Wells Fargo & Company (NYSE:WFC):
- Financial results:
- Net income of $6.2 billion, compared with $5.2 billion in
second quarter 2018
- Diluted earnings per share (EPS) of $1.30, compared with
$0.98
- Revenue of $21.6 billion
- Net interest income of $12.1 billion, down $446 million
- Noninterest income of $9.5 billion, up $477 million
- Noninterest expense of $13.4 billion, down $533 million
- Average deposits of $1.3 trillion, down $2.4 billion
- Average loans of $947.5 billion, up $3.4 billion
- Return on assets (ROA) of 1.31%, return on equity (ROE) of
13.26%, and return on average tangible common equity (ROTCE) of
15.78%1
- Credit quality:
- Provision expense of $503 million, up $51 million from second
quarter 2018
- Net charge-offs of $653 million, up $51 million
- Net charge-offs of 0.28% of average loans (annualized), up from
0.26%
- Reserve release2 of $150 million, equal to the amount released
in second quarter 2018
- Nonaccrual loans of $5.9 billion, down $1.2 billion, or
17%
- Strong capital position while returning more capital to
shareholders:
- Returned $6.1 billion to shareholders through common stock
dividends and net share repurchases, up 52% from $4.0 billion in
second quarter 2018
- Common Equity Tier 1 ratio (fully phased-in) of 12.0%3, which
continued to exceed both the regulatory minimum of 9% and our
current internal target of 10%
- Received a non-objection to the Company's 2019 Capital Plan
submission from the Federal Reserve
- As part of the plan, the Company expects to increase its third
quarter 2019 common stock dividend to $0.51 per share from $0.45
per share, subject to approval by the Company's Board of Directors.
The plan also includes up to $23.1 billion of gross common stock
repurchases, subject to management discretion, for the four-quarter
period from third quarter 2019 through second quarter 2020.
Financial results reported in this document are preliminary.
Final financial results and other disclosures will be reported in
our Quarterly Report on Form 10-Q for the quarter ended June 30,
2019, 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
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Earnings
Diluted earnings per common share
$
1.30
1.20
0.98
Wells Fargo net income (in billions)
6.21
5.86
5.19
Return on assets (ROA)
1.31
%
1.26
1.10
Return on equity (ROE)
13.26
12.71
10.60
Return on average tangible common equity
(ROTCE) (a)
15.78
15.16
12.62
Asset Quality
Net charge-offs (annualized) as a % of
average total loans
0.28
%
0.30
0.26
Allowance for credit losses as a % of
total loans
1.12
1.14
1.18
Allowance for credit losses as a % of
annualized net charge-offs
405
384
460
Other
Revenue (in billions)
$
21.6
21.6
21.6
Efficiency ratio (b)
62.3
%
64.4
64.9
Average loans (in billions)
$
947.5
950.0
944.1
Average deposits (in billions)
1,269.0
1,262.1
1,271.3
Net interest margin
2.82
%
2.91
2.93
(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 securities 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 36.
(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 $6.2
billion, or $1.30 per diluted common share, for second quarter
2019, compared with $5.2 billion, or $0.98 per share, for second
quarter 2018, and $5.9 billion, or $1.20 per share, for first
quarter 2019.
Interim Chief Executive Officer Allen Parker said, “In second
quarter 2019, we recorded strong earnings and continued to make
progress on our top priorities: focusing on our customers and team
members; meeting the expectations of our regulators; and continuing
the important transformation of our Company. The commitment of our
team members to provide outstanding customer service was reflected
in higher customer experience survey scores from our branches,
continued growth in primary consumer checking customers, and an
increase in referred investment assets as a result of the
partnership between our Wealth and Investment Management team and
our Community Banking team. During the second quarter, we formed a
new Strategic Execution and Operations Office that will focus on
achieving operational excellence across our businesses to enable us
to execute more effectively on our regulatory priorities and
further drive our transformation. Finally, our recent CCAR results
demonstrated the strength of our diversified business model, our
strong capital position, our sound financial risk management, and
our commitment to return excess capital to our shareholders in a
prudent manner. I’m confident that all our stakeholders will
benefit from the transformational changes we are implementing as we
work to build the most customer-focused, efficient, and innovative
Wells Fargo ever.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo
reported $6.2 billion of net income in the second quarter and
diluted earnings per share of $1.30. We grew period-end loans and
deposits, as well as pre-tax pre-provision profit, compared with
the first quarter and a year ago. Our credit quality remained solid
with net charge-offs near historic lows. Additionally, our strong
capital position was reflected in our 2019 Capital Plan, which
includes an increase in our quarterly common stock dividend rate in
third quarter 2019 to $0.51 per share from $0.45 per share, subject
to board approval, as well as up to $23.1 billion of gross common
stock repurchases during the four-quarter period beginning in third
quarter 2019. ”
Net Interest Income
Net interest income in the second quarter was $12.1 billion,
down $216 million from first quarter 2019, driven by balance sheet
mix and repricing, including the impacts of higher deposit costs
and the lower interest rate environment, as well as higher
mortgage-backed securities (MBS) premium amortization, partially
offset by the benefit of one additional day in the quarter.
The net interest margin was 2.82%, down 9 basis points from the
prior quarter due to balance sheet mix and repricing, including the
impacts of higher deposit costs and the lower interest rate
environment, as well as higher MBS premium amortization.
Noninterest Income
Noninterest income in the second quarter was $9.5 billion, up
$191 million from first quarter 2019. Second quarter noninterest
income included higher trust and investment fees, other income,
services charges on deposit accounts, and card fees, partially
offset by lower market sensitive revenue4.
- Service charges on deposit accounts were $1.2 billion, up from
$1.1 billion in first quarter 2019, due to seasonally lower fees
and higher fee waivers in the first quarter, as well as higher
treasury management fees in the second quarter.
- Trust and investment fees were $3.6 billion, up from $3.4
billion in first quarter 2019, driven by higher asset-based fees on
retail brokerage advisory assets reflecting higher market
valuations at March 31, 2019, and higher investment banking fees on
increased debt and equity underwriting.
- Card fees were $1.0 billion, up from a seasonally lower first
quarter of $944 million.
- Mortgage banking income was $758 million, up from $708 million
in first quarter 2019. Net mortgage servicing income was $277
million, down from $364 million in the first quarter primarily due
to the impact of lower interest rates including higher loan
payoffs. The production margin on residential held-for-sale
mortgage loan originations5 decreased to 0.98% from 1.05% in the
first quarter. Residential held-for-sale mortgage loan originations
increased in the second quarter to $33 billion from $22 billion in
the first quarter, primarily due to seasonality, as well as lower
mortgage loan interest rates in the second quarter.
- Market sensitive revenue4 was $871 million, down from $1.3
billion in first quarter 2019, and included lower net gains from
equity securities driven by a $258 million decrease in deferred
compensation plan investment results in the second quarter (largely
offset by lower employee benefits expense). Net gains from trading
activities decreased $128 million compared with the prior quarter,
driven by lower credit trading results. Net gains from debt
securities decreased $105 million compared with the prior quarter,
which included gains related to the sale of non-agency residential
mortgage-backed securities.
- Other income was $744 million and included a $721 million gain
from the sale of $1.9 billion of Pick-a-Pay purchased
credit-impaired (PCI) loans.
Noninterest Expense
Noninterest expense in the second quarter declined $467 million
from the prior quarter to $13.4 billion, predominantly due to a
decline in employee benefits expense and incentive compensation
expense, which were seasonally elevated in the first quarter, as
well as a $243 million decrease in deferred compensation expense
(largely offset by lower net gains from equity securities). These
decreases were partially offset by higher outside professional and
contract services, salary, and advertising and promotion expense.
The efficiency ratio was 62.3% in second quarter 2019, compared
with 64.4% in the first quarter.
Income Taxes
The Company’s effective income tax rate was 17.3% for second
quarter 2019. The effective income tax rate in first quarter 2019
was 13.1% and included net discrete income tax benefits of $297
million related mostly to the results of U.S. federal and state
income tax examinations and the accounting for stock compensation
activity. The Company currently expects the effective income tax
rate for the remainder of 2019 to be approximately 18%, excluding
the impact of any unanticipated discrete items.
Loans
Average loans were $947.5 billion in the second quarter, down
$2.6 billion from the first quarter. Period-end loan balances were
$949.9 billion at June 30, 2019, up $1.6 billion from March 31,
2019. Commercial loans were flat compared with March 31, 2019.
Consumer loans increased $1.6 billion from the prior quarter,
reflecting the following:
- Real estate 1-4 family first mortgage loans increased $1.9
billion, as $19.8 billion of held-for-investment mortgage loan
originations were partially offset by paydowns, the sale of $1.9
billion of Pick-a-Pay PCI loans, and the reclassification of $1.8
billion of mortgage loans to held for sale
- Real estate 1-4 family junior lien mortgage loans decreased
$1.0 billion, as paydowns continued to exceed originations
- Credit card loans increased $541 million, up from a seasonally
lower first quarter
- Automobile loans increased $751 million, as originations of
$6.3 billion outpaced paydowns, resulting in linked-quarter growth
for the first time since third quarter 2016
Period-End Loan Balances
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Commercial
$
512,245
512,226
513,405
501,886
503,105
Consumer
437,633
436,023
439,705
440,414
441,160
Total loans
$
949,878
948,249
953,110
942,300
944,265
Change from prior quarter
$
1,629
(4,861
)
10,810
(1,965
)
(3,043
)
Debt and Equity Securities
Debt securities include available-for-sale and held-to-maturity
debt securities, as well as debt securities held for trading.
Period-end debt securities were $482.1 billion at June 30, 2019,
down $1.4 billion from the first quarter, predominantly due to a
net decrease in available-for-sale debt securities. Debt securities
purchases of approximately $15.9 billion, predominantly federal
agency MBS in the available-for-sale portfolio, were more than
offset by runoff and sales.
Net unrealized gains on available-for-sale debt securities were
$2.5 billion at June 30, 2019, compared with $853 million at March
31, 2019, primarily due to lower long-term interest rates in the
second quarter.
Period-end equity securities, which include marketable and
non-marketable equity securities, as well as equity securities held
for trading, were $61.5 billion at June 30, 2019, up $3.1 billion
from the first quarter.
Deposits
Total average deposits for second quarter 2019 were $1.3
trillion, up $6.9 billion from the prior quarter primarily due to
higher retail banking deposits reflecting increased promotional
activity, partially offset by lower Wealth and Investment
Management deposits. The average deposit cost for second quarter
2019 was 70 basis points, up 5 basis points from the prior quarter
and 30 basis points from a year ago.
Capital
The Company's Common Equity Tier 1 ratio (fully phased-in) was
12.0%3 and continued to exceed both the regulatory minimum of 9%
and our current internal target of 10%. In second quarter 2019, the
Company repurchased 104.9 million shares of its common stock,
which, net of issuances, reduced period-end common shares
outstanding by 92.4 million. The Company paid a quarterly common
stock dividend of $0.45 per share.
In June 2019, the Company received a non-objection to its 2019
Capital Plan from the Federal Reserve. As part of the plan, the
Company expects to increase its third quarter 2019 common stock
dividend to $0.51 per share, subject to approval by the Company's
Board of Directors. The plan also includes up to $23.1 billion of
gross common stock repurchases, subject to management discretion,
for the four-quarter period from third quarter 2019 through second
quarter 2020. In addition, the Company may consider redemptions or
repurchases of other capital securities as part of the plan.
As of June 30, 2019, our eligible external total loss absorbing
capacity (TLAC) as a percentage of total risk-weighted assets was
24.1%6, compared with the required minimum of 22.0%.
Credit Quality
Net Loan Charge-offs
The quarterly loss rate in the second quarter was 0.28%
(annualized), down from 0.30% in the prior quarter, and up from
0.26% a year ago. Commercial and consumer losses were 0.13% and
0.45%, respectively. Total credit losses were $653 million in
second quarter 2019, down $42 million from first quarter 2019.
Commercial losses increased $20 million, while consumer losses
decreased $62 million primarily due to lower automobile losses.
Net Loan Charge-Offs
Quarter ended
June 30, 2019
March 31, 2019
June 30, 2018
($ in millions)
Net loan
charge-
offs
As a % of
average
loans (a)
Net loan
charge-
offs
As a % of
average
loans (a)
Net loan
charge-
offs
As a % of
average
loans (a)
Commercial:
Commercial and industrial
$
159
0.18
%
$
133
0.15
%
$
58
0.07
%
Real estate mortgage
4
0.01
6
0.02
—
—
Real estate construction
(2
)
(0.04
)
(2
)
(0.04
)
(6
)
(0.09
)
Lease financing
4
0.09
8
0.17
15
0.32
Total commercial
165
0.13
145
0.11
67
0.05
Consumer:
Real estate 1-4 family first mortgage
(30
)
(0.04
)
(12
)
(0.02
)
(23
)
(0.03
)
Real estate 1-4 family junior lien
mortgage
(19
)
(0.24
)
(9
)
(0.10
)
(13
)
(0.13
)
Credit card
349
3.68
352
3.73
323
3.61
Automobile
52
0.46
91
0.82
113
0.93
Other revolving credit and installment
136
1.56
128
1.47
135
1.44
Total consumer
488
0.45
550
0.51
535
0.49
Total
$
653
0.28
%
$
695
0.30
%
$
602
0.26
%
(a) Quarterly net charge-offs (recoveries)
as a percentage of average loans are annualized.
Nonperforming Assets
Nonperforming assets decreased $1.0 billion, or 14%, from first
quarter 2019 to $6.3 billion. Nonaccrual loans decreased $983
million from first quarter 2019 to $5.9 billion. Commercial
nonaccrual loans decreased $327 million driven by reductions in the
commercial and industrial portfolio reflecting broad-based
improvement across industry sectors. Consumer nonaccrual loans
decreased $656 million driven by lower nonaccruals in the real
estate 1-4 family first mortgage portfolio, which included a $373
million decline related to the reclassification of $1.8 billion of
mortgage loans to held for sale.
Nonperforming Assets (Nonaccrual Loans
and Foreclosed Assets)
June 30, 2019
March 31, 2019
June 30, 2018
($ in millions)
Total
balances
As a % of
total
loans
Total balances
As a
% of
total
loans
Total
balances
As a
% of
total
loans
Commercial:
Commercial and industrial
$
1,634
0.47
%
$
1,986
0.57
%
$
1,559
0.46
%
Real estate mortgage
737
0.60
699
0.57
765
0.62
Real estate construction
36
0.17
36
0.16
51
0.22
Lease financing
63
0.33
76
0.40
80
0.41
Total commercial
2,470
0.48
2,797
0.55
2,455
0.49
Consumer:
Real estate 1-4 family first mortgage
2,425
0.85
3,026
1.06
3,469
1.23
Real estate 1-4 family junior lien
mortgage
868
2.71
916
2.77
1,029
2.82
Automobile
115
0.25
116
0.26
119
0.25
Other revolving credit and installment
44
0.13
50
0.14
54
0.14
Total consumer
3,452
0.79
4,108
0.94
4,671
1.06
Total nonaccrual loans (a)
5,922
0.62
6,905
0.73
7,126
0.75
Foreclosed assets:
Government insured/guaranteed
68
75
90
Non-government insured/guaranteed
309
361
409
Total foreclosed assets
377
436
499
Total nonperforming assets
$
6,299
0.66
%
$
7,341
0.77
%
$
7,625
0.81
%
Change from prior quarter:
Total nonaccrual loans (a)
$
(983
)
$
409
$
(213
)
Total nonperforming assets
(1,042
)
394
(285
)
(a) Financial information for periods
prior to December 31, 2018, has been revised to exclude mortgage
loans held for sale (MLHFS), loans held for sale (LHFS) and loans
held at fair value. For additional information, see the “Five
Quarter Nonperforming Assets” table on page 33.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for
unfunded commitments, totaled $10.6 billion at June 30, 2019, down
$218 million from March 31, 2019. Second quarter 2019 included a
$150 million reserve release2 primarily driven by strong overall
credit portfolio performance. The allowance coverage for total
loans was 1.12%, compared with 1.14% in first quarter 2019. The
allowance covered 4.0 times annualized second quarter net
charge-offs, compared with 3.8 times in the prior quarter. The
allowance coverage for nonaccrual loans was 179% at June 30, 2019,
compared with 157% at March 31, 2019.
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
(in millions)
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Community Banking
$
3,147
2,823
2,496
Wholesale Banking
2,789
2,770
2,635
Wealth and Investment Management
602
577
445
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
(including funds transfer pricing, capital, liquidity and certain
corporate expenses) in support of the other operating segments and
results of investments in our affiliated venture capital and
private equity partnerships.
Selected Financial Information
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Total revenue
$
11,805
11,750
11,806
Provision for credit losses
479
710
484
Noninterest expense
7,212
7,689
7,290
Segment net income
3,147
2,823
2,496
(in billions)
Average loans
457.7
458.2
463.8
Average assets
1,024.8
1,015.4
1,034.3
Average deposits
777.6
765.6
760.6
Second Quarter 2019 vs. First Quarter 2019
- Net income of $3.1 billion, up $324 million, or 11%
- Revenue was $11.8 billion, flat compared with the prior
quarter, as higher service charges on deposit accounts, card fees,
and other income were predominantly offset by lower net interest
income, and lower market sensitive revenue4 reflecting lower
deferred compensation plan investment results (largely offset by
lower employee benefits expense)
- Noninterest expense of $7.2 billion decreased $477 million, or
6%, predominantly driven by lower personnel expense, which was
seasonally elevated in the first quarter, as well as lower deferred
compensation expense (largely offset by lower net gains from equity
securities), partially offset by higher advertising and promotion
expense
- Provision for credit losses decreased $231 million, primarily
due to credit improvement in the automobile and consumer real
estate portfolios
Second Quarter 2019 vs. Second Quarter 2018
- Net income was up $651 million, or 26%, driven by net discrete
tax expense of $481 million in second quarter 2018
- Revenue was flat compared with a year ago, as lower net
interest income was offset by higher gains from sales of Pick-a-Pay
PCI loans and higher service charges on deposit accounts
- Noninterest expense decreased $78 million, or 1%, driven by
lower core deposit and other intangibles amortization, FDIC
expense, and operating losses, partially offset by higher
personnel, equipment, and advertising and promotion expense
Business Metrics and Highlights
- Primary consumer checking customers7,8 of 24.3 million, up 1.3%
from a year ago. The sale of 52 branches and $1.8 billion of
deposits which closed in fourth quarter 2018 reduced the growth
rate by 0.4%
- Branch customer experience surveys completed during second
quarter 2019 reflected higher scores from the previous quarter,
with both ‘Customer Loyalty’ and ‘Overall Satisfaction with Most
Recent Visit’ scores reaching their highest level in more than
three years
- Debit card point-of-sale purchase volume9 of $93.2 billion in
the second quarter, up 6% year-over-year
- General purpose credit card point-of-sale purchase volume of
$20.4 billion in the second quarter, up 6% year-over-year
- 30.0 million digital (online and mobile) active customers,
including 23.7 million mobile active customers8,10
- 5,442 retail bank branches as of the end of second quarter
2019, reflecting 78 branch consolidations in the first half of
2019
- Home Lending
- Originations of $53 billion, up from $33 billion in the prior
quarter, primarily due to seasonality, as well as lower mortgage
loan interest rates
- Originations of loans held-for-sale and loans
held-for-investment were $33 billion and $20 billion,
respectively
- Production margin on residential held-for-sale mortgage loan
originations5 of 0.98%, down from 1.05% in the prior quarter
- Applications of $90 billion, up from $64 billion in the prior
quarter, driven primarily by seasonality, as well as lower mortgage
loan interest rates
- Unclosed application pipeline of $44 billion at quarter end, up
from $32 billion at March 31, 2019, driven primarily by
seasonality, as well as lower mortgage loan interest rates
- Automobile originations of $6.3 billion in the second quarter,
up 43% from the prior year, reflecting our focus on growing auto
loans following the restructuring of the business
- For the third year in a row, Wells Fargo was #1 in Nilson's
annual ranking of the top 50 U.S. debit card issuers, receiving the
top ranking by both purchase volume and number of transactions
(April 2019)
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 Commercial Banking, Commercial Real
Estate, Corporate and Investment Banking, Credit Investment
Portfolio, Treasury Management, and Commercial Capital.
Selected Financial Information
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Total revenue
$
7,065
7,111
7,197
Provision (reversal of provision) for
credit losses
28
134
(36
)
Noninterest expense
3,882
3,838
4,219
Segment net income
2,789
2,770
2,635
(in billions)
Average loans
474.0
476.4
464.7
Average assets
852.2
844.5
826.4
Average deposits
410.4
409.8
414.0
Second Quarter 2019 vs. First Quarter 2019
- Net income of $2.8 billion, up $19 million, or 1%
- Revenue of $7.1 billion decreased $46 million, or 1%, driven by
lower market sensitive revenue4, partially offset by higher
investment banking fees, mortgage banking fees, commercial real
estate brokerage fees, and treasury management fees
- Noninterest expense of $3.9 billion increased $44 million, or
1%, reflecting higher regulatory, risk, and technology expense,
partially offset by lower personnel expense, which was seasonally
elevated in the first quarter
- Provision for credit losses decreased $106 million, driven by
lower nonaccrual loans and improvement in overall credit
quality
Second Quarter 2019 vs. Second Quarter 2018
- Net income increased $154 million, or 6%
- Revenue decreased $132 million, or 2%, largely due to lower net
interest income and treasury management fees, partially offset by
higher market sensitive revenue4 and mortgage banking fees
- Noninterest expense decreased $337 million, or 8%, on lower
operating losses, FDIC expense, and core deposit and other
intangibles amortization, partially offset by higher regulatory,
risk, and technology expense
- Provision for credit losses increased $64 million, reflecting
higher loan losses and lower recoveries in second quarter 2019
Business Metrics and Highlights
- Commercial card spend volume11 of $8.7 billion, up 6% from the
prior year on increased transaction volumes, and up 3% compared
with first quarter 2019
- U.S. investment banking market share of 3.5% year-to-date
201912, compared with 3.3% year-to-date 201812
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
clients’ 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
(in millions)
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Total revenue
$
4,050
4,079
3,951
Provision (reversal of provision) for
credit losses
(1
)
4
(2
)
Noninterest expense
3,246
3,303
3,361
Segment net income
602
577
445
(in billions)
Average loans
75.0
74.4
74.7
Average assets
83.8
83.2
84.0
Average deposits
143.5
153.2
167.1
Second Quarter 2019 vs. First Quarter 2019
- Net income of $602 million, up $25 million, or 4%
- Revenue of $4.1 billion decreased $29 million, or 1%, mostly
due to lower net gains from equity securities on lower deferred
compensation plan investment results of $97 million (largely offset
by lower employee benefits expense), and lower net interest income,
partially offset by higher trust and investment fees, up 5% driven
by higher asset-based fees
- Noninterest expense of $3.2 billion decreased $57 million, or
2%, primarily driven by lower personnel expense, which was
seasonally higher in the first quarter, and lower employee benefits
expense from deferred compensation plan expense of $95 million
(largely offset by lower net gains from equity securities),
partially offset by higher broker commissions
Second Quarter 2019 vs. Second Quarter 2018
- Net income up $157 million, or 35%
- Revenue increased $99 million, or 3%, primarily driven by
higher net gains from equity securities primarily on lower
other-than-temporary impairment compared with second quarter 2018
which included an impairment of $214 million related to the sale of
Wells Fargo Asset Management's (WFAM) ownership stake in The Rock
Creek Group, LP (RockCreek), partially offset by lower net interest
income and asset-based fees
- Noninterest expense decreased $115 million, or 3%, primarily
due to lower operating losses and core deposit and other
intangibles amortization, partially offset by higher personnel
expense
Business Metrics and Highlights
Total WIM Segment
- WIM total client assets of $1.9 trillion, down 1% from a year
ago
- Average loan balances were flat compared with a year ago
- Second quarter 2019 closed referred investment assets
(referrals resulting from the WIM/Community Banking partnership) up
1% compared with second quarter 2018, reaching their highest
quarterly amount in two years
Retail Brokerage
- Client assets of $1.6 trillion, flat compared with the prior
year
- Advisory assets of $561 billion, up 3% from the prior year,
driven primarily by higher market valuations, partially offset by
net outflows
Wealth Management
- Client assets of $231 billion, down 3% from the prior year,
driven primarily by net outflows, partially offset by higher market
valuations
Asset Management
- Total assets under management (AUM) of $495 billion, flat
compared with the prior year, as higher market valuations and money
market fund net inflows were offset by equity and fixed income net
outflows, as well as the sale of WFAM's ownership stake in
RockCreek and removal of the associated AUM
Retirement
- IRA assets of $414 billion, up 3% from the prior year
- Institutional Retirement plan assets of $388 billion, flat
compared with the prior year
- On July 1, 2019, we closed the previously announced sale of our
Institutional Retirement and Trust business
Conference Call
The Company will host a live conference call on Tuesday, July
16, at 7:00 a.m. PT (10:00 a.m. ET). You may listen to the call 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~5890548.
A replay of the conference call will be available beginning at
11:00 a.m. PT (2:00 p.m. ET) on Tuesday, July 16 through Tuesday,
July 30. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406
(International) and enter Conference ID #5890548. 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~5890548.
End Notes
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 securities 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 36.
2 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.
3 See table on page 37 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.
4 Market sensitive revenue represents net gains from trading
activities, debt securities, and equity securities.
5 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 42 for more
information.
6 The TLAC ratio is a preliminary estimate.
7 Customers who actively use their checking account with
transactions such as debit card purchases, online bill payments,
and direct deposit.
8 Data as of May 2019, comparisons with May 2018.
9 Combined consumer and business debit card purchase volume
dollars.
10 Digital and mobile active customers is the number of consumer
and small business customers who have logged on via a digital or
mobile device in the prior 90 days.
11 Includes commercial card volume for the entire company.
12 Year-to-date through June. Source: Dealogic U.S. investment
banking fee market share.
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, return on
equity, and return on tangible common 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
any 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;
- developments in our mortgage banking business, including the
extent of the success of our mortgage loan modification efforts,
the amount of mortgage loan repurchase demands that we receive, any
negative effects relating to our mortgage servicing, loan
modification or foreclosure practices, and the effects of
regulatory or judicial requirements or guidance impacting our
mortgage banking business and any changes in industry
standards;
- our ability to realize any efficiency ratio or expense 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;
- the effect of the current interest rate environment or changes
in interest rates on our net interest income, net interest margin
and our mortgage originations, mortgage servicing rights and
mortgage loans 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 debt securities and equity securities
portfolios;
- 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
and from other instances where customers may have experienced
financial harm, 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;
- resolution of regulatory matters, litigation, or other legal
actions, which may result in, among other things, additional costs,
fines, penalties, restrictions on our business activities,
reputational harm, or other adverse consequences;
- 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, 2018.
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, 2018, 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.
Forward-looking Non-GAAP Financial
Measures. From time to time management may discuss
forward-looking non-GAAP financial measures, such as
forward-looking estimates or targets for return on average tangible
common equity. We are unable to provide a reconciliation of
forward-looking non-GAAP financial measures to their most directly
comparable GAAP financial measures because we are unable to
provide, without unreasonable effort, a meaningful or accurate
calculation or estimation of amounts that would be necessary for
the reconciliation due to the complexity and inherent difficulty in
forecasting and quantifying future amounts or when they may occur.
Such unavailable information could be significant to future
results.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,600 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 32 countries and territories to support customers who
conduct business in the global economy. With approximately 263,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 29 on
Fortune’s 2019 rankings of America’s largest corporations.
Wells Fargo & Company and
Subsidiaries
QUARTERLY FINANCIAL
DATA
TABLE OF CONTENTS
Pages
Summary
Information
Summary Financial Data
17
Income
Consolidated Statement of Income
19
Consolidated Statement of Comprehensive
Income
21
Condensed Consolidated Statement of
Changes in Total Equity
21
Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis)
22
Five Quarter Average Balances, Yields and
Rates Paid (Taxable-Equivalent Basis)
24
Noninterest Income and Noninterest
Expense
25
Five Quarter Deferred Compensation Plan
Investment Results
27
Balance
Sheet
Consolidated Balance Sheet
28
Trading Activities
30
Debt Securities
30
Equity Securities
31
Loans
Loans
32
Nonperforming Assets
33
Loans 90 Days or More Past Due and Still
Accruing
33
Changes in Allowance for Credit Losses
35
Equity
Tangible Common Equity
36
Common Equity Tier 1 Under Basel III
37
Operating
Segments
Operating Segment Results
38
Other
Mortgage Servicing and other related
data
40
Wells Fargo & Company and
Subsidiaries
SUMMARY FINANCIAL DATA
Quarter ended
% Change Jun 30, 2019 from
Six months ended
($ in millions, except per share
amounts)
Jun 30, 2019
Mar 31, 2019
Jun 30, 2018
Mar 31, 2019
Jun 30, 2018
Jun 30, 2019
Jun 30, 2018
% Change
For the Period
Wells Fargo net income
$
6,206
5,860
5,186
6
%
20
$
12,066
10,322
17
%
Wells Fargo net income applicable to
common stock
5,848
5,507
4,792
6
22
11,355
9,525
19
Diluted earnings per common share
1.30
1.20
0.98
8
33
2.50
1.94
29
Profitability ratios (annualized):
Wells Fargo net income to average assets
(ROA)
1.31
%
1.26
1.10
4
19
1.29
%
1.10
17
Wells Fargo net income applicable to
common stock to average Wells Fargo common stockholders’ equity
(ROE)
13.26
12.71
10.60
4
25
12.99
10.59
23
Return on average tangible common equity
(ROTCE)(1)
15.78
15.16
12.62
4
25
15.47
12.62
23
Efficiency ratio (2)
62.3
64.4
64.9
(3
)
(4
)
63.4
66.7
(5
)
Total revenue
$
21,584
21,609
21,553
—
—
$
43,193
43,487
(1
)
Pre-tax pre-provision profit (PTPP)
(3)
8,135
7,693
7,571
6
7
15,828
14,463
9
Dividends declared per common share
0.45
0.45
0.39
—
15
0.90
0.78
15
Average common shares outstanding
4,469.4
4,551.5
4,865.8
(2
)
(8
)
4,510.2
4,875.7
(7
)
Diluted average common shares
outstanding
4,495.0
4,584.0
4,899.8
(2
)
(8
)
4,540.1
4,916.1
(8
)
Average loans
$
947,460
950,010
944,079
—
—
$
948,728
947,532
—
Average assets
1,900,627
1,883,091
1,884,884
1
1
1,891,907
1,900,304
—
Average total deposits
1,268,979
1,262,062
1,271,339
1
—
1,265,539
1,284,187
(1
)
Average consumer and small business
banking deposits (4)
742,671
739,654
754,047
—
(2
)
741,171
754,898
(2
)
Net interest margin
2.82
%
2.91
2.93
(3
)
(4
)
2.86
%
2.89
(1
)
At Period End
Debt securities
$
482,067
483,467
475,495
—
1
$
482,067
475,495
1
Loans
949,878
948,249
944,265
—
1
949,878
944,265
1
Allowance for loan losses
9,692
9,900
10,193
(2
)
(5
)
9,692
10,193
(5
)
Goodwill
26,415
26,420
26,429
—
—
26,415
26,429
—
Equity securities
61,537
58,440
57,505
5
7
61,537
57,505
7
Assets
1,923,388
1,887,792
1,879,700
2
2
1,923,388
1,879,700
2
Deposits
1,288,426
1,264,013
1,268,864
2
2
1,288,426
1,268,864
2
Common stockholders' equity
177,235
176,025
181,386
1
(2
)
177,235
181,386
(2
)
Wells Fargo stockholders’ equity
199,042
197,832
205,188
1
(3
)
199,042
205,188
(3
)
Total equity
200,037
198,733
206,069
1
(3
)
200,037
206,069
(3
)
Tangible common equity (1)
148,864
147,723
152,580
1
(2
)
148,864
152,580
(2
)
Common shares outstanding
4,419.6
4,511.9
4,849.1
(2
)
(9
)
4,419.6
4,849.1
(9
)
Book value per common share (5)
$
40.10
39.01
37.41
3
7
$
40.10
37.41
7
Tangible book value per common share
(1)(5)
33.68
32.74
31.47
3
7
33.68
31.47
7
Team members (active, full-time
equivalent)
262,800
262,100
264,500
—
(1
)
262,800
264,500
(1
)
(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
securities 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 36.
(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
($ in millions, except per share
amounts)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
For the Quarter
Wells Fargo net income
$
6,206
5,860
6,064
6,007
5,186
Wells Fargo net income applicable to
common stock
5,848
5,507
5,711
5,453
4,792
Diluted earnings per common share
1.30
1.20
1.21
1.13
0.98
Profitability ratios (annualized):
Wells Fargo net income to average assets
(ROA)
1.31
%
1.26
1.28
1.27
1.10
Wells Fargo net income applicable to
common stock to average Wells Fargo common stockholders’ equity
(ROE)
13.26
12.71
12.89
12.04
10.60
Return on average tangible common equity
(ROTCE)(1)
15.78
15.16
15.39
14.33
12.62
Efficiency ratio (2)
62.3
64.4
63.6
62.7
64.9
Total revenue
$
21,584
21,609
20,980
21,941
21,553
Pre-tax pre-provision profit (PTPP)
(3)
8,135
7,693
7,641
8,178
7,571
Dividends declared per common share
0.45
0.45
0.43
0.43
0.39
Average common shares outstanding
4,469.4
4,551.5
4,665.8
4,784.0
4,865.8
Diluted average common shares
outstanding
4,495.0
4,584.0
4,700.8
4,823.2
4,899.8
Average loans
$
947,460
950,010
946,336
939,462
944,079
Average assets
1,900,627
1,883,091
1,879,047
1,876,283
1,884,884
Average total deposits
1,268,979
1,262,062
1,268,948
1,266,378
1,271,339
Average consumer and small business
banking deposits (4)
742,671
739,654
736,295
743,503
754,047
Net interest margin
2.82
%
2.91
2.94
2.94
2.93
At Quarter End
Debt securities
$
482,067
483,467
484,689
472,283
475,495
Loans
949,878
948,249
953,110
942,300
944,265
Allowance for loan losses
9,692
9,900
9,775
10,021
10,193
Goodwill
26,415
26,420
26,418
26,425
26,429
Equity securities
61,537
58,440
55,148
61,755
57,505
Assets
1,923,388
1,887,792
1,895,883
1,872,981
1,879,700
Deposits
1,288,426
1,264,013
1,286,170
1,266,594
1,268,864
Common stockholders' equity
177,235
176,025
174,359
176,934
181,386
Wells Fargo stockholders’ equity
199,042
197,832
196,166
198,741
205,188
Total equity
200,037
198,733
197,066
199,679
206,069
Tangible common equity (1)
148,864
147,723
145,980
148,391
152,580
Common shares outstanding
4,419.6
4,511.9
4,581.3
4,711.6
4,849.1
Book value per common share (5)
$
40.10
39.01
38.06
37.55
37.41
Tangible book value per common share
(1)(5)
33.68
32.74
31.86
31.49
31.47
Team members (active, full-time
equivalent)
262,800
262,100
258,700
261,700
264,500
(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
securities 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 36.
(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 June 30,
%
Six months ended June 30,
%
(in millions, except per share
amounts)
2019
2018
Change
2019
2018
Change
Interest income
Debt securities
$
3,781
3,594
5
%
$
7,722
7,008
10
%
Mortgage loans held for sale
195
198
(2
)
347
377
(8
)
Loans held for sale
20
48
(58
)
44
72
(39
)
Loans
11,316
10,912
4
22,670
21,491
5
Equity securities
236
221
7
446
452
(1
)
Other interest income
1,438
1,042
38
2,760
1,962
41
Total interest income
16,986
16,015
6
33,989
31,362
8
Interest expense
Deposits
2,213
1,268
75
4,239
2,358
80
Short-term borrowings
646
398
62
1,242
709
75
Long-term debt
1,900
1,658
15
3,827
3,234
18
Other interest expense
132
150
(12
)
275
282
(2
)
Total interest expense
4,891
3,474
41
9,583
6,583
46
Net interest income
12,095
12,541
(4
)
24,406
24,779
(2
)
Provision for credit losses
503
452
11
1,348
643
110
Net interest income after provision for
credit losses
11,592
12,089
(4
)
23,058
24,136
(4
)
Noninterest income
Service charges on deposit accounts
1,206
1,163
4
2,300
2,336
(2
)
Trust and investment fees
3,568
3,675
(3
)
6,941
7,358
(6
)
Card fees
1,025
1,001
2
1,969
1,909
3
Other fees
800
846
(5
)
1,570
1,646
(5
)
Mortgage banking
758
770
(2
)
1,466
1,704
(14
)
Insurance
93
102
(9
)
189
216
(13
)
Net gains from trading activities
229
191
20
586
434
35
Net gains on debt securities
20
41
(51
)
145
42
245
Net gains from equity securities
622
295
111
1,436
1,078
33
Lease income
424
443
(4
)
867
898
(3
)
Other
744
485
53
1,318
1,087
21
Total noninterest income
9,489
9,012
5
18,787
18,708
—
Noninterest expense
Salaries
4,541
4,465
2
8,966
8,828
2
Commission and incentive compensation
2,597
2,642
(2
)
5,442
5,410
1
Employee benefits
1,336
1,245
7
3,274
2,843
15
Equipment
607
550
10
1,268
1,167
9
Net occupancy
719
722
—
1,436
1,435
—
Core deposit and other intangibles
27
265
(90
)
55
530
(90
)
FDIC and other deposit assessments
144
297
(52
)
303
621
(51
)
Other
3,478
3,796
(8
)
6,621
8,190
(19
)
Total noninterest expense
13,449
13,982
(4
)
27,365
29,024
(6
)
Income before income tax
expense
7,632
7,119
7
14,480
13,820
5
Income tax expense
1,294
1,810
(29
)
2,175
3,184
(32
)
Net income before noncontrolling
interests
6,338
5,309
19
12,305
10,636
16
Less: Net income from noncontrolling
interests
132
123
7
239
314
(24
)
Wells Fargo net income
$
6,206
5,186
20
$
12,066
10,322
17
Less: Preferred stock dividends and
other
358
394
(9
)
711
797
(11
)
Wells Fargo net income applicable to
common stock
$
5,848
4,792
22
$
11,355
9,525
19
Per share information
Earnings per common share
$
1.31
0.98
34
$
2.52
1.95
29
Diluted earnings per common share
1.30
0.98
33
2.50
1.94
29
Average common shares
outstanding
4,469.4
4,865.8
(8
)
4,510.2
4,875.7
(7
)
Diluted average common shares
outstanding
4,495.0
4,899.8
(8
)
4,540.1
4,916.1
(8
)
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF
INCOME
Quarter ended
(in millions, except per share
amounts)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Interest income
Debt securities
$
3,781
3,941
3,803
3,595
3,594
Mortgage loans held for sale
195
152
190
210
198
Loans held for sale
20
24
33
35
48
Loans
11,316
11,354
11,367
11,116
10,912
Equity securities
236
210
260
280
221
Other interest income
1,438
1,322
1,268
1,128
1,042
Total interest income
16,986
17,003
16,921
16,364
16,015
Interest expense
Deposits
2,213
2,026
1,765
1,499
1,268
Short-term borrowings
646
596
546
462
398
Long-term debt
1,900
1,927
1,802
1,667
1,658
Other interest expense
132
143
164
164
150
Total interest expense
4,891
4,692
4,277
3,792
3,474
Net interest income
12,095
12,311
12,644
12,572
12,541
Provision for credit losses
503
845
521
580
452
Net interest income after provision for
credit losses
11,592
11,466
12,123
11,992
12,089
Noninterest income
Service charges on deposit accounts
1,206
1,094
1,176
1,204
1,163
Trust and investment fees
3,568
3,373
3,520
3,631
3,675
Card fees
1,025
944
981
1,017
1,001
Other fees
800
770
888
850
846
Mortgage banking
758
708
467
846
770
Insurance
93
96
109
104
102
Net gains from trading activities
229
357
10
158
191
Net gains on debt securities
20
125
9
57
41
Net gains from equity securities
622
814
21
416
295
Lease income
424
443
402
453
443
Other
744
574
753
633
485
Total noninterest income
9,489
9,298
8,336
9,369
9,012
Noninterest expense
Salaries
4,541
4,425
4,545
4,461
4,465
Commission and incentive compensation
2,597
2,845
2,427
2,427
2,642
Employee benefits
1,336
1,938
706
1,377
1,245
Equipment
607
661
643
634
550
Net occupancy
719
717
735
718
722
Core deposit and other intangibles
27
28
264
264
265
FDIC and other deposit assessments
144
159
153
336
297
Other
3,478
3,143
3,866
3,546
3,796
Total noninterest expense
13,449
13,916
13,339
13,763
13,982
Income before income tax
expense
7,632
6,848
7,120
7,598
7,119
Income tax expense
1,294
881
966
1,512
1,810
Net income before noncontrolling
interests
6,338
5,967
6,154
6,086
5,309
Less: Net income from noncontrolling
interests
132
107
90
79
123
Wells Fargo net income
$
6,206
5,860
6,064
6,007
5,186
Less: Preferred stock dividends and
other
358
353
353
554
394
Wells Fargo net income applicable to
common stock
$
5,848
5,507
5,711
5,453
4,792
Per share information
Earnings per common share
$
1.31
1.21
1.22
1.14
0.98
Diluted earnings per common share
1.30
1.20
1.21
1.13
0.98
Average common shares
outstanding
4,469.4
4,551.5
4,665.8
4,784.0
4,865.8
Diluted average common shares
outstanding
4,495.0
4,584.0
4,700.8
4,823.2
4,899.8
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Quarter ended June 30,
%
Six months ended June 30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Wells Fargo net income
$
6,206
5,186
20
%
$
12,066
10,322
17
%
Other comprehensive income (loss), before
tax:
Debt securities:
Net unrealized gains (losses) arising
during the period
1,709
(617
)
NM
4,540
(4,060
)
NM
Reclassification of net (gains) losses to
net income
39
49
(20
)
(42
)
117
NM
Derivative and hedging activities:
Net unrealized gains (losses) arising
during the period
57
(150
)
NM
22
(392
)
NM
Reclassification of net losses to net
income
79
77
3
158
137
15
Defined benefit plans adjustments:
Net actuarial and prior service gains
(losses) arising during the period
—
—
—
(4
)
6
NM
Amortization of net actuarial loss,
settlements and other to net income
33
29
14
68
61
11
Foreign currency translation
adjustments:
Net unrealized gains (losses) arising
during the period
14
(83
)
NM
56
(85
)
NM
Other comprehensive income (loss),
before tax
1,931
(695
)
NM
4,798
(4,216
)
NM
Income tax benefit (expense) related to
other comprehensive income
(473
)
154
NM
(1,167
)
1,016
NM
Other comprehensive income (loss), net
of tax
1,458
(541
)
NM
3,631
(3,200
)
NM
Less: Other comprehensive loss from
noncontrolling interests
—
(1
)
(100
)
—
(1
)
(100
)
Wells Fargo other comprehensive income
(loss), net of tax
1,458
(540
)
NM
3,631
(3,199
)
NM
Wells Fargo comprehensive
income
7,664
4,646
65
15,697
7,123
120
Comprehensive income from noncontrolling
interests
132
122
8
239
313
(24
)
Total comprehensive income
$
7,796
4,768
64
$
15,936
7,436
114
NM – Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN TOTAL EQUITY
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Balance, beginning of period
$
198,733
197,066
199,679
206,069
205,910
Cumulative effect from change in
accounting policies (1)
—
(11
)
—
—
—
Wells Fargo net income
6,206
5,860
6,064
6,007
5,186
Wells Fargo other comprehensive income
(loss), net of tax
1,458
2,173
537
(1,012
)
(540
)
Noncontrolling interests
94
1
(38
)
57
(77
)
Common stock issued
399
1,139
239
156
73
Common stock repurchased (2)
(4,898
)
(4,820
)
(7,299
)
(7,382
)
(2,923
)
Preferred stock redeemed (3)
—
—
—
(2,150
)
—
Preferred stock released by ESOP
193
—
268
260
490
Common stock warrants
repurchased/exercised
—
—
(131
)
(36
)
(1
)
Common stock dividends
(2,015
)
(2,054
)
(2,016
)
(2,062
)
(1,900
)
Preferred stock dividends
(358
)
(353
)
(353
)
(399
)
(394
)
Stock incentive compensation expense
247
544
144
202
258
Net change in deferred compensation and
related plans
(22
)
(812
)
(28
)
(31
)
(13
)
Balance, end of period
$
200,037
198,733
197,066
199,679
206,069
(1) Effective January 1, 2019, we adopted
ASU 2016-02 – Leases (Topic 842) and subsequent related Updates and
ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs
(Subtopic 310-20): Premium Amortization on Purchased Callable Debt
Securities.
(2) For the quarter ended June 30, 2018,
includes $1.0 billion related to a private forward repurchase
transaction that settled in third quarter 2018 for 18.8 million
shares of common stock.
(3) Represents the impact of the
redemption of preferred stock, Series J, in third quarter 2018.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended June 30,
2019
2018
(in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Interest-earning deposits with banks
$
141,045
2.33
%
$
819
154,846
1.75
%
$
676
Federal funds sold and securities
purchased under resale agreements
98,130
2.44
598
80,020
1.73
344
Debt securities (3):
Trading debt securities
86,514
3.45
746
80,661
3.45
695
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
15,402
2.21
85
6,425
1.66
27
Securities of U.S. states and political
subdivisions
45,769
4.02
460
47,388
3.91
464
Mortgage-backed securities:
Federal agencies
149,761
2.99
1,120
154,929
2.75
1,065
Residential and commercial
5,562
4.02
56
8,248
4.86
101
Total mortgage-backed securities
155,323
3.03
1,176
163,177
2.86
1,166
Other debt securities
45,063
4.40
494
47,009
4.33
506
Total available-for-sale debt
securities
261,557
3.39
2,215
263,999
3.28
2,163
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,762
2.19
244
44,731
2.19
244
Securities of U.S. states and political
subdivisions
6,958
4.06
71
6,255
4.34
68
Federal agency and other mortgage-backed
securities
95,506
2.64
632
94,964
2.33
552
Other debt securities
58
3.86
—
584
4.66
7
Total held-to-maturity debt securities
147,284
2.57
947
146,534
2.38
871
Total debt securities
495,355
3.16
3,908
491,194
3.04
3,729
Mortgage loans held for sale (4)
18,464
4.22
195
18,788
4.22
198
Loans held for sale (4)
1,642
4.80
20
3,481
5.48
48
Commercial loans:
Commercial and industrial - U.S.
285,084
4.47
3,176
275,259
4.16
2,851
Commercial and industrial - Non U.S.
62,905
3.90
611
59,716
3.51
524
Real estate mortgage
121,869
4.58
1,390
123,982
4.27
1,319
Real estate construction
21,568
5.36
288
23,637
4.88
287
Lease financing
19,133
4.71
226
19,266
4.48
216
Total commercial loans
510,559
4.47
5,691
501,860
4.15
5,197
Consumer loans:
Real estate 1-4 family first mortgage
286,169
3.88
2,776
283,101
4.06
2,870
Real estate 1-4 family junior lien
mortgage
32,609
5.75
468
37,249
5.32
495
Credit card
38,154
12.65
1,204
35,883
12.66
1,133
Automobile
45,179
5.23
589
48,568
5.18
628
Other revolving credit and installment
34,790
7.12
617
37,418
6.62
617
Total consumer loans
436,901
5.18
5,654
442,219
5.20
5,743
Total loans (4)
947,460
4.80
11,345
944,079
4.64
10,940
Equity securities
35,215
2.70
237
37,330
2.38
222
Other
4,693
1.76
20
5,518
1.48
21
Total earning assets
$
1,742,004
3.94
%
$
17,142
1,735,256
3.73
%
$
16,178
Funding sources
Deposits:
Interest-bearing checking
$
57,549
1.46
%
$
210
80,324
0.90
%
$
181
Market rate and other savings
690,677
0.59
1,009
676,668
0.26
434
Savings certificates
30,620
1.62
124
20,033
0.43
21
Other time deposits
96,887
2.61
630
82,061
2.26
465
Deposits in foreign offices
51,875
1.86
240
51,474
1.30
167
Total interest-bearing deposits
927,608
0.96
2,213
910,560
0.56
1,268
Short-term borrowings
114,754
2.26
646
103,795
1.54
398
Long-term debt
236,734
3.21
1,900
223,800
2.97
1,658
Other liabilities
24,314
2.18
132
28,202
2.12
150
Total interest-bearing liabilities
1,303,410
1.50
4,891
1,266,357
1.10
3,474
Portion of noninterest-bearing funding
sources
438,594
—
—
468,899
—
—
Total funding sources
$
1,742,004
1.12
4,891
1,735,256
0.80
3,474
Net interest margin and net interest
income on a taxable-equivalent basis (5)
2.82
%
$
12,251
2.93
%
$
12,704
Noninterest-earning assets
Cash and due from banks
$
19,475
18,609
Goodwill
26,415
26,444
Other
112,733
104,575
Total noninterest-earning assets
$
158,623
149,628
Noninterest-bearing funding
sources
Deposits
$
341,371
360,779
Other liabilities
56,161
51,681
Total equity
199,685
206,067
Noninterest-bearing funding sources used
to fund earning assets
(438,594
)
(468,899
)
Net noninterest-bearing funding
sources
$
158,623
149,628
Total assets
$
1,900,627
1,884,884
(1) Our average prime rate was 5.50% and
4.80% for the quarters ended June 30, 2019 and 2018, respectively.
The average three-month London Interbank Offered Rate (LIBOR) was
2.51% and 2.34% 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 $156 million and $163 million for the quarters ended
June 30, 2019 and 2018, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate utilized was 21% for the periods presented.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Six months ended June 30,
2019
2018
(in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Interest-earning deposits with banks
$
140,915
2.33
%
$
1,629
163,520
1.61
%
$
1,308
Federal funds sold and securities
purchased under resale agreements
90,875
2.42
1,093
79,083
1.57
615
Debt securities (3):
Trading debt securities
87,938
3.52
1,544
79,693
3.35
1,332
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
14,740
2.18
159
6,426
1.66
53
Securities of U.S. states and political
subdivisions
47,049
4.02
946
48,665
3.64
885
Mortgage-backed securities:
Federal agencies
150,623
3.04
2,293
156,690
2.73
2,141
Residential and commercial
5,772
4.17
120
8,558
4.48
192
Total mortgage-backed securities
156,395
3.09
2,413
165,248
2.82
2,333
Other debt securities
45,920
4.43
1,011
47,549
4.02
950
Total available-for-sale debt
securities
264,104
3.44
4,529
267,888
3.16
4,221
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,758
2.20
487
44,727
2.20
487
Securities of U.S. states and political
subdivisions
6,560
4.05
133
6,257
4.34
136
Federal agency and other mortgage-backed
securities
95,753
2.69
1,288
92,888
2.35
1,093
Other debt securities
60
3.91
1
639
3.89
12
Total held-to-maturity debt securities
147,131
2.60
1,909
144,511
2.40
1,728
Total debt securities
499,173
3.20
7,982
492,092
2.96
7,281
Mortgage loans held for sale (4)
16,193
4.28
347
18,598
4.06
377
Loans held for sale (4)
1,752
5.04
44
2,750
5.28
72
Commercial loans:
Commercial and industrial - U.S.
285,827
4.47
6,345
273,658
4.00
5,435
Commercial and industrial - Non U.S.
62,863
3.90
1,215
59,964
3.37
1,003
Real estate mortgage
121,644
4.58
2,763
125,085
4.16
2,581
Real estate construction
21,999
5.40
589
24,041
4.70
561
Lease financing
19,261
4.66
450
19,266
4.89
471
Total commercial loans
511,594
4.48
11,362
502,014
4.03
10,051
Consumer loans:
Real estate 1-4 family first mortgage
285,694
3.92
5,597
283,651
4.04
5,722
Real estate 1-4 family junior lien
mortgage
33,197
5.75
949
38,042
5.23
988
Credit card
38,168
12.76
2,416
36,174
12.71
2,280
Automobile
45,007
5.21
1,163
50,010
5.17
1,283
Other revolving credit and installment
35,068
7.13
1,240
37,641
6.54
1,221
Total consumer loans
437,134
5.22
11,365
445,518
5.18
11,494
Total loans (4)
948,728
4.82
22,727
947,532
4.57
21,545
Equity securities
34,154
2.63
448
38,536
2.37
455
Other
4,555
1.69
38
5,765
1.34
40
Total earning assets
$
1,736,345
3.97
%
$
34,308
1,747,876
3.64
%
$
31,693
Funding sources
Deposits:
Interest-bearing checking
$
56,905
1.44
%
$
407
74,084
0.84
%
$
310
Market rate and other savings
689,628
0.54
1,856
677,861
0.24
802
Savings certificates
27,940
1.46
202
20,025
0.38
38
Other time deposits
97,356
2.64
1,275
79,340
2.06
812
Deposits in foreign offices
53,649
1.88
499
73,023
1.09
396
Total interest-bearing deposits
925,478
0.92
4,239
924,333
0.51
2,358
Short-term borrowings
111,719
2.24
1,243
102,793
1.39
710
Long-term debt
234,963
3.27
3,827
224,924
2.88
3,234
Other liabilities
24,801
2.23
275
28,065
2.02
282
Total interest-bearing liabilities
1,296,961
1.49
9,584
1,280,115
1.03
6,584
Portion of noninterest-bearing funding
sources
439,384
—
—
467,761
—
—
Total funding sources
$
1,736,345
1.11
9,584
1,747,876
0.75
6,584
Net interest margin and net interest
income on a taxable-equivalent basis (5)
2.86
%
$
24,724
2.89
%
$
25,109
Noninterest-earning assets
Cash and due from banks
$
19,544
18,730
Goodwill
26,417
26,480
Other
109,601
107,218
Total noninterest-earning assets
$
155,562
152,428
Noninterest-bearing funding
sources
Deposits
$
340,061
359,854
Other liabilities
55,864
54,212
Total equity
199,021
206,123
Noninterest-bearing funding sources used
to fund earning assets
(439,384
)
(467,761
)
Net noninterest-bearing funding
sources
$
155,562
152,428
Total assets
$
1,891,907
1,900,304
(1) Our average prime rate was 5.50% and 4.66% for first half of
2019 and 2018, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 2.60% and 2.13% 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. 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 $318 million and $330 million for the first half of
2019 and 2018, respectively, predominantly related to tax-exempt
income on certain loans and securities. The federal statutory tax
rate utilized was 21% for the periods presented.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS
AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
($ in billions)
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Earning assets
Interest-earning deposits with banks
$
141.0
2.33
%
$
140.8
2.33
%
$
150.1
2.18
%
$
148.6
1.93
%
$
154.8
1.75
%
Federal funds sold and securities
purchased under resale agreements
98.1
2.44
83.5
2.40
76.1
2.22
79.9
1.93
80.0
1.73
Debt securities (3):
Trading debt securities
86.5
3.45
89.4
3.58
90.1
3.52
84.5
3.45
80.7
3.45
Available-for-sale debt
securities:
Securities of U.S. Treasury and
federal agencies
15.4
2.21
14.1
2.14
7.2
1.80
6.4
1.65
6.4
1.66
Securities of U.S. states and
political subdivisions
45.8
4.02
48.3
4.02
47.6
4.05
46.6
3.76
47.4
3.91
Mortgage-backed securities:
Federal agencies
149.8
2.99
151.5
3.10
155.3
2.91
155.5
2.77
154.9
2.75
Residential and commercial
5.6
4.02
6.0
4.31
6.7
4.87
7.3
4.68
8.2
4.86
Total mortgage-backed
securities
155.4
3.03
157.5
3.14
162.0
2.99
162.8
2.86
163.1
2.86
Other debt securities
45.0
4.40
46.8
4.46
46.1
4.46
46.4
4.39
47.1
4.33
Total available-for-sale debt
securities
261.6
3.39
266.7
3.48
262.9
3.41
262.2
3.26
264.0
3.28
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44.8
2.19
44.7
2.20
44.7
2.19
44.7
2.18
44.7
2.19
Securities of U.S. states and political
subdivisions
7.0
4.06
6.2
4.03
6.2
4.34
6.3
4.33
6.3
4.34
Federal agency and other mortgage-backed
securities
95.4
2.64
95.9
2.74
95.8
2.46
95.3
2.27
94.9
2.33
Other debt securities
0.1
3.86
0.1
3.96
0.1
3.65
0.1
5.61
0.6
4.66
Total held-to-maturity debt securities
147.3
2.57
146.9
2.63
146.8
2.46
146.4
2.33
146.5
2.38
Total debt securities
495.4
3.16
503.0
3.25
499.8
3.15
493.1
3.02
491.2
3.04
Mortgage loans held for sale
18.5
4.22
13.9
4.37
17.0
4.46
19.3
4.33
18.8
4.22
Loans held for sale
1.6
4.80
1.9
5.25
2.0
6.69
2.6
5.28
3.5
5.48
Commercial loans:
Commercial and industrial - U.S.
285.1
4.47
286.6
4.48
281.4
4.40
273.8
4.22
275.3
4.16
Commercial and industrial - Non U.S.
62.9
3.90
62.8
3.90
62.0
3.73
60.9
3.63
59.7
3.51
Real estate mortgage
121.9
4.58
121.4
4.58
120.4
4.51
121.3
4.35
124.0
4.27
Real estate construction
21.6
5.36
22.4
5.43
23.1
5.32
23.3
5.05
23.6
4.88
Lease financing
19.1
4.71
19.4
4.61
19.5
4.48
19.5
4.69
19.3
4.48
Total commercial loans
510.6
4.47
512.6
4.48
506.4
4.39
498.8
4.24
501.9
4.15
Consumer loans:
Real estate 1-4 family first mortgage
286.2
3.88
285.2
3.96
285.3
4.02
284.1
4.07
283.1
4.06
Real estate 1-4 family junior lien
mortgage
32.6
5.75
33.8
5.75
34.8
5.60
35.9
5.50
37.2
5.32
Credit card
38.2
12.65
38.2
12.88
37.9
12.69
36.9
12.77
35.9
12.66
Automobile
45.2
5.23
44.8
5.19
45.5
5.16
47.0
5.20
48.6
5.18
Other revolving credit and installment
34.7
7.12
35.4
7.14
36.4
6.95
36.8
6.78
37.4
6.62
Total consumer loans
436.9
5.18
437.4
5.26
439.9
5.25
440.7
5.26
442.2
5.20
Total loans
947.5
4.80
950.0
4.84
946.3
4.79
939.5
4.72
944.1
4.64
Equity securities
35.2
2.70
33.1
2.56
37.4
2.79
37.9
2.98
37.3
2.38
Other
4.7
1.76
4.4
1.63
4.2
1.78
4.7
1.47
5.6
1.48
Total earning assets
$
1,742.0
3.94
%
$
1,730.6
4.00
%
$
1,732.9
3.93
%
$
1,725.6
3.81
%
$
1,735.3
3.73
%
Funding sources
Deposits:
Interest-bearing checking
$
57.5
1.46
%
$
56.3
1.42
%
$
54.0
1.21
%
$
51.2
1.01
%
$
80.3
0.90
%
Market rate and other savings
690.7
0.59
688.6
0.50
689.6
0.43
693.9
0.35
676.7
0.26
Savings certificates
30.6
1.62
25.2
1.26
22.0
0.87
20.6
0.62
20.0
0.43
Other time deposits
96.9
2.61
97.8
2.67
92.6
2.46
87.8
2.35
82.1
2.26
Deposits in foreign offices
51.9
1.86
55.4
1.89
56.1
1.66
53.9
1.50
51.5
1.30
Total interest-bearing deposits
927.6
0.96
923.3
0.89
914.3
0.77
907.4
0.66
910.6
0.56
Short-term borrowings
114.8
2.26
108.6
2.23
106.0
2.04
105.5
1.74
103.8
1.54
Long-term debt
236.7
3.21
233.2
3.32
226.6
3.17
220.7
3.02
223.8
2.97
Other liabilities
24.3
2.18
25.3
2.28
27.4
2.41
27.0
2.40
28.2
2.12
Total interest-bearing liabilities
1,303.4
1.50
1,290.4
1.47
1,274.3
1.34
1,260.6
1.20
1,266.4
1.10
Portion of noninterest-bearing funding
sources
438.6
—
440.2
—
458.6
—
465.0
—
468.9
—
Total funding sources
$
1,742.0
1.12
$
1,730.6
1.09
$
1,732.9
0.99
$
1,725.6
0.87
$
1,735.3
0.80
Net interest margin on a
taxable-equivalent basis
2.82
%
2.91
%
2.94
%
2.94
%
2.93
%
Noninterest-earning assets
Cash and due from banks
$
19.5
19.6
19.3
18.4
18.6
Goodwill
26.4
26.4
26.4
26.4
26.4
Other
112.7
106.5
100.4
105.9
104.6
Total noninterest-earnings assets
$
158.6
152.5
146.1
150.7
149.6
Noninterest-bearing funding
sources
Deposits
$
341.4
338.8
354.6
359.0
360.7
Other liabilities
56.1
55.6
51.7
53.9
51.7
Total equity
199.7
198.3
198.4
202.8
206.1
Noninterest-bearing funding sources used
to fund earning assets
(438.6
)
(440.2
)
(458.6
)
(465.0
)
(468.9
)
Net noninterest-bearing funding
sources
$
158.6
152.5
146.1
150.7
149.6
Total assets
$
1,900.6
1,883.1
1,879.0
1,876.3
1,884.9
(1) Our average prime rate was 5.50% for
the quarter ended June 30, 2019, 5.50% for the quarter ended March
31, 2019, 5.28% for the quarter ended December 31, 2018, 5.01% for
the quarter ended September 30, 2018, and 4.80% for the quarter
ended June 30, 2018. The average three-month London Interbank
Offered Rate (LIBOR) was 2.51%, 2.69%, 2.62%, 2.34% and 2.34% 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 June 30,
%
Six months ended June 30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Service charges on deposit accounts
$
1,206
1,163
4
%
$
2,300
2,336
(2
)%
Trust and investment fees:
Brokerage advisory, commissions and other
fees
2,318
2,354
(2
)
4,511
4,757
(5
)
Trust and investment management
795
835
(5
)
1,581
1,685
(6
)
Investment banking
455
486
(6
)
849
916
(7
)
Total trust and investment fees
3,568
3,675
(3
)
6,941
7,358
(6
)
Card fees
1,025
1,001
2
1,969
1,909
3
Other fees:
Lending related charges and fees (1)
349
376
(7
)
696
756
(8
)
Cash network fees
117
120
(3
)
226
246
(8
)
Commercial real estate brokerage
commissions
105
109
(4
)
186
194
(4
)
Wire transfer and other remittance
fees
121
121
—
234
237
(1
)
All other fees
108
120
(10
)
228
213
7
Total other fees
800
846
(5
)
1,570
1,646
(5
)
Mortgage banking:
Servicing income, net
277
406
(32
)
641
874
(27
)
Net gains on mortgage loan
origination/sales activities
481
364
32
825
830
(1
)
Total mortgage banking
758
770
(2
)
1,466
1,704
(14
)
Insurance
93
102
(9
)
189
216
(13
)
Net gains from trading activities
229
191
20
586
434
35
Net gains on debt securities
20
41
(51
)
145
42
245
Net gains from equity securities
622
295
111
1,436
1,078
33
Lease income
424
443
(4
)
867
898
(3
)
Life insurance investment income
167
162
3
326
326
—
All other
577
323
79
992
761
30
Total
$
9,489
9,012
5
$
18,787
18,708
—
(1) Represents combined amount of
previously reported “Charges and fees on loans” and “Letters of
credit fees”.
NONINTEREST EXPENSE
Quarter ended June 30,
%
Six months ended June 30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Salaries
$
4,541
4,465
2
%
$
8,966
8,828
2
%
Commission and incentive compensation
2,597
2,642
(2
)
5,442
5,410
1
Employee benefits
1,336
1,245
7
3,274
2,843
15
Equipment
607
550
10
1,268
1,167
9
Net occupancy (1)
719
722
—
1,436
1,435
—
Core deposit and other intangibles
27
265
(90
)
55
530
(90
)
FDIC and other deposit assessments
144
297
(52
)
303
621
(51
)
Outside professional services
821
881
(7
)
1,499
1,702
(12
)
Contract services
624
536
16
1,187
983
21
Operating losses
247
619
(60
)
485
2,087
(77
)
Leases (2)
311
311
—
597
631
(5
)
Advertising and promotion
329
227
45
566
380
49
Outside data processing
175
164
7
342
326
5
Travel and entertainment
163
157
4
310
309
—
Postage, stationery and supplies
119
121
(2
)
241
263
(8
)
Telecommunications
93
88
6
184
180
2
Foreclosed assets
35
44
(20
)
72
82
(12
)
Insurance
25
24
4
50
50
—
All other
536
624
(14
)
1,088
1,197
(9
)
Total
$
13,449
13,982
(4
)
$
27,365
29,024
(6
)
(1) Represents expenses for both leased
and owned properties.
(2) Represents expenses for assets we lease to customers.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Service charges on deposit accounts
$
1,206
1,094
1,176
1,204
1,163
Trust and investment fees:
Brokerage advisory, commissions and other
fees
2,318
2,193
2,345
2,334
2,354
Trust and investment management
795
786
796
835
835
Investment banking
455
394
379
462
486
Total trust and investment fees
3,568
3,373
3,520
3,631
3,675
Card fees
1,025
944
981
1,017
1,001
Other fees:
Lending related charges and fees (1)
349
347
400
370
376
Cash network fees
117
109
114
121
120
Commercial real estate brokerage
commissions
105
81
145
129
109
Wire transfer and other remittance
fees
121
113
120
120
121
All other fees
108
120
109
110
120
Total other fees
800
770
888
850
846
Mortgage banking:
Servicing income, net
277
364
109
390
406
Net gains on mortgage loan
origination/sales activities
481
344
358
456
364
Total mortgage banking
758
708
467
846
770
Insurance
93
96
109
104
102
Net gains from trading activities
229
357
10
158
191
Net gains on debt securities
20
125
9
57
41
Net gains from equity securities
622
814
21
416
295
Lease income
424
443
402
453
443
Life insurance investment income
167
159
158
167
162
All other
577
415
595
466
323
Total
$
9,489
9,298
8,336
9,369
9,012
(1) Represents combined amount of
previously reported “Charges and fees on loans” and “Letters of
credit fees”.
FIVE QUARTER NONINTEREST
EXPENSE
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Salaries
$
4,541
4,425
4,545
4,461
4,465
Commission and incentive compensation
2,597
2,845
2,427
2,427
2,642
Employee benefits
1,336
1,938
706
1,377
1,245
Equipment
607
661
643
634
550
Net occupancy (1)
719
717
735
718
722
Core deposit and other intangibles
27
28
264
264
265
FDIC and other deposit assessments
144
159
153
336
297
Outside professional services
821
678
843
761
881
Contract services
624
563
616
593
536
Operating losses
247
238
432
605
619
Leases (2)
311
286
392
311
311
Advertising and promotion
329
237
254
223
227
Outside data processing
175
167
168
166
164
Travel and entertainment
163
147
168
141
157
Postage, stationery and supplies
119
122
132
120
121
Telecommunications
93
91
91
90
88
Foreclosed assets
35
37
47
59
44
Insurance
25
25
25
26
24
All other
536
552
698
451
624
Total
$
13,449
13,916
13,339
13,763
13,982
(1) Represents expenses for both leased
and owned properties.
(2) Represents expenses for assets we lease to customers.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER DEFERRED COMPENSATION PLAN
INVESTMENT RESULTS
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Net interest income
$
18
13
23
14
13
Net gains (losses) from equity
securities
87
345
(452
)
118
37
Total revenue (losses) from deferred
compensation plan investments
105
358
(429
)
132
50
Employee benefits expense (1)
114
357
(428
)
129
53
Income (loss) before income tax
expense
$
(9
)
1
(1
)
3
(3
)
(1) Represents change in deferred
compensation plan liability.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Jun 30, 2019
Dec 31, 2018
%
Change
Assets
Cash and due from banks
$
20,880
23,551
(11
)%
Interest-earning deposits with banks
143,547
149,736
(4
)
Total cash, cash equivalents, and
restricted cash
164,427
173,287
(5
)
Federal funds sold and securities
purchased under resale agreements
112,119
80,207
40
Debt securities:
Trading, at fair value
70,208
69,989
—
Available-for-sale, at fair value
265,983
269,912
(1
)
Held-to-maturity, at cost
145,876
144,788
1
Mortgage loans held for sale
22,998
15,126
52
Loans held for sale
1,181
2,041
(42
)
Loans
949,878
953,110
—
Allowance for loan losses
(9,692
)
(9,775
)
(1
)
Net loans
940,186
943,335
—
Mortgage servicing rights:
Measured at fair value
12,096
14,649
(17
)
Amortized
1,407
1,443
(2
)
Premises and equipment, net
9,435
8,920
6
Goodwill
26,415
26,418
—
Derivative assets
13,162
10,770
22
Equity securities
61,537
55,148
12
Other assets
76,358
79,850
(4
)
Total assets
$
1,923,388
1,895,883
1
Liabilities
Noninterest-bearing deposits
$
340,813
349,534
(2
)
Interest-bearing deposits
947,613
936,636
1
Total deposits
1,288,426
1,286,170
—
Short-term borrowings
115,344
105,787
9
Derivative liabilities
8,399
8,499
(1
)
Accrued expenses and other liabilities
69,706
69,317
1
Long-term debt
241,476
229,044
5
Total liabilities
1,723,351
1,698,817
1
Equity
Wells Fargo stockholders’ equity:
Preferred stock
23,021
23,214
(1
)
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
60,625
60,685
—
Retained earnings
164,551
158,163
4
Cumulative other comprehensive income
(loss)
(2,224
)
(6,336
)
(65
)
Treasury stock – 1,062,220,277 shares and
900,557,866 shares
(54,775
)
(47,194
)
16
Unearned ESOP shares
(1,292
)
(1,502
)
(14
)
Total Wells Fargo stockholders’ equity
199,042
196,166
1
Noncontrolling interests
995
900
11
Total equity
200,037
197,066
2
Total liabilities and equity
$
1,923,388
1,895,883
1
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE
SHEET
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Assets
Cash and due from banks
$
20,880
20,650
23,551
18,791
20,450
Interest-earning deposits with banks
143,547
128,318
149,736
140,732
142,999
Total cash, cash equivalents, and
restricted cash
164,427
148,968
173,287
159,523
163,449
Federal funds sold and securities
purchased under resale agreements
112,119
98,621
80,207
83,471
80,184
Debt securities:
Trading, at fair value
70,208
70,378
69,989
65,188
65,602
Available-for-sale, at fair value
265,983
268,099
269,912
262,964
265,687
Held-to-maturity, at cost
145,876
144,990
144,788
144,131
144,206
Mortgage loans held for sale
22,998
15,016
15,126
19,225
21,509
Loans held for sale
1,181
1,018
2,041
1,765
3,408
Loans
949,878
948,249
953,110
942,300
944,265
Allowance for loan losses
(9,692
)
(9,900
)
(9,775
)
(10,021
)
(10,193
)
Net loans
940,186
938,349
943,335
932,279
934,072
Mortgage servicing rights:
Measured at fair value
12,096
13,336
14,649
15,980
15,411
Amortized
1,407
1,427
1,443
1,414
1,407
Premises and equipment, net
9,435
8,825
8,920
8,802
8,882
Goodwill
26,415
26,420
26,418
26,425
26,429
Derivative assets
13,162
11,238
10,770
11,811
11,099
Equity securities
61,537
58,440
55,148
61,755
57,505
Other assets
76,358
82,667
79,850
78,248
80,850
Total assets
$
1,923,388
1,887,792
1,895,883
1,872,981
1,879,700
Liabilities
Noninterest-bearing deposits
$
340,813
341,399
349,534
352,869
365,021
Interest-bearing deposits
947,613
922,614
936,636
913,725
903,843
Total deposits
1,288,426
1,264,013
1,286,170
1,266,594
1,268,864
Short-term borrowings
115,344
106,597
105,787
105,451
104,496
Derivative liabilities
8,399
7,393
8,499
8,586
8,507
Accrued expenses and other liabilities
69,706
74,717
69,317
71,348
72,480
Long-term debt
241,476
236,339
229,044
221,323
219,284
Total liabilities
1,723,351
1,689,059
1,698,817
1,673,302
1,673,631
Equity
Wells Fargo stockholders’ equity:
Preferred stock
23,021
23,214
23,214
23,482
25,737
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,625
60,409
60,685
60,738
59,644
Retained earnings
164,551
160,776
158,163
154,576
150,803
Cumulative other comprehensive income
(loss)
(2,224
)
(3,682
)
(6,336
)
(6,873
)
(5,461
)
Treasury stock
(54,775
)
(50,519
)
(47,194
)
(40,538
)
(32,620
)
Unearned ESOP shares
(1,292
)
(1,502
)
(1,502
)
(1,780
)
(2,051
)
Total Wells Fargo stockholders’ equity
199,042
197,832
196,166
198,741
205,188
Noncontrolling interests
995
901
900
938
881
Total equity
200,037
198,733
197,066
199,679
206,069
Total liabilities and equity
$
1,923,388
1,887,792
1,895,883
1,872,981
1,879,700
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER TRADING ASSETS AND
LIABILITIES
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Trading assets
Debt securities
$
70,208
70,378
69,989
65,188
65,602
Equity securities
23,327
20,933
19,449
26,138
22,978
Loans held for sale
1,118
998
1,469
1,266
1,350
Gross trading derivative assets
34,683
30,002
29,216
30,302
30,758
Netting (1)
(22,827
)
(20,809
)
(19,807
)
(19,188
)
(20,687
)
Total trading derivative assets
11,856
9,193
9,409
11,114
10,071
Total trading assets
106,509
101,502
100,316
103,706
100,001
Trading liabilities
Short sales
15,955
21,586
19,720
23,992
21,765
Gross trading derivative liabilities
33,458
28,994
28,717
29,268
29,847
Netting (1)
(26,417
)
(22,810
)
(21,178
)
(21,842
)
(22,311
)
Total trading derivative liabilities
7,041
6,184
7,539
7,426
7,536
Total trading liabilities
$
22,996
27,770
27,259
31,418
29,301
(1) Represents balance sheet netting for
trading derivative asset and liability balances, and trading
portfolio level counterparty valuation adjustments.
FIVE QUARTER DEBT SECURITIES
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Trading debt securities
$
70,208
70,378
69,989
65,188
65,602
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
15,319
15,106
13,348
6,187
6,271
Securities of U.S. states and political
subdivisions
45,095
49,700
49,264
48,216
47,559
Mortgage-backed securities:
Federal agencies
155,858
150,663
153,203
153,511
154,556
Residential and commercial
5,443
5,828
7,000
6,939
8,286
Total mortgage-backed securities
161,301
156,491
160,203
160,450
162,842
Other debt securities
44,268
46,802
47,097
48,111
49,015
Total available-for-sale debt
securities
265,983
268,099
269,912
262,964
265,687
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,766
44,758
44,751
44,743
44,735
Securities of U.S. states and political
subdivisions
7,948
6,163
6,286
6,293
6,300
Federal agency and other mortgage-backed
securities (1)
93,105
94,009
93,685
93,020
93,016
Other debt securities
57
60
66
75
155
Total held-to-maturity debt securities
145,876
144,990
144,788
144,131
144,206
Total debt securities
$
482,067
483,467
484,689
472,283
475,495
(1) Predominantly consists of federal
agency mortgage-backed securities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER EQUITY SECURITIES
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Held for trading at fair value:
Marketable equity securities
$
23,327
20,933
19,449
26,138
22,978
Not held for trading:
Fair value:
Marketable equity securities (1)
5,379
5,135
4,513
5,705
5,273
Nonmarketable equity securities
7,244
6,518
5,594
6,479
5,876
Total equity securities at fair value
12,623
11,653
10,107
12,184
11,149
Equity method:
Low-income housing tax credit
investments
11,162
10,925
10,999
10,453
10,361
Private equity
3,352
3,890
3,832
3,838
3,732
Tax-advantaged renewable energy
3,051
3,041
3,073
1,967
1,950
New market tax credit and other
294
305
311
259
262
Total equity method
17,859
18,161
18,215
16,517
16,305
Other:
Federal Reserve Bank stock and other at
cost (2)
5,622
5,732
5,643
5,467
5,673
Private equity (3)
2,106
1,961
1,734
1,449
1,400
Total equity securities not held for
trading
38,210
37,507
35,699
35,617
34,527
Total equity securities
$
61,537
58,440
55,148
61,755
57,505
(1) Includes $3.5 billion, $3.5 billion, $3.2 billion, $3.6 billion
and $3.5 billion at June 30 and March 31, 2019, and December 31,
September 30 and June 30, 2018, respectively, related to securities
held as economic hedges of our deferred compensation plan
obligations. (2) Includes $5.6 billion, $5.7 billion, $5.6 billion,
$5.4 billion and $5.6 billion at June 30 and March 31, 2019, and
December 31, September 30 and June 30, 2018, respectively, related
to investments in Federal Reserve Bank and Federal Home Loan Bank
stock. (3) Represents nonmarketable equity securities for which we
have elected to account for the security under the measurement
alternative.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER LOANS
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Commercial:
Commercial and industrial
$
348,846
349,134
350,199
338,048
336,590
Real estate mortgage
123,008
122,113
121,014
120,403
123,964
Real estate construction
21,067
21,857
22,496
23,690
22,937
Lease financing
19,324
19,122
19,696
19,745
19,614
Total commercial
512,245
512,226
513,405
501,886
503,105
Consumer:
Real estate 1-4 family first mortgage
286,427
284,545
285,065
284,273
283,001
Real estate 1-4 family junior lien
mortgage
32,068
33,099
34,398
35,330
36,542
Credit card
38,820
38,279
39,025
37,812
36,684
Automobile
45,664
44,913
45,069
46,075
47,632
Other revolving credit and installment
34,654
35,187
36,148
36,924
37,301
Total consumer
437,633
436,023
439,705
440,414
441,160
Total loans (1)
$
949,878
948,249
953,110
942,300
944,265
(1) Includes $1.2 billion, $3.2 billion,
$5.0 billion, $6.9 billion, and $9.0 billion of purchased
credit-impaired (PCI) loans at June 30 and March 31, 2019, and
December 31, September 30 and June 30, 2018, 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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Commercial foreign loans:
Commercial and industrial
$
63,296
63,158
62,564
61,696
61,732
Real estate mortgage
6,801
7,049
6,731
6,891
7,617
Real estate construction
1,287
1,138
1,011
726
542
Lease financing
1,215
1,167
1,159
1,187
1,097
Total commercial foreign loans
$
72,599
72,512
71,465
70,500
70,988
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS
(NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Nonaccrual loans:
Commercial:
Commercial and industrial
$
1,634
1,986
1,486
1,555
1,559
Real estate mortgage
737
699
580
603
765
Real estate construction
36
36
32
44
51
Lease financing
63
76
90
96
80
Total commercial
2,470
2,797
2,188
2,298
2,455
Consumer:
Real estate 1-4 family first mortgage
2,425
3,026
3,183
3,267
3,469
Real estate 1-4 family junior lien
mortgage
868
916
945
983
1,029
Automobile
115
116
130
118
119
Other revolving credit and installment
44
50
50
48
54
Total consumer
3,452
4,108
4,308
4,416
4,671
Total nonaccrual loans (1)(2)(3)
$
5,922
6,905
6,496
6,714
7,126
As a percentage of total loans
0.62
%
0.73
0.68
0.71
0.75
Foreclosed assets:
Government insured/guaranteed
$
68
75
88
87
90
Non-government insured/guaranteed
309
361
363
435
409
Total foreclosed assets
377
436
451
522
499
Total nonperforming assets
$
6,299
7,341
6,947
7,236
7,625
As a percentage of total loans
0.66
%
0.77
0.73
0.77
0.81
(1) Financial information for periods prior to December 31, 2018,
has been revised to exclude mortgage loans held for sale (MLHFS),
loans held for sale (LHFS) and loans held at fair value of $339
million, and $360 million at September 30, and June 30, 2018,
respectively. (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) are not placed on nonaccrual status because they are
insured or guaranteed.
LOANS 90 DAYS OR MORE PAST DUE AND
STILL ACCRUING (1)
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Total (excluding PCI)(2):
$
7,258
7,870
8,704
8,838
9,087
Less: FHA insured/VA guaranteed (3)
6,478
6,996
7,725
7,906
8,246
Total, not government
insured/guaranteed
$
780
874
979
932
841
By segment and class, not government
insured/guaranteed:
Commercial:
Commercial and industrial
$
17
42
43
42
23
Real estate mortgage
24
20
51
56
26
Real estate construction
—
5
—
—
—
Total commercial
41
67
94
98
49
Consumer:
Real estate 1-4 family first mortgage
108
117
124
128
132
Real estate 1-4 family junior lien
mortgage
27
28
32
32
33
Credit card
449
502
513
460
429
Automobile
63
68
114
108
105
Other revolving credit and installment
92
92
102
106
93
Total consumer
739
807
885
834
792
Total, not government
insured/guaranteed
$
780
874
979
932
841
(1) Financial information for periods prior to December 31, 2018,
has been revised to exclude MLHFS, LHFS and loans held at fair
value, which reduced “Total, not government insured/guaranteed” by
$1 million at September 30 and June 30, 2018, respectively. (2) PCI
loans totaled $156 million, $243 million, $370 million, $567
million and $811 million, at June 30 and March 31, 2019, and
December 31, September 30 and June 30, 2018, respectively. (3)
Represents loans whose repayments are predominantly insured by the
FHA or guaranteed by the VA.
Wells Fargo & Company and
Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT
LOSSES
Quarter ended June 30,
Six months ended June 30,
(in millions)
2019
2018
2019
2018
Balance, beginning of period
$
10,821
11,313
10,707
11,960
Provision for credit losses
503
452
1,348
643
Interest income on certain impaired loans
(1)
(39
)
(43
)
(78
)
(86
)
Loan charge-offs:
Commercial:
Commercial and industrial
(205
)
(134
)
(381
)
(298
)
Real estate mortgage
(14
)
(19
)
(26
)
(21
)
Real estate construction
—
—
(1
)
—
Lease financing
(12
)
(20
)
(23
)
(37
)
Total commercial
(231
)
(173
)
(431
)
(356
)
Consumer:
Real estate 1-4 family first mortgage
(27
)
(55
)
(70
)
(96
)
Real estate 1-4 family junior lien
mortgage
(29
)
(47
)
(63
)
(94
)
Credit card
(437
)
(404
)
(874
)
(809
)
Automobile
(142
)
(216
)
(329
)
(516
)
Other revolving credit and installment
(167
)
(164
)
(329
)
(344
)
Total consumer
(802
)
(886
)
(1,665
)
(1,859
)
Total loan charge-offs
(1,033
)
(1,059
)
(2,096
)
(2,215
)
Loan recoveries:
Commercial:
Commercial and industrial
46
76
89
155
Real estate mortgage
10
19
16
36
Real estate construction
2
6
5
10
Lease financing
8
5
11
10
Total commercial
66
106
121
211
Consumer:
Real estate 1-4 family first mortgage
57
78
112
137
Real estate 1-4 family junior lien
mortgage
48
60
91
115
Credit card
88
81
173
154
Automobile
90
103
186
195
Other revolving credit and installment
31
29
65
60
Total consumer
314
351
627
661
Total loan recoveries
380
457
748
872
Net loan charge-offs
(653
)
(602
)
(1,348
)
(1,343
)
Other
(29
)
(10
)
(26
)
(64
)
Balance, end of period
$
10,603
11,110
10,603
11,110
Components:
Allowance for loan losses
$
9,692
10,193
9,692
10,193
Allowance for unfunded credit
commitments
911
917
911
917
Allowance for credit losses
$
10,603
11,110
10,603
11,110
Net loan charge-offs (annualized) as a
percentage of average total loans
0.28
%
0.26
0.29
0.29
Allowance for loan losses as a percentage
of total loans
1.02
1.08
1.02
1.08
Allowance for credit losses as a
percentage of total loans
1.12
1.18
1.12
1.18
(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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Balance, beginning of quarter
$
10,821
10,707
10,956
11,110
11,313
Provision for credit losses
503
845
521
580
452
Interest income on certain impaired loans
(1)
(39
)
(39
)
(38
)
(42
)
(43
)
Loan charge-offs:
Commercial:
Commercial and industrial
(205
)
(176
)
(220
)
(209
)
(134
)
Real estate mortgage
(14
)
(12
)
(12
)
(9
)
(19
)
Real estate construction
—
(1
)
—
—
—
Lease financing
(12
)
(11
)
(18
)
(15
)
(20
)
Total commercial
(231
)
(200
)
(250
)
(233
)
(173
)
Consumer:
Real estate 1-4 family first mortgage
(27
)
(43
)
(38
)
(45
)
(55
)
Real estate 1-4 family junior lien
mortgage
(29
)
(34
)
(38
)
(47
)
(47
)
Credit card
(437
)
(437
)
(414
)
(376
)
(404
)
Automobile
(142
)
(187
)
(217
)
(214
)
(216
)
Other revolving credit and installment
(167
)
(162
)
(180
)
(161
)
(164
)
Total consumer
(802
)
(863
)
(887
)
(843
)
(886
)
Total loan charge-offs
(1,033
)
(1,063
)
(1,137
)
(1,076
)
(1,059
)
Loan recoveries:
Commercial:
Commercial and industrial
46
43
88
61
76
Real estate mortgage
10
6
24
10
19
Real estate construction
2
3
1
2
6
Lease financing
8
3
5
8
5
Total commercial
66
55
118
81
106
Consumer:
Real estate 1-4 family first mortgage
57
55
60
70
78
Real estate 1-4 family junior lien
mortgage
48
43
48
56
60
Credit card
88
85
76
77
81
Automobile
90
96
84
84
103
Other revolving credit and installment
31
34
30
28
29
Total consumer
314
313
298
315
351
Total loan recoveries
380
368
416
396
457
Net loan charge-offs
(653
)
(695
)
(721
)
(680
)
(602
)
Other
(29
)
3
(11
)
(12
)
(10
)
Balance, end of quarter
$
10,603
10,821
10,707
10,956
11,110
Components:
Allowance for loan losses
$
9,692
9,900
9,775
10,021
10,193
Allowance for unfunded credit
commitments
911
921
932
935
917
Allowance for credit losses
$
10,603
10,821
10,707
10,956
11,110
Net loan charge-offs (annualized) as a
percentage of average total loans
0.28
%
0.30
0.30
0.29
0.26
Allowance for loan losses as a percentage
of:
Total loans
1.02
1.04
1.03
1.06
1.08
Nonaccrual loans
164
143
150
149
143
Nonaccrual loans and other nonperforming
assets
154
135
141
138
134
Allowance for credit losses as a
percentage of:
Total loans
1.12
1.14
1.12
1.16
1.18
Nonaccrual loans
179
157
165
163
156
Nonaccrual loans and other nonperforming
assets
168
147
154
151
146
(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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Tangible book value per common share
(1):
Total equity
$
200,037
198,733
197,066
199,679
206,069
Adjustments:
Preferred stock
(23,021
)
(23,214
)
(23,214
)
(23,482
)
(25,737
)
Additional paid-in capital on ESOP
preferred stock
(78
)
(95
)
(95
)
(105
)
(116
)
Unearned ESOP shares
1,292
1,502
1,502
1,780
2,051
Noncontrolling interests
(995
)
(901
)
(900
)
(938
)
(881
)
Total common stockholders' equity
(A)
177,235
176,025
174,359
176,934
181,386
Adjustments:
Goodwill
(26,415
)
(26,420
)
(26,418
)
(26,425
)
(26,429
)
Certain identifiable intangible assets
(other than MSRs)
(493
)
(522
)
(559
)
(826
)
(1,091
)
Other assets (2)
(2,251
)
(2,131
)
(2,187
)
(2,121
)
(2,160
)
Applicable deferred taxes (3)
788
771
785
829
874
Tangible common equity
(B)
$
148,864
147,723
145,980
148,391
152,580
Common shares outstanding
(C)
4,419.6
4,511.9
4,581.3
4,711.6
4,849.1
Book value per common share
(A)/(C)
$
40.10
39.01
38.06
37.55
37.41
Tangible book value per common share
(B)/(C)
33.68
32.74
31.86
31.49
31.47
Quarter ended
Six months ended
(in millions, except ratios)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Jun 30, 2019
Jun 30, 2018
Return on average tangible common equity
(1):
Net income applicable to common stock
(A)
$
5,848
5,507
5,711
5,453
4,792
11,355
9,525
Average total equity
199,685
198,349
198,442
202,826
206,067
199,021
206,123
Adjustments:
Preferred stock
(23,023
)
(23,214
)
(23,463
)
(24,219
)
(26,021
)
(23,118
)
(26,089
)
Additional paid-in capital on ESOP
preferred stock
(78
)
(95
)
(105
)
(115
)
(129
)
(87
)
(141
)
Unearned ESOP shares
1,294
1,502
1,761
2,026
2,348
1,397
2,428
Noncontrolling interests
(939
)
(899
)
(910
)
(892
)
(919
)
(919
)
(958
)
Average common stockholders’ equity
(B)
176,939
175,643
175,725
179,626
181,346
176,294
181,363
Adjustments:
Goodwill
(26,415
)
(26,420
)
(26,423
)
(26,429
)
(26,444
)
(26,417
)
(26,480
)
Certain identifiable intangible assets
(other than MSRs)
(505
)
(543
)
(693
)
(958
)
(1,223
)
(524
)
(1,355
)
Other assets (2)
(2,155
)
(2,159
)
(2,204
)
(2,083
)
(2,271
)
(2,157
)
(2,252
)
Applicable deferred taxes (3)
780
784
800
845
889
782
911
Average tangible common equity
(C)
$
148,644
147,305
147,205
151,001
152,297
147,978
152,187
Return on average common stockholders'
equity (ROE) (annualized)
(A)/(B)
13.26
12.71
12.89
12.04
10.60
12.99
10.59
Return on average tangible common equity
(ROTCE) (annualized)
(A)/(C)
15.78
15.16
15.39
14.33
12.62
15.47
12.62
(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
securities 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 securities, 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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Total equity
$
200.0
198.7
197.1
199.7
206.1
Adjustments:
Preferred stock
(23.0
)
(23.2
)
(23.2
)
(23.5
)
(25.7
)
Additional paid-in capital on ESOP
preferred stock
(0.1
)
(0.1
)
(0.1
)
(0.1
)
(0.1
)
Unearned ESOP shares
1.3
1.5
1.5
1.8
2.0
Noncontrolling interests
(1.0
)
(0.9
)
(0.9
)
(0.9
)
(0.9
)
Total common stockholders' equity
177.2
176.0
174.4
177.0
181.4
Adjustments:
Goodwill
(26.4
)
(26.4
)
(26.4
)
(26.4
)
(26.4
)
Certain identifiable intangible assets
(other than MSRs)
(0.5
)
(0.5
)
(0.6
)
(0.8
)
(1.1
)
Other assets (2)
(2.3
)
(2.1
)
(2.2
)
(2.1
)
(2.2
)
Applicable deferred taxes (3)
0.8
0.8
0.8
0.8
0.9
Investment in certain subsidiaries and
other
0.4
0.3
0.4
0.4
0.4
Common Equity Tier 1 (Fully Phased-In)
under Basel III
(A)
149.2
148.1
146.4
148.9
153.0
Total risk-weighted assets (RWAs)
anticipated under Basel III (4)(5)
(B)
$
1,248.2
1,243.1
1,247.2
1,250.2
1,276.3
Common Equity Tier 1 to total RWAs
anticipated under Basel III (Fully Phased-In) (5)
(A)/(B)
12.0
%
11.9
11.7
11.9
12.0
(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. 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. Beginning January 1, 2018, the requirements for calculating
CET1 and tier 1 capital, along with RWAs, became fully phased-in.
(2) Represents goodwill and other intangibles on nonmarketable
equity securities, 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 June 30, 2019, 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 March 31, 2019,
and December 31, September 30 and June 30, 2018, was calculated
under the Basel III Standardized Approach RWAs. (5) The Company’s
June 30, 2019, RWAs and capital ratio are preliminary estimates.
Wells Fargo & Company and
Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,
average balances in billions)
Community Banking
Wholesale Banking
Wealth and Investment
Management
Other (2)
Consolidated Company
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Quarter ended June 30,
Net interest income (3)
$
7,066
7,346
4,535
4,693
1,037
1,111
(543
)
(609
)
12,095
12,541
Provision (reversal of provision) for
credit losses
479
484
28
(36
)
(1
)
(2
)
(3
)
6
503
452
Noninterest income
4,739
4,460
2,530
2,504
3,013
2,840
(793
)
(792
)
9,489
9,012
Noninterest expense
7,212
7,290
3,882
4,219
3,246
3,361
(891
)
(888
)
13,449
13,982
Income (loss) before income tax expense
(benefit)
4,114
4,032
3,155
3,014
805
592
(442
)
(519
)
7,632
7,119
Income tax expense (benefit)
838
1,413
365
379
201
147
(110
)
(129
)
1,294
1,810
Net income (loss) before noncontrolling
interests
3,276
2,619
2,790
2,635
604
445
(332
)
(390
)
6,338
5,309
Less: Net income from noncontrolling
interests
129
123
1
—
2
—
—
—
132
123
Net income (loss)
$
3,147
2,496
2,789
2,635
602
445
(332
)
(390
)
6,206
5,186
Average loans
$
457.7
463.8
474.0
464.7
75.0
74.7
(59.2
)
(59.1
)
947.5
944.1
Average assets
1,024.8
1,034.3
852.2
826.4
83.8
84.0
(60.2
)
(59.8
)
1,900.6
1,884.9
Average deposits
777.6
760.6
410.4
414.0
143.5
167.1
(62.5
)
(70.4
)
1,269.0
1,271.3
Six months ended June 30,
Net interest income (3)
$
14,314
14,541
9,069
9,225
2,138
2,223
(1,115
)
(1,210
)
24,406
24,779
Provision (reversal of provision) for
credit losses
1,189
702
162
(56
)
3
(8
)
(6
)
5
1,348
643
Noninterest income
9,241
9,095
5,107
5,251
5,991
5,970
(1,552
)
(1,608
)
18,787
18,708
Noninterest expense
14,901
15,992
7,720
8,197
6,549
6,651
(1,805
)
(1,816
)
27,365
29,024
Income (loss) before income tax expense
(benefit)
7,465
6,942
6,294
6,335
1,577
1,550
(856
)
(1,007
)
14,480
13,820
Income tax expense (benefit)
1,262
2,222
734
827
393
386
(214
)
(251
)
2,175
3,184
Net income (loss) before noncontrolling
interests
6,203
4,720
5,560
5,508
1,184
1,164
(642
)
(756
)
12,305
10,636
Less: Net income (loss) from
noncontrolling interests
233
311
1
(2
)
5
5
—
—
239
314
Net income (loss)
$
5,970
4,409
5,559
5,510
1,179
1,159
(642
)
(756
)
12,066
10,322
Average loans
$
457.9
467.1
475.2
464.9
74.7
74.3
(59.1
)
(58.8
)
948.7
947.5
Average assets
1,020.1
1,048.0
848.4
827.8
83.5
84.1
(60.1
)
(59.6
)
1,891.9
1,900.3
Average deposits
771.6
754.1
410.1
429.9
148.3
172.5
(64.5
)
(72.3
)
1,265.5
1,284.2
(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,
substantially all 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 as well as interest credits for
any funding of a segment available to be provided to other
segments. The cost of liabilities includes actual interest expense
on segment liabilities as well as funding charges for any funding
provided from other segments.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS
(1)
Quarter ended
(income/expense in millions, average
balances in billions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
COMMUNITY BANKING
Net interest income (2)
$
7,066
7,248
7,340
7,338
7,346
Provision for credit losses
479
710
534
547
484
Noninterest income
4,739
4,502
4,121
4,478
4,460
Noninterest expense
7,212
7,689
7,032
7,467
7,290
Income before income tax expense
4,114
3,351
3,895
3,802
4,032
Income tax expense
838
424
637
925
1,413
Net income before noncontrolling
interests
3,276
2,927
3,258
2,877
2,619
Less: Net income from noncontrolling
interests
129
104
89
61
123
Segment net income
$
3,147
2,823
3,169
2,816
2,496
Average loans
$
457.7
458.2
459.7
460.9
463.8
Average assets
1,024.8
1,015.4
1,015.9
1,024.9
1,034.3
Average deposits
777.6
765.6
759.4
760.9
760.6
WHOLESALE BANKING
Net interest income (2)
$
4,535
4,534
4,739
4,726
4,693
Provision (reversal of provision) for
credit losses
28
134
(28
)
26
(36
)
Noninterest income
2,530
2,577
2,187
2,578
2,504
Noninterest expense
3,882
3,838
4,025
3,935
4,219
Income before income tax expense
3,155
3,139
2,929
3,343
3,014
Income tax expense
365
369
253
475
379
Net income before noncontrolling
interests
2,790
2,770
2,676
2,868
2,635
Less: Net income from noncontrolling
interests
1
—
5
17
—
Segment net income
$
2,789
2,770
2,671
2,851
2,635
Average loans
$
474.0
476.4
470.2
462.8
464.7
Average assets
852.2
844.5
839.1
827.2
826.4
Average deposits
410.4
409.8
421.6
413.6
414.0
WEALTH AND INVESTMENT
MANAGEMENT
Net interest income (2)
$
1,037
1,101
1,116
1,102
1,111
Provision (reversal of provision) for
credit losses
(1
)
4
(3
)
6
(2
)
Noninterest income
3,013
2,978
2,841
3,124
2,840
Noninterest expense
3,246
3,303
3,044
3,243
3,361
Income before income tax expense
805
772
916
977
592
Income tax expense
201
192
231
244
147
Net income before noncontrolling
interests
604
580
685
733
445
Less: Net income (loss) from
noncontrolling interests
2
3
(4
)
1
—
Segment net income
$
602
577
689
732
445
Average loans
$
75.0
74.4
75.2
74.6
74.7
Average assets
83.8
83.2
83.6
83.8
84.0
Average deposits
143.5
153.2
155.5
159.8
167.1
OTHER (3)
Net interest income (2)
$
(543
)
(572
)
(551
)
(594
)
(609
)
Provision (reversal of provision) for
credit losses
(3
)
(3
)
18
1
6
Noninterest income
(793
)
(759
)
(813
)
(811
)
(792
)
Noninterest expense
(891
)
(914
)
(762
)
(882
)
(888
)
Loss before income tax benefit
(442
)
(414
)
(620
)
(524
)
(519
)
Income tax benefit
(110
)
(104
)
(155
)
(132
)
(129
)
Net loss before noncontrolling
interests
(332
)
(310
)
(465
)
(392
)
(390
)
Less: Net income from noncontrolling
interests
—
—
—
—
—
Other net loss
$
(332
)
(310
)
(465
)
(392
)
(390
)
Average loans
$
(59.2
)
(59.0
)
(58.8
)
(58.8
)
(59.1
)
Average assets
(60.2
)
(60.0
)
(59.6
)
(59.6
)
(59.8
)
Average deposits
(62.5
)
(66.5
)
(67.6
)
(67.9
)
(70.4
)
CONSOLIDATED COMPANY
Net interest income (2)
$
12,095
12,311
12,644
12,572
12,541
Provision for credit losses
503
845
521
580
452
Noninterest income
9,489
9,298
8,336
9,369
9,012
Noninterest expense
13,449
13,916
13,339
13,763
13,982
Income before income tax expense
7,632
6,848
7,120
7,598
7,119
Income tax expense
1,294
881
966
1,512
1,810
Net income before noncontrolling
interests
6,338
5,967
6,154
6,086
5,309
Less: Net income from noncontrolling
interests
132
107
90
79
123
Wells Fargo net income
$
6,206
5,860
6,064
6,007
5,186
Average loans
$
947.5
950.0
946.3
939.5
944.1
Average assets
1,900.6
1,883.1
1,879.0
1,876.3
1,884.9
Average deposits
1,269.0
1,262.1
1,268.9
1,266.4
1,271.3
(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) 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 as well as interest credits for
any funding of a segment available to be provided to other
segments. The cost of liabilities includes actual interest expense
on segment liabilities as well as funding charges for any funding
provided from other segments. (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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
MSRs measured using the fair value
method:
Fair value, beginning of quarter
$
13,336
14,649
15,980
15,411
15,041
Servicing from securitizations or asset
transfers (1)
400
341
449
502
486
Sales and other (2)
(1
)
(281
)
(64
)
(2
)
(1
)
Net additions
399
60
385
500
485
Changes in fair value:
Due to changes in valuation model inputs
or assumptions:
Mortgage interest rates (3)
(1,153
)
(940
)
(874
)
582
376
Servicing and foreclosure costs (4)
(22
)
12
763
(9
)
30
Discount rates (5)
(109
)
100
(821
)
(9
)
—
Prepayment estimates and other (6)
206
(63
)
(314
)
(33
)
(61
)
Net changes in valuation model inputs or
assumptions
(1,078
)
(891
)
(1,246
)
531
345
Changes due to collection/realization of
expected cash flows over time
(561
)
(482
)
(470
)
(462
)
(460
)
Total changes in fair value
(1,639
)
(1,373
)
(1,716
)
69
(115
)
Fair value, end of quarter
$
12,096
13,336
14,649
15,980
15,411
(1) Includes impacts associated with exercising our right to
repurchase delinquent loans from Government National Mortgage
Association (GNMA) loan securitization pools. Total reported MSRs
may increase upon repurchase due to servicing liabilities
associated with these loans. (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) Reflects discount rate assumption
change, excluding portion attributable to changes in mortgage
interest rates.
(6) 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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Amortized MSRs:
Balance, beginning of quarter
$
1,427
1,443
1,414
1,407
1,411
Purchases
16
24
45
42
22
Servicing from securitizations or asset
transfers
33
26
52
33
39
Amortization
(69
)
(66
)
(68
)
(68
)
(65
)
Balance, end of quarter
$
1,407
1,427
1,443
1,414
1,407
Fair value of amortized MSRs:
Beginning of quarter
$
2,149
2,288
2,389
2,309
2,307
End of quarter
1,897
2,149
2,288
2,389
2,309
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE
SERVICING (CONTINUED)
Quarter ended
(in millions)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Servicing income, net:
Servicing fees (1)
$
830
841
925
890
905
Changes in fair value of MSRs carried at
fair value:
Due to changes in valuation model inputs
or assumptions (2)
(A)
(1,078
)
(891
)
(1,246
)
531
345
Changes due to collection/realization of
expected cash flows over time
(561
)
(482
)
(470
)
(462
)
(460
)
Total changes in fair value of MSRs
carried at fair value
(1,639
)
(1,373
)
(1,716
)
69
(115
)
Amortization
(69
)
(66
)
(68
)
(68
)
(65
)
Net derivative gains (losses) from
economic hedges (3)
(B)
1,155
962
968
(501
)
(319
)
Total servicing income, net
$
277
364
109
390
406
Market-related valuation changes to MSRs,
net of hedge results (2)(3)
(A)+(B)
$
77
71
(278
)
30
26
(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)
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Managed servicing portfolio
(1):
Residential mortgage servicing:
Serviced for others
$
1,107
1,125
1,164
1,184
1,190
Owned loans serviced
340
331
334
337
340
Subserviced for others
5
26
4
5
4
Total residential servicing
1,452
1,482
1,502
1,526
1,534
Commercial mortgage servicing:
Serviced for others
548
552
543
529
518
Owned loans serviced
123
122
121
121
124
Subserviced for others
9
9
9
9
10
Total commercial servicing
680
683
673
659
652
Total managed servicing portfolio
$
2,132
2,165
2,175
2,185
2,186
Total serviced for others
$
1,655
1,677
1,707
1,713
1,708
Ratio of MSRs to related loans serviced
for others
0.82
%
0.88
0.94
1.02
0.98
Weighted-average note rate (mortgage loans
serviced for others)
4.33
4.34
4.32
4.29
4.27
(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
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Jun 30, 2018
Net gains on mortgage loan
origination/sales activities (in millions):
Residential
(A)
$
322
232
245
324
281
Commercial
83
47
65
75
49
Residential pipeline and
unsold/repurchased loan management (1)
76
65
48
57
34
Total
$
481
344
358
456
364
Application data (in billions):
Wells Fargo first mortgage quarterly
applications
$
90
64
48
57
67
Refinances as a percentage of
applications
44
%
44
30
26
25
Wells Fargo first mortgage unclosed
pipeline, at quarter end
$
44
32
18
22
26
Residential real estate
originations:
Purchases as a percentage of
originations
68
%
70
78
81
78
Refinances as a percentage of
originations
32
30
22
19
22
Total
100
%
100
100
100
100
Wells Fargo first mortgage loans (in
billions):
Retail
$
26
14
16
18
21
Correspondent
27
18
21
27
28
Other (2)
—
1
1
1
1
Total quarter-to-date
$
53
33
38
46
50
Held-for-sale
(B)
$
33
22
28
33
37
Held-for-investment
20
11
10
13
13
Total quarter-to-date
$
53
33
38
46
50
Total year-to-date
$
86
33
177
139
93
Production margin on residential
held-for-sale mortgage originations
(A)/(B)
0.98
%
1.05
0.89
0.97
0.77
(1) Predominantly includes the results of sales of modified GNMA
loans, interest rate management activities and changes in estimate
to the liability for mortgage loan repurchase losses. (2) Consists
of home equity loans and lines.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190716005348/en/
Media Ancel Martinez, 415-222-3858 ancel.martinez@wellsfargo.com or
Investor Relations John M. Campbell, 415-396-0523
john.m.campbell@wellsfargo.com
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