for sale
20,009 26,309 (24 ) Loans held for sale
157
80 96 Loans
951,873 967,604 (2 ) Allowance for loan losses
(11,078 ) (11,419 ) (3 )
Net loans
940,795 956,185
(2 ) Mortgage servicing rights: Measured at fair value
13,338 12,959 3 Amortized
1,406 1,406 — Premises and
equipment, net
8,449 8,333 1 Goodwill
26,581 26,693 —
Derivative assets
12,580 14,498 (13 ) Other assets
116,276 114,541 2 Total
assets
$ 1,934,939
1,930,115 —
Liabilities Noninterest-bearing deposits
$ 366,528 375,967 (3 ) Interest-bearing deposits
940,178 930,112 1
Total deposits
1,306,706 1,306,079 — Short-term borrowings
93,811 96,781 (3 ) Derivative liabilities
9,497
14,492 (34 ) Accrued expenses and other liabilities
79,208
57,189 39 Long-term debt
238,893
255,077 (6 ) Total liabilities
1,728,115 1,729,618 —
Equity Wells Fargo stockholders’ equity: Preferred stock
25,576 24,551 4 Common stock – $1-2/3 par value, authorized
9,000,000,000 shares; issued 5,481,811,474 shares
9,136
9,136 — Additional paid-in capital
60,759 60,234 1 Retained
earnings
141,761 133,075 7 Cumulative other comprehensive
income (loss)
(1,627 ) (3,137 ) (48 ) Treasury stock
– 553,940,326 shares and 465,702,148 shares
(27,772 )
(22,713 ) 22 Unearned ESOP shares
(1,904
) (1,565 ) 22 Total Wells Fargo stockholders’
equity
205,929 199,581 3 Noncontrolling interests
895 916 (2 ) Total equity
206,824 200,497 3
Total liabilities and equity
$
1,934,939 1,930,115
—
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET (in millions)
Sep 30, 2017 Jun 30,2017
Mar 31,2017 Dec 31,2016 Sep
30,2016
Assets Cash and due from banks
$
19,206 20,248 19,698 20,729 19,287 Federal funds sold,
securities purchased under resale agreements and other short-term
investments
273,105 264,706 308,747 266,038 298,325 Trading
assets
88,404 83,607 80,326 74,397 81,094 Investment
securities: Available-for-sale, at fair value
272,210
269,202 299,530 308,364 291,591 Held-to-maturity, at cost
142,423 140,392 108,030 99,583 99,241 Mortgages held for
sale
20,009 24,807 17,822 26,309 27,423 Loans held for sale
157 156 253 80 183 Loans
951,873 957,423 958,405
967,604 961,326 Allowance for loan losses
(11,078 ) (11,073 )
(11,168 ) (11,419 ) (11,583 ) Net loans
940,795 946,350
947,237 956,185
949,743 Mortgage servicing rights: Measured at fair
value
13,338 12,789 13,208 12,959 10,415 Amortized
1,406 1,399 1,402 1,406 1,373 Premises and equipment, net
8,449 8,403 8,320 8,333 8,322 Goodwill
26,581 26,573
26,666 26,693 26,688 Derivative assets
12,580 13,273 12,564
14,498 18,736 Other assets
116,276
118,966 107,761
114,541 109,703 Total assets
$ 1,934,939
1,930,871 1,951,564
1,930,115 1,942,124
Liabilities
Noninterest-bearing deposits
$ 366,528 372,766
365,780 375,967 376,136 Interest-bearing deposits
940,178 933,064
959,664 930,112 899,758
Total deposits
1,306,706 1,305,830 1,325,444
1,306,079 1,275,894 Short-term borrowings
93,811 95,356
94,871 96,781 124,668 Derivative liabilities
9,497 11,636
12,461 14,492 13,603 Accrued expenses and other liabilities
79,208 73,035 59,831 57,189 69,166 Long-term debt
238,893 238,869
256,468 255,077
254,835 Total liabilities
1,728,115
1,724,726 1,749,075
1,729,618 1,738,166
Equity Wells Fargo stockholders’ equity: Preferred
stock
25,576 25,785 25,501 24,551 24,594 Common stock
9,136 9,136 9,136 9,136 9,136 Additional paid-in capital
60,759 60,689 60,585 60,234 60,685 Retained earnings
141,761 139,524 136,032 133,075 130,288 Cumulative other
comprehensive income (loss)
(1,627 ) (2,110 ) (3,178
) (3,137 ) 2,184 Treasury stock
(27,772 ) (25,675 )
(24,030 ) (22,713 ) (22,247 ) Unearned ESOP shares
(1,904 ) (2,119 ) (2,546
) (1,565 ) (1,612 ) Total Wells Fargo
stockholders’ equity
205,929 205,230 201,500 199,581 203,028
Noncontrolling interests
895
915 989 916
930 Total equity
206,824
206,145 202,489
200,497 203,958 Total
liabilities and equity
$ 1,934,939
1,930,871 1,951,564
1,930,115 1,942,124
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER INVESTMENT
SECURITIES
(in millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec
31,2016 Sep 30,2016 Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
$
6,350 17,896 24,625 25,819 26,376 Securities of U.S. states
and political subdivisions
52,774 52,013 52,061 51,101
55,366 Mortgage-backed securities: Federal agencies
150,181
135,938 156,966 161,230 135,692 Residential and commercial
11,046 12,772 14,233
16,318 18,387 Total mortgage-backed
securities
161,227 148,710 171,199 177,548 154,079 Other
debt securities
50,966 49,555
50,520 52,685 54,537
Total available-for-sale debt securities
271,317 268,174
298,405 307,153 290,358 Marketable equity securities
893 1,028 1,125
1,211 1,233 Total available-for-sale securities
272,210 269,202
299,530 308,364 291,591
Held-to-maturity securities: Securities of U.S. Treasury and
federal agencies
44,712 44,704 44,697 44,690 44,682
Securities of U.S. states and political subdivisions
6,321
6,325 6,331 6,336 2,994 Federal agency and other mortgage-backed
securities (1)
90,071 87,525 53,778 45,161 47,721 Other debt
securities
1,319 1,838
3,224 3,396 3,844 Total
held-to-maturity debt securities
142,423
140,392 108,030 99,583
99,241 Total investment securities
$ 414,633 409,594 407,560
407,947 390,832
(1) Predominantly consists of
federal agency mortgage-backed securities.
FIVE QUARTER LOANS
(in millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec
31,2016 Sep 30,2016 Commercial: Commercial and
industrial
$ 327,944 331,113 329,252 330,840 324,020
Real estate mortgage
128,475 130,277 131,532 132,491 130,223
Real estate construction
24,520 25,337 25,064 23,916 23,340
Lease financing
19,211 19,174
19,156 19,289 18,871
Total commercial
500,150 505,901
505,004 506,536 496,454
Consumer: Real estate 1-4 family first mortgage
280,173
276,566 274,633 275,579 278,689 Real estate 1-4 family junior lien
mortgage
41,152 42,747 44,333 46,237 48,105 Credit card
36,249 35,305 34,742 36,700 34,992 Automobile
55,455
57,958 60,408 62,286 62,873 Other revolving credit and installment
38,694 38,946
39,285 40,266 40,213 Total consumer
451,723 451,522
453,401 461,068 464,872 Total loans (1)
$ 951,873 957,423
958,405 967,604 961,326
(1) Includes $13.6 billion,
$14.3 billion, $15.7 billion, $16.7 billion, and $17.7 billion of
purchased credit-impaired (PCI) loans at September 30, June 30, and
March 31, 2017 and December 31, and September 30, 2016,
respectively.
Our foreign loans are reported by
respective class of financing receivable in the table above.
Substantially all of our foreign loan portfolio is commercial
loans. Loans are classified as foreign primarily based on whether
the borrower's primary address is outside of the United States. The
following table presents total commercial foreign loans outstanding
by class of financing receivable.
(in millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017
Dec 31,2016 Sep 30,2016 Commercial foreign loans:
Commercial and industrial
$ 58,570 57,825 56,987
55,396 51,515 Real estate mortgage
8,032 8,359 8,206 8,541
8,466 Real estate construction
647 585 471 375 310 Lease
financing
1,141 1,092
986 972 958 Total
commercial foreign loans
$ 68,390
67,861 66,650
65,284 61,249
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND
FORECLOSED ASSETS) (in millions)
Sep 30,
2017 Jun 30,2017 Mar 31,2017
Dec 31,2016 Sep 30,2016 Nonaccrual
loans: Commercial: Commercial and industrial
$ 2,397
2,632 2,898 3,216 3,331 Real estate mortgage
593 630 672 685
780 Real estate construction
38 34 40 43 59 Lease financing
81 89
96 115 92 Total
commercial
3,109 3,385
3,706 4,059
4,262 Consumer: Real estate 1-4 family first mortgage
4,213 4,413 4,743 4,962 5,310 Real estate 1-4 family junior
lien mortgage
1,101 1,095 1,153 1,206 1,259 Automobile
137 104 101 106 108 Other revolving credit and installment
59 59
56 51 47 Total
consumer
5,510 5,671
6,053 6,325
6,724 Total nonaccrual loans (1)(2)(3)
$ 8,619 9,056
9,759 10,384
10,986 As a percentage of total loans
0.91 % 0.95
1.02 1.07 1.14 Foreclosed assets: Government insured/guaranteed
$ 137 149 179 197 282 Non-government
insured/guaranteed
569
632 726 781
738 Total foreclosed assets
706
781 905 978
1,020 Total nonperforming assets
$ 9,325 9,837
10,664 11,362
12,006 As a percentage of total loans
0.98
% 1.03 1.11
1.17 1.25 (1) Includes nonaccrual
mortgages held for sale and loans held for sale in their respective
loan categories. (2) Excludes PCI loans because they continue to
earn interest income from accretable yield, independent of
performance in accordance with their contractual terms.
(3) Real estate 1-4 family mortgage loans
predominantly insured by the Federal Housing Administration (FHA)
or guaranteed by the Department of Veterans Affairs (VA) and
student loans largely guaranteed by agencies on behalf of the U.S.
Department of Education under the Federal Family Education Loan
Program are not placed on nonaccrual status because they are
insured or guaranteed. All remaining student loans guaranteed under
the FFELP were sold as of March 31, 2017
Wells Fargo & Company and
Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING (in
millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
Sep 30,2016 Total (excluding PCI)(1):
$
10,227 9,716 10,525 11,858 12,068 Less: FHA
insured/guaranteed by the VA (2)(3)
9,266 8,873 9,585 10,883
11,198 Less: Student loans guaranteed under the FFELP (4)
— — —
3 17
Total, not
government insured/guaranteed $ 961
843 940
972 853 By segment and class, not
government insured/guaranteed: Commercial: Commercial and
industrial
$ 27 42 88 28 47 Real estate mortgage
11 2 11 36 4 Real estate construction
—
10 3
— — Total commercial
38
54 102
64 51 Consumer: Real estate 1-4 family
first mortgage (3)
190 145 149 175 171 Real estate 1-4
family junior lien mortgage (3)
49 44 42 56 54 Credit card
475 411 453 452 392 Automobile
111 91 79 112 81 Other
revolving credit and installment
98
98 115 113
104 Total consumer
923
789 838
908 802
Total, not government
insured/guaranteed $ 961
843 940 972
853 (1) PCI loans totaled $1.4 billion, $1.5
billion, $1.8 billion, $2.0 billion and $2.2 billion, at September
30, June 30 and March 31, 2017 and December 31 and September 30,
2016, respectively. (2) Represents loans whose repayments are
predominantly insured by the FHA or guaranteed by the VA. (3)
Includes mortgages held for sale 90 days or more past due and still
accruing. (4) Represents loans whose repayments are largely
guaranteed by agencies on behalf of the U.S. Department of
Education under the FFELP. All remaining student loans guaranteed
under the FFELP were sold as of March 31, 2017. Wells
Fargo & Company and Subsidiaries
CHANGES IN ACCRETABLE YIELD RELATED TO
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
Loans purchased with evidence of credit deterioration since
origination and for which it is probable that all contractually
required payments will not be collected are considered to be credit
impaired. PCI loans predominantly represent loans acquired from
Wachovia that were deemed to be credit impaired. Evidence of credit
quality deterioration as of the purchase date may include
statistics such as past due and nonaccrual status, recent borrower
credit scores and recent LTV percentages. PCI loans are initially
measured at fair value, which includes estimated future credit
losses expected to be incurred over the life of the loan.
Accordingly, the associated allowance for credit losses related to
these loans is not carried over at the acquisition date. As
a result of PCI loan accounting, certain credit-related ratios
cannot be used to compare a portfolio that includes PCI loans
against one that does not, or to compare ratios across quarters or
years. The ratios particularly affected include the allowance for
loan losses and allowance for credit losses as percentages of
loans, of nonaccrual loans and of nonperforming assets; nonaccrual
loans and nonperforming assets as a percentage of total loans; and
net charge-offs as a percentage of loans.
The excess of cash flows expected to be
collected over the carrying value of PCI loans is referred to as
the accretable yield and is accreted into interest income over the
estimated lives of the PCI loans using the effective yield method.
The accretable yield is affected by:
• Changes in interest rate indices for variable rate PCI loans -
Expected future cash flows are based on the variable rates in
effect at the time of the quarterly assessment of expected cash
flows; • Changes in prepayment assumptions - Prepayments affect the
estimated life of PCI loans which may change the amount of interest
income, and possibly principal, expected to be collected; and
• Changes in the expected principal and
interest payments over the estimated life - Updates to changes in
expected cash flows are driven by the credit outlook and actions
taken with borrowers. Changes in expected future cash flows from
loan modifications are included in the regular evaluations of cash
flows expected to be collected.
The change in the accretable yield related to PCI loans since the
merger with Wachovia is presented in the following table.
(in millions)
Quarterended Sep 30, 2017
Nine monthsendedSep
30, 2017
2009-2016 Balance, beginning of period
$ 9,369 11,216 10,447 Change in
accretable yield due to acquisitions — 2
159 Accretion into interest income (1) (340
) (1,071 ) (15,577 )
Accretion into noninterest income due to sales (2) —
(334 ) (467 ) Reclassification from
nonaccretable difference for loans with improving credit-related
cash flows (3) 234 640 10,955 Changes
in expected cash flows that do not affect nonaccretable difference
(4) (20 )
(1,210 ) 5,699
Balance, end of period $ 9,243
9,243
11,216 (1) Includes accretable yield released as a
result of settlements with borrowers, which is included in interest
income. (2) Includes accretable yield released as a result of sales
to third parties, which is included in noninterest income.
(3) At September 30, 2017, our carrying
value for PCI loans totaled $13.6 billion and the remainder of
nonaccretable difference established in purchase accounting totaled
$454 million. The nonaccretable difference absorbs losses of
contractual amounts that exceed our carrying value for PCI
loans.
(4) Represents changes in cash flows expected to be collected due
to the impact of modifications, changes in prepayment assumptions,
changes in interest rates on variable rate PCI loans and sales to
third parties.
Wells Fargo & Company and
Subsidiaries
PICK-A-PAY PORTFOLIO (1) September 30, 2017 PCI loans
All other loans (in millions) Adjusted
unpaid
principal
balance (2)
Current
LTV
ratio (3)
Carrying
value (4)
Ratio of
carrying
value to
current
value (5)
Carrying
value (4)
Ratio of
carrying
value to
current
value (5)
California $ 11,753 61 % $ 9,033
47 % $ 6,703 44 % Florida 1,481 69 1,076 49
1,439 54 New Jersey 586 76 429 55 953 62 New York 446 69 363 52 477
59 Texas 135 48 102 36 570 37 Other states 2,928
68 2,208 51 3,942 56 Total Pick-a-Pay loans
$ 17,329 64 $ 13,211 48 $ 14,084
50
(1) The individual states shown in this table represent the
top five states based on the total net carrying value of the
Pick-a-Pay loans at the beginning of 2017.
(2) Adjusted unpaid principal balance
includes write-downs taken on loans where severe delinquency
(normally 180 days) or other indications of severe borrower
financial stress exist that indicate there will be a loss of
contractually due amounts upon final resolution of the loan.
(3) The current LTV ratio is calculated as
the adjusted unpaid principal balance divided by the collateral
value. Collateral values are generally determined using automated
valuation models (AVM) and are updated quarterly. AVMs are
computer-based tools used to estimate market values of homes based
on processing large volumes of market data including market
comparables and price trends for local market areas.
(4) Carrying value, which does not reflect
the allowance for loan losses, includes remaining purchase
accounting adjustments, which, for PCI loans may include the
nonaccretable difference and the accretable yield and, for all
other loans, an adjustment to mark the loans to a market yield at
date of merger less any subsequent charge-offs.
(5) The ratio of carrying value to current value is calculated as
the carrying value divided by the collateral value.
Wells Fargo & Company and
Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT LOSSES Quarter ended
September 30, Nine months ended September 30, (in millions)
2017 2016
2017 2016
Balance, beginning of period
$ 12,146 12,749
12,540
12,512 Provision for credit losses
717 805
1,877 2,965 Interest income on certain impaired loans (1)
(43 ) (54 )
(137 ) (153 ) Loan
charge-offs: Commercial: Commercial and industrial
(194
) (324 )
(608 ) (1,110 ) Real estate mortgage
(21 ) (7 )
(34 ) (13 ) Real estate
construction
— —
— (1 ) Lease financing
(11 ) (4 )
(31
) (25 ) Total commercial
(226 ) (335 )
(673
) (1,149 ) Consumer: Real estate 1-4 family
first mortgage
(67 ) (106 )
(191 ) (366
) Real estate 1-4 family junior lien mortgage
(70 )
(119 )
(225 ) (385 ) Credit card
(337 )
(296 )
(1,083 ) (930 ) Automobile
(274
) (215 )
(741 ) (602 ) Other revolving credit
and installment
(170 )
(170 )
(544 ) (508 )
Total consumer
(918 )
(906 )
(2,784 ) (2,791 )
Total loan charge-offs
(1,144 )
(1,241 )
(3,457 )
(3,940 ) Loan recoveries: Commercial: Commercial and industrial
69 65
234 210 Real estate mortgage
24 35
68 90 Real estate construction
15 18
27 30
Lease financing
5 2
13 10 Total
commercial
113 120
342 340 Consumer:
Real estate 1-4 family first mortgage
83 86
216 284
Real estate 1-4 family junior lien mortgage
69 70
205
200 Credit card
60 51
177 153 Automobile
72 78
246 248 Other revolving credit and installment
30 31
94
100 Total consumer
314 316
938
985 Total loan recoveries
427 436
1,280 1,325 Net loan charge-offs
(717 ) (805 )
(2,177 ) (2,615 ) Other
6 (1 )
6
(15 )
Balance, end of period
$ 12,109 12,694
12,109 12,694
Components: Allowance for loan losses
$ 11,078 11,583
11,078 11,583 Allowance for unfunded credit commitments
1,031 1,111
1,031 1,111 Allowance for
credit losses
$ 12,109
12,694
12,109
12,694 Net loan charge-offs (annualized) as a
percentage of average total loans
0.30 % 0.33
0.30 0.37 Allowance for loan losses as a percentage of total
loans
1.16 1.20
1.16 1.20 Allowance for credit losses
as a percentage of total loans
1.27
1.32
1.27
1.32
(1) Certain impaired loans with
an allowance calculated by discounting expected cash flows using
the loan’s effective interest rate over the remaining life of the
loan recognize changes in allowance attributable to the passage of
time as interest income.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES Quarter
ended (in millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec
31,2016 Sep 30,2016
Balance, beginning of
quarter $ 12,146 12,287
12,540 12,694 12,749 Provision
for credit losses
717 555 605 805 805 Interest income on
certain impaired loans (1)
(43 ) (46 ) (48 ) (52 )
(54 ) Loan charge-offs: Commercial: Commercial and industrial
(194 ) (161 ) (253 ) (309 ) (324 ) Real estate
mortgage
(21 ) (8 ) (5 ) (14 ) (7 ) Real estate
construction
— — — — — Lease financing
(11 ) (13 ) (7 )
(16 ) (4 ) Total commercial
(226 ) (182 ) (265 )
(339 ) (335 ) Consumer: Real estate 1-4
family first mortgage
(67 ) (55 ) (69 ) (86 ) (106 )
Real estate 1-4 family junior lien mortgage
(70 ) (62
) (93 ) (110 ) (119 ) Credit card
(337 ) (379 ) (367
) (329 ) (296 ) Automobile
(274 ) (212 ) (255 ) (243
) (215 ) Other revolving credit and installment
(170 ) (185 ) (189 )
(200 ) (170 ) Total consumer
(918 ) (893 ) (973
) (968 ) (906 ) Total loan charge-offs
(1,144 ) (1,075 )
(1,238 ) (1,307 ) (1,241 ) Loan
recoveries: Commercial: Commercial and industrial
69 83 82
53 65 Real estate mortgage
24 14 30 26 35 Real estate
construction
15 4 8 8 18 Lease financing
5 6 2
1 2 Total commercial
113 107
122 88 120
Consumer: Real estate 1-4 family first mortgage
83 71 62 89
86 Real estate 1-4 family junior lien mortgage
69 66 70 66
70 Credit card
60 59 58 54 51 Automobile
72 86 88 77
78 Other revolving credit and installment
30
31 33
28 31 Total consumer
314 313 311
314 316 Total loan
recoveries
427 420
433 402 436
Net loan charge-offs
(717 )
(655 ) (805 ) (905 )
(805 ) Other
6
5 (5 ) (2 )
(1 )
Balance, end of quarter $
12,109 12,146
12,287 12,540 12,694
Components: Allowance for loan losses
$ 11,078
11,073 11,168 11,419 11,583 Allowance for unfunded credit
commitments
1,031 1,073
1,119 1,121
1,111 Allowance for credit losses
$ 12,109 12,146
12,287 12,540
12,694 Net loan charge-offs (annualized) as a percentage of
average total loans
0.30 % 0.27 0.34 0.37 0.33
Allowance for loan losses as a percentage of: Total loans
1.16 1.16 1.17 1.18 1.20 Nonaccrual loans
129 122 114
110 105 Nonaccrual loans and other nonperforming assets
119
113 105 101 96 Allowance for credit losses as a percentage of:
Total loans
1.27 1.27 1.28 1.30 1.32 Nonaccrual loans
141 134 126 121 116 Nonaccrual loans and other nonperforming
assets
130 123
115 110 106
(1) Certain impaired loans with
an allowance calculated by discounting expected cash flows using
the loan’s effective interest rate over the remaining life of the
loan recognize changes in allowance attributable to the passage of
time as interest income.
Wells Fargo & Company and
Subsidiaries
TANGIBLE COMMON EQUITY (1) (in millions, except ratios)
Sep 30, 2017
Jun 30,2017 Mar 31,2017
Dec 31,2016 Sep 30,2016 Tangible book value per
common share (1): Total equity
$ 206,824 206,145
202,489 200,497 203,958 Adjustments: Preferred stock
(25,576
) (25,785 ) (25,501 ) (24,551 ) (24,594 ) Additional paid-in
capital on ESOP
preferred stock
(130 ) (136 ) (157 ) (126 ) (130 ) Unearned ESOP
shares
1,904 2,119 2,546 1,565 1,612 Noncontrolling
interests
(895 )
(915 ) (989 ) (916 )
(930 ) Total common stockholders' equity (A)
182,127 181,428 178,388 176,469 179,916 Adjustments:
Goodwill
(26,581 ) (26,573 ) (26,666 ) (26,693 )
(26,688 ) Certain identifiable intangible assets
(other than MSRs)
(1,913 ) (2,147 ) (2,449 ) (2,723 ) (3,001 ) Other
assets (2)
(2,282 ) (2,268 ) (2,121 ) (2,088 ) (2,230
) Applicable deferred taxes (3)
1,550 1,624 1,698
1,772 1,832
Tangible common equity (B)
$
152,901 152,064
148,850 146,737 149,829
Common shares outstanding (C)
4,927.9 4,966.8 4,996.7
5,016.1 5,023.9 Book value per common share (A)/(C)
$
36.96 36.53 35.70 35.18 35.81 Tangible book value per common
share (B)/(C)
31.03
30.62 29.79
29.25 29.82
Quarter ended Nine months ended (in
millions, except ratios)
Sep
30, 2017 Jun 30,2017 Mar
31,2017 Dec 31,2016 Sep 30,2016
Sep 30, 2017 Sep 30,2016 Return
on average tangible common equity (1):
Net income applicable to
common stock (A)
$ 4,185 5,404 5,056 4,872 5,243
14,645 15,501 Average total equity
207,934 205,968
201,767 201,247 203,883
205,246 200,502 Adjustments:
Preferred stock
(25,780 ) (25,849 ) (25,163 ) (24,579
) (24,813 )
(25,600 ) (24,291 ) Additional paid-in
capital on ESOP preferred stock
(136 ) (144 ) (146 )
(128 ) (148 )
(142 ) (172 ) Unearned ESOP shares
2,114 2,366 2,198 1,596 1,850
2,226 2,150
Noncontrolling interests
(926 ) (910 ) (957 )
(928 ) (927 )
(931
) (938 ) Average common stockholders’ equity
(B)
183,206 181,431 177,699 177,208 179,845
180,799
177,251 Adjustments: Goodwill
(26,600 ) (26,664 )
(26,673 ) (26,713 ) (26,979 )
(26,645 ) (26,696 )
Certain identifiable intangible assets (other than MSRs)
(2,056 ) (2,303 ) (2,588 ) (2,871 ) (3,145 )
(2,314 ) (3,383 ) Other assets (2)
(2,231
) (2,160 ) (2,095 ) (2,175 ) (2,131 )
(2,163 )
(2,097 ) Applicable deferred taxes (3)
1,579 1,648
1,722 1,785 1,855
1,650 1,973
Average tangible common equity (C)
$ 153,898 151,952
148,065 147,234
149,445
151,327
147,048 Return on average common stockholders' equity (ROE)
(annualized) (A)/(B)
9.06 % 11.95 11.54 10.94 11.60
10.83 11.68 Return on average tangible common equity (ROTCE)
(annualized) (A)/(C)
10.79
14.26 13.85
13.16 13.96
12.94 14.08
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to
goodwill and other intangible assets. They were determined by
applying the combined federal statutory rate and composite state
income tax rates to the difference between book and tax basis of
the respective goodwill and intangible assets at period end.
Wells Fargo & Company and
Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1)
Estimated
(in billions, except ratio)
Sep 30, 2017 Jun
30,2017 Mar 31,2017 Dec 31,2016
Sep 30,2016 Total equity
$ 206.8 206.1 202.5
200.5 204.0 Adjustments: Preferred stock
(25.6 )
(25.8 ) (25.5 ) (24.6 ) (24.6 ) Additional paid-in capital on ESOP
preferred stock
(0.1 ) (0.1 ) (0.2 ) (0.1 ) (0.1 ) Unearned ESOP
shares
1.9 2.1 2.5 1.6 1.6 Noncontrolling interests
(0.9 ) (0.9 )
(1.0 ) (0.9 ) (1.0 )
Total common stockholders' equity
182.1 181.4 178.3 176.5
179.9 Adjustments: Goodwill
(26.6 ) (26.6 ) (26.7 )
(26.7 ) (26.7 ) Certain identifiable intangible assets (other than
MSRs)
(1.9 ) (2.1 ) (2.4 ) (2.7 ) (3.0 ) Other assets
(2)
(2.3 ) (2.2 ) (2.1 ) (2.1 ) (2.2 ) Applicable
deferred taxes (3)
1.6 1.6 1.7 1.8 1.8 Investment in certain
subsidiaries and other
(0.1
) (0.2 ) (0.1 )
(0.4 ) (2.0 ) Common Equity Tier 1 (Fully Phased-In)
under Basel III (A)
152.8
151.9 148.7 146.4
147.8 Total risk-weighted assets (RWAs)
anticipated under Basel III (4)(5) (B)
$ 1,297.1 1,310.5
1,324.5 1,358.9
1,380.0 Common Equity Tier 1 to total RWAs anticipated under
Basel III (Fully Phased-In) (5) (A)/(B)
11.8 % 11.6 11.2
10.8 10.7
(1) Basel III capital rules, adopted by
the Federal Reserve Board on July 2, 2013, revised the definition
of capital, increased minimum capital ratios, and introduced a
minimum Common Equity Tier 1 (CET1) ratio. These rules established
a new comprehensive capital framework for U.S. banking
organizations that implements the Basel III capital framework and
certain provisions of the Dodd-Frank Act. The rules are being
phased in through the end of 2021. Fully phased-in capital amounts,
ratios and RWAs are calculated assuming the full phase-in of the
Basel III capital rules. Fully phased-in regulatory capital
amounts, ratios and RWAs are considered non-GAAP financial measures
that are used by management, bank regulatory agencies, investors
and analysts to assess and monitor the Company’s capital
position.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to
goodwill and other intangible assets. They were determined by
applying the combined federal statutory rate and composite state
income tax rates to the difference between book and tax basis of
the respective goodwill and intangible assets at period end.
(4) The final Basel III capital rules provide for two capital
frameworks: the Standardized Approach, which replaced Basel I, and
the Advanced Approach applicable to certain institutions. Under the
final rules, we are subject to the lower of our CET1 ratio
calculated under the Standardized Approach and under the Advanced
Approach in the assessment of our capital adequacy. Because the
final determination of our CET1 ratio and which approach will
produce the lower CET1 ratio as of September 30, 2017, is subject
to detailed analysis of considerable data, our CET1 ratio at that
date has been estimated using the Basel III definition of capital
under the Basel III Standardized Approach RWAs. The capital ratio
for June 30 and March 31, 2017, and December 31 and September 30,
2016, was calculated under the Basel III Standardized Approach
RWAs. (5) The Company’s September 30, 2017, RWAs and capital ratio
are preliminary estimates.
Wells Fargo & Company and
Subsidiaries
OPERATING SEGMENT RESULTS (1)
CommunityBanking
WholesaleBanking
Wealth andInvestmentManagement
Other (2)
ConsolidatedCompany
(income/expense in millions, average
balances in billions)
2017 2016
2017 2016
2017
2016
2017 2016
2017 2016
Quarter ended Sep 30,
Net interest income (3)
$ 7,645 7,430
4,353 4,062
1,159 977
(681 ) (517 )
12,476 11,952 Provision (reversal of provision) for credit
losses
650 651
69 157
(1 ) 4
(1
) (7 )
717 805 Noninterest income
4,415 4,957
2,732 3,085
3,087 3,122
(784 ) (788 )
9,450 10,376 Noninterest expense
7,834
6,953
4,248
4,120
3,106
2,999
(837 )
(804 )
14,351
13,268 Income (loss) before income tax expense (benefit)
3,576 4,783
2,768 2,870
1,141 1,096
(627 ) (494 )
6,858 8,255 Income tax expense
(benefit)
1,286 1,546
729 827
427 415
(238 ) (187 )
2,204 2,601 Net income (loss) before
noncontrolling interests
2,290 3,237
2,039 2,043
714 681
(389 ) (307 )
4,654 5,654 Less:
Net income (loss) from noncontrolling interests
61 10
(7
) (4 )
4
4
— —
58 10 Net income
(loss)
$ 2,229
3,227
2,046 2,047
710 677
(389 ) (307 )
4,596 5,644 Average loans
$ 473.5 489.2
463.8 454.3
72.4 68.4
(57.4 ) (54.4 )
952.3 957.5 Average assets
988.9 993.6
824.3 794.2
213.4 212.1
(88.1 ) (85.3 )
1,938.5 1,914.6 Average
deposits
734.5 708.0
463.4 441.2
188.1 189.2
(79.6 ) (76.9 )
1,306.4 1,261.5
Nine
months ended Sep 30, Net interest income (3)
$
22,820 22,277
12,779 11,729
3,360 2,852
(1,700 ) (1,506 )
37,259 35,352 Provision
(reversal of provision) for credit losses
1,919 2,060
(39 ) 905
2 (8 )
(5 ) 8
1,877 2,965 Noninterest income
13,622 14,928
8,295 9,660
9,261 9,020
(2,340 ) (2,275
)
28,838 31,333 Noninterest expense
22,278 20,437
12,551 12,124
9,387 9,017
(2,532 ) (2,416 )
41,684 39,162 Income (loss) before
income tax expense (benefit)
12,245 14,708
8,562
8,360
3,232 2,863
(1,503 ) (1,373 )
22,536 24,558 Income tax expense (benefit)
3,817 4,910
2,034 2,341
1,206 1,087
(571 ) (521 )
6,486 7,817 Net income (loss) before
noncontrolling interests
8,428 9,798
6,528 6,019
2,026 1,776
(932 ) (852 )
16,050 16,741
Less: Net income (loss) from noncontrolling interests
197 96
(21
) (22 )
11
3
— —
187 77 Net income
(loss)
$ 8,231
9,702
6,549 6,041
2,015 1,773
(932 ) (852 )
15,863 16,664 Average
loans
$ 477.8 486.4
465.0 445.2
71.6
66.4
(56.8 ) (52.8 )
957.6 945.2 Average
assets
987.7 969.6
816.5 771.9
216.1 208.5
(88.1 ) (84.3 )
1,932.2 1,865.7 Average
deposits
726.4 698.3
464.1 431.7
190.6 185.4
(78.8 ) (76.1 )
1,302.3 1,239.3 (1) The management
accounting process measures the performance of the operating
segments based on our management structure and is not necessarily
comparable with other similar information for other financial
services companies. We define our operating segments by product
type and customer segment. (2) Includes the elimination of certain
items that are included in more than one business segment, most of
which represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels. (3) Net interest income is the difference between
interest earned on assets and the cost of liabilities to fund those
assets. Interest earned includes actual interest earned on segment
assets and, if the segment has excess liabilities, interest credits
for providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from another
segment.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS
(1)
Quarter ended (income/expense in millions, average balances in
billions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
Sep 30,2016
COMMUNITY BANKING
Net interest income (2)
$ 7,645 7,548 7,627 7,556
7,430 Provision for credit losses
650 623 646 631 651
Noninterest income
4,415 4,741 4,466 4,105 4,957 Noninterest
expense
7,834 7,223
7,221 6,985
6,953 Income before income tax expense
3,576
4,443 4,226 4,045 4,783 Income tax expense
1,286 1,404 1,127
1,272 1,546 Net
income before noncontrolling interests
2,290 3,039 3,099
2,773 3,237 Less: Net income from noncontrolling interests
61 46 90
40 10 Segment net
income
$ 2,229
2,993 3,009 2,733
3,227 Average loans
$ 473.5
477.2 482.7 488.1 489.2 Average assets
988.9 983.5 990.7
1,000.7 993.6 Average deposits
734.5
727.2 717.2
709.8 708.0
WHOLESALE BANKING
Net interest income (2)
$ 4,353 4,278 4,148 4,323
4,062 Provision (reversal of provision) for credit losses
69
(65 ) (43 ) 168 157 Noninterest income
2,732 2,673 2,890
2,830 3,085 Noninterest expense
4,248
4,078 4,225
4,002 4,120 Income before income tax
expense
2,768 2,938 2,856 2,983 2,870 Income tax expense
729 559
746 795 827
Net income before noncontrolling interests
2,039 2,379 2,110
2,188 2,043 Less: Net loss from noncontrolling interests
(7 ) (9 ) (5 )
(6 ) (4 ) Segment net income
$ 2,046 2,388
2,115 2,194
2,047 Average loans
$ 463.8 464.9 466.3 461.5
454.3 Average assets
824.3 817.3 807.8 811.9 794.2 Average
deposits
463.4 463.0
466.0 459.2
441.2
WEALTH AND INVESTMENT MANAGEMENT Net
interest income (2)
$ 1,159 1,127 1,074 1,061 977
Provision (reversal of provision) for credit losses
(1
) 7 (4 ) 3 4 Noninterest income
3,087 3,055 3,119
3,013 3,122 Noninterest expense
3,106
3,075 3,206
3,042 2,999 Income before income tax
expense
1,141 1,100 991 1,029 1,096 Income tax expense
427 417
362 380 415
Net income before noncontrolling interests
714 683 629 649
681 Less: Net income (loss) from noncontrolling interests
4 1 6
(4 ) 4 Segment net income
$ 710 682
623 653 677
Average loans
$ 72.4 71.7 70.7 70.0 68.4
Average assets
213.4 213.1 221.9 220.4 212.1 Average
deposits
188.1 188.2
195.6 194.9
189.2
OTHER (3
) Net interest income (2)
$ (681 ) (470 ) (549 ) (538 ) (517 ) Provision
(reversal of provision) for credit losses
(1 ) (10 )
6 3 (7 ) Noninterest income
(784 ) (783 ) (773 ) (768
) (788 ) Noninterest expense
(837 )
(835 ) (860 ) (814 )
(804 ) Loss before income tax benefit
(627
) (408 ) (468 ) (495 ) (494 ) Income tax benefit
(238 ) (155 ) (178
) (189 ) (187 ) Net loss before
noncontrolling interests
(389 ) (253 ) (290 ) (306 )
(307 ) Less: Net income from noncontrolling interests
— — —
— — Other net loss
$ (389 ) (253 )
(290 ) (306 ) (307 ) Average
loans
$ (57.4 ) (56.9 ) (56.1 ) (55.5 ) (54.4
) Average assets
(88.1 ) (86.8 ) (89.4 ) (88.7 )
(85.3 ) Average deposits
(79.6 )
(77.2 ) (79.6 ) (79.7 )
(76.9 )
CONSOLIDATED COMPANY Net interest income (2)
$ 12,476 12,483 12,300 12,402 11,952 Provision for
credit losses
717 555 605 805 805 Noninterest income
9,450 9,686 9,702 9,180 10,376 Noninterest expense
14,351 13,541
13,792 13,215
13,268 Income before income tax expense
6,858 8,073
7,605 7,562 8,255 Income tax expense
2,204
2,225 2,057
2,258 2,601 Net income before
noncontrolling interests
4,654 5,848 5,548 5,304 5,654 Less:
Net income from noncontrolling interests
58
38 91
30 10 Wells Fargo net income
$ 4,596 5,810
5,457 5,274
5,644 Average loans
$ 952.3 956.9 963.6
964.1 957.5 Average assets
1,938.5 1,927.1 1,931.0 1,944.3
1,914.6 Average deposits
1,306.4
1,301.2 1,299.2
1,284.2 1,261.5 (1) The management
accounting process measures the performance of the operating
segments based on our management structure and is not necessarily
comparable with other similar information for other financial
services companies. We define our operating segments by product
type and customer segment. (2) Net interest income is the
difference between interest earned on assets and the cost of
liabilities to fund those assets. Interest earned includes actual
interest earned on segment assets and, if the segment has excess
liabilities, interest credits for providing funding to other
segments. The cost of liabilities includes interest expense on
segment liabilities and, if the segment does not have enough
liabilities to fund its assets, a funding charge based on the cost
of excess liabilities from another segment. (3) Includes the
elimination of certain items that are included in more than one
business segment, most of which represents products and services
for Wealth and Investment Management customers served through
Community Banking distribution channels.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING Quarter ended
(in millions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017 Dec
31,2016 Sep 30,2016
MSRs measured using the fair
value method:
Fair value, beginning of quarter
$ 12,789
13,208 12,959 10,415 10,396 Purchases
541 — — — — Servicing
from securitizations or asset transfers (1)
605 436 583 752
609 Sales and other (2)
64
(8 ) (47 ) (47 ) 4
Net additions
1,210
428 536 705
613 Changes in fair value: Due to changes in
valuation model inputs or assumptions: Mortgage interest rates (3)
(171 ) (305 ) 152 2,367 39 Servicing and foreclosure
costs (4)
60 (14 ) 27 93 (10 ) Prepayment estimates and
other (5)
(31 ) (41 )
(5 ) (106 ) (37 ) Net
changes in valuation model inputs or assumptions
(142 ) (360 ) 174
2,354 (8 ) Changes due to
collection/realization of expected cash flows over time
(519 ) (487 ) (461
) (515 ) (586 ) Total changes in fair
value
(661 ) (847 ) (287 ) 1,839 (594 ) Fair value,
end of quarter
$ 13,338
12,789 13,208
12,959 10,415 (1) Includes impacts
associated with exercising our right to repurchase delinquent loans
from GNMA loan securitization pools. (2) Includes sales and
transfers of MSRs, which can result in an increase of total
reported MSRs if the sales or transfers are related to
nonperforming loan portfolios or portfolios with servicing
liabilities. (3) Includes prepayment speed changes as well as other
valuation changes due to changes in mortgage interest rates (such
as changes in estimated interest earned on custodial deposit
balances) (4) Includes costs to service and unreimbursed
foreclosure costs. (5) Represents changes driven by other valuation
model inputs or assumptions including prepayment speed estimation
changes and other assumption updates. Prepayment speed estimation
changes are influenced by observed changes in borrower behavior and
other external factors that occur independent of interest rate
changes. Quarter ended (in millions)
Sep 30, 2017 Jun 30,2017
Mar 31,2017 Dec 31,2016
Sep 30,2016
Amortized MSRs: Balance, beginning of quarter
$ 1,399 1,402 1,406 1,373 1,353 Purchases
31
26 18 34 18 Servicing from securitizations or asset transfers
41 37 45 66 69 Amortization
(65
) (66 ) (67 ) (67
) (67 ) Balance, end of quarter
$ 1,406 1,399
1,402 1,406 1,373
Fair value of amortized MSRs: Beginning of quarter
$ 1,989 2,051 1,956 1,627 1,620 End of quarter
1,990 1,989
2,051 1,956 1,627
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended (in millions)
Sep 30, 2017 Jun 30,2017
Mar 31,2017 Dec 31,2016 Sep 30,2016
Servicing income, net:
Servicing fees (1)
$ 795 882 882
738 878 Changes in fair value of MSRs carried at fair value: Due to
changes in valuation model inputs or assumptions (2) (A)
(142 ) (360 ) 174 2,354 (8 ) Changes due to
collection/realization of expected cash flows over time
(519 ) (487
) (461 ) (515 ) (586 )
Total changes in fair value of MSRs carried at fair value
(661 ) (847 ) (287 ) 1,839 (594 ) Amortization
(65 ) (66 ) (67 ) (67 ) (67 ) Net derivative gains
(losses) from economic hedges (3) (B)
240 431 (72 )
(2,314 ) 142 Total servicing
income, net
$ 309
400 456
196 359 Market-related valuation
changes to MSRs, net of hedge results (2)(3) (A)+(B)
$ 98 71
102 40 134
(1) Includes contractually specified servicing fees, late
charges and other ancillary revenues, net of unreimbursed direct
servicing costs. (2) Refer to the changes in fair value MSRs table
on the previous page for more detail. (3) Represents results from
economic hedges used to hedge the risk of changes in fair value of
MSRs.
(in billions)
Sep 30, 2017
Jun 30,2017 Mar 31,2017
Dec 31,2016 Sep 30,2016
Managed servicing
portfolio (1
): Residential mortgage servicing: Serviced
for others
$ 1,223 1,189 1,204 1,205 1,226 Owned
loans serviced
340 343 335 347 352 Subserviced for others
3 4
4 8
4 Total residential servicing
1,566 1,536
1,543 1,560 1,582
Commercial mortgage servicing: Serviced for others
480 475
474 479 477 Owned loans serviced
128 130 132 132 130
Subserviced for others
8
8 7
8 8 Total commercial servicing
616 613
613 619
615 Total managed servicing portfolio
$ 2,182
2,149 2,156 2,179
2,197 Total serviced for others
$
1,703 1,664 1,678 1,684 1,703 Ratio of MSRs to related loans
serviced for others
0.87 % 0.85 0.87 0.85 0.69
Weighted-average note rate (mortgage loans serviced for others)
4.23
4.23 4.23 4.26
4.28
(1) The components of our managed
servicing portfolio are presented at unpaid principal balance for
loans serviced and subserviced for others and at book value for
owned loans serviced.
Wells Fargo & Company and
Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
Quarter ended
Sep
30, 2017 Jun 30,2017 Mar
31,2017 Dec 31,2016 Sep 30,2016
Net
gains on mortgage loan origination/sales activities (in
millions):
Residential (A)
$ 546 521 569 939 953
Commercial
81 81 101 90 167 Residential pipeline and
unsold/repurchased loan management (1)
110 146 102
192 188 Total
$ 737
748 772
1,221 1,308
Application data (in
billions): Wells Fargo first mortgage quarterly applications
$ 73 83 59 75 100 Refinances as a percentage of
applications
37 % 32 36 48 55 Wells Fargo first
mortgage unclosed pipeline, at quarter end
$ 29 34
28 30 50
Residential real estate originations: Purchases as a
percentage of originations
72 % 75 61 50 58
Refinances as a percentage of originations
28 25
39 50 42
Total
100 %
100 100 100
100 Wells Fargo first mortgage loans (in
billions): Retail
$ 26 25 21 35 37 Correspondent
32 31 22 36 32 Other (2)
1 — 1
1 1 Total quarter-to-date
$ 59
56 44 72
70 Held-for-sale (B)
$ 44 42 34
56 53 Held-for-investment
15 14 10
16 17 Total
quarter-to-date
$
59 56 44
72 70 Total year-to-date
$ 159
100 44 249
177
Production margin on residential
held-for-sale mortgage originations (A)/(B)
1.24 % 1.24
1.68 1.68 1.81
(1) Largely includes the results of GNMA loss mitigation
activities, interest rate management activities and changes in
estimate to the liability for mortgage loan repurchase losses. (2)
Consists of home equity loans and lines.
CHANGES IN MORTGAGE REPURCHASE
LIABILITY
Quarter ended (in millions)
Sep 30, 2017 Jun 30,2017
Mar 31,2017 Dec 31,2016
Sep 30,2016 Balance, beginning of period
$ 178 222
229 239 255 Assumed with MSR purchases (1)
10 — —
— —
Provision for repurchase losses: Loan sales
6 6 8 10 11
Change in estimate (2)
(12 ) (45 ) (8 )
(7 ) (24 ) Net additions (reductions) to
provision
(6 ) (39 ) — 3 (13 ) Losses
(3 ) (5 )
(7 ) (13 ) (3 ) Balance, end of
period
$ 179
178 222 229
239 (1) Represents repurchase liability
associated with portfolio of loans underlying mortgage servicing
rights acquired during the period. (2) Results from changes in
investor demand and mortgage insurer practices, credit
deterioration and changes in the financial stability of
correspondent lenders.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171013005160/en/
MediaAncel Martinez, 415-222-3858orInvestorsJohn
M. Campbell, 415-396-0523
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Sep 2023 to Sep 2024