Full Year 2017 Net Income of $22.2 Billion;
Diluted EPS of $4.10
Wells Fargo & Company (NYSE:WFC):
- Full year 2017 financial
results1:
- Net income of $22.2 billion, compared
with $21.9 billion in 2016
- Diluted earnings per share (EPS) of
$4.10, compared with $3.99
- Revenue of $88.4 billion, up from $88.3
billion
- Net interest income of $49.6 billion,
up $1.8 billion, or 4 percent
- Noninterest income of $38.8 billion,
down $1.7 billion, or 4 percent
- Average deposits of $1.3 trillion, up
$54.1 billion, or 4 percent
- Average loans of $956.1 billion, up
$6.2 billion, or 1 percent
- Return on assets (ROA) of 1.15 percent
and return on equity (ROE) of 11.35 percent
- Net charge-offs of 0.31 percent of
average loans, down from 0.37 percent
- Nonaccrual loans of $8.0 billion, down
$2.3 billion, or 23 percent
- Returned $14.5 billion to shareholders
through common stock dividends and net share repurchases, up
16 percent from $12.5 billion
- Net share repurchases of $6.8 billion,
up 42 percent
- Period-end common shares outstanding of
4.9 billion, down 124.5 million shares, or 2 percent
- Fourth quarter 2017 financial
results included:
- $3.35 billion after-tax benefit, or
$0.67 per share, from the Tax Cuts & Jobs Act (Tax Act)
- $3.89 billion estimated tax benefit
from the reduction to net deferred income taxes
- $370 million after-tax loss from
adjustments related to leveraged leases, low income housing and
tax-advantaged renewable energy investments
- $173 million tax expense from estimated
deemed repatriation
- $848 million pre-tax gain, or $0.11 per
share, on sale of Wells Fargo Insurance Services USA
- $3.25 billion pre-tax expense, or
$(0.59) per share, from litigation accruals for a variety of
matters, including mortgage-related regulatory investigations,
sales practices, and other consumer-related matters; a majority of
this expense was not tax deductible
Final financial results and other disclosures will be reported
in our Annual Report on Form 10-K for the year ended December 31,
2017, and may differ materially from the results and disclosures in
this document due to, among other things, the completion of final
review procedures, the occurrence of subsequent events, or the
discovery of additional information.
Selected Financial Information
Quarter ended Year ended Dec. 31,
Dec 31, 2017 Sep 30,2017
Dec 31,2016
2017 2016
Earnings (a)
Diluted earnings per common share
$
1.16 0.83 0.96
4.10 3.99 Wells Fargo net income (in
billions)
6.15 4.54 5.27
22.18 21.94 Return on assets
(ROA)
1.26 % 0.93 1.08
1.15 1.16 Return on
equity (ROE)
12.47 8.96 10.94
11.35 11.49 Return on
average tangible common equity (ROTCE) (b)
14.85 10.66 13.16
13.55 13.85
Asset Quality Net charge-offs
(annualized) as a % of average total loans
0.31 %
0.30 0.37
0.31 0.37 Allowance for credit losses as a % of
total loans
1.25 1.27 1.30
1.25 1.30 Allowance for
credit losses as a % of annualized net charge-offs
401 426
348
408 356
Other Revenue (in billions) (a)
$
22.1 21.8 21.6
88.4 88.3 Efficiency ratio (a)(c)
76.2 % 65.7 61.2
66.2 59.3 Average loans (in
billions)
$ 951.8 952.3 964.1
956.1 950.0
Average deposits (in billions)
1,311.6 1,306.4 1,284.2
1,304.6 1,250.6 Net interest margin (a)
2.84
% 2.86 2.87
2.87
2.86
(a) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
(b) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity, which utilizes tangible
common equity, is a useful financial measure because it enables
investors and others to assess the Company's use of equity. For
additional information, including a corresponding reconciliation to
GAAP financial measures, see the "Tangible Common Equity" tables on
page 35.
(c) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).(1) Financial information for prior quarters in
2017 has been revised to reflect the impact of the adoption in
fourth quarter 2017 of Accounting Standards Update (ASU) 2017-12 –
Derivatives and Hedging (Topic 815): Targeted Improvements to
Accounting for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
Wells Fargo & Company (NYSE:WFC) reported net income of
$6.2 billion, or $1.16 per diluted common share, for fourth
quarter 2017, compared with $5.3 billion, or $0.96 per share,
for fourth quarter 2016, and $4.5 billion, or $0.83 per
share, for third quarter 2017.
Chief Executive Officer Tim Sloan said, “In 2017 we continued
executing on our plan to build a better bank for the future, and
I'm proud of the hard work and dedication of our team members to
put our customers first as we transform Wells Fargo. Over the past
year we have invested billions of dollars into our business and
capabilities including risk management, accelerated the pace of
innovation, increased our commitment to communities, enhanced team
member benefits, and continued to execute on our business
strategies to provide long-term value to our shareholders. The
progress we made over the past year was evident in the fourth
quarter in higher deposits, loan growth particularly in commercial
loans, increased debit and credit card transactions, and record
client assets under management in Wealth and Investment Management.
While we faced challenges in 2017, we are a much better company
today than we were a year ago, and I am confident that this year
Wells Fargo will be even better.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo
reported $6.2 billion of net income in the fourth quarter, which
included a net benefit from the Tax Cuts & Jobs Act and a gain
on the sale of Wells Fargo Insurance Services, partially offset by
litigation accruals. Compared with the third quarter we grew both
loans and deposits, and our credit performance, liquidity and
capital remained exceptionally strong. We returned a record
$14.5 billion to shareholders through common stock dividends and
net share repurchases in 2017, up 16 percent, and returning more
capital to shareholders remains a priority. We've made progress on
our efficiency initiatives and remain committed to our target of $2
billion of expense reductions by the end of 2018, which are being
used to support our investments in the business, and an additional
$2 billion by the end of 2019. In addition, by the beginning of
2019 we expect the amortization of core deposit intangible expense
($769 million in 2018) and the FDIC special assessment to be
complete.”
Net Interest Income
Net interest income in fourth quarter 2017 was $12.3 billion,
down $136 million, compared with third quarter 2017, driven
primarily by a negative $183 million one-time adjustment related to
leveraged leases due to the Tax Act, which reduced loan yields in
the fourth quarter, partially offset by a modest net benefit from
all other growth, repricing and variable items.
Net interest margin was 2.84 percent, down 2 basis points from
third quarter 2017. The negative impacts from the one-time
adjustment to leveraged leases and growth in average deposits were
partially offset by lower average long-term debt and a modest net
benefit from all other growth, repricing and variable items.
Noninterest Income
Noninterest income in the fourth quarter was $9.7 billion,
compared with $9.4 billion in third quarter 2017. Fourth
quarter noninterest income reflected higher other income, trust and
investment fees, and market sensitive revenue2, partially offset by
lower mortgage banking and deposit service charges.
- Deposit service charges of $1.2 billion
were down $30 million in the fourth quarter driven by the impact of
customer-friendly changes including the launch of Overdraft
RewindSM in November.
- Trust and investment fees were $3.7
billion, compared with $3.6 billion in third quarter 2017, as
higher asset-based fees and retail brokerage transaction activity
were partially offset by lower investment banking fees.
- Mortgage banking noninterest income was
$928 million, compared with $1.0 billion in third quarter
2017. Residential mortgage loan originations were $53 billion in
the fourth quarter, down from $59 billion in the third
quarter. The production margin on residential held-for-sale
mortgage loan originations3 was 1.25 percent, compared with
1.24 percent in the third quarter. Mortgage servicing income was
$262 million in the fourth quarter, down from
$309 million in the third quarter.
- Market sensitive revenue was $728
million, compared with $649 million in third quarter 2017, driven
by higher net gains from equity investments.
- Other income was $405 million,
compared with $47 million in the third quarter. Fourth quarter
2017 included an $848 million gain on the previously announced sale
of Wells Fargo Insurance Services USA, which was partially offset
by $414 million of impairments on low income housing and
renewable energy investments due to the Tax Act.
Noninterest Expense
Noninterest expense in the fourth quarter was
$16.8 billion, compared with $14.4 billion in the prior
quarter. Fourth quarter expenses included operating losses of
$3.5 billion, up from $1.3 billion in the third quarter,
primarily reflecting litigation accruals for a variety of matters,
including mortgage-related regulatory investigations, sales
practices, and other consumer-related matters. Fourth quarter
expenses also included higher charitable donations (up $103 million
from the third quarter), commission and incentive compensation
expense, outside professional services, and typically higher
equipment and advertising expense, which were partially offset by a
$117 million gain on the sale of a corporate property. The
efficiency ratio was 76.2 percent in fourth quarter 2017, up
from 65.7 percent in the third quarter, driven primarily by
higher operating losses.
Income Taxes
The Company’s fourth quarter income tax expense was a $1.6
billion benefit and reflected the estimated impact of the Tax Act,
including a benefit of $3.89 billion resulting from the
re-measurement of the Company's estimated net deferred tax
liability as of December 31, 2017, partially offset by $173 million
of tax expense relating to the estimated tax impact of the deemed
repatriation of the Company's previously undistributed foreign
earnings. The fourth quarter income tax benefit was also adversely
impacted by a $1.0 billion tax effect relating to the impact of
discrete non-deductible items (primarily litigation accruals). The
full year 2017 effective income tax rate was 18.1 percent. The
Company currently expects its full year 2018 effective income tax
rate to be approximately 19 percent.
Loans
Total average loans were $951.8 billion in the fourth
quarter, down $521 million from the third quarter. Period-end loan
balances were $956.8 billion at December 31, 2017, up
$4.9 billion from September 30, 2017. Commercial loans
were up $3.2 billion from September 30, 2017 with growth in
commercial and industrial loans, partially offset by declines in
commercial real estate loans. Consumer loans increased $1.7 billion
from the prior quarter, as growth in real estate 1-4 family first
mortgage loans and consumer credit card loans was partially offset
by expected declines in automobile loans and the junior lien
mortgage portfolio.
Period-End Loan Balances
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016 Commercial
$ 503,388 500,150 505,901
505,004 506,536 Consumer
453,382
451,723 451,522 453,401
461,068 Total loans
$ 956,770
951,873 957,423 958,405
967,604 Change from prior quarter
$ 4,897
(5,550 ) (982 ) (9,199 ) 6,278
Investment Securities
Investment securities were $416.4 billion at December 31,
2017, up $1.8 billion from the third quarter, as approximately
$20.9 billion of purchases, mostly federal agency mortgage-backed
securities (MBS) in the available-for-sale portfolio, were
partially offset by run-off and sales.
Net unrealized gains on available-for-sale securities declined
to $1.5 billion at December 31, 2017, compared with
$1.8 billion at September 30, 2017, primarily due to
gains realized in the fourth quarter. Modestly higher Treasury
yields were largely offset by tighter credit and agency MBS spreads
during the quarter.
Deposits
Total average deposits for fourth quarter 2017 were $1.3
trillion, up $5.2 billion from the prior quarter. The average
deposit cost for fourth quarter 2017 was 28 basis points, up 2
basis points from the prior quarter and 16 basis points from a year
ago, primarily driven by an increase in commercial and Wealth and
Investment Management deposit rates.
Capital
Capital levels remained strong in the fourth quarter, with a
Common Equity Tier 1 ratio (fully phased-in) of 11.9 percent4,
compared with 11.8 percent in the prior quarter. In fourth quarter
2017, the Company repurchased 51.4 million shares of its
common stock, which reduced period-end common shares outstanding by
36.3 million.
Credit Quality
Net Loan Charge-offs
The quarterly loss rate was 0.31 percent (annualized), compared
with 0.30 percent in the prior quarter. Commercial and consumer
losses were 0.09 percent and 0.56 percent, respectively. Total
credit losses were $751 million in fourth quarter 2017, up $34
million from third quarter 2017. Commercial losses were up
$2 million on lower recoveries in commercial real estate
loans. Consumer losses increased $32 million, as higher
recoveries on consumer real estate loans and lower losses on
automobile loans were offset by higher credit card losses driven by
seasonality and portfolio seasoning.
Net Loan Charge-Offs
Quarter ended December 31, 2017
September 30, 2017 June 30, 2017 ($
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 $ 118 0.14 % $ 125 0.15 % $ 78 0.10 % Real estate
mortgage (10 ) (0.03 ) (3 ) (0.01 ) (6 ) (0.02 ) Real estate
construction (3 ) (0.05 ) (15 ) (0.24 ) (4 ) (0.05 ) Lease
financing 10 0.20 6 0.12 7 0.15
Total commercial 115 0.09
113 0.09 75 0.06
Consumer: Real estate 1-4 family first mortgage (23 ) (0.03
) (16 ) (0.02 ) (16 ) (0.02 ) Real estate 1-4 family junior lien
mortgage (7 ) (0.06 ) 1 — (4 ) (0.03 ) Credit card 336 3.66 277
3.08 320 3.67 Automobile 188 1.38 202 1.41 126 0.86 Other revolving
credit and installment 142 1.46 140 1.44 154
1.58
Total consumer 636
0.56 604 0.53 580
0.51 Total $ 751
0.31 % $ 717 0.30
% $ 655 0.27 %
(a) Quarterly net charge-offs (recoveries)
as a percentage of average loans are annualized. See explanation on
page 31 of the accounting for purchased credit-impaired (PCI) loans
and the impact on selected financial ratios.
Nonperforming Assets
Nonperforming assets decreased $647 million, or 7 percent, from
third quarter 2017 to $8.7 billion. Nonaccrual loans decreased $583
million from third quarter 2017 to $8.0 billion primarily driven by
lower commercial and industrial nonaccruals reflecting continued
improvement in the oil and gas portfolio, as well as continued
declines in consumer real estate nonaccruals.
Nonperforming Assets (Nonaccrual Loans
and Foreclosed Assets)
December 31, 2017 September 30,
2017 June 30, 2017 ($ in millions)
Totalbalances
As a%
oftotalloans
Totalbalances
As a%
oftotalloans
Totalbalances
As a%
oftotalloans
Commercial:
Commercial and industrial $ 1,899 0.57 % $ 2,397 0.73 % $ 2,632
0.79 % Real estate mortgage 628 0.50 593 0.46 630 0.48 Real estate
construction 37 0.15 38 0.15 34 0.13 Lease financing 76
0.39 81 0.42 89 0.46
Total commercial
2,640 0.52 3,109
0.62 3,385 0.67 Consumer: Real
estate 1-4 family first mortgage 4,122 1.45 4,213 1.50 4,413 1.60
Real estate 1-4 family junior lien mortgage 1,086 2.73 1,101 2.68
1,095 2.56 Automobile 130 0.24 137 0.25 104 0.18 Other revolving
credit and installment 58 0.15 59 0.15 59
0.15
Total consumer 5,396
1.19 5,510 1.22 5,671
1.26 Total nonaccrual loans 8,036
0.84 8,619 0.91 9,056
0.95 Foreclosed assets: Government
insured/guaranteed 120 137 149 Non-government insured/guaranteed
522 569 632
Total foreclosed
assets 642 706 781
Total nonperforming assets $
8,678 0.91 % $ 9,325
0.98 % $ 9,837
1.03 % Change from prior quarter: Total nonaccrual
loans $ (583 ) $ (437 ) $ (703 ) Total nonperforming assets
(647 ) (512 ) (827 )
Allowance for Credit Losses
The allowance for credit losses, including the allowance for
unfunded commitments, totaled $12.0 billion at December 31,
2017, down $149 million from September 30, 2017. Fourth
quarter 2017 included a $100 million reserve release5, reflecting
continued strong credit performance. The allowance coverage for
total loans was 1.25 percent compared with 1.27 percent in
third quarter 2017. The allowance covered 4.0 times annualized
fourth quarter net charge-offs, compared with 4.3 times in the
prior quarter. The allowance coverage for nonaccrual loans was
149 percent at December 31, 2017, compared with
141 percent at September 30, 2017. The Company believes
the allowance was appropriate for losses inherent in the loan
portfolio at December 31, 2017.
Business Segment Performance
Wells Fargo defines its operating segments by product type and
customer segment. Segment net income for each of the three business
segments was:
Quarter ended (in millions)
Dec 31, 2017 Sep
30,2017 Dec 31,2016 Community Banking (a)
$
3,673 2,176 2,733 Wholesale Banking (a)
2,148 2,045 2,194 Wealth and Investment Management
659 710 653
(a) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Community Banking offers a
complete line of diversified financial products and services for
consumers and small businesses including checking and savings
accounts, credit and debit cards, and automobile, student,
mortgage, home equity and small business lending, as well as
referrals to Wholesale Banking and Wealth and Investment Management
business partners. The Community Banking segment also includes the
results of our Corporate Treasury activities net of allocations in
support of the other operating segments and results of investments
in our affiliated venture capital partnerships.
Selected Financial Information
Quarter ended (in millions)
Dec 31, 2017 Sep 30,2017 Dec
31,2016 Total revenue (a)
$ 12,028 11,984
11,661 Provision for credit losses
636 650 631
Noninterest expense
10,200 7,834 6,985 Segment net income
(a)
3,673 2,176 2,733 (in billions) Average loans
473.5 473.5 488.1 Average assets
974.0 988.9 1,000.7
Average deposits
738.1 734.5 709.8
(a) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Community Banking reported net income of $3.7 billion, up
$1.5 billion, or 69 percent, from third quarter 2017. Fourth
quarter income tax expense reflected the estimated impact of the
Tax Act to the Company and the impact of discrete non-deductible
items, primarily litigation accruals. Revenue in the fourth quarter
was $12.0 billion, flat compared with third quarter 2017, and
included lower net interest income, mortgage banking revenue, and
service charges on deposit accounts, offset by higher market
sensitive revenue and trust and investment fees. Noninterest
expense increased $2.4 billion, or 30 percent, compared with
third quarter 2017, driven primarily by litigation accruals. The
provision for credit losses decreased $14 million from the
prior quarter.
Net income was up $940 million, or 34 percent, from fourth
quarter 2016, and included the income tax benefit from the Tax Act.
Revenue increased $367 million, or 3 percent, compared with a
year ago due to higher market sensitive revenue and other income,
partially offset by lower mortgage banking revenue, service charges
on deposit accounts, and net interest income. Noninterest expense
increased $3.2 billion, or 46 percent, from a year ago
primarily driven by litigation accruals. The provision for credit
losses increased $5 million from a year ago.
Retail Banking and Consumer Payments, Virtual Solutions and
Innovation
- 1.6 million branch customer experience
surveys completed during 2017, both ‘Loyalty’ and ‘Overall
Satisfaction with Most Recent Visit’ scores improved in fourth
quarter from third quarter
- 5,861 retail bank branches as of the
end of fourth quarter 2017, reflecting 214 branch consolidations
for full year 2017
- For the 15th consecutive year,
America's #1 small business lender and #1 lender to small
businesses in low-and moderate-income areas (loans under $1
million; 2016 Community Reinvestment Act data, released November
2017)
- Primary consumer checking
customers6,7up 0.2 percent year-over-year
- Debit card point-of-sale purchase
volume8 of $83.1 billion in fourth quarter, up 6 percent
year-over-year
- Credit card point-of-sale purchase
volume of $19.1 billion in fourth quarter, up 6 percent
year-over-year
- Credit card penetration in retail
banking households of 45.3 percent9
- 28.1 million digital (online and
mobile) active customers, including 21.2 million mobile active
users7,10
- Bank Monitor Awards provided Wells
Fargo a Gold Medal, the highest level, in Website Design and
Usability (December 2017)
- Dynatrace (formerly Keynote) ranked
Wells Fargo #1 in Functionality, Open Accounts, and Transact in its
fourth quarter Online Banking Scorecard (November 2017)
Consumer Lending
- Home Lending
- Originations of $53 billion, down
from $59 billion in prior quarter
- Applications of $63 billion, down
from $73 billion in prior quarter
- Application pipeline of
$23 billion at quarter end, down from $29 billion at September
30, 2017
- Automobile originations of $4.3 billion
in fourth quarter, flat compared with prior quarter and down
33 percent from prior year, as proactive steps to tighten
underwriting standards resulted in lower origination volume
Wholesale Banking provides
financial solutions to businesses across the United States and
globally with annual sales generally in excess of $5 million.
Products and businesses include Business Banking, Commercial Real
Estate, Corporate Banking, Financial Institutions Group, Government
and Institutional Banking, Middle Market Banking, Principal
Investments, Treasury Management, Wells Fargo Commercial Capital,
and Wells Fargo Securities.
Selected Financial Information
Quarter ended (in millions)
Dec
31, 2017 Sep 30,2017 Dec 31,2016 Total
revenue (a)
$ 7,094 7,084 7,153
Provision for credit losses
20 69 168 Noninterest expense
4,204 4,248 4,002 Segment net income (a)
2,148 2,045
2,194 (in billions) Average loans
463.5 463.8 461.5 Average
assets
837.3 824.3 811.9 Average deposits
465.7 463.4 459.2
(a) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Wholesale Banking reported net income of $2.1 billion, up
$103 million, or 5 percent, from third quarter 2017. Fourth
quarter results included the loss from adjustments related to
leveraged leases and other tax advantaged businesses due to the Tax
Act, as well as a gain related to the completion of the previously
announced sale of Wells Fargo Insurance Services USA (WFIS).
Revenue of $7.1 billion was flat compared with the prior
quarter, as the gain related to the sale of WFIS was offset by the
impact of the Tax Act and lower market sensitive revenue. Net
interest income decreased $134 million, or 3 percent, as the
impact to leveraged leases due to the Tax Act was partially offset
by higher trading related income and a modest benefit from higher
interest rates. Noninterest income increased $144 million, or
5 percent, as the gain related to the sale of WFIS and higher
commercial real estate brokerage fees were partially offset by
impairments on low income housing and tax-advantaged renewable
energy investments due to the Tax Act, lower market sensitive
revenue and one less month of WFIS operating income. Noninterest
expense decreased $44 million, or 1 percent, from the prior
quarter reflecting one less month of WFIS operating expenses and
lower operating lease expense. The provision for credit losses
decreased $49 million from the prior quarter, primarily due to
a reserve release in the fourth quarter.
Net income of $2.1 billion decreased $46 million, or 2
percent, from fourth quarter 2016. Revenue decreased
$59 million, or 1 percent, from fourth quarter 2016, as
lower net interest income was partially offset by higher
noninterest income. Net interest income decreased $112 million, or
3 percent, from fourth quarter 2016, as the impact to
leveraged leases due to the Tax Act was partially offset by the
impact of rising interest rates. Noninterest income increased
$53 million, or 2 percent, from a year ago as the gain related
to the sale of WFIS and higher market sensitive revenue were
partially offset by impairments on low income housing and
tax-advantaged renewable energy investments due to the Tax Act,
lower investment banking results, and one less month of WFIS
operating income. Noninterest expense increased $202 million,
or 5 percent, from a year ago reflecting increased personnel
expense and higher regulatory, risk, cyber and technology expenses.
The provision for credit losses decreased $148 million from a
year ago primarily due to improvements in the oil and gas
portfolio.
Wealth and Investment
Management (WIM) provides a full range of personalized
wealth management, investment and retirement products and services
to clients across U.S. based businesses including Wells Fargo
Advisors, The Private Bank, Abbot Downing, Wells Fargo
Institutional Retirement and Trust, and Wells Fargo Asset
Management. We deliver financial planning, private banking, credit,
investment management and fiduciary services to high-net worth and
ultra-high-net worth individuals and families. We also serve
customers’ brokerage needs, supply retirement and trust services to
institutional clients and provide investment management
capabilities delivered to global institutional clients through
separate accounts and the Wells Fargo Funds.
Selected Financial Information
Quarter ended (in millions)
Dec 31,
2017 Sep 30,2017 Dec 31,2016 Total revenue
$ 4,305 4,246 4,074 Provision (reversal
of provision) for credit losses
(7 ) (1 ) 3
Noninterest expense
3,244 3,106 3,042 Segment net income
659 710 653 (in billions) Average loans
72.8 72.4
70.0 Average assets
209.3 213.4 220.4 Average deposits
184.2 188.1 194.9
Wealth and Investment Management reported net income of
$659 million, down $51 million, or 7 percent, from third
quarter 2017. Revenue of $4.3 billion increased
$59 million from the prior quarter, primarily due to higher
asset-based fees and transaction revenue, partially offset by lower
net interest income. Noninterest expense increased
$138 million, or 4 percent, from the prior quarter,
primarily due to higher non-personnel expense and broker
commissions.
Net income was up $6 million, or 1 percent, from fourth quarter
2016. Revenue increased $231 million, or 6 percent, from
a year ago primarily driven by higher asset-based fees, higher net
interest income, and higher gains on deferred compensation plan
investments (offset in employee benefits expense), partially offset
by lower transaction revenue. Noninterest expense increased
$202 million, or 7 percent, from a year ago, primarily
due to higher regulatory, risk, cyber and technology expenses, as
well as higher broker commissions and deferred compensation plan
expense (offset in trading revenue), partially offset by lower
other non-personnel expense.
- WIM total client assets reached a
record-high of $1.9 trillion, up 11 percent from a year ago, driven
by higher market valuations
- Fourth quarter 2017 average closed
referred investment assets (referrals resulting from the
WIM/Community Banking partnership) were flat compared with the
prior quarter and up 12 percent from prior year
Retail Brokerage
- Client assets of $1.7 trillion, up 11
percent from prior year
- Advisory assets of $543 billion, up 17
percent from prior year, primarily driven by higher market
valuations and positive net flows
- Continued loan growth, with average
balances up 7 percent from prior year largely due to growth in
non-conforming mortgage loans
Wealth Management
- Client assets of $248 billion, up 7
percent from prior year
- Average loan balances up 3 percent from
prior year primarily driven by continued growth in non-conforming
mortgage loans
Asset Management
- Total assets under management of $504
billion, up 5 percent from prior year as higher market valuations,
positive fixed income and money market net flows were partially
offset by equity net outflows
Retirement
- IRA assets of $410 billion, up 8
percent from prior year
- Institutional Retirement plan assets of
$393 billion, up 12 percent from prior year
Conference Call
The Company will host a live conference call on Friday, January
12, at 7:00 a.m. PT (10:00 a.m. ET). You may participate by dialing
866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The
call will also be available online at
https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/
and https://engage.vevent.com/rt/wells_fargo_ao~6099528.
A replay of the conference call will be available beginning at
10:00 a.m. PT (1:00 p.m. ET) on Friday, January 12 through Friday,
January 26. Please dial 855-859-2056 (U.S. and Canada) or
404-537-3406 (International) and enter Conference ID #6099528. 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~6099528.
Endnotes
1 Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 – Derivatives and
Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities. See footnote (1) to the Summary Financial Data
table on page 16 for more information.
2 Market sensitive revenue represents net gains from trading
activities, debt securities and equity investments.
3 Production margin represents net gains on residential mortgage
loan origination/sales activities divided by total residential
held-for-sale mortgage originations. See the Selected Five Quarter
Residential Mortgage Production Data table on page 41 for more
information.
4 See table on page 36 for more information on Common Equity
Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary
estimate and is calculated assuming the full phase-in of the Basel
III capital rules.
5 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.
6 Customers who actively use their checking account with
transactions such as debit card purchases, online bill payments,
and direct deposit.
7 Data as of November 2017, comparisons with November 2016.
8 Combined consumer and business debit card purchase volume
dollars.
9 Penetration defined as the percentage of Retail Banking
households that have a credit card with Wells Fargo. Retail Banking
households reflect only those households that maintain a retail
checking account, which we believe provides the foundation for
long-term retail banking relationships. Credit card household
penetration rates have not been adjusted to reflect the impact of
the potentially unauthorized accounts (determined principally based
on whether the account was activated by the customer) identified by
a third party consulting firm in August 2017 because the maximum
impact in any one quarter was not greater than 127 bps.
10 Primarily includes retail banking, consumer lending, small
business and business banking customers.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. In
addition, we may make forward-looking statements in our other
documents filed or furnished with the SEC, and our management may
make forward-looking statements orally to analysts, investors,
representatives of the media and others. Forward-looking statements
can be identified by words such as “anticipates,” “intends,”
“plans,” “seeks,” “believes,” “estimates,” “expects,” “target,”
“projects,” “outlook,” “forecast,” “will,” “may,” “could,”
“should,” “can” and similar references to future periods. In
particular, forward-looking statements include, but are not limited
to, statements we make about: (i) the future operating or
financial performance of the Company, including our outlook for
future growth; (ii) our noninterest expense and efficiency
ratio; (iii) future credit quality and performance, including
our expectations regarding future loan losses and allowance levels;
(iv) the appropriateness of the allowance for credit losses;
(v) our expectations regarding net interest income and net
interest margin; (vi) loan growth or the reduction or
mitigation of risk in our loan portfolios; (vii) future
capital or liquidity levels or targets and our estimated Common
Equity Tier 1 ratio under Basel III capital standards;
(viii) the performance of our mortgage business and any
related exposures; (ix) the expected outcome and impact of
legal, regulatory and legislative developments, as well as our
expectations regarding compliance therewith; (x) future common
stock dividends, common share repurchases and other uses of
capital; (xi) our targeted range for return on assets and
return on equity; (xii) the outcome of contingencies, such as
legal proceedings; and (xiii) the Company’s plans, objectives
and strategies.
Forward-looking statements are not based on historical facts but
instead represent our current expectations and assumptions
regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you, therefore, against relying on any of
these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that
could cause actual results to differ materially from those in the
forward-looking statements include the following, without
limitation:
- current and future economic and market
conditions, including the effects of declines in housing prices,
high unemployment rates, U.S. fiscal debt, budget and tax matters
(including the impact of the Tax Cuts & Jobs Act), geopolitical
matters, and the overall slowdown in global economic growth;
- our capital and liquidity requirements
(including under regulatory capital standards, such as the Basel
III capital standards) and our ability to generate capital
internally or raise capital on favorable terms;
- financial services reform and other
current, pending or future legislation or regulation that could
have a negative effect on our revenue and businesses, including the
Dodd-Frank Act and other legislation and regulation relating to
bank products and services;
- the extent of our success in our loan
modification efforts, as well as the effects of regulatory
requirements or guidance regarding loan modifications;
- the amount of mortgage loan repurchase
demands that we receive and our ability to satisfy any such demands
without having to repurchase loans related thereto or otherwise
indemnify or reimburse third parties, and the credit quality of or
losses on such repurchased mortgage loans;
- negative effects relating to our
mortgage servicing and foreclosure practices, as well as changes in
industry standards or practices, regulatory or judicial
requirements, penalties or fines, increased servicing and other
costs or obligations, including loan modification requirements, or
delays or moratoriums on foreclosures;
- our ability to realize our efficiency
ratio target as part of our expense management initiatives,
including as a result of business and economic cyclicality,
seasonality, changes in our business composition and operating
environment, growth in our businesses and/or acquisitions, and
unexpected expenses relating to, among other things, litigation and
regulatory matters;
- losses related to recent hurricanes,
which primarily affected Texas, Florida and Puerto Rico, and
related to recent California wildfires, in each case including from
damage or loss to our collateral for loans in our consumer and
commercial loan portfolios and from the impact on the ability of
our borrowers to repay their loans;
- the effect of the current low interest
rate environment or changes in interest rates on our net interest
income, net interest margin and our mortgage originations, mortgage
servicing rights and mortgages held for sale;
- significant turbulence or a disruption
in the capital or financial markets, which could result in, among
other things, reduced investor demand for mortgage loans, a
reduction in the availability of funding or increased funding
costs, and declines in asset values and/or recognition of
other-than-temporary impairment on securities held in our
investment securities portfolio;
- the effect of a fall in stock market
prices on our investment banking business and our fee income from
our brokerage, asset and wealth management businesses;
- negative effects from the retail
banking sales practices matter 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;
- reputational damage from negative
publicity, protests, fines, penalties and other negative
consequences from regulatory violations and legal actions;
- a failure in or breach of our
operational or security systems or infrastructure, or those of our
third party vendors or other service providers, including as a
result of cyber attacks;
- the effect of changes in the level of
checking or savings account deposits on our funding costs and net
interest margin;
- fiscal and monetary policies of the
Federal Reserve Board; and
- the other risk factors and
uncertainties described under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2016.
In addition to the above factors, we also caution that the
amount and timing of any future common stock dividends or
repurchases will depend on the earnings, cash requirements and
financial condition of the Company, market conditions, capital
requirements (including under Basel capital standards), common
stock issuance requirements, applicable law and regulations
(including federal securities laws and federal banking
regulations), and other factors deemed relevant by the Company’s
Board of Directors, and may be subject to regulatory approval or
conditions.
For more information about factors that could cause actual
results to differ materially from our expectations, refer to our
reports filed with the Securities and Exchange Commission,
including the discussion under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2016, as
filed with the Securities and Exchange Commission and available on
its website at www.sec.gov.
Any forward-looking statement made by us speaks only as of the
date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or
otherwise, except as may be required by law.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $2.0 trillion
in assets. Wells Fargo’s vision is to satisfy our customers’
financial needs and help them succeed financially. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
investments, mortgage, and consumer and commercial finance through
more than 8,300 locations, 13,000 ATMs, the internet
(wellsfargo.com) and mobile banking, and has offices in 42
countries and territories to support customers who conduct business
in the global economy. With approximately 263,000 team members,
Wells Fargo serves one in three households in the United States.
Wells Fargo & Company was ranked No. 25 on Fortune’s 2017
rankings of America’s largest corporations.
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA TABLE OF CONTENTS
Pages
Summary
Information
Summary Financial Data
16
Income
Consolidated Statement of Income 18 Consolidated Statement of
Comprehensive Income 20 Condensed Consolidated Statement of Changes
in Total Equity 20 Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis) 21 Five Quarter Average Balances, Yields
and Rates Paid (Taxable-Equivalent Basis) 23 Noninterest Income and
Noninterest Expense 24
Balance
Sheet
Consolidated Balance Sheet 26 Investment Securities 28
Loans
Loans 28 Nonperforming Assets 29 Loans 90 Days or More Past Due and
Still Accruing 30 Purchased Credit-Impaired Loans 31 Pick-A-Pay
Portfolio 32 Changes in Allowance for Credit Losses 34
Equity
Tangible Common Equity 35 Common Equity Tier 1 Under Basel III 36
Operating
Segments
Operating Segment Results 37
Other
Mortgage Servicing and other related data 39
Wells Fargo & Company and
Subsidiaries
SUMMARY FINANCIAL DATA Quarter ended
% ChangeDec 31, 2017 from
Year ended ($ in millions, except per share amounts)
Dec 31, 2017 Sep 30,2017 Dec
31,2016 Sep 30,2017 Dec 31,2016
Dec 31,
2017 Dec 31,2016 %Change
For the Period
Wells Fargo net income (1)
$
6,151 4,542 5,274 35 % 17
$ 22,183 21,938 1 %
Wells Fargo net income applicable to common stock (1)
5,740
4,131 4,872 39 18
20,554 20,373 1 Diluted earnings per
common share (1)
1.16 0.83 0.96 40 21
4.10 3.99 3
Profitability ratios (annualized) (1): Wells Fargo net income to
average assets (ROA)
1.26 % 0.93 1.08 35 17
1.15 % 1.16 (1 ) Wells Fargo net income applicable to
common stock to average Wells Fargo common stockholders’ equity
(ROE)
12.47 8.96 10.94 39 14
11.35 11.49 (1 ) Return
on average tangible common equity (ROTCE)(2)
14.85 10.66
13.16 39 13
13.55 13.85 (2 ) Efficiency ratio (1)(3)
76.2 65.7 61.2 16 25
66.2 59.3 12 Total revenue (1)
$ 22,050 21,849 21,582 1 2
$ 88,389
88,267 — Pre-tax pre-provision profit (PTPP) (1)(4)
5,250
7,498 8,367 (30 ) (37 )
29,905 35,890 (17 ) Dividends
declared per common share
0.390 0.390 0.380 — 3
1.540
1.515 2 Average common shares outstanding
4,912.5 4,948.6
5,025.6 (1 ) (2 )
4,964.6 5,052.8 (2 ) Diluted average
common shares outstanding
4,963.1 4,996.8 5,078.2 (1 ) (2 )
5,017.3 5,108.3 (2 ) Average loans
$ 951,822
952,343 964,147 — (1 )
$ 956,129 949,960 1 Average
assets (1)
1,935,318 1,938,461 1,944,250 — —
1,933,005 1,885,441 3 Average total deposits
1,311,592 1,306,356 1,284,158 — 2
1,304,622 1,250,566
4 Average consumer and small business banking deposits (5)
757,541 755,094 749,946 — 1
758,271 732,620 4 Net
interest margin (1)
2.84 % 2.86 2.87 (1 ) (1 )
2.87 % 2.86 —
At Period End Investment
securities
$ 416,420 414,633 407,947 — 2
$
416,420 407,947 2 Loans
956,770 951,873 967,604 1 (1
)
956,770 967,604 (1 ) Allowance for loan losses
11,004 11,078 11,419 (1 ) (4 )
11,004 11,419 (4 )
Goodwill
26,587 26,581 26,693 — —
26,587 26,693 —
Assets (1)
1,951,757 1,934,880 1,930,115 1 1
1,951,757 1,930,115 1 Deposits
1,335,991 1,306,706
1,306,079 2 2
1,335,991 1,306,079 2 Common stockholders'
equity (1)
183,134 181,920 176,469 1 4
183,134
176,469 4 Wells Fargo stockholders’ equity (1)
206,936
205,722 199,581 1 4
206,936 199,581 4 Total equity (1)
208,079 206,617 200,497 1 4
208,079 200,497 4
Tangible common equity (1)(2)
153,730 152,694 146,737 1 5
153,730 146,737 5 Common shares outstanding
4,891.6
4,927.9 5,016.1 (1 ) (2 )
4,891.6 5,016.1 (2 ) Book value
per common share (1)(6)
$ 37.44 36.92 35.18 1 6
$ 37.44 35.18 6 Tangible book value per common share
(1)(2)(6)
31.43 30.99 29.25 1 7
31.43 29.25 7 Common
stock price: High
62.24 56.45 58.02 10 7
62.24 58.02
7 Low
52.84 49.28 43.55 7 21
49.28 43.55 13 Period
end
60.67 55.15 55.11 10 10
60.67 55.11 10 Team
members (active, full-time equivalent)
262,700
268,000 269,100 (2 ) (2 )
262,700 269,100 (2 )
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption of Accounting Standards Update (ASU) 2017-12 – Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities in fourth quarter 2017. The retrospective
application of the changes to certain hedging strategies resulted
in a cumulative effect adjustment to opening retained earnings
effective January 1, 2017. The adjustment reduced retained earnings
by $381 million and increased other comprehensive income by $168
million. The effect of adoption on previously reported September
30, 2017, year-to-date net income resulted in an increase of $169
million ($242 million pre-tax) and a decrease in other
comprehensive income of $163 million. Other affected financial
information, including financial ratios, has been revised to
reflect this adoption.
(2) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 35.
(3) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(4) Pre-tax pre-provision profit (PTPP) is
total revenue less noninterest expense. Management believes that
PTPP is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
(5) Consumer and small business banking deposits are total deposits
excluding mortgage escrow and wholesale deposits. (6) Book value
per common share is common stockholders' equity divided by common
shares outstanding. Tangible book value per common share is
tangible common equity divided by common shares outstanding.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA Quarter ended ($
in millions, except per share amounts)
Dec 31,
2017 Sep 30,2017 Jun 30,2017 Mar
31,2017 Dec 31,2016
For the Quarter
Wells Fargo net income (1)
$ 6,151
4,542 5,856 5,634 5,274 Wells Fargo net income applicable to common
stock (1)
5,740 4,131 5,450 5,233 4,872 Diluted earnings per
common share (1)
1.16 0.83 1.08 1.03 0.96 Profitability
ratios (annualized) (1): Wells Fargo net income to average assets
(ROA)
1.26 % 0.93 1.22 1.18 1.08 Wells Fargo net
income applicable to common stock to average Wells Fargo common
stockholders’ equity (ROE)
12.47 8.96 12.06 11.96 10.94
Return on average tangible common equity (ROTCE)(2)
14.85
10.66 14.41 14.35 13.16 Efficiency ratio (1)(3)
76.2 65.7
60.9 62.0 61.2 Total revenue (1)
$ 22,050 21,849
22,235 22,255 21,582 Pre-tax pre-provision profit (PTPP) (1)(4)
5,250 7,498 8,694 8,463 8,367 Dividends declared per common
share
0.39 0.39 0.38 0.38 0.38 Average common shares
outstanding
4,912.5 4,948.6 4,989.9 5,008.6 5,025.6 Diluted
average common shares outstanding
4,963.1 4,996.8 5,037.7
5,070.4 5,078.2 Average loans
$ 951,822 952,343
956,879 963,645 964,147 Average assets (1)
1,935,318
1,938,461 1,927,021 1,931,040 1,944,250 Average total deposits
1,311,592 1,306,356 1,301,195 1,299,191 1,284,158 Average
consumer and small business banking deposits (5)
757,541
755,094 760,149 758,754 749,946 Net interest margin (1)
2.84
% 2.86 2.90 2.87 2.87
At Quarter End Investment
securities
$ 416,420 414,633 409,594 407,560 407,947
Loans
956,770 951,873 957,423 958,405 967,604 Allowance for
loan losses
11,004 11,078 11,073 11,168 11,419 Goodwill
26,587 26,581 26,573 26,666 26,693 Assets (1)
1,951,757 1,934,880 1,930,792 1,951,501 1,930,115 Deposits
1,335,991 1,306,706 1,305,830 1,325,444 1,306,079 Common
stockholders' equity (1)
183,134 181,920 181,233 178,209
176,469 Wells Fargo stockholders’ equity (1)
206,936 205,722
205,034 201,321 199,581 Total equity (1)
208,079 206,617
205,949 202,310 200,497 Tangible common equity (1)(2)
153,730 152,694 151,868 148,671 146,737 Common shares
outstanding
4,891.6 4,927.9 4,966.8 4,996.7 5,016.1 Book
value per common share (1)(6)
$ 37.44 36.92 36.49
35.67 35.18 Tangible book value per common share (1)(2)(6)
31.43 30.99 30.58 29.75 29.25 Common stock price: High
62.24 56.45 56.60 59.99 58.02 Low
52.84 49.28 50.84
53.35 43.55 Period end
60.67 55.15 55.41 55.66 55.11 Team
members (active, full-time equivalent)
262,700
268,000 270,600 272,800
269,100
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption of Accounting Standards Update (ASU) 2017-12 – Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities in fourth quarter 2017. The retrospective
application of the changes to certain hedging strategies resulted
in a cumulative effect adjustment to opening retained earnings
effective January 1, 2017. The adjustment reduced retained earnings
by $381 million and increased other comprehensive income by $168
million. The effect of adoption on previously reported September
30, 2017, year-to-date net income resulted in an increase of $169
million ($242 million pre-tax) and a decrease in other
comprehensive income of $163 million. Other affected financial
information, including financial ratios, has been revised to
reflect this adoption.
(2) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 35.
(3) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(4) 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.
(5) Consumer and small business banking deposits are total deposits
excluding mortgage escrow and wholesale deposits. (6) 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
December 31, % Year ended December 31, % (in
millions, except per share amounts)
2017 2016
Change
2017 2016 Change
Interest income Trading assets
$
821 745 10 %
$ 2,928 2,506 17 % Investment
securities
2,669 2,512 6
10,664 9,248 15 Mortgages
held for sale
196 235 (17 )
786 784 — Loans held for
sale
2 2 —
12 9 33 Loans
10,367 10,128 2
41,388 39,505 5 Other interest income
903
436 107
3,131
1,611 94 Total interest income
14,958
14,058 6
58,909 53,663
10
Interest expense Deposits
931 400 133
3,013 1,395 116 Short-term borrowings
255 101 152
758 330 130 Long-term debt
1,344 1,061 27
5,157 3,830 35 Other interest expense
115
94 22
424 354
20 Total interest expense
2,645
1,656 60
9,352 5,909 58
Net interest income 12,313 12,402 (1 )
49,557
47,754 4 Provision for credit losses
651
805 (19 )
2,528 3,770
(33 ) Net interest income after provision for credit losses
11,662 11,597 1
47,029 43,984 7
Noninterest
income Service charges on deposit accounts
1,246 1,357
(8 )
5,111 5,372 (5 ) Trust and investment fees
3,687
3,698 —
14,495 14,243 2 Card fees
996 1,001 —
3,960 3,936 1 Other fees
913 962 (5 )
3,557
3,727 (5 ) Mortgage banking
928 1,417 (35 )
4,350
6,096 (29 ) Insurance
223 262 (15 )
1,049 1,268 (17 )
Net gains (losses) from trading activities
132 (109 ) NM
1,053 834 26 Net gains on debt securities
157 145 8
479 942 (49 ) Net gains from equity investments
439
306 43
1,268 879 44 Lease income
458 523 (12 )
1,907 1,927 (1 ) Other
558 (382
) NM
1,603 1,289 24 Total
noninterest income
9,737 9,180 6
38,832 40,513 (4 )
Noninterest expense Salaries
4,403 4,193 5
17,363 16,552 5 Commission and incentive compensation
2,665 2,478 8
10,442 10,247 2 Employee benefits
1,293 1,101 17
5,566 5,094 9 Equipment
608 642
(5 )
2,237 2,154 4 Net occupancy
715 710 1
2,849 2,855 — Core deposit and other intangibles
288
301 (4 )
1,152 1,192 (3 ) FDIC and other deposit assessments
312 353 (12 )
1,287 1,168 10 Other
6,516 3,437 90
17,588
13,115 34 Total noninterest expense
16,800 13,215 27
58,484
52,377 12
Income before income tax
expense 4,599 7,562 (39 )
27,377 32,120 (15 )
Income tax expense (benefit)
(1,642 )
2,258 NM
4,917 10,075 (51
)
Net income before noncontrolling interests 6,241
5,304 18
22,460 22,045 2 Less: Net income from
noncontrolling interests
90 30
200
277 107 159
Wells Fargo
net income $ 6,151 5,274
17
$ 22,183 21,938
1 Less: Preferred stock dividends and other
411
402 2
1,629 1,565
4
Wells Fargo net income applicable to common stock
$ 5,740 4,872 18
$ 20,554 20,373 1
Per share
information Earnings per common share
$ 1.17 0.97
21
$ 4.14 4.03 3 Diluted earnings per common share
1.16 0.96 21
4.10 3.99 3 Dividends declared per
common share
0.390 0.380 3
1.540 1.515 2
Average
common shares outstanding 4,912.5 5,025.6 (2 )
4,964.6 5,052.8 (2 )
Diluted average common shares
outstanding 4,963.1 5,078.2
(2 )
5,017.3 5,108.3
(2 )
NM – Not meaningful
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME Quarter
ended (in millions, except per share amounts)
Dec
31, 2017 Sep 30,2017 Jun 30,2017
Mar 31,2017 Dec 31,2016
Interest income
Trading assets
$ 821 754 710 643 745 Investment
securities (1)
2,669 2,650 2,681 2,664 2,512 Mortgages held
for sale (1)
196 217 191 182 235 Loans held for sale
2 5 4 1 2 Loans
10,367 10,522 10,358 10,141 10,128
Other interest income
903 896
750 582 436 Total interest
income (1)
14,958 15,044 14,694
14,213 14,058
Interest
expense Deposits (1)
931 869 677 536 400 Short-term
borrowings
255 226 163 114 101 Long-term debt (1)
1,344 1,391 1,275 1,147 1,061 Other interest expense
115 109 108 92
94 Total interest expense (1)
2,645
2,595 2,223 1,889
1,656
Net interest income (1) 12,313 12,449
12,471 12,324 12,402 Provision for credit losses
651
717 555 605 805
Net interest income after provision for credit losses
11,662 11,732 11,916
11,719 11,597
Noninterest income
Service charges on deposit accounts
1,246 1,276 1,276 1,313
1,357 Trust and investment fees
3,687 3,609 3,629 3,570
3,698 Card fees
996 1,000 1,019 945 1,001 Other fees
913 877 902 865 962 Mortgage banking
928 1,046 1,148
1,228 1,417 Insurance
223 269 280 277 262 Net gains (losses)
from trading activities
132 245 237 439 (109 ) Net gains on
debt securities
157 166 120 36 145 Net gains from equity
investments
439 238 188 403 306 Lease income
458 475
493 481 523 Other (1)
558 199
472 374 (382 ) Total noninterest income
(1)
9,737 9,400 9,764
9,931 9,180
Noninterest expense
Salaries
4,403 4,356 4,343 4,261 4,193 Commission and
incentive compensation
2,665 2,553 2,499 2,725 2,478
Employee benefits
1,293 1,279 1,308 1,686 1,101 Equipment
608 523 529 577 642 Net occupancy
715 716 706 712 710
Core deposit and other intangibles
288 288 287 289 301 FDIC
and other deposit assessments
312 314 328 333 353 Other
6,516 4,322 3,541
3,209 3,437 Total noninterest expense
16,800 14,351 13,541
13,792 13,215
Income before income tax
expense (1)
4,599 6,781 8,139 7,858 7,562 Income tax
expense (benefit) (1)
(1,642 ) 2,181
2,245 2,133 2,258
Net
income before noncontrolling interests (1)
6,241 4,600
5,894 5,725 5,304 Less: Net income from noncontrolling interests
90 58 38 91
30
Wells Fargo net income (1)
$
6,151 4,542 5,856 5,634
5,274 Less: Preferred stock dividends and
other
411 411 406
401 402
Wells Fargo net income applicable
to common stock (1)
$ 5,740 4,131
5,450 5,233 4,872
Per share information Earnings per common share (1)
$
1.17 0.83 1.09 1.05 0.97 Diluted earnings per common share
(1)
1.16 0.83 1.08 1.03 0.96 Dividends declared per common
share
0.390 0.390 0.380 0.380 0.380
Average common shares
outstanding 4,912.5 4,948.6 4,989.9 5,008.6 5,025.6
Diluted average common shares outstanding
4,963.1 4,996.8 5,037.7
5,070.4 5,078.2
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended Dec 31, % Year ended Dec 31, %
(in millions)
2017 2016 Change
2017 2016 Change Wells Fargo net income
$ 6,151 5,274 17%
$
22,183 21,938 1% Other comprehensive
income (loss), before tax: Investment securities: Net
unrealized gains (losses) arising during the period
(106
) (5,936 ) (98)
2,719 (3,458 ) NM Reclassification of
net gains to net income
(215 ) (239 ) (10)
(737 ) (1,240 ) (41) Derivatives and hedging
activities: Net unrealized gains (losses) arising during the period
(558 ) (2,434 ) (77)
(540 ) 177 NM
Reclassification of net gains on cash flow hedges to net income
(83 ) (246 ) (66)
(543 ) (1,029 ) (47)
Defined benefit plans adjustments: Net actuarial and prior service
gains (losses) arising during the period
45 422 (89)
49 (52 ) NM Amortization of net actuarial loss, settlements
and other to net income
33 43 (23)
153 158 (3)
Foreign currency translation adjustments: Net unrealized gains
(losses) arising during the period
10
(30 ) NM
96 (3 ) NM
Other comprehensive
income (loss), before tax (874 ) (8,420 ) (90)
1,197 (5,447 ) NM Income tax benefit (expense) related to
other comprehensive income
319 3,106
(90)
(434 ) 1,996 NM
Other
comprehensive income (loss), net of tax (555 )
(5,314 ) (90)
763 (3,451 ) NM Less: Other comprehensive
income (loss) from noncontrolling interests
(33
) 7 NM
(62 ) (17 ) 265
Wells Fargo other comprehensive income (loss), net of tax
(522 ) (5,321 ) (90)
825
(3,434 ) NM
Wells Fargo comprehensive income (loss)
5,629 (47 ) NM
23,008 18,504 24 Comprehensive income
from noncontrolling interests
57 37
54
215 90 139
Total
comprehensive income (loss) $ 5,686
(10 ) NM
$ 23,223
18,594 25
NM – Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN TOTAL EQUITY
Quarter ended (in millions)
Dec 31,
2017 Sep 30,2017 Jun 30,2017 Mar
31,2017 Dec 31,2016
Balance, beginning of period (1)
$ 206,617 205,949 202,310
200,497 203,958 Cumulative effect from change in hedge
accounting (1)
— — —
(213
) — Wells Fargo net income (1)
6,151 4,542 5,856 5,634 5,274
Wells Fargo other comprehensive income (loss), net of tax (1)
(522 ) 526 1,005 (184 ) (5,321 ) Noncontrolling
interests
247 (20 ) (75 ) 75 (13 ) Common stock issued
436 254 252 1,406 610 Common stock repurchased (2)
(2,845 ) (2,601 ) (2,287 ) (2,175 ) (2,034 )
Preferred stock released by ESOP
218 209 406 — 43 Common
stock warrants repurchased/exercised
(46 ) (19 ) (24
) (44 ) — Preferred stock issued
— — 677 — — Common stock
dividends
(1,920 ) (1,936 ) (1,899 ) (1,903 ) (1,909
) Preferred stock dividends
(411 ) (411 ) (406 ) (401
) (401 ) Tax benefit from stock incentive compensation (3)
—
— — — 74 Stock incentive compensation expense
206 135 145
389 232 Net change in deferred compensation and related plans
(52 ) (11 ) (11 ) (771 )
(16 )
Balance, end of period (1) $
208,079 206,617 205,949
202,310 200,497
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
(2) For the quarter ended December 31,
2016, includes $750 million related to a private forward repurchase
transaction that settled in first quarter 2017 for 14.7 million
shares of common stock.
(3) Effective January 1, 2017, we adopted
Accounting Standards Update 2016-09 (Improvements to Employee
Share-Based Payment Accounting). Accordingly, tax benefit from
stock incentive compensation is reported in income tax expense in
the consolidated statement of income.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2) Quarter ended December 31,
2017
2016 (in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets Federal funds
sold, securities purchased under resale agreements and other
short-term investments
$ 264,940 1.25 %
$ 835 273,073 0.56 % $ 381 Trading assets
111,213 3.01 838 102,757 2.96 761 Investment
securities (3): Available-for-sale securities: Securities of U.S.
Treasury and federal agencies
6,423 1.66 27
25,935 1.53 99 Securities of U.S. states and political subdivisions
52,390 3.91 513 53,917 4.06 547
Mortgage-backed securities: Federal agencies
152,910
2.62 1,000 147,980 2.37 875 Residential and
commercial
9,371 4.85 114
16,456 5.87 242 Total mortgage-backed securities
162,281 2.75 1,114 164,436 2.72 1,117 Other
debt and equity securities
49,138 3.70
456 52,692 3.71 492 Total available-for-sale
securities
270,232 3.12 2,110
296,980 3.03 2,255 Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,716
2.19 246 44,686 2.20 246 Securities of U.S. states
and political subdivisions
6,263 5.26 83 4,738
5.31 63 Federal agency and other mortgage-backed securities
89,622 2.25 503 46,009 1.81 209 Other debt
securities
1,194 2.64 8
3,597 2.26 20 Total held-to-maturity securities
141,795 2.36 840 99,030
2.17 538 Total investment securities
412,027 2.86
2,950 396,010 2.82 2,793 Mortgages held for sale (4)
20,517 3.82 196 27,503 3.43 235 Loans held for
sale (4)
114 8.14 2 155 5.42 2 Loans:
Commercial: Commercial and industrial - U.S.
270,294
3.89 2,649 272,828 3.46 2,369 Commercial and
industrial - Non U.S.
59,233 2.96 442 54,410
2.58 352 Real estate mortgage
127,199 3.88
1,244 131,195 3.44 1,135 Real estate construction
24,408 4.38 270 23,850 3.61 216 Lease
financing
19,226 0.62 31
18,904 5.78 273 Total commercial
500,360
3.68 4,636 501,187 3.45 4,345
Consumer: Real estate 1-4 family first mortgage
281,966
4.01 2,826 277,732 4.01 2,785 Real estate 1-4 family
junior lien mortgage
40,379 4.96 505 47,203
4.42 524 Credit card
36,428 12.37 1,136 35,383
11.73 1,043 Automobile
54,323 5.13 702 62,521
5.54 870 Other revolving credit and installment
38,366 6.28 607 40,121
5.91 595 Total consumer
451,462 5.10
5,776 462,960 5.01 5,817 Total loans (4)
951,822 4.35 10,412 964,147 4.20 10,162 Other
13,084 2.06 68 6,729
3.27 56 Total earning assets
$
1,773,717 3.43 % $ 15,301
1,770,374 3.24 % $ 14,390
Funding sources
Deposits: Interest-bearing checking
$ 50,483
0.68 % $ 86 46,907 0.17 % $ 19 Market
rate and other savings
679,893 0.19 319
676,365 0.07 122 Savings certificates
20,920 0.31
17 24,362 0.30 18 Other time deposits
68,187
1.49 255 49,170 1.16 144 Deposits in foreign offices
124,597 0.81 254 110,425
0.35 97 Total interest-bearing deposits
944,080
0.39 931 907,229 0.18 400 Short-term borrowings
102,142 0.99 256 124,698 0.33 102 Long-term
debt
231,598 2.32 1,344 252,162 1.68 1,061
Other liabilities
24,728 1.86
115 17,210 2.15 94 Total interest-bearing
liabilities
1,302,548 0.81 2,646 1,301,299
0.51 1,657 Portion of noninterest-bearing funding sources
471,169 — — 469,075 — —
Total funding sources
$ 1,773,717
0.59 2,646 1,770,374 0.37
1,657
Net interest margin and net interest income on a
taxable-equivalent basis (5) 2.84 %
$ 12,655 2.87 % $ 12,733
Noninterest-earning assets Cash and due from banks
$
19,152 18,967 Goodwill
26,579 26,713 Other
115,870 128,196 Total noninterest-earning
assets
$ 161,601 173,876
Noninterest-bearing funding sources Deposits
$
367,512 376,929 Other liabilities
57,845 64,775 Total
equity
207,413 201,247 Noninterest-bearing funding sources
used to fund earning assets
(471,169 )
(469,075 ) Net noninterest-bearing funding sources
$
161,601 173,876
Total assets
$ 1,935,318 1,944,250 (1) Our
average prime rate was 4.30% and 3.54% for the quarters ended
December 31, 2017 and 2016, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 1.46% and 0.92% 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 $342 million and $331 million for the quarters ended
December 31, 2017 and 2016, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate was 35% for the periods presented.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2) Year ended December 31,
2017
2016 (in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets Federal funds
sold, securities purchased under resale agreements and other
short-term investments
$ 276,561 1.05 %
$ 2,897 287,718 0.51 % $ 1,457 Trading assets
101,716 2.93 2,982 88,400 2.89 2,553
Investment securities (3): Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
15,966
1.49 239 29,418 1.56 457 Securities of U.S. states
and political subdivisions
52,658 3.95 2,082
52,959 4.20 2,225 Mortgage-backed securities: Federal agencies
145,310 2.60 3,782 110,637 2.50 2,764
Residential and commercial
11,839 5.33
631 18,725 5.49 1,029 Total mortgage-backed
securities
157,149 2.81 4,413 129,362 2.93
3,793 Other debt and equity securities
49,193
3.73 1,834 53,433 3.44 1,841 Total
available-for-sale securities
274,966
3.12 8,568 265,172 3.14 8,316
Held-to-maturity securities: Securities of U.S. Treasury and
federal agencies
44,705 2.19 979 44,675 2.19
979 Securities of U.S. states and political subdivisions
6,268 5.32 334 2,893 5.32 154 Federal agency
and other mortgage-backed securities
78,330 2.34
1,832 39,330 2.00 786 Other debt securities
2,194 2.50 55 4,043 2.01
81 Total held-to-maturity securities
131,497
2.43 3,200 90,941 2.20 2,000 Total
investment securities
406,463 2.90 11,768
356,113 2.90 10,316 Mortgages held for sale (4)
20,780
3.78 786 22,412 3.50 784 Loans held for sale (4)
147 8.38 12 218 4.01 9 Loans: Commercial:
Commercial and industrial - U.S.
272,034 3.75
10,196 268,182 3.45 9,243 Commercial and industrial - Non
U.S.
57,198 2.86 1,639 51,601 2.36 1,219 Real
estate mortgage
129,990 3.74 4,859 127,232
3.44 4,371 Real estate construction
24,813 4.10
1,017 23,197 3.55 824 Lease financing
19,128
3.74 715 17,950 5.10 916 Total
commercial
503,163 3.66 18,426
488,162 3.39 16,573 Consumer: Real estate 1-4 family
first mortgage
277,751 4.03 11,206 276,712
4.01 11,096 Real estate 1-4 family junior lien mortgage
42,780 4.82 2,062 49,735 4.39 2,183 Credit
card
35,600 12.23 4,355 34,178 11.62 3,970
Automobile
57,900 5.34 3,094 61,566 5.62 3,458
Other revolving credit and installment
38,935
6.18 2,408 39,607 5.93 2,350 Total
consumer
452,966 5.11 23,125
461,798 4.99 23,057 Total loans (4)
956,129
4.35 41,551 949,960 4.17 39,630 Other
11,445 2.06 237 6,262
2.51 157 Total earning assets
$ 1,773,241
3.40 % $ 60,233 1,711,083
3.21 % $ 54,906
Funding sources Deposits:
Interest-bearing checking
$ 49,474 0.49
% $ 242 42,379 0.14 % $ 60 Market rate and
other savings
682,053 0.14 983 663,557 0.07
449 Savings certificates
22,190 0.30 67 25,912
0.35 91 Other time deposits
61,625 1.43 880
55,846 0.91 508 Deposits in foreign offices
123,816
0.68 841 103,206 0.28 287 Total
interest-bearing deposits
939,158 0.32 3,013
890,900 0.16 1,395 Short-term borrowings
98,922 0.77
761 115,187 0.29 333 Long-term debt
246,195
2.09 5,157 239,471 1.60 3,830 Other liabilities
21,872 1.94 424 16,702
2.12 354 Total interest-bearing liabilities
1,306,147
0.72 9,355 1,262,260 0.47 5,912 Portion of
noninterest-bearing funding sources
467,094
— — 448,823 — — Total funding sources
$ 1,773,241 0.53
9,355 1,711,083 0.35 5,912
Net
interest margin and net interest income on a taxable-equivalent
basis (5) 2.87 % $ 50,878
2.86 % $ 48,994
Noninterest-earning assets
Cash and due from banks
$ 18,622 18,617 Goodwill
26,629 26,700 Other
114,513 129,041
Total noninterest-earning assets
$
159,764 174,358
Noninterest-bearing funding
sources Deposits
$ 365,464 359,666 Other
liabilities
55,740 62,825 Total equity
205,654
200,690 Noninterest-bearing funding sources used to fund earning
assets
(467,094 ) (448,823 ) Net
noninterest-bearing funding sources
$ 159,764
174,358
Total assets $
1,933,005 1,885,441
(1) Our average prime rate was 4.10%
and 3.51% for the 2017 and 2016, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 1.26% and
0.74% 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)
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 $1.3 billion and $1.2 billion for the 2017 and 2016,
respectively, predominantly related to tax-exempt income on certain
loans and securities. The federal statutory tax rate was 35% for
the periods presented.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS
AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Dec 31, 2017 Sep 30, 2017
Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 ($ in
billions)
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Earning assets
Federal funds sold, securities purchased under
resale agreements and other short-term investments
$
264.9 1.25 % $ 276.1 1.20 % $ 281.6 0.99 % $
283.8 0.76 % $ 273.1 0.56 % Trading assets
111.2 3.01
103.6 2.96 98.1 2.95 93.8 2.80 102.8 2.96 Investment securities
(3): Available-for-sale securities: Securities of U.S. Treasury and
federal agencies
6.4 1.66 14.5 1.31 18.1 1.53 25.0
1.54 25.9 1.53 Securities of U.S. states and political subdivisions
(4)
52.4 3.91 52.5 4.08 53.5 3.89 52.2 3.93 53.9 4.06
Mortgage-backed securities: Federal agencies
152.9
2.62 139.8 2.58 132.0 2.63 156.6 2.58 148.0 2.37 Residential
and commercial (4)
9.4 4.85 11.0
5.44 12.6 5.55 14.5 5.34 16.5 5.87 Total
mortgage-backed securities
162.3 2.75 150.8 2.79
144.6 2.89 171.1 2.81 164.5 2.72 Other debt and equity securities
(4)
49.1 3.70 48.1 3.74 49.0
3.87 50.7 3.61 52.7 3.71 Total
available-for-sale securities (4)
270.2
3.12 265.9 3.14 265.2 3.18 299.0 3.04
297.0 3.03 Held-to-maturity securities: Securities of U.S.
Treasury and federal agencies
44.7 2.19 44.7 2.18
44.7 2.19 44.7 2.20 44.7 2.20 Securities of U.S. states and
political subdivisions
6.3 5.26 6.3 5.44 6.3 5.29 6.3
5.30 4.7 5.31 Federal agency and other mortgage-backed securities
89.6 2.25 88.3 2.26 83.1 2.44 51.8 2.51 46.0 1.81
Other debt securities
1.2 2.64 1.4
3.05 2.8 2.34 3.3 2.34 3.6 2.26 Total
held-to-maturity securities
141.8 2.36
140.7 2.38 136.9 2.49 106.1 2.54 99.0
2.17 Total investment securities (4)
412.0 2.86 406.6
2.88 402.1 2.94 405.1 2.91 396.0 2.82 Mortgages held for sale (4)
20.5 3.82 22.9 3.79 19.8 3.87 19.9 3.67 27.5 3.43
Loans held for sale
0.1 8.14 0.2 13.35 0.2 6.95 0.1
4.44 0.2 5.42 Loans: Commercial: Commercial and industrial - U.S.
270.3 3.89 270.1 3.81 273.1 3.70 274.8 3.59 272.8
3.46 Commercial and industrial - Non U.S. (4)
59.2
2.96 57.7 2.89 56.4 2.86 55.3 2.73 54.4 2.58 Real estate
mortgage
127.2 3.88 129.1 3.83 131.3 3.68 132.4 3.56
131.2 3.44 Real estate construction
24.4 4.38 25.0
4.18 25.3 4.10 24.6 3.72 23.9 3.61 Lease financing
19.3 0.62 19.2 4.59 19.0 4.82
19.1 4.94 18.9 5.78 Total commercial
500.4 3.68 501.1 3.76 505.1 3.67
506.2 3.54 501.2 3.45 Consumer: Real estate 1-4
family first mortgage
282.0 4.01 278.4 4.03 275.1
4.08 275.5 4.02 277.7 4.01 Real estate 1-4 family junior lien
mortgage
40.4 4.96 41.9 4.95 43.6 4.78 45.3 4.60 47.2
4.42 Credit card
36.4 12.37 35.6 12.41 34.9 12.18
35.4 11.97 35.4 11.73 Automobile
54.3 5.13 56.7 5.34
59.1 5.43 61.5 5.46 62.5 5.54 Other revolving credit and
installment
38.3 6.28 38.6 6.31
39.1 6.13 39.7 6.02 40.1 5.91 Total consumer
451.4 5.10 451.2 5.14 451.8
5.13 457.4 5.06 462.9 5.01 Total loans
951.8 4.35 952.3 4.41 956.9 4.36 963.6 4.26 964.1
4.20 Other
13.2 2.06 15.1 1.69
10.6 2.00 6.8 2.96 6.7 3.27 Total earning
assets (4)
$ 1,773.7 3.43
% $ 1,776.8 3.44 % $ 1,769.3 3.40 % $ 1,773.1
3.30 % $ 1,770.4 3.24 %
Funding sources
Deposits: Interest-bearing checking
$ 50.5
0.68 % $ 48.3 0.57 % $ 48.5 0.41 % $ 50.7 0.29 % $
46.9 0.17 % Market rate and other savings
679.9 0.19
681.2 0.17 683.0 0.13 684.2 0.09 676.4 0.07 Savings certificates
20.9 0.31 21.8 0.31 22.6 0.30 23.5 0.29 24.4 0.30
Other time deposits (4)
68.2 1.49 66.1 1.51 57.1 1.39
54.9 1.30 49.2 1.16 Deposits in foreign offices
124.6
0.81 124.7 0.76 123.7 0.65 122.2
0.49 110.4 0.35 Total interest-bearing deposits
944.1
0.39 942.1 0.37 934.9 0.29 935.5 0.23 907.3 0.18 Short-term
borrowings
102.1 0.99 99.2 0.91 95.8 0.69 98.5 0.47
124.7 0.33 Long-term debt (4)
231.6 2.32 243.5 2.28
249.9 2.04 260.1 1.77 252.2 1.68 Other liabilities
24.7 1.86 24.8 1.74 21.0 2.05
16.8 2.22 17.1 2.15 Total interest-bearing
liabilities (4)
1,302.5 0.81 1,309.6 0.79 1,301.6
0.68 1,310.9 0.58 1,301.3 0.51 Portion of noninterest-bearing
funding sources (4)
471.2 — 467.2
— 467.7 — 462.2 — 469.1 — Total funding
sources (4)
$ 1,773.7 0.59
$ 1,776.8 0.58 $ 1,769.3 0.50 $
1,773.1 0.43 $ 1,770.4 0.37
Net
interest margin on a taxable-equivalent basis (4) 2.84
% 2.86 % 2.90 % 2.87 % 2.87 %
Noninterest-earning
assets Cash and due from banks
$ 19.2 18.5 18.2
18.7 19.0 Goodwill
26.6 26.6 26.7 26.7 26.7 Other (4)
115.8 116.6 112.8 112.5 128.2
Total noninterest-earnings assets (4)
$
161.6 161.7 157.7 157.9 173.9
Noninterest-bearing funding sources Deposits
$
367.5 364.3 366.3 363.7 376.9 Other liabilities (4)
57.8 56.8 53.4 54.8 64.9 Total equity (4)
207.4 207.7
205.8 201.6 201.2 Noninterest-bearing funding sources used to fund
earning assets (4)
(471.1 ) (467.1 ) (467.8 )
(462.2 ) (469.1 ) Net noninterest-bearing funding sources (4)
$ 161.6 161.7 157.7 157.9
173.9
Total assets (4) $
1,935.3 1,938.5 1,927.0 1,931.0
1,944.3
(1) Our average prime rate was 4.30% for
the quarter ended December 31, 2017, 4.25% for the quarter ended
September 30, 2017, 4.05% for the quarter ended June 30, 2017,
3.80% for the quarter ended March 31, 2017 and 3.54% for the
quarter ended December 31, 2016. The average three-month London
Interbank Offered Rate (LIBOR) was 1.46%, 1.31%, 1.21%, 1.07% and
0.92% 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.
(4) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Wells Fargo & Company and
Subsidiaries
NONINTEREST INCOME
Quarter ended December 31, % Year ended December 31, % (in
millions)
2017 2016 Change
2017 2016 Change Service charges on deposit
accounts
$ 1,246 1,357 (8 )%
$
5,111 5,372 (5 )% Trust and investment fees:
Brokerage advisory, commissions and other fees
2,401 2,342 3
9,358 9,216 2 Trust and investment management
866 837
3
3,372 3,336 1 Investment banking
420
519 (19 )
1,765 1,691 4
Total trust and investment fees
3,687
3,698 —
14,495 14,243 2 Card
fees
996 1,001 —
3,960 3,936 1 Other fees: Charges
and fees on loans
313 305 3
1,263 1,241 2 Cash
network fees
120 130 (8 )
506 537 (6 ) Commercial
real estate brokerage commissions
159 172 (8 )
462
494 (6 ) Letters of credit fees
78 79 (1 )
305 321 (5
) Wire transfer and other remittance fees
115 105 10
448 401 12 All other fees
128
171 (25 )
573 733 (22 ) Total
other fees
913 962 (5 )
3,557 3,727 (5 ) Mortgage banking:
Servicing income, net
262 196 34
1,427 1,765 (19 )
Net gains on mortgage loan origination/sales activities
666 1,221 (45 )
2,923
4,331 (33 ) Total mortgage banking
928
1,417 (35 )
4,350 6,096
(29 ) Insurance
223 262 (15 )
1,049 1,268 (17
) Net gains (losses) from trading activities
132 (109 ) NM
1,053 834 26 Net gains on debt securities
157 145 8
479 942 (49 ) Net gains from equity investments
439
306 43
1,268 879 44 Lease income
458 523 (12 )
1,907 1,927 (1 ) Life insurance investment income
153
132 16
594 587 1 All other
405
(514 ) NM
1,009 702 44 Total
$ 9,737 9,180 6
$ 38,832 40,513 (4
)
NM – Not meaningful
NONINTEREST EXPENSE
Quarter ended December 31, % Year ended
December 31, % (in millions)
2017 2016
Change
2017 2016 Change Salaries
$ 4,403 4,193 5 %
$ 17,363
16,552 5 % Commission and incentive compensation
2,665 2,478 8
10,442 10,247 2 Employee benefits
1,293 1,101 17
5,566 5,094 9 Equipment
608 642
(5 )
2,237 2,154 4 Net occupancy
715 710 1
2,849 2,855 — Core deposit and other intangibles
288
301 (4 )
1,152 1,192 (3 ) FDIC and other deposit assessments
312 353 (12 )
1,287 1,168 10 Operating losses
3,531 243 NM
5,492 1,608 242 Outside professional
services
1,025 984 4
3,813 3,138 22 Contract services
344 325 6
1,369 1,203 14 Operating leases
325
379 (14 )
1,351 1,329 2 Outside data processing
208
222 (6 )
891 888 — Travel and entertainment
183 195
(6 )
687 704 (2 ) Advertising and promotion
200 178
12
614 595 3 Postage, stationery and supplies
137 156
(12 )
544 622 (13 ) Telecommunications
92 96 (4 )
364 383 (5 ) Foreclosed assets
47 75 (37 )
251
202 24 Insurance
28 23 22
100 179 (44 ) All other
396 561 (29 )
2,112
2,264 (7 ) Total
$ 16,800
13,215 27
$
58,484 52,377 12
NM – Not meaningful
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended (in millions)
Dec 31, 2017
Sep 30,2017 Jun 30,2017 Mar 31,2017 Dec
31,2016 Service charges on deposit accounts
$ 1,246
1,276 1,276 1,313 1,357 Trust and
investment fees: Brokerage advisory, commissions and other fees
2,401 2,304 2,329 2,324 2,342 Trust and investment
management
866 840 837 829 837 Investment banking
420 465 463 417
519 Total trust and investment fees
3,687 3,609 3,629
3,570 3,698 Card fees
996 1,000 1,019
945 1,001 Other fees: Charges and fees on loans
313 318 325
307 305 Cash network fees
120 126 134 126 130 Commercial
real estate brokerage commissions
159 120 102 81 172 Letters
of credit fees
78 77 76 74 79 Wire transfer and other
remittance fees
115 114 112 107 105 All other fees
128 122 153 170
171 Total other fees
913
877 902 865 962
Mortgage banking: Servicing income, net
262 309 400
456 196 Net gains on mortgage loan origination/sales activities
666 737 748
772 1,221 Total mortgage banking
928 1,046 1,148
1,228 1,417 Insurance
223 269 280 277
262 Net gains (losses) from trading activities
132 245 237
439 (109 ) Net gains on debt securities
157 166 120 36 145
Net gains from equity investments
439 238 188 403 306 Lease
income
458 475 493 481 523 Life insurance investment income
153 152 145 144 132 All other (1)
405
47 327 230 (514 )
Total
$ 9,737 9,400
9,764 9,931 9,180
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
FIVE QUARTER NONINTEREST
EXPENSE
Quarter ended (in millions)
Dec 31, 2017
Sep 30,2017 Jun 30,2017 Mar 31,2017 Dec
31,2016 Salaries
$ 4,403 4,356 4,343
4,261 4,193 Commission and incentive compensation
2,665 2,553 2,499 2,725 2,478 Employee benefits
1,293
1,279 1,308 1,686 1,101 Equipment
608 523 529 577 642 Net
occupancy
715 716 706 712 710 Core deposit and other
intangibles
288 288 287 289 301 FDIC and other deposit
assessments
312 314 328 333 353 Operating losses
3,531 1,329 350 282 243 Outside professional services
1,025 955 1,029 804 984 Contract services
344 351 349
325 325 Operating leases
325 347 334 345 379 Outside data
processing
208 227 236 220 222 Travel and entertainment
183 154 171 179 195 Advertising and promotion
200 137
150 127 178 Postage, stationery and supplies
137 128 134 145
156 Telecommunications
92 90 91 91 96 Foreclosed assets
47 66 52 86 75 Insurance
28 24 24 24 23 All other
396 514 621
581 561 Total
$ 16,800
14,351 13,541 13,792
13,215
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Dec 31, 2017
Dec 31,2016 %
Change
Assets Cash and due from banks
$ 23,367 20,729
13 % Federal funds sold, securities purchased under resale
agreements and other short-term investments
272,605 266,038
2 Trading assets
92,329 74,397 24 Investment securities:
Available-for-sale, at fair value
277,085 308,364 (10 )
Held-to-maturity, at cost
139,335 99,583 40 Mortgages held
for sale
20,070 26,309 (24 ) Loans held for sale
108
80 35 Loans
956,770 967,604 (1 ) Allowance for loan losses
(11,004 ) (11,419 ) (4 ) Net loans
945,766 956,185 (1 ) Mortgage
servicing rights: Measured at fair value
13,625 12,959 5
Amortized
1,424 1,406 1 Premises and equipment, net
8,847 8,333 6 Goodwill
26,587 26,693 — Derivative
assets
12,228 14,498 (16 ) Other assets
118,381 114,541 3 Total assets
$ 1,951,757 1,930,115 1
Liabilities Noninterest-bearing deposits
$
373,722 375,967 (1 ) Interest-bearing deposits
962,269 930,112 3 Total deposits
1,335,991 1,306,079 2 Short-term borrowings
103,256
96,781 7 Derivative liabilities
8,796 14,492 (39 ) Accrued
expenses and other liabilities
70,615 57,189 23 Long-term
debt
225,020 255,077 (12
) Total liabilities
1,743,678 1,729,618
1
Equity Wells Fargo stockholders’ equity:
Preferred stock
25,358 24,551 3 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
60,893
60,234 1 Retained earnings
145,263 133,075 9 Cumulative
other comprehensive income (loss)
(2,144 ) (3,137 )
(32 ) Treasury stock – 590,194,846 shares and 465,702,148 shares
(29,892 ) (22,713 ) 32 Unearned ESOP shares
(1,678 ) (1,565 ) 7 Total Wells Fargo
stockholders’ equity
206,936 199,581 4 Noncontrolling
interests
1,143 916 25 Total
equity
208,079 200,497 4 Total
liabilities and equity
$ 1,951,757
1,930,115 1
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE
SHEET
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
Assets Cash and due from banks
$ 23,367 19,206
20,248 19,698 20,729 Federal funds sold, securities purchased under
resale agreements and other short-term investments
272,605
273,105 264,706 308,747 266,038 Trading assets
92,329 88,404
83,607 80,326 74,397 Investment securities: Available-for-sale, at
fair value
277,085 272,210 269,202 299,530 308,364
Held-to-maturity, at cost
139,335 142,423 140,392 108,030
99,583 Mortgages held for sale
20,070 20,009 24,807 17,822
26,309 Loans held for sale
108 157 156 253 80 Loans
956,770 951,873 957,423 958,405 967,604 Allowance for loan
losses
(11,004 ) (11,078 )
(11,073 ) (11,168 ) (11,419 ) Net loans
945,766 940,795 946,350
947,237 956,185 Mortgage servicing
rights: Measured at fair value
13,625 13,338 12,789 13,208
12,959 Amortized
1,424 1,406 1,399 1,402 1,406 Premises and
equipment, net
8,847 8,449 8,403 8,320 8,333 Goodwill
26,587 26,581 26,573 26,666 26,693 Derivative assets
12,228 12,580 13,273 12,564 14,498 Other assets (1)
118,381 116,217 118,887
107,698 114,541 Total assets (1)
$ 1,951,757 1,934,880
1,930,792 1,951,501 1,930,115
Liabilities Noninterest-bearing deposits
$
373,722 366,528 372,766 365,780 375,967 Interest-bearing
deposits
962,269 940,178
933,064 959,664 930,112 Total
deposits
1,335,991 1,306,706 1,305,830 1,325,444 1,306,079
Short-term borrowings
103,256 93,811 95,356 94,871 96,781
Derivative liabilities
8,796 9,497 11,636 12,461 14,492
Accrued expenses and other liabilities (1)
70,615 78,993
72,799 59,629 57,189 Long-term debt (1)
225,020
239,256 239,222 256,786
255,077 Total liabilities (1)
1,743,678 1,728,263 1,724,843
1,749,191 1,729,618
Equity Wells Fargo stockholders’ equity: Preferred stock
25,358 25,576 25,785 25,501 24,551 Common stock
9,136
9,136 9,136 9,136 9,136 Additional paid-in capital
60,893
60,759 60,689 60,585 60,234 Retained earnings (1)
145,263
141,549 139,366 135,828 133,075 Cumulative other comprehensive
income (loss) (1)
(2,144 ) (1,622 ) (2,148 ) (3,153 )
(3,137 ) Treasury stock
(29,892 ) (27,772 ) (25,675 )
(24,030 ) (22,713 ) Unearned ESOP shares
(1,678
) (1,904 ) (2,119 ) (2,546 )
(1,565 ) Total Wells Fargo stockholders’ equity (1)
206,936
205,722 205,034 201,321 199,581 Noncontrolling interests
1,143 895 915 989
916 Total equity (1)
208,079
206,617 205,949 202,310
200,497 Total liabilities and equity (1)
$ 1,951,757 1,934,880
1,930,792 1,951,501 1,930,115
(1) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER INVESTMENT
SECURITIES
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
Available-for-sale securities: Securities of U.S. Treasury and
federal agencies
$ 6,319 6,350 17,896 24,625 25,819
Securities of U.S. states and political subdivisions
51,326
52,774 52,013 52,061 51,101 Mortgage-backed securities: Federal
agencies
160,219 150,181 135,938 156,966 161,230 Residential
and commercial
9,173 11,046
12,772 14,233 16,318 Total
mortgage-backed securities
169,392 161,227 148,710 171,199
177,548 Other debt securities
49,370
50,966 49,555 50,520
52,685 Total available-for-sale debt securities
276,407
271,317 268,174 298,405 307,153 Marketable equity securities
678 893 1,028
1,125 1,211 Total available-for-sale securities
277,085 272,210 269,202
299,530 308,364 Held-to-maturity
securities: Securities of U.S. Treasury and federal agencies
44,720 44,712 44,704 44,697 44,690 Securities of U.S. states
and political subdivisions
6,313 6,321 6,325 6,331 6,336
Federal agency and other mortgage-backed securities (1)
87,527 90,071 87,525 53,778 45,161 Other debt securities
775 1,319 1,838
3,224 3,396 Total held-to-maturity debt
securities
139,335 142,423
140,392 108,030 99,583 Total
investment securities
$ 416,420
414,633 409,594 407,560
407,947
(1) Predominantly consists of federal
agency mortgage-backed securities.
FIVE QUARTER LOANS
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
Commercial: Commercial and industrial
$ 333,125
327,944 331,113 329,252 330,840 Real estate mortgage
126,599
128,475 130,277 131,532 132,491 Real estate construction
24,279 24,520 25,337 25,064 23,916 Lease financing
19,385 19,211 19,174
19,156 19,289 Total commercial
503,388 500,150 505,901
505,004 506,536 Consumer: Real estate 1-4
family first mortgage
284,054 280,173 276,566 274,633
275,579 Real estate 1-4 family junior lien mortgage
39,713
41,152 42,747 44,333 46,237 Credit card
37,976 36,249 35,305
34,742 36,700 Automobile
53,371 55,455 57,958 60,408 62,286
Other revolving credit and installment
38,268
38,694 38,946 39,285
40,266 Total consumer
453,382
451,723 451,522 453,401
461,068 Total loans (1)
$ 956,770
951,873 957,423 958,405
967,604
(1) Includes $12.8 billion, $13.6 billion,
$14.3 billion, $15.7 billion, and $16.7 billion of purchased
credit-impaired (PCI) loans at December 31, September 30, June 30,
and March 31, 2017 and December 31, 2016, respectively.
Our foreign loans are reported by
respective class of financing receivable in the table above.
Substantially all of our foreign loan portfolio is commercial
loans. Loans are classified as foreign primarily based on whether
the borrower's primary address is outside of the United States. The
following table presents total commercial foreign loans outstanding
by class of financing receivable.
(in millions)
Dec 31, 2017 Sep
30,2017 Jun 30,2017 Mar 31,2017 Dec 31,2016
Commercial foreign loans:
Commercial and industrial
$ 60,106 58,570 57,825
56,987 55,396 Real estate mortgage
8,033 8,032 8,359 8,206
8,541 Real estate construction
655 647 585 471 375 Lease
financing
1,126 1,141
1,092 986 972 Total commercial foreign
loans
$ 69,920 68,390
67,861 66,650 65,284
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS
(NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016 Nonaccrual
loans: Commercial: Commercial and industrial
$ 1,899
2,397 2,632 2,898 3,216 Real estate mortgage
628 593 630 672
685 Real estate construction
37 38 34 40 43 Lease financing
76 81 89 96
115 Total commercial
2,640
3,109 3,385 3,706
4,059 Consumer: Real estate 1-4 family first mortgage
4,122
4,213 4,413 4,743 4,962 Real estate 1-4 family junior lien mortgage
1,086 1,101 1,095 1,153 1,206 Automobile
130 137 104
101 106 Other revolving credit and installment
58
59 59 56 51
Total consumer
5,396 5,510
5,671 6,053 6,325 Total
nonaccrual loans (1)(2)(3)
$ 8,036
8,619 9,056 9,759
10,384 As a percentage of total loans
0.84 % 0.91
0.95 1.02 1.07 Foreclosed assets: Government insured/guaranteed
$ 120 137 149 179 197 Non-government
insured/guaranteed
522 569
632 726 781 Total foreclosed
assets
642 706 781
905 978 Total nonperforming assets
$ 8,678 9,325 9,837
10,664 11,362 As a percentage of total
loans
0.91 % 0.98 1.03
1.11 1.17
(1) Includes nonaccrual mortgages held for
sale and loans held for sale in their respective loan
categories.
(2) Excludes PCI loans because they
continue to earn interest income from accretable yield, independent
of performance in accordance with their contractual terms.
(3) Real estate 1-4 family mortgage loans
predominantly insured by the Federal Housing Administration (FHA)
or guaranteed by the Department of Veterans Affairs (VA) and
student loans largely guaranteed by agencies on behalf of the U.S.
Department of Education under the Federal Family Education Loan
Program are not placed on nonaccrual status because they are
insured or guaranteed. All remaining student loans guaranteed under
the FFELP were sold as of March 31, 2017.
Wells Fargo & Company and
Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND
STILL ACCRUING
(in millions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016 Total
(excluding PCI)(1):
$ 11,997 10,227 9,716 10,525
11,858 Less: FHA insured/guaranteed by the VA (2)(3)
10,934
9,266 8,873 9,585 10,883 Less: Student loans guaranteed under the
FFELP (4)
— — —
— 3
Total, not government
insured/guaranteed $ 1,063
961 843 940 972 By
segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial
$ 26 27 42 88 28 Real
estate mortgage
23 11 2 11 36 Real estate construction
— — 10 3
— Total commercial
49 38
54 102 64 Consumer: Real
estate 1-4 family first mortgage (3)
219 190 145 149 175
Real estate 1-4 family junior lien mortgage (3)
60 49 44 42
56 Credit card
492 475 411 453 452 Automobile
143 111
91 79 112 Other revolving credit and installment
100
98 98 115
113 Total consumer
1,014 923
789 838 908
Total, not
government insured/guaranteed $ 1,063
961 843 940
972
(1) PCI loans totaled $1.4 billion, $1.4
billion, $1.5 billion, $1.8 billion and $2.0 billion, at December
31, September 30, June 30, and March 31, 2017 and December 31,
2016, respectively.
(2) Represents loans whose repayments are
predominantly insured by the FHA or guaranteed by the VA.
(3) Includes mortgages held for sale 90
days or more past due and still accruing.
(4) Represents loans whose repayments are
largely guaranteed by agencies on behalf of the U.S. Department of
Education under the FFELP. All remaining student loans guaranteed
under the FFELP were sold as of March 31, 2017.
Wells Fargo & Company and
Subsidiaries
CHANGES IN ACCRETABLE YIELD RELATED TO
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
Loans purchased with evidence of credit
deterioration since origination and for which it is probable that
all contractually required payments will not be collected are
considered to be credit impaired. PCI loans predominantly represent
loans acquired from Wachovia that were deemed to be credit
impaired. Evidence of credit quality deterioration as of the
purchase date may include statistics such as past due and
nonaccrual status, recent borrower credit scores and recent LTV
percentages. PCI loans are initially measured at fair value, which
includes estimated future credit losses expected to be incurred
over the life of the loan. Accordingly, the associated allowance
for credit losses related to these loans is not carried over at the
acquisition date.
As a result of PCI loan accounting,
certain credit-related ratios cannot be used to compare a portfolio
that includes PCI loans against one that does not, or to compare
ratios across quarters or years. The ratios particularly affected
include the allowance for loan losses and allowance for credit
losses as percentages of loans, of nonaccrual loans and of
nonperforming assets; nonaccrual loans and nonperforming assets as
a percentage of total loans; and net charge-offs as a percentage of
loans.
The excess of cash flows expected to be
collected over the carrying value of PCI loans is referred to as
the accretable yield and is accreted into interest income over the
estimated lives of the PCI loans using the effective yield method.
The accretable yield is affected by:
- Changes in interest rate indices for
variable rate PCI loans - Expected future cash flows are based on
the variable rates in effect at the time of the quarterly
assessment of expected cash flows;
- Changes in prepayment assumptions -
Prepayments affect the estimated life of PCI loans which may change
the amount of interest income, and possibly principal, expected to
be collected; and
- Changes in the expected principal and
interest payments over the estimated life - Updates to changes in
expected cash flows are driven by the credit outlook and actions
taken with borrowers. Changes in expected future cash flows from
loan modifications are included in the regular evaluations of cash
flows expected to be collected.
The change in the accretable yield related
to PCI loans since the merger with Wachovia is presented in the
following table.
(in millions)
Quarterended Dec 31, 2017
Year endedDec 31, 2017 2009-2016
Balance, beginning of period $ 9,243
11,216 10,447 Change in accretable
yield due to acquisitions — 2 159
Accretion into interest income (1) (335 )
(1,406 ) (15,577 ) Accretion into
noninterest income due to sales (2) — (334
) (467 ) Reclassification from
nonaccretable difference for loans with improving credit-related
cash flows (3) 2 642 10,955 Changes in
expected cash flows that do not affect nonaccretable difference
(4) (23 ) (1,233 )
5,699 Balance, end of period
$ 8,887 8,887
11,216
(1) Includes accretable yield released as
a result of settlements with borrowers, which is included in
interest income.
(2) Includes accretable yield released as
a result of sales to third parties, which is included in
noninterest income.
(3) At December 31, 2017, our
carrying value for PCI loans totaled $12.8 billion and the
remainder of nonaccretable difference established in purchase
accounting totaled $474 million. The nonaccretable difference
absorbs losses of contractual amounts that exceed our carrying
value for PCI loans.
(4) Represents changes in cash flows
expected to be collected due to the impact of modifications,
changes in prepayment assumptions, changes in interest rates on
variable rate PCI loans and sales to third parties.
Wells Fargo & Company and
Subsidiaries
PICK-A-PAY PORTFOLIO (1)
December 31, 2017 PCI loans All other loans (in
millions) Adjusted
unpaid
principal
balance (2)
Current
LTV
ratio (3)
Carrying
value (4)
Ratio of
carrying
value to
current
value (5)
Carrying
value (4)
Ratio of
carrying
value to
current
value (5)
California $ 11,286 60 % $ 8,632 45 % $ 6,365
43 % Florida 1,436 67 1,065 49 1,372 53 New Jersey 565 74
410 53 909 61 New York 434 67 348 50 458 57 Texas 130 48 98 36 545
37 Other states 2,818 67 2,086 49 3,750
54 Total Pick-a-Pay loans $ 16,669 62 $ 12,639
46 $ 13,399 48
(1) The individual states shown in this
table represent the top five states based on the total net carrying
value of the Pick-a-Pay loans at the beginning of 2017.
(2) Adjusted unpaid principal balance
includes write-downs taken on loans where severe delinquency
(normally 180 days) or other indications of severe borrower
financial stress exist that indicate there will be a loss of
contractually due amounts upon final resolution of the loan.
(3) The current LTV ratio is calculated as
the adjusted unpaid principal balance divided by the collateral
value. Collateral values are generally determined using automated
valuation models (AVM) and are updated quarterly. AVMs are
computer-based tools used to estimate market values of homes based
on processing large volumes of market data including market
comparables and price trends for local market areas.
(4) Carrying value, which does not reflect
the allowance for loan losses, includes remaining purchase
accounting adjustments, which, for PCI loans may include the
nonaccretable difference and the accretable yield and, for all
other loans, an adjustment to mark the loans to a market yield at
date of merger less any subsequent charge-offs.
(5) The ratio of carrying value to current
value is calculated as the carrying value divided by the collateral
value.
Wells Fargo & Company and
Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT
LOSSES
Quarter ended December 31, Year ended December 31,
(in millions)
2017 2016
2017 2016
Balance, beginning
of period $ 12,109 12,694
12,540
12,512 Provision for credit losses
651 805
2,528 3,770 Interest income on certain impaired loans (1)
(49 ) (52 )
(186 ) (205 ) Loan
charge-offs: Commercial: Commercial and industrial
(181
) (309 )
(789 ) (1,419 ) Real estate mortgage
(4 ) (14 )
(38 ) (27 ) Real estate
construction
— —
— (1 ) Lease financing
(14 ) (16 )
(45 )
(41 ) Total commercial
(199 ) (339 )
(872 ) (1,488 ) Consumer: Real estate
1-4 family first mortgage
(49 ) (86 )
(240
) (452 ) Real estate 1-4 family junior lien mortgage
(54 ) (110 )
(279 ) (495 ) Credit card
(398 ) (329 )
(1,481 ) (1,259 )
Automobile
(261 ) (243 )
(1,002 ) (845
) Other revolving credit and installment
(169
) (200 )
(713 ) (708 )
Total consumer
(931 ) (968 )
(3,715 ) (3,759 ) Total loan charge-offs
(1,130 ) (1,307 )
(4,587
) (5,247 ) Loan recoveries: Commercial: Commercial
and industrial
63 53
297 263 Real estate mortgage
14 26
82 116 Real estate construction
3 8
30 38 Lease financing
4 1
17 11 Total commercial
84 88
426
428 Consumer: Real estate 1-4 family first mortgage
72 89
288 373 Real estate 1-4 family junior lien
mortgage
61 66
266 266 Credit card
62 54
239 207 Automobile
73 77
319 325 Other
revolving credit and installment
27 28
121 128 Total consumer
295 314
1,233
1,299 Total loan recoveries
379
402
1,659 1,727
Net loan charge-offs
(751 ) (905
)
(2,928 ) (3,520 ) Other
— (2 )
6 (17 )
Balance, end of period $ 11,960
12,540
11,960 12,540
Components: Allowance for loan losses
$ 11,004
11,419
11,004 11,419 Allowance for unfunded credit
commitments
956 1,121
956 1,121 Allowance for credit losses
$ 11,960 12,540
11,960 12,540 Net loan charge-offs
(annualized) as a percentage of average total loans
0.31
% 0.37
0.31 0.37 Allowance for loan losses as a
percentage of total loans
1.15 1.18
1.15 1.18
Allowance for credit losses as a percentage of total loans
1.25 1.30
1.25
1.30
(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)
Dec 31, 2017
Sep 30,2017 Jun 30,2017 Mar 31,2017 Dec
31,2016
Balance, beginning of quarter $ 12,109
12,146 12,287 12,540 12,694 Provision
for credit losses
651 717 555 605 805 Interest income on
certain impaired loans (1)
(49 ) (43 ) (46 ) (48 )
(52 ) Loan charge-offs: Commercial: Commercial and industrial
(181 ) (194 ) (161 ) (253 ) (309 ) Real estate
mortgage
(4 ) (21 ) (8 ) (5 ) (14 ) Real estate
construction
— — — — — Lease financing
(14
) (11 ) (13 ) (7 ) (16 ) Total
commercial
(199 ) (226 ) (182 )
(265 ) (339 ) Consumer: Real estate 1-4 family first
mortgage
(49 ) (67 ) (55 ) (69 ) (86 ) Real estate
1-4 family junior lien mortgage
(54 ) (70 ) (62 ) (93
) (110 ) Credit card
(398 ) (337 ) (379 ) (367 ) (329
) Automobile
(261 ) (274 ) (212 ) (255 ) (243 ) Other
revolving credit and installment
(169 )
(170 ) (185 ) (189 ) (200 ) Total consumer
(931 ) (918 ) (893 ) (973
) (968 ) Total loan charge-offs
(1,130
) (1,144 ) (1,075 ) (1,238 )
(1,307 ) Loan recoveries: Commercial: Commercial and industrial
63 69 83 82 53 Real estate mortgage
14 24 14 30 26
Real estate construction
3 15 4 8 8 Lease financing
4 5 6 2
1 Total commercial
84 113
107 122 88
Consumer: Real estate 1-4 family first mortgage
72 83 71 62
89 Real estate 1-4 family junior lien mortgage
61 69 66 70
66 Credit card
62 60 59 58 54 Automobile
73 72 86 88
77 Other revolving credit and installment
27
30 31 33 28
Total consumer
295 314
313 311 314 Total loan
recoveries
379 427 420
433 402 Net loan charge-offs
(751 ) (717 ) (655 ) (805
) (905 ) Other
— 6
5 (5 ) (2 )
Balance, end of quarter
$ 11,960 12,109
12,146 12,287 12,540 Components:
Allowance for loan losses
$ 11,004 11,078 11,073
11,168 11,419 Allowance for unfunded credit commitments
956 1,031 1,073
1,119 1,121 Allowance for credit losses
$ 11,960 12,109 12,146
12,287 12,540 Net loan
charge-offs (annualized) as a percentage of average total loans
0.31 % 0.30 0.27 0.34 0.37 Allowance for loan losses
as a percentage of: Total loans
1.15 1.16 1.16 1.17 1.18
Nonaccrual loans
137 129 122 114 110 Nonaccrual loans and
other nonperforming assets
127 119 113 105 101 Allowance for
credit losses as a percentage of: Total loans
1.25 1.27 1.27
1.28 1.30 Nonaccrual loans
149 141 134 126 121 Nonaccrual
loans and other nonperforming assets
138
130 123 115 110
(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)
Dec 31,
2017 Sep 30,2017 Jun 30,2017 Mar
31,2017 Dec 31,2016 Tangible book value per common share
(1): Total equity (2)
$ 208,079 206,617 205,949
202,310 200,497 Adjustments: Preferred stock
(25,358
) (25,576 ) (25,785 ) (25,501 ) (24,551 ) Additional paid-in
capital on ESOP
preferred stock
(122 ) (130 ) (136 ) (157 ) (126 ) Unearned ESOP
shares
1,678 1,904 2,119 2,546 1,565 Noncontrolling
interests
(1,143 ) (895 )
(915 ) (989 ) (916 ) Total common
stockholders' equity (2) (A)
183,134 181,920 181,232 178,209
176,469 Adjustments: Goodwill
(26,587 ) (26,581 )
(26,573 ) (26,666 ) (26,693 ) Certain identifiable intangible
assets
(other than MSRs)
(1,624 ) (1,913 ) (2,147 ) (2,449 ) (2,723 ) Other
assets (3)
(2,155 ) (2,282 ) (2,268 ) (2,121 ) (2,088
) Applicable deferred taxes (4)
962
1,550 1,624 1,698
1,772 Tangible common equity (2) (B)
$ 153,730 152,694 151,868
148,671 146,737 Common shares
outstanding (C)
4,891.6 4,927.9 4,966.8 4,996.7 5,016.1 Book
value per common share (2) (A)/(C)
$ 37.44 36.92
36.49 35.67 35.18 Tangible book value per common share (2)
(B)/(C)
31.43 30.99 30.58
29.75 29.25
Quarter ended Year
ended (in millions, except ratios)
Dec 31,
2017 Sep 30,2017 Jun 30,2017 Mar 31,2017 Dec 31,2016
Dec 31, 2017 Dec 31,2016 Return on average tangible
common equity (1): Net income applicable to common stock (2) (A)
$ 5,740 4,131 5,450 5,233 4,872
20,554 20,373
Average total equity (2)
207,413 207,723 205,755 201,559
201,247
205,654 200,690 Adjustments: Preferred stock
(25,569 ) (25,780 ) (25,849 ) (25,163 ) (24,579 )
(25,592 ) (24,363 ) Additional paid-in capital on
ESOP preferred stock
(129 ) (136 ) (144 ) (146 ) (128
)
(139 ) (161 ) Unearned ESOP shares
1,896
2,114 2,366 2,198 1,596
2,143 2,011 Noncontrolling interests
(998 ) (926 ) (910 ) (957 ) (928
)
(948 ) (936 ) Average common stockholders’
equity (2) (B)
182,613 182,995 181,218 177,491 177,208
181,118 177,241 Adjustments: Goodwill
(26,579
) (26,600 ) (26,664 ) (26,673 ) (26,713 )
(26,629
) (26,700 ) Certain identifiable intangible assets (other
than MSRs)
(1,767 ) (2,056 ) (2,303 ) (2,588 ) (2,871
)
(2,176 ) (3,254 ) Other assets (3)
(2,245
) (2,231 ) (2,160 ) (2,095 ) (2,175 )
(2,184 )
(2,117 ) Applicable deferred taxes (4)
1,332 1,579 1,648 1,722 1,785
1,570 1,897 Average tangible
common equity (2) (C)
$ 153,354
153,687 151,739 147,857 147,234
151,699 147,067 Return on average common
stockholders' equity (ROE) (annualized) (2) (A)/(B)
12.47
% 8.96 12.06 11.96 10.94
11.35 11.49 Return on
average tangible common equity (ROTCE) (annualized) (2)
(A)/(C)
14.85 10.66 14.41 14.35
13.16
13.55 13.85
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
investments but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity.
(2) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
(3) Represents goodwill and other
intangibles on nonmarketable equity investments, which are included
in other assets.
(4) 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)
Dec
31, 2017 Sep 30,2017 Jun 30,2017
Mar 31,2017 Dec 31,2016 Total equity (2)
$
208.1 206.6 205.9 202.3 200.5 Adjustments: Preferred stock
(25.4 ) (25.6 ) (25.8 ) (25.5 ) (24.6 ) Additional
paid-in capital on ESOP
preferred stock
(0.1 ) (0.1 ) (0.1 ) (0.2 ) (0.1 ) Unearned ESOP
shares
1.7 1.9 2.1 2.5 1.6 Noncontrolling interests
(1.1 ) (0.9 ) (0.9 ) (1.0
) (0.9 ) Total common stockholders' equity (2)
183.2
181.9 181.2 178.1 176.5 Adjustments: Goodwill
(26.6 )
(26.6 ) (26.6 ) (26.7 ) (26.7 ) Certain identifiable intangible
assets (other than MSRs)
(1.6 ) (1.9 ) (2.1 ) (2.4 )
(2.7 ) Other assets (3)
(2.2 ) (2.3 ) (2.2 ) (2.1 )
(2.1 ) Applicable deferred taxes (4)
1.0 1.6 1.6 1.7 1.8
Investment in certain subsidiaries and other
0.2 (0.1 ) (0.2 ) (0.1 )
(0.4 ) Common Equity Tier 1 (Fully Phased-In) under Basel III
(A)
154.0 152.6 151.7
148.5 146.4 Total risk-weighted
assets (RWAs) anticipated under Basel III (5)(6) (B)
$ 1,292.3 1,292.8 1,310.5
1,324.5 1,358.9 Common Equity
Tier 1 to total RWAs anticipated under Basel III (Fully Phased-In)
(6) (A)/(B)
11.9 % 11.8
11.6 11.2 10.8
(1) Basel III capital rules, adopted
by the Federal Reserve Board on July 2, 2013, revised the
definition of capital, increased minimum capital ratios, and
introduced a minimum Common Equity Tier 1 (CET1) ratio. These rules
established a new comprehensive capital framework for U.S. banking
organizations that implements the Basel III capital framework and
certain provisions of the Dodd-Frank Act. The rules are being
phased in through the end of 2021. Fully phased-in capital amounts,
ratios and RWAs are calculated assuming the full phase-in of the
Basel III capital rules. Fully phased-in regulatory capital
amounts, ratios and RWAs are considered non-GAAP financial measures
that are used by management, bank regulatory agencies, investors
and analysts to assess and monitor the Company’s capital
position.
(2) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
(3) Represents goodwill and other
intangibles on nonmarketable equity investments, which are included
in other assets.
(4) 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.
(5) 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
December 31, 2017, is subject to detailed analysis of
considerable data, our CET1 ratio at that date has been estimated
using the Basel III definition of capital under the Basel III
Standardized Approach RWAs. The capital ratio for September 30,
June 30 and March 31, 2017, and December 31, 2016, was calculated
under the Basel III Standardized Approach RWAs.
(6) The Company’s December 31,
2017, 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
2017 2016
2017 2016
2017 2016
2017 2016
2017 2016
Quarter ended December 31,
Net interest income (3)
$
7,537 7,556
4,211 4,323
1,133 1,061
(568 ) (538 )
12,313 12,402 Provision
(reversal of provision) for credit losses
636 631
20
168
(7 ) 3
2 3
651 805 Noninterest
income
4,491 4,105
2,883 2,830
3,172 3,013
(809 ) (768 )
9,737 9,180 Noninterest expense
10,200 6,985
4,204
4,002
3,244 3,042
(848 ) (814 )
16,800 13,215 Income (loss) before income tax
expense (benefit)
1,192 4,045
2,870 2,983
1,068 1,029
(531 ) (495 )
4,599 7,562
Income tax expense (benefit)
(2,560 )
1,272
716 795
404 380
(202 )
(189 )
(1,642 ) 2,258 Net income
(loss) before noncontrolling interests
3,752 2,773
2,154 2,188
664 649
(329 ) (306 )
6,241 5,304 Less: Net income (loss) from noncontrolling
interests
79 40
6
(6 )
5 (4 )
— —
90 30
Net income (loss)
$ 3,673 2,733
2,148 2,194
659 653
(329 )
(306 )
6,151 5,274
Average loans
$ 473.5 488.1
463.5 461.5
72.8 70.0
(58.0 ) (55.5 )
951.8 964.1
Average assets
974.0 1,000.7
837.3 811.9
209.3
220.4
(85.3 ) (88.7 )
1,935.3 1,944.3 Average
deposits
738.1 709.8
465.7 459.2
184.2 194.9
(76.4 ) (79.7 )
1,311.6 1,284.2
Year
ended December 31, Net interest income (3)
$
30,365 29,833
16,967 16,052
4,493 3,913
(2,268 ) (2,044 )
49,557 47,754 Provision
(reversal of provision) for credit losses
2,555 2,691
(19 ) 1,073
(5 ) (5 )
(3
) 11
2,528 3,770 Noninterest income
18,342
19,033
11,206 12,490
12,433 12,033
(3,149
) (3,043 )
38,832 40,513 Noninterest expense
32,478 27,422
16,755
16,126
12,631
12,059
(3,380 ) (3,230 )
58,484 52,377 Income (loss) before income tax
expense (benefit)
13,674 18,753
11,437 11,343
4,300 3,892
(2,034 ) (1,868 )
27,377
32,120 Income tax expense (benefit)
1,327
6,182
2,753 3,136
1,610 1,467
(773
) (710 )
4,917 10,075 Net
income (loss) before noncontrolling interests
12,347 12,571
8,684 8,207
2,690 2,425
(1,261 ) (1,158
)
22,460 22,045 Less: Net income (loss) from noncontrolling
interests
276 136
(15 ) (28 )
16 (1
)
— —
277
107 Net income (loss)
$ 12,071
12,435
8,699 8,235
2,674 2,426
(1,261
) (1,158 )
22,183 21,938
Average loans
$ 476.7 486.9
464.6 449.3
71.9 67.3
(57.1 ) (53.5 )
956.1 950.0
Average assets
984.2 977.3
821.8 782.0
214.4
211.5
(87.4 ) (85.4 )
1,933.0 1,885.4 Average
deposits
729.3 701.2
464.5 438.6
189.0
187.8
(78.2 ) (77.0 )
1,304.6 1,250.6
(1) The management accounting process
measures the performance of the operating segments based on our
management structure and is not necessarily comparable with other
similar information for other financial services companies. We
define our operating segments by product type and customer
segment.
(2) Includes the elimination of
certain items that are included in more than one business segment,
most of which represents products and services for Wealth and
Investment Management customers served through Community Banking
distribution channels.
(3) Net interest income is the
difference between interest earned on assets and the cost of
liabilities to fund those assets. Interest earned includes actual
interest earned on segment assets and, if the segment has excess
liabilities, interest credits for providing funding to other
segments. The cost of liabilities includes interest expense on
segment liabilities and, if the segment does not have enough
liabilities to fund its assets, a funding charge based on the cost
of excess liabilities from another segment.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS
(1)
Quarter ended (income/expense in millions, average balances in
billions)
Dec 31, 2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
COMMUNITY BANKING Net interest income (2)(4)
$
7,537 7,626 7,543 7,659 7,556 Provision for credit losses
636 650 623 646 631 Noninterest income (4)
4,491
4,358 4,810 4,683 4,105 Noninterest expense
10,200
7,834 7,223 7,221
6,985 Income before income tax expense (4)
1,192 3,500 4,507 4,475 4,045 Income tax expense (benefit)
(4)
(2,560 ) 1,263 1,423
1,201 1,272 Net income before
noncontrolling interests (4)
3,752 2,237 3,084 3,274 2,773
Less: Net income from noncontrolling interests
79
61 46 90 40
Segment net income (4)
$ 3,673
2,176 3,038 3,184
2,733 Average loans
$ 473.5 473.5 477.2 482.7
488.1 Average assets
974.0 988.9 983.4 990.7 1,000.7 Average
deposits
738.1 734.5
727.2 717.2 709.8
WHOLESALE
BANKING Net interest income (2)(4)
$ 4,211 4,345
4,271 4,140 4,323 Provision (reversal of provision) for credit
losses
20 69 (65 ) (43 ) 168 Noninterest income (4)
2,883 2,739 2,682 2,902 2,830 Noninterest expense
4,204 4,248 4,078
4,225 4,002 Income before income tax expense
(4)
2,870 2,767 2,940 2,860 2,983 Income tax expense (4)
716 729 560
748 795 Net income before noncontrolling
interests (4)
2,154 2,038 2,380 2,112 2,188 Less: Net loss
from noncontrolling interests
6 (7 )
(9 ) (5 ) (6 ) Segment net income (4)
$ 2,148 2,045 2,389
2,117 2,194 Average loans
$ 463.5 463.8 464.9 466.3 461.5 Average assets
837.3 824.3 817.3 807.8 811.9 Average deposits
465.7 463.4 463.0
466.0 459.2
WEALTH AND INVESTMENT
MANAGEMENT Net interest income (2)
$ 1,133 1,159
1,127 1,074 1,061 Provision (reversal of provision) for credit
losses
(7 ) (1 ) 7 (4 ) 3 Noninterest income
3,172 3,087 3,055 3,119 3,013 Noninterest expense
3,244 3,106 3,075
3,206 3,042 Income before income tax expense
1,068 1,141 1,100 991 1,029 Income tax expense
404 427 417 362
380 Net income before noncontrolling interests
664 714 683 629 649 Less: Net income (loss) from
noncontrolling interests
5 4
1 6 (4 ) Segment net income
$ 659 710 682
623 653 Average loans
$
72.8 72.4 71.7 70.7 70.0 Average assets
209.3 213.4
213.1 221.9 220.4 Average deposits
184.2
188.1 188.2 195.6
194.9
OTHER (3
) Net interest income (2)
$ (568 ) (681 ) (470 ) (549 ) (538 ) Provision
(reversal of provision) for credit losses
2 (1 ) (10 ) 6 3
Noninterest income
(809 ) (784 ) (783 ) (773 ) (768 )
Noninterest expense
(848 ) (837 )
(835 ) (860 ) (814 ) Loss before income tax
benefit
(531 ) (627 ) (408 ) (468 ) (495 ) Income tax
benefit
(202 ) (238 ) (155 )
(178 ) (189 ) Net loss before noncontrolling
interests
(329 ) (389 ) (253 ) (290 ) (306 ) Less:
Net income from noncontrolling interests
—
— — — —
Other net loss
$ (329 ) (389 )
(253 ) (290 ) (306 ) Average loans
$
(58.0 ) (57.4 ) (56.9 ) (56.1 ) (55.5 ) Average
assets
(85.3 ) (88.1 ) (86.8 ) (89.4 ) (88.7 )
Average deposits
(76.4 ) (79.6 )
(77.2 ) (79.6 ) (79.7 )
CONSOLIDATED COMPANY
Net interest income (2)(4)
$ 12,313 12,449 12,471
12,324 12,402 Provision for credit losses
651 717 555 605
805 Noninterest income (4)
9,737 9,400 9,764 9,931 9,180
Noninterest expense
16,800 14,351
13,541 13,792 13,215
Income before income tax expense (4)
4,599 6,781
8,139 7,858 7,562 Income tax expense (benefit) (4)
(1,642 ) 2,181 2,245
2,133 2,258 Net income before
noncontrolling interests (4)
6,241 4,600 5,894 5,725 5,304
Less: Net income from noncontrolling interests
90
58 38 91 30
Wells Fargo net income (4)
$ 6,151
4,542 5,856 5,634
5,274 Average loans
$ 951.8 952.3 956.9
963.6 964.1 Average assets (4)
1,935.3 1,938.5 1,927.0
1,931.0 1,944.3 Average deposits
1,311.6
1,306.4 1,301.2 1,299.2
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) Net interest income is the
difference between interest earned on assets and the cost of
liabilities to fund those assets. Interest earned includes actual
interest earned on segment assets and, if the segment has excess
liabilities, interest credits for providing funding to other
segments. The cost of liabilities includes interest expense on
segment liabilities and, if the segment does not have enough
liabilities to fund its assets, a funding charge based on the cost
of excess liabilities from another segment.
(3) Includes the elimination of
certain items that are included in more than one business segment,
most of which represents products and services for Wealth and
Investment Management customers served through Community Banking
distribution channels.
(4) Financial information for prior
quarters in 2017 has been revised to reflect the impact of the
adoption in fourth quarter 2017 of Accounting Standards Update
(ASU) 2017-12 – Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities. See footnote (1)
to the Summary Financial Data table on page 16 for more
information.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED MORTGAGE SERVICING Quarter ended (in
millions)
Dec 31,2017 Sep 30,2017
Jun 30,2017 Mar 31,2017 Dec 31,2016
MSRs
measured using the fair value method:
Fair value, beginning of quarter
$ 13,338
12,789 13,208 12,959 10,415 Purchases
— 541 — — — Servicing
from securitizations or asset transfers (1)
639 605 436 583
752 Sales and other (2)
(32 ) 64
(8 ) (47 ) (47 ) Net additions
607 1,210 428
536 705 Changes in fair value: Due to
changes in valuation model inputs or assumptions: Mortgage interest
rates (3)
221 (171 ) (305 ) 152 2,367 Servicing and
foreclosure costs (4)
23 60 (14 ) 27 93 Discount rates (5)
13 — — — — Prepayment estimates and other (6)
(55 ) (31 ) (41 ) (5 )
(106 ) Net changes in valuation model inputs or assumptions
202 (142 ) (360 ) 174
2,354 Changes due to collection/realization of
expected cash flows over time
(522 )
(519 ) (487 ) (461 ) (515 ) Total
changes in fair value
(320 )
(661 ) (847 ) (287 ) 1,839 Fair value,
end of quarter
$ 13,625 13,338
12,789 13,208 12,959
(1) Includes impacts associated with exercising our right to
repurchase delinquent loans from GNMA loan securitization pools.
(2) Includes sales and transfers of MSRs, which can result in an
increase of total reported MSRs if the sales or transfers are
related to nonperforming loan portfolios or portfolios with
servicing liabilities. (3) Includes prepayment speed changes as
well as other valuation changes due to changes in mortgage interest
rates (such as changes in estimated interest earned on custodial
deposit balances) (4) Includes costs to service and unreimbursed
foreclosure costs. (5) 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)
Dec 31,2017 Sep 30,2017 Jun
30,2017 Mar 31,2017 Dec 31,2016
Amortized
MSRs: Balance, beginning of quarter
$ 1,406 1,399
1,402 1,406 1,373 Purchases
40 31 26 18 34 Servicing from
securitizations or asset transfers
43 41 37 45 66
Amortization
(65 ) (65 )
(66 ) (67 ) (67 ) Balance, end of quarter
$ 1,424 1,406 1,399
1,402 1,406
Fair value of
amortized MSRs: Beginning of quarter
$ 1,990
1,989 2,051 1,956 1,627 End of quarter
2,025
1,990 1,989 2,051
1,956 Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
(CONTINUED) Quarter ended (in millions)
Dec 31,2017 Sep 30,2017 Jun 30,2017
Mar 31,2017 Dec 31,2016
Servicing income, net:
Servicing fees (1)
$ 833
795 882 882 738 Changes in fair value of MSRs carried at fair
value: Due to changes in valuation model inputs or assumptions (2)
(A)
202
(142 ) (360 ) 174 2,354 Changes due to collection/realization of
expected cash flows over time
(522
) (519 ) (487 ) (461 ) (515 )
Total changes in fair value of MSRs carried at fair value
(320 ) (661 ) (847 ) (287 ) 1,839 Amortization
(65 ) (65 ) (66 ) (67 ) (67 ) Net derivative gains
(losses) from economic hedges (3)
(B)
(186
)
240 431 (72 ) (2,314 )
Total servicing income, net
$ 262
309 400 456
196 Market-related valuation changes to MSRs, net of hedge
results (2)(3)
(A)+(B)
$
16
98 71 102
40 (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)
Dec 31,2017 Sep 30,2017 Jun 30,2017
Mar 31,2017 Dec 31,2016
Managed servicing
portfolio (1
): Residential mortgage servicing: Serviced
for others
$ 1,209 1,223 1,189 1,204 1,205 Owned
loans serviced
342 340 343 335 347 Subserviced for others
3 3 4
4 8 Total residential servicing
1,554 1,566
1,536 1,543 1,560 Commercial
mortgage servicing: Serviced for others
495 480 475 474 479
Owned loans serviced
127 128 130 132 132 Subserviced for
others
9 8
8 7 8 Total commercial servicing
631 616 613
613 619 Total managed servicing
portfolio
$ 2,185 2,182
2,149 2,156 2,179
Total serviced for others
$ 1,704 1,703 1,664 1,678
1,684 Ratio of MSRs to related loans serviced for others
0.88 % 0.87 0.85 0.87 0.85 Weighted-average note rate
(mortgage loans serviced for others)
4.23 4.23 4.23
4.23 4.26 (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
Dec 31, 2017
Sep 30,2017 Jun 30,2017 Mar 31,2017 Dec
31,2016
Net gains on mortgage loan origination/sales activities
(in millions): Residential (A)
$ 504 546 521 569 939 Commercial
95 81 81 101
90 Residential pipeline and unsold/repurchased loan management (1)
67 110 146
102 192 Total
$
666 737 748 772
1,221
Application data (in billions): Wells
Fargo first mortgage quarterly applications
$ 63 73
83 59 75 Refinances as a percentage of applications
38
% 37 32 36 48 Wells Fargo first mortgage unclosed pipeline,
at quarter end
$ 23 29
34 28 30
Residential
real estate originations: Purchases as a percentage of
originations
64 % 72 75 61 50 Refinances as a
percentage of originations
36 28
25 39 50 Total
100 % 100 100
100 100 Wells Fargo first mortgage loans (in
billions): Retail
$ 23 26 25 21 35 Correspondent
30 32 31 22 36 Other (2)
—
1 — 1 1 Total
quarter-to-date
$ 53 59
56 44 72 Held-for-sale
(B)
$ 40 44 42 34 56 Held-for-investment
13 15 14 10
16 Total quarter-to-date
$
53 59 56 44
72 Total year-to-date
$ 212
159 100 44
249
Production margin on residential held-for-sale mortgage
originations (A)/(B)
1.25 % 1.24
1.24 1.68 1.68
(1) Predominantly includes the
results of GNMA loss mitigation activities, interest rate
management activities and changes in estimate to the liability for
mortgage loan repurchase losses.
(2) Consists of home equity loans and
lines.
CHANGES IN MORTGAGE REPURCHASE
LIABILITY
Quarter ended (in millions)
Dec 31,
2017 Sep 30,2017 Jun 30,2017 Mar
31,2017 Dec 31,2016 Balance, beginning of period
$
179 178 222 229 239 Assumed with
MSR purchases (1)
— 10 — — — Provision for repurchase
losses: Loan sales
4 6 6 8 10 Change in estimate (2)
2 (12 ) (45 ) (8 ) (7 )
Net additions (reductions) to provision
6 (6 ) (39 ) — 3
Losses
(4 ) (3 ) (5 ) (7
) (13 ) Balance, end of period
$ 181
179 178 222 229
(1) Represents repurchase liability
associated with portfolio of loans underlying mortgage servicing
rights acquired during the period.
(2) Results from changes in investor
demand and mortgage insurer practices, credit deterioration and
changes in the financial stability of correspondent lenders.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180112005127/en/
MediaAncel Martinez, 415-222-3858orInvestorsJohn
M. Campbell, 415-396-0523
Wells Fargo (NYSE:WFC)
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