Full Year 2018 Net Income of $22.4 Billion; Diluted EPS of
$4.28
Wells Fargo & Company (NYSE:WFC):
- Full year 2018 financial results:
- Net income of $22.4 billion, compared
with $22.2 billion in 2017
- Diluted earnings per share (EPS) of
$4.28, compared with $4.10
- Return on assets (ROA) of 1.19 percent,
return on equity (ROE) of 11.53 percent, and return on average
tangible common equity (ROTCE) of 13.73 percent1
- Revenue of $86.4 billion, down from
$88.4 billion
- Noninterest expense of
$56.1 billion, down from $58.5 billion
- Returned $25.8 billion to shareholders
through common stock dividends and net share repurchases
- Net share repurchases of $17.9 billion,
which more than doubled from $6.8 billion in 2017
- Common stock dividends of $1.64 per
share, up 6 percent from $1.54 per share
- Period-end common shares outstanding
down 310.3 million shares, or 6 percent
- Fourth quarter 2018 financial results:
- Net income of $6.1 billion, compared
with $6.2 billion in fourth quarter 2017
- Diluted earnings per share (EPS) of
$1.21, compared with $1.16
- ROA of 1.28 percent, ROE of 12.89
percent, and ROTCE of 15.39 percent1
- Revenue of $21.0 billion, down from
$22.1 billion
- Net interest income of $12.6 billion,
up $331 million
- Noninterest income of $8.3 billion,
down $1.4 billion
- Noninterest expense of $13.3 billion,
down $3.5 billion
- Income tax expense of
$966 million, compared with an income tax benefit of
$1.6 billion
- Average deposits of $1.3 trillion, down
$42.6 billion, or 3 percent
- Average loans of $946.3 billion, down
$5.5 billion, or 1 percent
- Provision expense of $521 million, down
$130 million, or 20 percent
- Net charge-offs of 0.30 percent of
average loans (annualized), down from 0.31 percent
- Reserve release2 of $200 million,
compared with $100 million release
- Nonaccrual loans of $6.5 billion, down
$1.2 billion, or 15 percent
Financial results reported in this document are preliminary.
Final financial results and other disclosures will be reported in
our Annual Report on Form 10-K for the year ended December 31,
2018, 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, 2018
Sep 30,2018
Dec 31,2017
2018 2017
Earnings
Diluted earnings per common share
$ 1.21 1.13
1.16
4.28 4.10 Wells Fargo net income (in billions)
6.06 6.01 6.15
22.39 22.18 Return on assets (ROA)
1.28 % 1.27 1.26
1.19 1.15 Return on equity
(ROE)
12.89 12.04 12.47
11.53 11.35 Return on average
tangible common equity (ROTCE) (a)
15.39 14.33 14.85
13.73 13.55
Asset Quality Net charge-offs
(annualized) as a % of average total loans
0.30 %
0.29 0.31
0.29 0.31 Allowance for credit losses as a % of
total loans
1.12 1.16 1.25
1.12 1.25 Allowance for
credit losses as a % of annualized net charge-offs
374 406
401
390 408
Other Revenue (in billions)
$
21.0 21.9 22.1
86.4 88.4 Efficiency ratio (b)
63.6 % 62.7 76.2
65.0 66.2 Average loans (in
billions)
$ 946.3 939.5 951.8
945.2 956.1
Average deposits (in billions)
1,268.9 1,266.4 1,311.6
1,275.9 1,304.6 Net interest margin
2.94
% 2.94 2.84
2.91
2.87
(a) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
securities but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity, which utilizes tangible
common equity, is a useful financial measure because it enables
investors and others to assess the Company's use of equity. For
additional information, including a corresponding reconciliation to
GAAP financial measures, see the “Tangible Common Equity” tables on
page 36.
(b) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
Wells Fargo & Company (NYSE:WFC) reported net income of
$6.1 billion, or $1.21 per diluted common share, for
fourth quarter 2018, compared with $6.2 billion, or $1.16 per
share, for fourth quarter 2017, and $6.0 billion, or
$1.13 per share, for third quarter 2018.
Chief Executive Officer Tim Sloan said, “I’m proud of the
transformational changes we made at Wells Fargo during 2018
including significant progress on our six goals. We have made
meaningful improvements to how we manage risk across the company,
particularly operational and compliance risk. We improved customer
service which resulted in both ‘Customer Loyalty’ and ‘Overall
Satisfaction with Most Recent Visit’ branch survey scores reaching
a 24-month high in December. Our voluntary team member attrition in
2018 improved to its lowest level in six years reflecting our
efforts to make Wells Fargo a better place to work, and we continue
to attract impressive leaders from outside the company. We launched
many customer-focused innovations including our online mortgage
application, Control TowerSM, Pay with Wells Fargo, and our new
Propel® Card. Our commitment to building stronger communities was
demonstrated by exceeding our target of donating $400 million to
communities across the U.S., and a recent example was our Holiday
Food Bank program which provided over 50 million meals during the
holidays. Our focus on delivering long-term shareholder value
included meeting our 2018 expense target and returning a record
$25.8 billion to shareholders in 2018, up 78% from 2017. I
want to thank our team members for their commitment to making Wells
Fargo a better bank in 2018. I’m confident that we’ll continue to
make Wells Fargo even better in 2019.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo
reported $6.1 billion of net income in the fourth quarter. Compared
with the third quarter, we grew both loans and deposits and credit
performance remained strong. In addition, our effective income tax
rate was lower compared with the prior quarter, and we maintained
solid capital levels even as we reduced our common shares
outstanding. We continued to have positive business trends in the
fourth quarter with primary consumer checking customers, consumer
credit card active accounts, debit and credit card usage,
commercial loan balances, and loan originations in auto, small
business, home equity and student lending all growing compared with
a year ago. Our focus on reducing expenses enabled us to meet our
2018 expense target, and we are on track to meet our 2019 expense
target as well.”
Net Interest Income
Net interest income in the fourth quarter was $12.6 billion, up
$72 million from third quarter 2018, driven primarily by the
benefits of higher average interest rates and favorable hedge
ineffectiveness accounting results, partially offset by the impacts
from balance sheet mix and lower variable income. Net interest
margin was 2.94 percent, flat compared with the prior quarter.
Noninterest Income
Noninterest income in the fourth quarter was $8.3 billion, down
$1.0 billion from third quarter 2018. Fourth quarter noninterest
income included lower market sensitive revenue3, mortgage banking
fees and trust and investment fees, partially offset by higher
other income.
- Mortgage banking income was $467
million, down from $846 million in third quarter 2018. Net
mortgage servicing income was $109 million, down from
$390 million in the third quarter predominantly due to updated
mortgage servicing rights valuation assumptions driven by recent
market observations. The production margin on residential
held-for-sale mortgage loan originations4 decreased to
0.89 percent, from 0.97 percent in the third quarter,
primarily due to lower retail margins, partially offset by a lower
percentage of correspondent volume. Residential mortgage loan
originations in the fourth quarter were $38 billion, down from
$46 billion in the third quarter primarily due to
seasonality.
- Market sensitive revenue3 was $40
million, down from $631 million in third quarter 2018, primarily
due to lower net gains from equity securities as lower deferred
compensation plan investment results were partially offset by
higher equity investment gains. The decrease related to the
deferred compensation plan was offset by lower employee benefits
expense. Revenue from trading activities declined compared with the
prior quarter as well, driven by wider spreads in credit and asset
backed products.
- Other income was $595 million, up
from $466 million in the third quarter. The increase in the
fourth quarter included a $117 million gain from the previously
announced sale of 52 branches.
Noninterest Expense
Noninterest expense in the fourth quarter declined $424 million
from the prior quarter to $13.3 billion, predominantly due to
a $671 million decline in employee benefits driven by lower
deferred compensation expense (largely offset in market sensitive
revenue), lower FDIC expense due to the completion of their special
assessment, and lower operating losses. These decreases were
partially offset by higher other expense, operating lease expense
on lease asset impairment, outside professional services and salary
expense. The efficiency ratio was 63.6 percent in fourth
quarter 2018, compared with 62.7 percent in the third
quarter.
Fourth quarter 2018 operating losses were $432 million and
included a $175 million accrual for an agreement reached in
December 2018 with all 50 state Attorneys General and the District
of Columbia regarding previously disclosed matters.
Income Taxes
The Company’s effective income tax rate was 13.7 percent for
fourth quarter 2018, compared with 20.1 percent for third quarter
2018, which included net discrete income tax expense in the third
quarter related to re-measurement of our initial estimates for the
impacts of the Tax Cuts & Jobs Act (Tax Act) recognized in
fourth quarter 2017. The fourth quarter 2018 income tax rate
included $158 million of net discrete income tax benefits
primarily related to the results of state income tax audits and
incremental state tax credits. In addition, the fourth quarter
income tax rate benefited from $137 million related to
revisions to our full year 2018 effective income tax rate made
during the quarter. The Company's full year 2018 effective income
tax rate was 20.2 percent (18 percent before discrete items). We
currently expect the effective income tax rate for full year 2019
to be approximately 18 percent, excluding the impact of any
unanticipated discrete items.
Loans
Total average loans were $946.3 billion in the fourth
quarter, up $6.9 billion from the third quarter. Period-end
loan balances were $953.1 billion at December 31, 2018, up
$10.8 billion from September 30, 2018. Commercial loans
were up $11.5 billion compared with September 30, 2018, due to
$12.2 billion of growth in commercial and industrial loans,
partially offset by a $583 million decline in commercial real
estate loans. Consumer loans decreased $709 million from the prior
quarter, reflecting the following:
- Real estate 1-4 family first mortgage
loans increased $792 million, as $9.8 billion of
held-for-investment nonconforming mortgage loan originations were
predominantly offset by payoffs and $1.6 billion of sales of
purchased credit-impaired (PCI) Pick-a-Pay mortgage loans.
Additionally, $562 million of nonconforming mortgage loan
originations that would have otherwise been included in 1-4 family
first mortgage loan outstandings were designated as held-for-sale
in fourth quarter 2018 in anticipation of the future issuance of
residential mortgage-backed securities (RMBS).
- Real estate 1-4 family junior lien
mortgage loans decreased $932 million, as payoffs continued to
exceed originations
- Credit card loans increased $1.2
billion primarily due to seasonality
- Automobile loans declined
$1.0 billion due to expected continued runoff
Period-End Loan Balances
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017 Commercial
$ 513,405 501,886 503,105
503,396 503,388 Consumer
439,705
440,414 441,160 443,912
453,382 Total loans
$ 953,110
942,300 944,265 947,308
956,770 Change from prior quarter
$ 10,810
(1,965 ) (3,043 ) (9,462 ) 4,897
Debt and Equity Securities
Debt securities include available-for-sale and held-to-maturity
debt securities, as well as debt securities held for trading. Debt
securities were $484.7 billion at December 31, 2018, up
$12.4 billion from the third quarter, predominantly due to a
net increase in available-for-sale and held for trading debt
securities. Debt securities purchases of approximately
$16.9 billion, primarily U.S. Treasury and federal agency
mortgage-backed securities (MBS) in the available-for-sale
portfolio, more than offset runoff and sales.
Net unrealized losses on available-for-sale debt securities were
$2.6 billion at December 31, 2018, compared with net
unrealized losses of $3.8 billion at September 30, 2018,
predominantly due to lower interest rates, partially offset by
higher credit spreads.
Equity securities include marketable and non-marketable equity
securities, as well as equity securities held for trading. Equity
securities were $55.1 billion at December 31, 2018, down
$6.6 billion from the third quarter, predominantly due to a
decrease in equity securities held for trading.
Deposits
Total average deposits for fourth quarter 2018 were $1.3
trillion, up $2.6 billion from the prior quarter as growth in
commercial deposits was partially offset by lower consumer and
small business banking deposits, which included $1.8 billion of
deposits associated with the previously announced sale of 52
branches that closed on November 30. The average deposit cost for
fourth quarter 2018 was 55 basis points, up 8 basis points from the
prior quarter and 27 basis points from a year ago.
Capital
Capital in the fourth quarter continued to exceed our internal
target, with a Common Equity Tier 1 ratio (fully phased-in) of
11.7 percent5, down from 11.9 percent in the prior quarter. In
fourth quarter 2018, the Company repurchased 142.7 million
shares of its common stock, which net of issuances, reduced
period-end common shares outstanding by 130.3 million. The
Company paid a quarterly common stock dividend of $0.43 per
share.
Credit Quality
Net Loan Charge-offs
The quarterly loss rate in the fourth quarter was 0.30 percent
(annualized), compared with 0.29 percent in the prior quarter
and 0.31 percent a year ago. Commercial and consumer losses were
0.10 percent and 0.53 percent, respectively. Total credit losses
were $721 million in fourth quarter 2018, up $41 million from
third quarter 2018. Commercial losses decreased $20 million
driven by lower commercial and industrial loan net charge-offs and
higher recoveries in commercial real estate, while consumer losses
increased $61 million predominantly driven by seasonal
increases in credit card and other revolving credit and installment
loan charge-offs.
Net Loan Charge-Offs
Quarter ended December 31, 2018
September 30, 2018 December 31, 2017
($ in millions)
Net
loancharge-offs
As a % ofaverageloans
(a)
Net
loancharge-offs
As a % ofaverageloans
(a)
Net
loancharge-offs
As a % ofaverageloans
(a)
Commercial: Commercial and industrial $
132 0.15 % $ 148 0.18 % $ 118 0.14 % Real estate mortgage (12 )
(0.04 ) (1 ) — (10 ) (0.03 ) Real estate construction (1 ) (0.01 )
(2 ) (0.04 ) (3 ) (0.05 ) Lease financing 13 0.26 7
0.14 10 0.20
Total commercial
132 0.10 152 0.12
115 0.09 Consumer: Real estate 1-4
family first mortgage (22 ) (0.03 ) (25 ) (0.04 ) (23 ) (0.03 )
Real estate 1-4 family junior lien mortgage (10 ) (0.11 ) (9 )
(0.10 ) (7 ) (0.06 ) Credit card 338 3.54 299 3.22 336 3.66
Automobile 133 1.16 130 1.10 188 1.38 Other revolving credit and
installment 150 1.64 133 1.44 142 1.46
Total consumer 589 0.53
528 0.47 636 0.56
Total $ 721 0.30 %
$ 680 0.29 % $ 751
0.31 %
(a) Quarterly net charge-offs (recoveries)
as a percentage of average loans are annualized. See explanation on
page 33 of the accounting for purchased credit-impaired (PCI) loans
and the impact on selected financial ratios.
Nonperforming Assets
Nonperforming assets decreased $289 million, or 4 percent, from
third quarter 2018 to $6.9 billion. Nonaccrual loans decreased
$218 million from third quarter 2018 to $6.5 billion reflecting
both lower consumer and commercial nonaccruals.
Nonperforming Assets (Nonaccrual Loans
and Foreclosed Assets)
December 31, 2018 September 30,
2018 December 31, 2017 ($ in millions)
Totalbalances
As a%
oftotalloans
Totalbalances
As a%
oftotalloans
Totalbalances
As a%
oftotalloans
Commercial:
Commercial and industrial $ 1,486 0.42 % $ 1,555 0.46 % $ 1,899
0.57 % Real estate mortgage 580 0.48 603 0.50 628 0.50 Real estate
construction 32 0.14 44 0.19 37 0.15 Lease financing 90
0.46 96 0.49 76 0.39
Total commercial
2,188 0.43 2,298
0.46 2,640 0.52 Consumer: Real
estate 1-4 family first mortgage 3,183 1.12 3,267 1.15 3,732 1.31
Real estate 1-4 family junior lien mortgage 945 2.75 983 2.78 1,086
2.73 Automobile 130 0.29 118 0.26 130 0.24 Other revolving credit
and installment 50 0.14 48 0.13 58 0.15
Total consumer 4,308 0.98
4,416 1.00 5,006 1.10
Total nonaccrual loans (a) 6,496
0.68 6,714 0.71 7,646
0.80 Foreclosed assets: Government insured/guaranteed
88 87 120 Non-government insured/guaranteed 363 435
522
Total foreclosed assets 451
522 642 Total nonperforming
assets $ 6,947 0.73 %
$ 7,236 0.77 % $
8,288 0.87 % Change from prior quarter:
Total nonaccrual loans (a) $ (218 ) $ (412 ) $ (572 ) Total
nonperforming assets (289 ) (389 )
(636 )
(a) Financial information for periods
prior to December 31, 2018, has been revised to exclude mortgage
loans held for sale (MLHFS), loans held for sale (LHFS) and loans
held at fair value. For additional information, see the "Five
Quarter Nonperforming Assets" table on page 32.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for
unfunded commitments, totaled $10.7 billion at
December 31, 2018, down $249 million from September 30,
2018. Fourth quarter 2018 included a $200 million reserve release2,
which reflected continued improvement in the credit quality of the
loan portfolio. The allowance coverage for total loans was
1.12 percent, compared with 1.16 percent in third quarter
2018. The allowance covered 3.7 times annualized fourth quarter net
charge-offs, compared with 4.1 times in the prior quarter. The
allowance coverage for nonaccrual loans was 165 percent at
December 31, 2018, compared with 163 percent at
September 30, 2018.
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,
2018 Sep 30,2018 Dec 31,2017 Community Banking
$ 3,169 2,816 3,472 Wholesale Banking
2,671 2,851 2,373 Wealth and Investment Management
689 732 675
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 and private equity
partnerships.
Selected Financial Information
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018
Dec 31,2017
Total revenue
$ 11,461 11,816 11,720
Provision for credit losses
534 547 636 Noninterest expense
7,032 7,467 10,216 Segment net income
3,169 2,816
3,472 (in billions) Average loans
459.7 460.9 473.2 Average
assets
1,015.9 1,024.9 1,073.2 Average deposits
759.4 760.9 738.3
Fourth Quarter 2018 vs. Third Quarter 2018
- Net income of $3.2 billion, up
$353 million, or 13 percent, primarily due to lower
noninterest expense and income tax expense, partially offset by
lower revenue
- Revenue was $11.5 billion, down
$355 million, or 3 percent, driven predominantly by lower
mortgage banking income and lower market sensitive revenue
reflecting lower deferred compensation plan investment results
(offset in employee benefits expense), partially offset by a
$117 million gain on the previously announced sale of 52
branches
- Noninterest expense of $7.0 billion was
down $435 million, or 6 percent, driven mainly by lower deferred
compensation expense (offset in market sensitive revenue),
operating losses, and FDIC expense, partially offset by higher
other expense
Fourth Quarter 2018 vs. Fourth Quarter 2017
- Net income was down $303 million, or 9
percent, predominantly due to higher income tax expense, as fourth
quarter 2017 included an income tax benefit from the Tax Act, and
lower revenue, partially offset by lower noninterest expense
- Revenue declined $259 million, or
2 percent, predominantly due to lower market sensitive revenue
and mortgage banking income, partially offset by gains from the
sales of PCI Pick-a-Pay loans and the previously announced sale of
52 branches
- Noninterest expense decreased $3.2
billion, or 31 percent, driven by lower operating losses
- Provision for credit losses decreased
$102 million, largely due to continued credit improvement in
the automobile and consumer real estate portfolios
Business Metrics and Highlights
- Primary consumer checking customers6,7
of 23.9 million, up 1.2 percent from a year ago. The previously
announced sale of 52 branches and $1.8 billion of deposits which
closed in fourth quarter 2018 reduced the growth rate by 0.5
percent
- More than 318,000 branch customer
experience surveys completed during fourth quarter 2018 (over 1.4
million in 2018), with both ‘Customer Loyalty’ and ‘Overall
Satisfaction with Most Recent Visit’ scores up from the prior
quarter and reaching a 24-month high in December
- Debit card point-of-sale purchase
volume8 of $89.8 billion in the fourth quarter, up 8 percent
year-over-year
- General purpose credit card
point-of-sale purchase volume of $20.2 billion in the fourth
quarter, up 5 percent year-over-year
- 29.2 million digital (online and
mobile) active customers, including 22.8 million mobile active
users7,9
- 5,518 retail bank branches as of the
end of fourth quarter 2018, reflecting 93 branch consolidations in
the quarter and 300 in 2018; in addition, completed the previously
announced sale of 52 branches in Indiana, Ohio, Michigan and part
of Wisconsin in fourth quarter 2018
- Home Lending
- Originations of $38 billion, down
from $46 billion in the prior quarter, primarily due to
seasonality; included home equity originations of $673 million,
down 6 percent from the prior quarter and up 14 percent from the
prior year
- Applications of $48 billion, down
from $57 billion in the prior quarter
- Application pipeline of
$18 billion at quarter end, down from $22 billion at September
30, 2018
- Production margin on residential
held-for-sale mortgage loan originations4 of 0.89 percent,
down from 0.97 percent in the prior quarter, primarily due to lower
retail margins
- Automobile originations of $4.7 billion
in the fourth quarter, up 9 percent from the prior year
- Student loan originations of $258
million in fourth quarter 2018, up 16 percent from the prior
year
- Small Business Lending10 originations
of $595 million, up 19 percent from the prior year
Wholesale Banking provides
financial solutions to businesses across the United States and
globally with annual sales generally in excess of $5 million.
Products and businesses include Commercial Banking, Commercial Real
Estate, Corporate and Investment Banking, Principal Investments,
Treasury Management, and Commercial Capital.
Selected Financial Information
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018 Dec 31,2017 Total revenue
$ 6,926 7,304 7,440 Provision (reversal
of provision) for credit losses
(28 ) 26 20
Noninterest expense
4,025 3,935 4,187 Segment net income
2,671 2,851 2,373 (in billions) Average loans
470.2
462.8 463.5 Average assets
839.1 827.2 837.2 Average
deposits
421.6 413.6
465.7
Fourth Quarter 2018 vs. Third Quarter 2018
- Net income of $2.7 billion, down
$180 million, or 6 percent
- Revenue of $6.9 billion decreased
$378 million, or 5 percent, as higher net interest income,
commercial real estate brokerage and other fees were more than
offset by lower market sensitive revenue, investment banking fees
and other income
- Noninterest expense of $4.0 billion
increased $90 million, or 2 percent, reflecting higher
operating lease expense, partially offset by lower FDIC
expense
- Provision for credit losses decreased
$54 million, driven primarily by higher recoveries
Fourth Quarter 2018 vs. Fourth Quarter 2017
- Net income increased $298 million, or
13 percent, as fourth quarter 2018 results benefited from a lower
effective income tax rate
- Revenue decreased $514 million, or
7 percent, largely due to the impact of the sales of Wells
Fargo Insurance Services USA (WFIS) in fourth quarter 2017 and
Wells Fargo Shareowner Services in first quarter 2018, as well as
lower market sensitive revenue, operating lease income and treasury
management fees, partially offset by increases related to losses
taken in fourth quarter 2017 from adjustments to leveraged leases
and other tax advantaged businesses due to the Tax Act
- Noninterest expense decreased
$162 million, or 4 percent, on lower expense related to
the sales of WFIS and Wells Fargo Shareowner Services, as well as
lower project-related expense and FDIC expense, partially offset by
higher regulatory, risk and technology expense
Business Metrics and Highlights
- Commercial card spend volume11 of $8.6
billion, up 11 percent from the prior year on increased transaction
volumes primarily reflecting customer growth, and up 5 percent
compared with third quarter 2018
- U.S. investment banking market share of
3.2 percent in 201812, compared with 3.6 percent in
201712
Wealth and Investment
Management (WIM) provides a full range of personalized
wealth management, investment and retirement products and services
to clients across U.S. based businesses including Wells Fargo
Advisors, The Private Bank, Abbot Downing, Wells Fargo
Institutional Retirement and Trust, and Wells Fargo Asset
Management. We deliver financial planning, private banking, credit,
investment management and fiduciary services to high-net worth and
ultra-high-net worth individuals and families. We also serve
clients’ brokerage needs, supply retirement and trust services to
institutional clients and provide investment management
capabilities delivered to global institutional clients through
separate accounts and the Wells Fargo Funds.
Selected Financial Information
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018 Dec 31,2017 Total revenue
$ 3,957 4,226 4,333 Provision (reversal
of provision) for credit losses
(3 ) 6 (7 )
Noninterest expense
3,044 3,243 3,246 Segment net income
689 732 675 (in billions) Average loans
75.2 74.6
72.9 Average assets
83.6 83.8 83.7 Average deposits
155.5 159.8 184.1
Fourth Quarter 2018 vs. Third Quarter 2018
- Net income of $689 million, down
$43 million, or 6 percent
- Revenue of $4.0 billion decreased
$269 million, or 6 percent, mostly due to net losses from
equity securities on lower deferred compensation plan investment
results of $218 million (offset in employee benefits expense) and
lower asset-based fees
- Noninterest expense of $3.0 billion
decreased $199 million, or 6 percent, primarily driven by
lower employee benefits from deferred compensation plan expense of
$216 million (offset in deferred compensation plan
investments)
Fourth Quarter 2018 vs. Fourth Quarter 2017
- Net income up $14 million, or 2
percent, as fourth quarter 2018 results benefited from a lower
effective income tax rate
- Revenue decreased $376 million, or
9 percent, primarily driven by lower deferred compensation plan
investment results of $235 million (offset in employee benefits
expense), asset-based fees, brokerage transaction revenue, and net
interest income
- Noninterest expense decreased
$202 million, or 6 percent, primarily due to lower employee
benefits from deferred compensation plan expense of $234 million
(offset in deferred compensation plan investments) and lower FDIC
expense, partially offset by higher regulatory, risk and technology
expense
Business Metrics and Highlights
Total WIM Segment
- WIM total client assets of $1.7
trillion, down 10 percent from a year ago, driven primarily by
lower market valuations, as well as net outflows
- Average loan balances up 3 percent from
a year ago largely due to growth in nonconforming mortgage
loans
- Full year 2018 closed referred
investment assets (referrals resulting from the WIM/Community
Banking partnership) of $10.1 billion, down 2 percent compared with
2017
Retail Brokerage
- Client assets of $1.5 trillion, down 10
percent from prior year, driven primarily by lower market
valuations, as well as net outflows
- Advisory assets of $501 billion, down 8
percent from prior year, driven primarily by lower market
valuations, as well as net outflows
Wealth Management
- Client assets of $224 billion, down 10
percent from prior year, driven primarily by lower market
valuations, as well as lower deposit balances
Asset Management
- Total assets under management (AUM) of
$466 billion, down 8 percent from prior year, primarily due to
equity and fixed income net outflows, the sale of Wells Fargo Asset
Management's ownership stake in The Rock Creek Group, LP and
removal of the associated AUM, and lower market valuations,
partially offset by higher money market fund net inflows
Retirement
- IRA assets of $373 billion, down 9
percent from prior year
- Institutional Retirement plan assets of
$364 billion, down 8 percent from prior year
Conference Call
The Company will host a live conference call on Tuesday, January
15, 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~7179357.
A replay of the conference call will be available beginning at
11:00 a.m. PT (2:00 p.m. ET) on Tuesday, January 15 through
Tuesday, January 29. Please dial 855-859-2056 (U.S. and Canada) or
404-537-3406 (International) and enter Conference ID #7179357. 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~7179357.
End Notes
1 Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity securities but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity, which utilizes tangible common equity, is a useful
financial measure because it enables investors and others to assess
the Company's use of equity. For additional information, including
a corresponding reconciliation to GAAP financial measures, see the
“Tangible Common Equity” tables on page 36.
2 Reserve build represents the amount by which the provision for
credit losses exceeds net charge-offs, while reserve release
represents the amount by which net charge-offs exceed the provision
for credit losses.
3 Market sensitive revenue represents net gains from trading
activities, debt securities, and equity securities.
4 Production margin represents net gains on residential mortgage
loan origination/sales activities divided by total residential
held-for-sale mortgage originations. See the "Selected Five Quarter
Residential Mortgage Production Data" table on page 42 for more
information.
5 See table on page 37 for more information on Common Equity
Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary
estimate and is calculated assuming the full phase-in of the Basel
III capital rules.
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 2018, comparisons with November 2017.
8 Combined consumer and business debit card purchase volume
dollars.
9 Primarily includes retail banking, consumer lending, small
business and business banking customers.
10 Small Business Lending includes credit card, lines of credit
and loan products (primarily under $100,000 sold through our retail
banking branches).
11 Includes commercial card volume for the entire company.
12 Source: Dealogic U.S. investment banking fee market
share.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. In
addition, we may make forward-looking statements in our other
documents filed or furnished with the SEC, and our management may
make forward-looking statements orally to analysts, investors,
representatives of the media and others. Forward-looking statements
can be identified by words such as “anticipates,” “intends,”
“plans,” “seeks,” “believes,” “estimates,” “expects,” “target,”
“projects,” “outlook,” “forecast,” “will,” “may,” “could,”
“should,” “can” and similar references to future periods. In
particular, forward-looking statements include, but are not limited
to, statements we make about: (i) the future operating or
financial performance of the Company, including our outlook for
future growth; (ii) our noninterest expense and efficiency
ratio; (iii) future credit quality and performance, including
our expectations regarding future loan losses and allowance levels;
(iv) the appropriateness of the allowance for credit losses;
(v) our expectations regarding net interest income and net
interest margin; (vi) loan growth or the reduction or
mitigation of risk in our loan portfolios; (vii) future
capital or liquidity levels or targets and our estimated Common
Equity Tier 1 ratio under Basel III capital standards;
(viii) the performance of our mortgage business and any
related exposures; (ix) the expected outcome and impact of
legal, regulatory and legislative developments, as well as our
expectations regarding compliance therewith; (x) future common
stock dividends, common share repurchases and other uses of
capital; (xi) our targeted range for return on assets, return
on equity, and return on tangible common equity; (xii) the
outcome of contingencies, such as legal proceedings; and
(xiii) the Company’s plans, objectives and strategies.
Forward-looking statements are not based on historical facts but
instead represent our current expectations and assumptions
regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you, therefore, against relying on any of
these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that
could cause actual results to differ materially from those in the
forward-looking statements include the following, without
limitation:
- current and future economic and market
conditions, including the effects of declines in housing prices,
high unemployment rates, U.S. fiscal debt, budget and tax matters,
geopolitical matters, and any slowdown in global economic
growth;
- our capital and liquidity requirements
(including under regulatory capital standards, such as the Basel
III capital standards) and our ability to generate capital
internally or raise capital on favorable terms;
- financial services reform and other
current, pending or future legislation or regulation that could
have a negative effect on our revenue and businesses, including the
Dodd-Frank Act and other legislation and regulation relating to
bank products and services;
- 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 any efficiency
ratio or expense target as part of our expense management
initiatives, including as a result of business and economic
cyclicality, seasonality, changes in our business composition and
operating environment, growth in our businesses and/or
acquisitions, and unexpected expenses relating to, among other
things, litigation and regulatory matters;
- the effect of the current interest rate
environment or changes in interest rates on our net interest
income, net interest margin and our mortgage originations, mortgage
servicing rights and mortgage loans held for sale;
- significant turbulence or a disruption
in the capital or financial markets, which could result in, among
other things, reduced investor demand for mortgage loans, a
reduction in the availability of funding or increased funding
costs, and declines in asset values and/or recognition of
other-than-temporary impairment on securities held in our debt
securities and equity securities portfolios;
- the effect of a fall in stock market
prices on our investment banking business and our fee income from
our brokerage, asset and wealth management businesses;
- negative effects from the retail
banking sales practices matter and from other instances where
customers may have experienced financial harm, including on our
legal, operational and compliance costs, our ability to engage in
certain business activities or offer certain products or services,
our ability to keep and attract customers, our ability to attract
and retain qualified team members, and our reputation;
- resolution of regulatory matters,
litigation, or other legal actions, which may result in, among
other things, additional costs, fines, penalties, restrictions on
our business activities, reputational harm, or other adverse
consequences;
- a failure in or breach of our
operational or security systems or infrastructure, or those of our
third party vendors or other service providers, including as a
result of cyber attacks;
- the effect of changes in the level of
checking or savings account deposits on our funding costs and net
interest margin;
- fiscal and monetary policies of the
Federal Reserve Board; and
- the other risk factors and
uncertainties described under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2017.
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, 2017, as
filed with the Securities and Exchange Commission and available on
its website at www.sec.gov.
Any forward-looking statement made by us speaks only as of the
date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or
otherwise, except as may be required by law.
Forward-looking Non-GAAP Financial
Measures. From time to time management may discuss
forward-looking non-GAAP financial measures, such as
forward-looking estimates or targets for return on average tangible
common equity. We are unable to provide a reconciliation of
forward-looking non-GAAP financial measures to their most directly
comparable GAAP financial measures because we are unable to
provide, without unreasonable effort, a meaningful or accurate
calculation or estimation of amounts that would be necessary for
the reconciliation due to the complexity and inherent difficulty in
forecasting and quantifying future amounts or when they may occur.
Such unavailable information could be significant to future
results.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion
in assets. Wells Fargo’s vision is to satisfy our customers’
financial needs and help them succeed financially. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,800 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 37 countries and territories to support customers who
conduct business in the global economy. With approximately 259,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 26 on
Fortune’s 2018 rankings of America’s largest corporations.
Wells Fargo & Company and
Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
Pages
Summary
Information
Summary Financial Data
17
Income
Consolidated Statement of Income 19 Consolidated Statement of
Comprehensive Income 21 Condensed Consolidated Statement of Changes
in Total Equity 21 Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis) 22 Five Quarter Average Balances, Yields
and Rates Paid (Taxable-Equivalent Basis) 24 Noninterest Income and
Noninterest Expense 25
Balance
Sheet
Consolidated Balance Sheet 27 Trading Activities 29 Debt Securities
29 Equity Securities 30
Loans
Loans 31 Nonperforming Assets 32 Loans 90 Days or More Past Due and
Still Accruing 32 Purchased Credit-Impaired Loans 33 Changes in
Allowance for Credit Losses 35
Equity
Tangible Common Equity 36 Common Equity Tier 1 Under Basel III 37
Operating
Segments
Operating Segment Results 38
Other
Mortgage Servicing and other related data 40
Wells Fargo & Company and
Subsidiaries
SUMMARY FINANCIAL DATA
Quarter ended % ChangeDec 31, 2018 from Year
ended ($ in millions, except per share amounts)
Dec 31, 2018 Sep 30,2018 Dec 31,2017
Sep 30,2018 Dec 31,2017
Dec 31,
2018 Dec 31,2017 %Change
For the Period
Wells Fargo net income
$
6,064 6,007 6,151 1 % (1 )
$ 22,393 22,183 1 %
Wells Fargo net income applicable to common stock
5,711
5,453 5,740 5 (1 )
20,689 20,554 1 Diluted earnings per
common share
1.21 1.13 1.16 7 4
4.28 4.10 4
Profitability ratios (annualized): Wells Fargo net income to
average assets (ROA)
1.28 % 1.27 1.26 1 2
1.19
% 1.15 3 Wells Fargo net income applicable to common stock
to average Wells Fargo common stockholders’ equity (ROE)
12.89 12.04 12.47 7 3
11.53 11.35 2 Return on average
tangible common equity (ROTCE)(1)
15.39 14.33 14.85 7 4
13.73 13.55 1 Efficiency ratio (2)
63.6 62.7 76.2 1
(17 )
65.0 66.2 (2 ) Total revenue
$ 20,980
21,941 22,050 (4 ) (5 )
$ 86,408 88,389 (2 ) Pre-tax
pre-provision profit (PTPP) (3)
7,641 8,178 5,250 (7 ) 46
30,282 29,905 1 Dividends declared per common share
0.43 0.43 0.39 — 10
1.64 1.54 6 Average common shares
outstanding
4,665.8 4,784.0 4,912.5 (2 ) (5 )
4,799.7
4,964.6 (3 ) Diluted average common shares outstanding
4,700.8 4,823.2 4,963.1 (3 ) (5 )
4,838.4 5,017.3 (4
) Average loans
$ 946,336 939,462 951,822 1 (1 )
$ 945,197 956,129 (1 ) Average assets
1,879,047 1,876,283 1,935,318 — (3 )
1,888,892
1,933,005 (2 ) Average total deposits
1,268,948 1,266,378
1,311,592 — (3 )
1,275,857 1,304,622 (2 ) Average consumer
and small business banking deposits (4)
736,295 743,503
757,541 (1 ) (3 )
747,183 758,271 (1 ) Net interest margin
2.94 % 2.94 2.84 — 4
2.91
%
2.87 1
At Period End Debt securities (5)
$
484,689 472,283 473,366 3 2
$ 484,689 473,366
2 Loans
953,110 942,300 956,770 1 —
953,110 956,770 —
Allowance for loan losses
9,775 10,021 11,004 (2 ) (11 )
9,775 11,004 (11 ) Goodwill
26,418 26,425 26,587 — (1
)
26,418 26,587 (1 ) Equity securities (5)
55,148
61,755 62,497 (11 ) (12 )
55,148 62,497 (12 ) Assets
1,895,883 1,872,981 1,951,757 1 (3 )
1,895,883
1,951,757 (3 ) Deposits
1,286,170 1,266,594 1,335,991 2 (4 )
1,286,170 1,335,991 (4 ) Common stockholders' equity
174,359 176,934 183,134 (1 ) (5 )
174,359 183,134 (5
) Wells Fargo stockholders’ equity
196,166 198,741 206,936
(1 ) (5 )
196,166 206,936 (5 ) Total equity
197,066
199,679 208,079 (1 ) (5 )
197,066 208,079 (5 ) Tangible
common equity (1)
145,980 148,391 153,730 (2 ) (5 )
145,980 153,730 (5 ) Common shares outstanding
4,581.3 4,711.6 4,891.6 (3 ) (6 )
4,581.3 4,891.6 (6
) Book value per common share (6)
$ 38.06 37.55 37.44
1 2
$ 38.06 37.44 2 Tangible book value per common
share (1)(6)
31.86 31.49 31.43 1 1
31.86 31.43 1 Team
members (active, full-time equivalent)
258,700
261,700 262,700 (1 ) (2 )
258,700 262,700 (2 )
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
securities but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 36.
(2) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is
total revenue less noninterest expense. Management believes that
PTPP is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
(4) Consumer and small business banking
deposits are total deposits excluding mortgage escrow and wholesale
deposits.
(5) Financial information for the prior
periods of 2017 has been revised to reflect the impact of the
adoption in first quarter 2018 of Accounting Standards Update (ASU)
2016-01 – Financial Instruments – Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial
Liabilities.
(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, 2018 Sep 30,2018 Jun
30,2018 Mar 31,2018 Dec 31,2017
For the
Quarter Wells Fargo net income
$ 6,064 6,007 5,186 5,136 6,151 Wells Fargo net
income applicable to common stock
5,711 5,453 4,792 4,733
5,740 Diluted earnings per common share
1.21 1.13 0.98 0.96
1.16 Profitability ratios (annualized): Wells Fargo net income to
average assets (ROA)
1.28 % 1.27 1.10 1.09 1.26 Wells
Fargo net income applicable to common stock to average Wells Fargo
common stockholders’ equity (ROE)
12.89 12.04 10.60 10.58
12.47 Return on average tangible common equity (ROTCE)(1)
15.39 14.33 12.62 12.62 14.85 Efficiency ratio (2)
63.6 62.7 64.9 68.6 76.2 Total revenue
$
20,980 21,941 21,553 21,934 22,050 Pre-tax pre-provision
profit (PTPP) (3)
7,641 8,178 7,571 6,892 5,250 Dividends
declared per common share
0.43 0.43 0.39 0.39 0.39 Average
common shares outstanding
4,665.8 4,784.0 4,865.8 4,885.7
4,912.5 Diluted average common shares outstanding
4,700.8
4,823.2 4,899.8 4,930.7 4,963.1 Average loans
$
946,336 939,462 944,079 951,024 951,822 Average assets
1,879,047 1,876,283 1,884,884 1,915,896 1,935,318 Average
total deposits
1,268,948 1,266,378 1,271,339 1,297,178
1,311,592 Average consumer and small business banking deposits (4)
736,295 743,503 754,047 755,483 757,541 Net interest margin
2.94 % 2.94 2.93 2.84 2.84
At Quarter End Debt
securities (5)
$ 484,689 472,283 475,495 472,968
473,366 Loans
953,110 942,300 944,265 947,308 956,770
Allowance for loan losses
9,775 10,021 10,193 10,373 11,004
Goodwill
26,418 26,425 26,429 26,445 26,587 Equity
securities (5)
55,148 61,755 57,505 58,935 62,497 Assets
1,895,883 1,872,981 1,879,700 1,915,388 1,951,757 Deposits
1,286,170 1,266,594 1,268,864 1,303,689 1,335,991 Common
stockholders' equity
174,359 176,934 181,386 181,150 183,134
Wells Fargo stockholders’ equity
196,166 198,741 205,188
204,952 206,936 Total equity
197,066 199,679 206,069 205,910
208,079 Tangible common equity (1)
145,980 148,391 152,580
151,878 153,730 Common shares outstanding
4,581.3 4,711.6
4,849.1 4,873.9 4,891.6 Book value per common share (6)
$
38.06 37.55 37.41 37.17 37.44 Tangible book value per common
share (1)(6)
31.86 31.49 31.47 31.16 31.43 Team members
(active, full-time equivalent)
258,700
261,700 264,500 265,700
262,700
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
securities but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 36.
(2) The efficiency ratio is noninterest
expense divided by total revenue (net interest income and
noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is
total revenue less noninterest expense. Management believes that
PTPP is a useful financial measure because it enables investors and
others to assess the Company’s ability to generate capital to cover
credit losses through a credit cycle.
(4) Consumer and small business banking
deposits are total deposits excluding mortgage escrow and wholesale
deposits.
(5) Financial information for the quarter
ended December 31, 2017, has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
(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)
2018 2017 Change
2018
2017 Change
Interest income Debt
securities (1)
$ 3,803 3,294 15 %
$
14,406 12,946 11 % Mortgage loans held for sale
190
196 (3 )
777 786 (1 ) Loans held for sale (1)
33 12
175
140 50 180 Loans
11,367 10,367 10
43,974
41,388 6 Equity securities (1)
260 239 9
992 799 24
Other interest income (1)
1,268 850
49
4,358 2,940 48 Total
interest income
16,921 14,958 13
64,647 58,909 10
Interest
expense Deposits
1,765 931 90
5,622 3,013 87
Short-term borrowings
546 255 114
1,717 758 127
Long-term debt
1,802 1,344 34
6,703 5,157 30 Other
interest expense
164 115 43
610 424 44 Total interest
expense
4,277 2,645 62
14,652 9,352 57
Net interest
income 12,644 12,313 3
49,995 49,557 1 Provision
for credit losses
521 651 (20 )
1,744 2,528 (31 ) Net interest
income after provision for credit losses
12,123
11,662 4
48,251
47,029 3
Noninterest income Service charges on
deposit accounts
1,176 1,246 (6 )
4,716 5,111 (8 )
Trust and investment fees
3,520 3,687 (5 )
14,509
14,495 — Card fees
981 996 (2 )
3,907 3,960 (1 )
Other fees
888 913 (3 )
3,384 3,557 (5 ) Mortgage
banking
467 928 (50 )
3,017 4,350 (31 ) Insurance
109 223 (51 )
429 1,049 (59 ) Net gains (losses) from
trading activities (1)
10 (1 ) NM
602 542 11 Net
gains on debt securities
9 157 (94 )
108 479 (77 )
Net gains from equity securities (1)
21 572 (96 )
1,515 1,779 (15 ) Lease income
402 458 (12 )
1,753 1,907 (8 ) Other
753 558
35
2,473 1,603 54 Total
noninterest income
8,336 9,737
(14 )
36,413 38,832 (6 )
Noninterest expense Salaries
4,545 4,403 3
17,834 17,363 3 Commission and incentive compensation
2,427 2,665 (9 )
10,264 10,442 (2 ) Employee benefits
706 1,293 (45 )
4,926 5,566 (11 ) Equipment
643 608 6
2,444 2,237 9 Net occupancy
735 715
3
2,888 2,849 1 Core deposit and other intangibles
264 288 (8 )
1,058 1,152 (8 ) FDIC and other deposit
assessments
153 312 (51 )
1,110 1,287 (14 ) Other
3,866 6,516 (41 )
15,602 17,588 (11 ) Total noninterest
expense
13,339 16,800 (21 )
56,126 58,484 (4 )
Income
before income tax expense 7,120 4,599 55
28,538
27,377 4 Income tax expense (benefit)
966
(1,642 ) NM
5,662 4,917
15
Net income before noncontrolling interests 6,154
6,241 (1 )
22,876 22,460 2 Less: Net income from
noncontrolling interests
90 90 —
483 277 74
Wells Fargo net
income $ 6,064 6,151
(1 )
$ 22,393 22,183 1
Less: Preferred stock dividends and other
353
411 (14 )
1,704 1,629
5
Wells Fargo net income applicable to common stock
$ 5,711 5,740 (1 )
$ 20,689 20,554 1
Per share
information Earnings per common share
$ 1.22 1.17
4
$ 4.31 4.14 4 Diluted earnings per common share
1.21 1.16 4
4.28 4.10 4
Average common shares
outstanding 4,665.8 4,912.5 (5 )
4,799.7 4,964.6
(3 )
Diluted average common shares outstanding
4,700.8 4,963.1 (5 )
4,838.4 5,017.3 (4 )
NM - Not meaningful
(1) Financial information for the prior
periods of 2017 has been revised to reflect the impact of the
adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF
INCOME
Quarter ended (in millions, except per share amounts)
Dec 31, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017
Interest income
Debt securities (1)
$ 3,803
3,595 3,594 3,414 3,294 Mortgage loans held for sale
190 210
198 179 196 Loans held for sale (1)
33 35 48 24 12 Loans
11,367 11,116 10,912 10,579 10,367 Equity securities (1)
260 280 221 231 239 Other interest income (1)
1,268 1,128 1,042
920 850 Total interest income
16,921 16,364 16,015
15,347 14,958
Interest expense
Deposits
1,765 1,499 1,268 1,090 931 Short-term borrowings
546 462 398 311 255 Long-term debt
1,802 1,667 1,658
1,576 1,344 Other interest expense
164
164 150 132 115
Total interest expense
4,277 3,792
3,474 3,109 2,645
Net interest income 12,644 12,572 12,541 12,238
12,313 Provision for credit losses
521
580 452 191 651
Net interest income after provision for credit losses
12,123 11,992 12,089
12,047 11,662
Noninterest income
Service charges on deposit accounts
1,176 1,204 1,163 1,173
1,246 Trust and investment fees
3,520 3,631 3,675 3,683
3,687 Card fees
981 1,017 1,001 908 996 Other fees
888 850 846 800 913 Mortgage banking
467 846 770 934
928 Insurance
109 104 102 114 223 Net gains (losses) from
trading activities (1)
10 158 191 243 (1 ) Net gains on debt
securities
9 57 41 1 157 Net gains from equity securities
(1)
21 416 295 783 572 Lease income
402 453 443 455
458 Other
753 633 485
602 558 Total noninterest income
8,336 9,369 9,012
9,696 9,737
Noninterest expense
Salaries
4,545 4,461 4,465 4,363 4,403 Commission and
incentive compensation
2,427 2,427 2,642 2,768 2,665
Employee benefits
706 1,377 1,245 1,598 1,293 Equipment
643 634 550 617 608 Net occupancy
735 718 722 713 715
Core deposit and other intangibles
264 264 265 265 288 FDIC
and other deposit assessments
153 336 297 324 312 Other
3,866 3,546 3,796
4,394 6,516 Total noninterest expense
13,339 13,763 13,982
15,042 16,800
Income before
income tax expense 7,120 7,598 7,119 6,701 4,599 Income
tax expense (benefit)
966 1,512
1,810 1,374 (1,642 )
Net
income before noncontrolling interests 6,154 6,086 5,309
5,327 6,241 Less: Net income from noncontrolling interests
90 79 123 191
90
Wells Fargo net income
$ 6,064 6,007 5,186
5,136 6,151 Less: Preferred
stock dividends and other
353 554
394 403 411
Wells Fargo net income applicable to common stock
$ 5,711 5,453 4,792
4,733 5,740
Per share
information Earnings per common share
$ 1.22 1.14
0.98 0.97 1.17 Diluted earnings per common share
1.21 1.13
0.98 0.96 1.16
Average common shares outstanding
4,665.8 4,784.0 4,865.8 4,885.7 4,912.5
Diluted average
common shares outstanding 4,700.8
4,823.2 4,899.8 4,930.7
4,963.1
(1) Financial information for the quarter
ended December 31, 2017, has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Quarter ended December 31, % Year ended
December 31, % (in millions)
2018 2017
Change
2018 2017 Change Wells
Fargo net income
$ 6,064 6,151
(1)%
$ 22,393 22,183 1%
Other comprehensive income (loss), before tax: Debt
securities (1): Net unrealized gains (losses) arising during the
period
1,035 (106 ) NM
(4,493 ) 2,719 NM
Reclassification of net (gains) losses to net income
80 (215
) NM
248 (737 ) NM Derivatives and hedging activities: Net
unrealized losses arising during the period
(116 )
(558 ) (79)
(532 ) (540 ) (1) Reclassification of net
(gains) losses to net income
78 (83 ) NM
294 (543 )
NM Defined benefit plans adjustments: Net actuarial and prior
service gains (losses) arising during the period
(440
) 45 NM
(434 ) 49 NM Amortization of net
actuarial loss, settlements and other to net income
163 33
394
253 153 65 Foreign currency translation adjustments: Net
unrealized gains (losses) arising during the period
(62 ) 10 NM
(156 )
96 NM
Other comprehensive income (loss), before tax
738 (874 ) NM
(4,820 ) 1,197 NM Income tax
benefit (expense) related to other comprehensive income
(202 ) 319 NM
1,144
(434 ) NM
Other comprehensive income (loss), net of
tax 536 (555 ) NM
(3,676 ) 763 NM Less:
Other comprehensive loss from noncontrolling interests
(1 ) (33 ) (97)
(2 ) (62
) (97)
Wells Fargo other comprehensive income (loss), net of
tax 537 (522 ) NM
(3,674
) 825 NM
Wells Fargo comprehensive
income 6,601 5,629 17
18,719 23,008 (19)
Comprehensive income from noncontrolling interests
89
57 56
481 215 124
Total comprehensive income $ 6,690
5,686 18
$ 19,200
23,223 (17)
NM – Not meaningful
(1) The quarter and year ended December
31, 2017, includes net unrealized gains (losses) arising during the
period from equity securities of ($31) million and $81 million and
reclassification of net (gains) losses to net income related to
equity securities of ($133) million and ($456) million,
respectively. With the adoption in first quarter 2018 of ASU
2016-01, the quarter and year ended December 31, 2018, reflects net
unrealized gains (losses) arising during the period and
reclassification of net (gains) losses to net income from only debt
securities.
FIVE QUARTER CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN TOTAL EQUITY
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017
Balance, beginning of period
$ 199,679 206,069 205,910
208,079 206,617 Cumulative effect from change in accounting
policies (1)
— — — (24 ) — Wells Fargo net income
6,064 6,007 5,186 5,136 6,151 Wells Fargo other
comprehensive income (loss), net of tax
537 (1,012 ) (540 )
(2,659 ) (522 ) Noncontrolling interests
(38 ) 57 (77
) (178 ) 247 Common stock issued
239 156 73 1,208 436 Common
stock repurchased (2)
(7,299 ) (7,382 ) (2,923 )
(3,029 ) (2,845 ) Preferred stock redeemed (3)
— (2,150 ) —
— — Preferred stock released by ESOP
268 260 490 231 218
Common stock warrants repurchased/exercised
(131 )
(36 ) (1 ) (157 ) (46 ) Common stock dividends
(2,016
) (2,062 ) (1,900 ) (1,911 ) (1,920 ) Preferred stock
dividends
(353 ) (399 ) (394 ) (410 ) (411 ) Stock
incentive compensation expense
144 202 258 437 206 Net
change in deferred compensation and related plans
(28
) (31 ) (13 ) (813 ) (52 )
Balance, end of period $ 197,066
199,679 206,069 205,910
208,079
(1) The cumulative effect for the quarter
ended March 31, 2018, reflects the impact of the adoption in first
quarter 2018 of ASU 2016-04, ASU 2016-01 and ASU 2014-09.
(2) For the quarter ended June 30, 2018,
includes $1.0 billion related to a private forward repurchase
transaction that settled in third quarter 2018 for 18.8 million
shares of common stock.
(3) Represents the impact of the
redemption of preferred stock, Series J, in third quarter 2018.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended December 31,
2018 2017 (in millions)
Averagebalance
Yields/rates
Interestincome/expense
Averagebalance
Yields/rates
Interestincome/expense
Earning assets Interest-earning
deposits with banks (3)
$ 150,091 2.18
% $ 825 189,114 1.27 % $ 605 Federal funds
sold and securities purchased under resale agreements (3)
76,108 2.22 426 75,826 1.20 230 Debt
securities (4): Trading debt securities (5)
90,110
3.52 794 81,580 3.17 647 Available-for-sale debt
securities: Securities of U.S. Treasury and federal agencies
7,195 1.80 32 6,423 1.66 27 Securities of U.S.
states and political subdivisions
47,618 4.05
483 52,390 3.91 513 Mortgage-backed securities: Federal
agencies
155,322 2.91 1,128 152,910 2.62 1,000
Residential and commercial
6,666 4.87
81 9,371 4.85 114 Total mortgage-backed
securities
161,988 2.99 1,209 162,281 2.75
1,114 Other debt securities (5)
46,072
4.46 518 48,679 3.62 443 Total
available-for-sale debt securities (5)
262,873
3.41 2,242 269,773 3.10 2,097
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies
44,747
2.19 247 44,716 2.19 246 Securities of U.S. states
and political subdivisions
6,247 4.34 67 6,263
5.26 83 Federal agency and other mortgage-backed securities
95,748 2.46 589 89,622 2.25 503 Other debt
securities
68 3.65 1
1,194 2.64 8 Total held-to-maturity debt securities
146,810 2.46 904 141,795
2.36 840 Total debt securities (5)
499,793 3.15
3,940 493,148 2.90 3,584 Mortgage loans held for sale (6)
17,044 4.46 190 20,517 3.82 196 Loans held for
sale (5)(6)
1,992 6.69 33 1,490 3.19 12
Commercial loans: Commercial and industrial - U.S.
281,431
4.40 3,115 270,294 3.89 2,649 Commercial and
industrial - Non U.S.
62,035 3.73 584 59,233
2.96 442 Real estate mortgage
120,404 4.51
1,369 127,199 3.88 1,244 Real estate construction
23,090 5.32 310 24,408 4.38 270 Lease
financing
19,519 4.48 219
19,226 0.62 31 Total commercial loans
506,479
4.39 5,597 500,360 3.68 4,636
Consumer loans: Real estate 1-4 family first mortgage
285,260 4.02 2,868 281,966 4.01 2,826 Real
estate 1-4 family junior lien mortgage
34,844 5.60
491 40,379 4.96 505 Credit card
37,858 12.69
1,211 36,428 12.37 1,136 Automobile
45,536
5.16 592 54,323 5.13 702 Other revolving credit and
installment
36,359 6.95 637
38,366 6.28 607 Total consumer loans
439,857 5.25 5,799 451,462
5.10 5,776 Total loans (6)
946,336 4.79
11,396 951,822 4.35 10,412 Equity securities (5)
37,412 2.79 261 38,001 2.60 246 Other (5)
4,074 1.78 18 7,103
0.88 16 Total earning assets (5)
$
1,732,850 3.93 % $ 17,089
1,777,021 3.43 % $ 15,301
Funding sources
Deposits: Interest-bearing checking
$ 53,983
1.21 % $ 165 50,483 0.68 % $ 86 Market
rate and other savings
689,639 0.43 741
679,893 0.19 319 Savings certificates
21,955 0.87
48 20,920 0.31 17 Other time deposits
92,676
2.46 575 68,187 1.49 255 Deposits in foreign offices
56,098 1.66 236 124,597
0.81 254 Total interest-bearing deposits
914,351
0.77 1,765 944,080 0.39 931 Short-term borrowings
105,962 2.04 546 102,142 0.99 256 Long-term
debt
226,591 3.17 1,802 231,598 2.32 1,344
Other liabilities
27,365 2.41
164 24,728 1.86 115 Total interest-bearing
liabilities
1,274,269 1.34 4,277 1,302,548
0.81 2,646 Portion of noninterest-bearing funding sources (5)
458,581 — — 474,473
— — Total funding sources (5)
$
1,732,850 0.99 4,277
1,777,021 0.59 2,646
Net interest margin and net
interest income on a taxable-equivalent basis (7) 2.94
% $ 12,812 2.84 % $
12,655
Noninterest-earning assets Cash and due from banks
$ 19,288 19,152 Goodwill
26,423 26,579 Other
(5)
100,486 112,566 Total
noninterest-earning assets (5)
$ 146,197
158,297
Noninterest-bearing funding sources
Deposits
$ 354,597 367,512 Other liabilities
51,739 57,845 Total equity
198,442 207,413
Noninterest-bearing funding sources used to fund earning assets (5)
(458,581 ) (474,473 ) Net noninterest-bearing
funding sources (5)
$ 146,197 158,297
Total assets $ 1,879,047
1,935,318
(1) Our average prime rate was 5.28% and
4.30% for the quarters ended December 31, 2018 and 2017,
respectively. The average three-month London Interbank Offered Rate
(LIBOR) was 2.62% and 1.46% 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) Financial information for the prior
period has been revised to reflect the impact of the adoption in
first quarter 2018 of ASU 2016-18 – Statement of Cash Flows (Topic
230): Restricted Cash in which we changed the presentation of our
cash and cash equivalents to include both cash and due from banks
as well as interest-earning deposits with banks, which are
inclusive of any restricted cash.
(4) 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.
(5) Financial information for the prior
period has been revised to reflect the impact of the adoption in
first quarter 2018 of ASU 2016-01 – Financial Instruments – Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities.
(6) Nonaccrual loans and related income
are included in their respective loan categories.
(7) Includes taxable-equivalent
adjustments of $168 million and $342 million for the quarters ended
December 31, 2018 and 2017, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate was 21% and 35% for the quarters ended December
31, 2018 and 2017, respectively.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Year ended December 31,
2018 2017 (in millions)
Averagebalance
Yields/rates
Interestincome/expense
Averagebalance
Yields/rates
Interestincome/expense
Earning assets Interest-earning
deposits with banks (3)
$ 156,366 1.82
% $ 2,854 201,864 1.07 % $ 2,162 Federal funds
sold and securities purchased under resale agreements (3)
78,547 1.82 1,431 74,697 0.98 735 Debt
securities (4): Trading debt securities (5)
83,526
3.42 2,856 74,475 3.16 2,356 Available-for-sale debt
securities: Securities of U.S. Treasury and federal agencies
6,618 1.70 112 15,966 1.49 239 Securities of
U.S. states and political subdivisions
47,884 3.77
1,806 52,658 3.95 2,082 Mortgage-backed securities: Federal
agencies
156,052 2.79 4,348 145,310 2.60 3,782
Residential and commercial
7,769 4.62
358 11,839 5.33 631 Total mortgage-backed
securities
163,821 2.87 4,706 157,149 2.81
4,413 Other debt securities (5)
46,875
4.22 1,980 48,714 3.68 1,794 Total
available-for-sale debt securities (5)
265,198
3.24 8,604 274,487 3.11 8,528
Held-to-maturity debt securities: Securities of U.S. Treasury and
federal agencies
44,735 2.19 980 44,705 2.19
979 Securities of U.S. states and political subdivisions
6,253 4.34 271 6,268 5.32 334 Federal agency
and other mortgage-backed securities
94,216 2.36
2,221 78,330 2.34 1,832 Other debt securities
361 4.00 15 2,194 2.50 55
Total held-to-maturity debt securities
145,565
2.40 3,487 131,497 2.43 3,200 Total
debt securities (5)
494,289 3.02 14,947
480,459 2.93 14,084 Mortgage loans held for sale (6)
18,394
4.22 777 20,780 3.78 786 Loans held for sale (5)(6)
2,526 5.56 140 1,487 3.40 50 Commercial loans:
Commercial and industrial - U.S.
275,656 4.16
11,465 272,034 3.75 10,196 Commercial and industrial - Non
U.S.
60,718 3.53 2,143 57,198 2.86 1,639 Real
estate mortgage
122,947 4.29 5,279 129,990
3.74 4,859 Real estate construction
23,609 4.94
1,167 24,813 4.10 1,017 Lease financing
19,392
4.74 919 19,128 3.74 715 Total
commercial loans
502,322 4.18
20,973 503,163 3.66 18,426 Consumer loans:
Real estate 1-4 family first mortgage
284,178 4.04
11,481 277,751 4.03 11,206 Real estate 1-4 family junior
lien mortgage
36,687 5.38 1,975 42,780 4.82
2,062 Credit card
36,780 12.72 4,678 35,600
12.23 4,355 Automobile
48,115 5.18 2,491
57,900 5.34 3,094 Other revolving credit and installment
37,115 6.70 2,488 38,935
6.18 2,408 Total consumer loans
442,875
5.22 23,113 452,966 5.11 23,125 Total
loans (6)
945,197 4.66 44,086 956,129 4.35
41,551 Equity securities (5)
38,092 2.62 999
36,105 2.27 821 Other (5)
5,071 1.46
74 5,069 0.85 44 Total earning assets (5)
$ 1,738,482 3.76 %
$ 65,308 1,776,590 3.40 % $ 60,233
Funding sources Deposits: Interest-bearing checking
$
63,243 0.96 % $ 606 49,474 0.49
% $ 242 Market rate and other savings
684,882 0.31
2,157 682,053 0.14 983 Savings certificates
20,653
0.57 118 22,190 0.30 67 Other time deposits
84,822 2.25 1,906 61,625 1.43 880 Deposits in
foreign offices
63,945 1.30 835
123,816 0.68 841 Total interest-bearing deposits
917,545 0.61 5,622 939,158 0.32 3,013
Short-term borrowings
104,267 1.65 1,719
98,922 0.77 761 Long-term debt
224,268 2.99
6,703 246,195 2.09 5,157 Other liabilities
27,648 2.21 610 21,872
1.94 424 Total interest-bearing liabilities
1,273,728
1.15 14,654 1,306,147 0.72 9,355 Portion of
noninterest-bearing funding sources (5)
464,754
— — 470,443 — — Total funding
sources (5)
$ 1,738,482 0.85
14,654 1,776,590 0.53 9,355
Net interest margin and net interest income on a
taxable-equivalent basis (7) 2.91 %
$ 50,654 2.87 % $ 50,878
Noninterest-earning assets Cash and due from banks
$
18,777 18,622 Goodwill
26,453 26,629 Other (5)
105,180 111,164 Total noninterest-earning
assets (5)
$ 150,410 156,415
Noninterest-bearing funding sources Deposits
$
358,312 365,464 Other liabilities
53,496 55,740 Total
equity
203,356 205,654 Noninterest-bearing funding sources
used to fund earning assets (5)
(464,754 )
(470,443 ) Net noninterest-bearing funding sources (5)
$ 150,410 156,415
Total assets
$ 1,888,892 1,933,005
(1) Our average prime rate was 4.91% and
4.10% for 2018 and 2017, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 2.31% and 1.26% 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) Financial information for the prior
period has been revised to reflect the impact of the adoption in
first quarter 2018 of ASU 2016-18 – Statement of Cash Flows (Topic
230): Restricted Cash in which we changed the presentation of our
cash and cash equivalents to include both cash and due from banks
as well as interest-earning deposits with banks, which are
inclusive of any restricted cash.
(4) Yields and rates are based on interest
income/expense amounts for the period. The average balance amounts
represent amortized cost for the periods presented.
(5) Financial information for the year
ended December 31, 2017, has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
(6) Nonaccrual loans and related income
are included in their respective loan categories.
(7) Includes taxable-equivalent
adjustments of $659 million and $1.3 billion for 2018 and 2017,
respectively, predominantly related to tax-exempt income on certain
loans and securities. The federal statutory tax rate was 21% and
35% for the years ended 2018 and 2017, respectively.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS
AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Dec 31, 2018 Sep 30, 2018
Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 ($ in
billions)
Averagebalance
Yields/rates
Averagebalance
Yields/rates
Averagebalance
Yields/rates
Averagebalance
Yields/rates
Averagebalance
Yields/rates
Earning assets
Interest-earning deposits with banks (3)
$
150.1 2.18 % $ 148.6 1.93 % $ 154.8 1.75 % $
172.3 1.49 % $ 189.1 1.27 % Federal funds sold and securities
purchased under resale agreements (3)
76.1 2.22 79.9
1.93 80.0 1.73 78.1 1.40 75.8 1.20 Debt securities (4): Trading
debt securities (5)
90.1 3.52 84.5 3.45 80.7 3.45
78.7 3.24 81.6 3.17 Available-for-sale debt securities: Securities
of U.S. Treasury and federal agencies
7.2 1.80 6.4
1.65 6.4 1.66 6.4 1.66 6.4 1.66 Securities of U.S. states and
political subdivisions
47.6 4.05 46.6 3.76 47.4 3.91
50.0 3.37 52.4 3.91 Mortgage-backed securities: Federal agencies
155.3 2.91 155.5 2.77 154.9 2.75 158.4 2.72 152.9
2.62 Residential and commercial
6.7
4.87 7.3 4.68 8.2 4.86 8.9 4.12 9.4
4.85 Total mortgage-backed securities
162.0
2.99 162.8 2.86 163.1 2.86 167.3 2.79 162.3 2.75 Other debt
securities (5)
46.1 4.46 46.4
4.39 47.1 4.33 48.1 3.73 48.6 3.62 Total
available-for-sale debt securities (5)
262.9
3.41 262.2 3.26 264.0 3.28 271.8 3.04
269.7 3.10 Held-to-maturity debt 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 2.19 Securities of U.S. states and
political subdivisions
6.2 4.34 6.3 4.33 6.3 4.34 6.3
4.34 6.3 5.26 Federal agency and other mortgage-backed securities
95.8 2.46 95.3 2.27 94.9 2.33 90.8 2.38 89.6 2.25
Other debt securities
0.1 3.65 0.1
5.61 0.6 4.66 0.7 3.23 1.2 2.64 Total
held-to-maturity debt securities
146.8
2.46 146.4 2.33 146.5 2.38 142.5 2.42
141.8 2.36 Total debt securities (5)
499.8
3.15 493.1 3.02 491.2 3.04 493.0 2.89 493.1 2.90 Mortgage
loans held for sale
17.0 4.46 19.3 4.33 18.8 4.22
18.4 3.89 20.5 3.82 Loans held for sale (5)
2.0 6.69
2.6 5.28 3.5 5.48 2.0 4.92 1.5 3.19 Commercial loans: Commercial
and industrial - U.S.
281.4 4.40 273.8 4.22 275.3
4.16 272.0 3.85 270.3 3.89 Commercial and industrial - Non U.S.
62.0 3.73 60.9 3.63 59.7 3.51 60.2 3.23 59.2 2.96
Real estate mortgage
120.4 4.51 121.3 4.35 124.0 4.27
126.2 4.05 127.2 3.88 Real estate construction
23.1
5.32 23.3 5.05 23.6 4.88 24.4 4.54 24.4 4.38 Lease financing
19.5 4.48 19.5 4.69 19.3
4.48 19.4 5.30 19.3 0.62 Total commercial loans
506.4 4.39 498.8 4.24 501.9
4.15 502.2 3.91 500.4 3.68 Consumer loans:
Real estate 1-4 family first mortgage
285.3 4.02
284.1 4.07 283.1 4.06 284.2 4.02 282.0 4.01 Real estate 1-4 family
junior lien mortgage
34.8 5.60 35.9 5.50 37.2 5.32
38.8 5.13 40.4 4.96 Credit card
37.9 12.69 36.9 12.77
35.9 12.66 36.4 12.75 36.4 12.37 Automobile
45.5 5.16
47.0 5.20 48.6 5.18 51.5 5.16 54.3 5.13 Other revolving credit and
installment
36.4 6.95 36.8 6.78
37.4 6.62 37.9 6.46 38.3 6.28 Total consumer
loans
439.9 5.25 440.7 5.26
442.2 5.20 448.8 5.16 451.4 5.10 Total loans
946.3 4.79 939.5 4.72 944.1 4.64 951.0 4.50 951.8
4.35 Equity securities (5)
37.4 2.79 37.9 2.98 37.3
2.38 39.8 2.35 38.0 2.60 Other (5)
4.2
1.78 4.7 1.47 5.6 1.48 6.0 1.21 7.2
0.88 Total earning assets (5)
$ 1,732.9
3.93 % $ 1,725.6 3.81 % $ 1,735.3
3.73 % $ 1,760.6 3.55 % $ 1,777.0 3.43 %
Funding sources Deposits: Interest-bearing checking
$
54.0 1.21 % $ 51.2 1.01 % $ 80.3 0.90 % $ 67.8
0.77 % $ 50.5 0.68 % Market rate and other savings
689.6
0.43 693.9 0.35 676.7 0.26 679.1 0.22 679.9 0.19 Savings
certificates
22.0 0.87 20.6 0.62 20.0 0.43 20.0 0.34
20.9 0.31 Other time deposits
92.6 2.46 87.8 2.35
82.1 2.26 76.6 1.84 68.2 1.49 Deposits in foreign offices
56.1 1.66 53.9 1.50 51.5 1.30
94.8 0.98 124.6 0.81 Total interest-bearing deposits
914.3 0.77 907.4 0.66 910.6 0.56 938.3 0.47 944.1
0.39 Short-term borrowings
106.0 2.04 105.5 1.74
103.8 1.54 101.8 1.24 102.1 0.99 Long-term debt
226.6
3.17 220.7 3.02 223.8 2.97 226.0 2.80 231.6 2.32 Other
liabilities
27.4 2.41 27.0 2.40
28.2 2.12 27.9 1.92 24.7 1.86 Total
interest-bearing liabilities
1,274.3 1.34 1,260.6
1.20 1,266.4 1.10 1,294.0 0.97 1,302.5 0.81 Portion of
noninterest-bearing funding sources (5)
458.6
— 465.0 — 468.9 — 466.6 — 474.5
— Total funding sources (5)
$ 1,732.9
0.99 $ 1,725.6 0.87 $ 1,735.3
0.80 $ 1,760.6 0.71 $ 1,777.0 0.59
Net interest margin on a taxable-equivalent basis
2.94 % 2.94 % 2.93 % 2.84 % 2.84 %
Noninterest-earning assets Cash and due from banks
$
19.3 18.4 18.6 18.9 19.2 Goodwill
26.4 26.4 26.4 26.5
26.6 Other (5)
100.4 105.9 104.6
109.9 112.5 Total noninterest-earnings assets (5)
$ 146.1 150.7 149.6 155.3
158.3
Noninterest-bearing funding sources
Deposits
$ 354.6 359.0 360.7 358.9 367.5 Other
liabilities (5)
51.7 53.9 51.7 56.8 57.9 Total equity
198.4 202.8 206.1 206.2 207.4 Noninterest-bearing funding
sources used to fund earning assets (5)
(458.6
) (465.0 ) (468.9 ) (466.6 ) (474.5 ) Net
noninterest-bearing funding sources (5)
$
146.1 150.7 149.6 155.3 158.3
Total assets $ 1,879.0
1,876.3 1,884.9 1,915.9 1,935.3
(1) Our average prime rate was 5.28% for
the quarter ended December 31, 2018, 5.01% for the quarter ended
September 30,2018, 4.80% for the quarter ended June 30, 2018, 4.52%
for the quarter ended March 31, 2018 and 4.30% for the quarter
ended December 31, 2017. The average three-month London Interbank
Offered Rate (LIBOR) was 2.62%, 2.34%, 2.34%, 1.93% and 1.46% 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) Financial information for the quarter
ended December 31, 2017 has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-18 – Statement of
Cash Flows (Topic 230): Restricted Cash in which we changed the
presentation of our cash and cash equivalents to include both cash
and due from banks as well as interest-earning deposits with banks,
which are inclusive of any restricted cash.
(4) 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.
(5) Financial information for the quarter
ended December 31, 2017 has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
Wells Fargo & Company and
Subsidiaries
NONINTEREST INCOME
Quarter ended December 31, % Year ended December 31, % (in
millions)
2018 2017 Change
2018 2017 Change Service charges on deposit
accounts
$ 1,176 1,246 (6 )%
$
4,716 5,111 (8 )% Trust and investment fees:
Brokerage advisory, commissions and other fees
2,345 2,401
(2 )
9,436 9,358 1 Trust and investment management
796 866 (8 )
3,316 3,372 (2 ) Investment banking
379 420 (10 )
1,757
1,765 — Total trust and investment fees
3,520 3,687 (5 )
14,509
14,495 — Card fees
981 996 (2 )
3,907
3,960 (1 ) Other fees: Lending related charges and fees (1)
400 391 2
1,526 1,568 (3 ) Cash network fees
114 120 (5 )
481 506 (5 ) Commercial real estate
brokerage commissions
145 159 (9 )
468 462 1 Wire
transfer and other remittance fees
120 115 4
477 448
6 All other fees
109 128 (15 )
432 573 (25 ) Total other fees
888 913 (3 )
3,384
3,557 (5 ) Mortgage banking: Servicing income, net
109 262 (58 )
1,373 1,427 (4 ) Net gains on mortgage
loan origination/sales activities
358
666 (46 )
1,644 2,923 (44 )
Total mortgage banking
467 928
(50 )
3,017 4,350 (31 ) Insurance
109 223 (51 )
429 1,049 (59 ) Net gains (losses) from
trading activities (2)
10 (1 ) NM
602 542 11 Net
gains on debt securities
9 157 (94 )
108 479 (77 )
Net gains from equity securities (2)
21 572 (96 )
1,515 1,779 (15 ) Lease income
402 458 (12 )
1,753 1,907 (8 ) Life insurance investment income
158
153 3
651 594 10 All other
595
405 47
1,822 1,009 81 Total
$ 8,336 9,737 (14
)
$ 36,413 38,832
(6 )
NM - Not meaningful
(1) Represents combined amount of
previously reported "Charges and fees on loans" and "Letters of
credit fees".
(2) Financial information for the prior
periods has been revised to reflect the impact of the adoption in
first quarter 2018 of ASU 2016-01 – Financial Instruments – Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities.
NONINTEREST EXPENSE
Quarter ended December 31, % Year ended December 31, % (in
millions)
2018 2017 Change
2018 2017 Change Salaries
$
4,545 4,403 3 %
$ 17,834 17,363
3 % Commission and incentive compensation
2,427 2,665 (9 )
10,264 10,442 (2 ) Employee benefits
706 1,293 (45 )
4,926 5,566 (11 ) Equipment
643 608 6
2,444
2,237 9 Net occupancy
735 715 3
2,888 2,849 1 Core
deposit and other intangibles
264 288 (8 )
1,058
1,152 (8 ) FDIC and other deposit assessments
153 312 (51 )
1,110 1,287 (14 ) Outside professional services
843
1,025 (18 )
3,306 3,813 (13 ) Operating losses
432
3,531 (88 )
3,124 5,492 (43 ) Contract services (1)
616 410 50
2,192 1,638 34 Operating leases
392
325 21
1,334 1,351 (1 ) Advertising and promotion
254
200 27
857 614 40 Outside data processing
168 208 (19
)
660 891 (26 ) Travel and entertainment
168 183 (8 )
618 687 (10 ) Postage, stationery and supplies
132
137 (4 )
515 544 (5 ) Telecommunications
91 92 (1 )
361 364 (1 ) Foreclosed assets
47 47 —
188 251
(25 ) Insurance
25 28 (11 )
101 100 1 All other (1)
698 330 112
2,346
1,843 27 Total
$ 13,339
16,800 (21 )
$
56,126 58,484 (4 )
(1) The prior periods have been revised to
conform with the current period presentation whereby temporary help
is included in contract services rather than in all other
noninterest expense.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended (in millions)
Dec 31, 2018
Sep 30,2018 Jun 30,2018 Mar 31,2018 Dec
31,2017 Service charges on deposit accounts
$ 1,176
1,204 1,163 1,173 1,246 Trust and
investment fees: Brokerage advisory, commissions and other fees
2,345 2,334 2,354 2,403 2,401 Trust and investment
management
796 835 835 850 866 Investment banking
379 462 486 430
420 Total trust and investment fees
3,520 3,631 3,675
3,683 3,687 Card fees
981 1,017 1,001
908 996 Other fees: Lending related charges and fees (1)
400
370 376 380 391 Cash network fees
114 121 120 126 120
Commercial real estate brokerage commissions
145 129 109 85
159 Wire transfer and other remittance fees
120 120 121 116
115 All other fees
109 110
120 93 128 Total other
fees
888 850 846
800 913 Mortgage banking: Servicing
income, net
109 390 406 468 262 Net gains on mortgage loan
origination/sales activities
358 456
364 466 666 Total
mortgage banking
467 846
770 934 928 Insurance
109
104 102 114 223 Net gains (losses) from trading activities (2)
10 158 191 243 (1 ) Net gains on debt securities
9 57
41 1 157 Net gains from equity securities (2)
21 416 295 783
572 Lease income
402 453 443 455 458 Life insurance
investment income
158 167 162 164 153 All other
595 466 323 438
405 Total
$ 8,336
9,369 9,012 9,696
9,737
(1) Represents combined amount of
previously reported "Charges and fees on loans" and "Letters of
credit fees".
(2) Financial information for the quarter
ended December 31, 2017 has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
FIVE QUARTER NONINTEREST
EXPENSE
Quarter ended (in millions)
Dec 31, 2018
Sep 30,2018 Jun 30,2018 Mar 31,2018 Dec
31,2017 Salaries
$ 4,545 4,461 4,465
4,363 4,403 Commission and incentive compensation
2,427 2,427 2,642 2,768 2,665 Employee benefits
706
1,377 1,245 1,598 1,293 Equipment
643 634 550 617 608 Net
occupancy
735 718 722 713 715 Core deposit and other
intangibles
264 264 265 265 288 FDIC and other deposit
assessments
153 336 297 324 312 Outside professional
services
843 761 881 821 1,025 Operating losses
432
605 619 1,468 3,531 Contract services (1)
616 593 536 447
410 Operating leases
392 311 311 320 325 Advertising and
promotion
254 223 227 153 200 Outside data processing
168 166 164 162 208 Travel and entertainment
168 141
157 152 183 Postage, stationery and supplies
132 120 121 142
137 Telecommunications
91 90 88 92 92 Foreclosed assets
47 59 44 38 47 Insurance
25 26 24 26 28 All other (1)
698 451 624
573 330 Total
$ 13,339
13,763 13,982 15,042
16,800
(1) The quarter ended December 31, 2017,
has been revised to conform with the current period presentation
whereby temporary help is included in contract services rather than
in all other noninterest expense.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Dec 31, 2018
Dec 31,2017
%Change
Assets Cash and due from banks
$ 23,551 23,367
1
%
Interest-earning deposits with banks (1)
149,736
192,580 (22 ) Total cash, cash equivalents,
and restricted cash (1)
173,287 215,947
(20 ) Federal funds sold and securities purchased under
resale agreements (1)
80,207 80,025 — Debt securities:
Trading, at fair value (2)
69,989 57,624 21
Available-for-sale, at fair value (2)
269,912 276,407 (2 )
Held-to-maturity, at cost
144,788 139,335 4 Mortgage loans
held for sale
15,126 20,070 (25 ) Loans held for sale (2)
2,041 1,131 80 Loans
953,110 956,770 — Allowance for
loan losses
(9,775 ) (11,004 ) (11 )
Net loans
943,335 945,766 —
Mortgage servicing rights: Measured at fair value
14,649
13,625 8 Amortized
1,443 1,424 1 Premises and equipment, net
8,920 8,847 1 Goodwill
26,418 26,587 (1 ) Derivative
assets
10,770 12,228 (12 ) Equity securities (2)
55,148 62,497 (12 ) Other assets (2)
79,850
90,244 (12 ) Total assets
$
1,895,883 1,951,757 (3 )
Liabilities Noninterest-bearing deposits
$
349,534 373,722 (6 ) Interest-bearing deposits
936,636 962,269 (3 ) Total deposits
1,286,170 1,335,991 (4 ) Short-term borrowings
105,787 103,256 2 Derivative liabilities
8,499 8,796
(3 ) Accrued expenses and other liabilities
69,317 70,615 (2
) Long-term debt
229,044 225,020
2 Total liabilities
1,698,817 1,743,678
(3 )
Equity Wells Fargo stockholders’ equity:
Preferred stock
23,214 25,358 (8 ) 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
60,685
60,893 — Retained earnings
158,163 145,263 9 Cumulative
other comprehensive income (loss)
(6,336 ) (2,144 )
196 Treasury stock – 900,557,866 shares and 590,194,846 shares
(47,194 ) (29,892 ) 58 Unearned ESOP shares
(1,502 ) (1,678 ) (10 ) Total Wells Fargo
stockholders’ equity
196,166 206,936 (5 ) Noncontrolling
interests
900 1,143 (21 ) Total
equity
197,066 208,079 (5 )
Total liabilities and equity
$ 1,895,883
1,951,757 (3 )
(1) Financial information has been revised
to reflect the impact of the adoption in first quarter 2018 of ASU
2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash in
which we changed the presentation of our cash and cash equivalents
to include both cash and due from banks as well as interest-earning
deposits with banks, which are inclusive of any restricted
cash.
(2) Financial information for the prior
period has been revised to reflect the impact of the adoption in
first quarter 2018 of ASU 2016-01 – Financial Instruments – Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE
SHEET
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017
Assets Cash and due from banks
$ 23,551 18,791
20,450 18,145 23,367 Interest-earning deposits with banks (1)
149,736 140,732 142,999
184,250 192,580 Total cash, cash
equivalents, and restricted cash (1)
173,287
159,523 163,449 202,395
215,947 Federal funds sold and securities purchased
under resale agreements (1)
80,207 83,471 80,184 73,550
80,025 Debt securities: Trading, at fair value (2)
69,989
65,188 65,602 59,866 57,624 Available-for-sale, at fair value (2)
269,912 262,964 265,687 271,656 276,407 Held-to-maturity, at
cost
144,788 144,131 144,206 141,446 139,335 Mortgage loans
held for sale
15,126 19,225 21,509 17,944 20,070 Loans held
for sale (2)
2,041 1,765 3,408 3,581 1,131 Loans
953,110 942,300 944,265 947,308 956,770 Allowance for loan
losses
(9,775 ) (10,021 )
(10,193 ) (10,373 ) (11,004 ) Net loans
943,335 932,279 934,072
936,935 945,766 Mortgage servicing
rights: Measured at fair value
14,649 15,980 15,411 15,041
13,625 Amortized
1,443 1,414 1,407 1,411 1,424 Premises and
equipment, net
8,920 8,802 8,882 8,828 8,847 Goodwill
26,418 26,425 26,429 26,445 26,587 Derivative assets
10,770 11,811 11,099 11,467 12,228 Equity securities (2)
55,148 61,755 57,505 58,935 62,497 Other assets (2)
79,850 78,248 80,850
85,888 90,244 Total assets
$ 1,895,883 1,872,981
1,879,700 1,915,388 1,951,757
Liabilities Noninterest-bearing deposits
$
349,534 352,869 365,021 370,085 373,722 Interest-bearing
deposits
936,636 913,725
903,843 933,604 962,269 Total
deposits
1,286,170 1,266,594 1,268,864 1,303,689 1,335,991
Short-term borrowings
105,787 105,451 104,496 97,207 103,256
Derivative liabilities
8,499 8,586 8,507 7,883 8,796 Accrued
expenses and other liabilities
69,317 71,348 72,480 73,397
70,615 Long-term debt
229,044 221,323
219,284 227,302 225,020
Total liabilities
1,698,817
1,673,302 1,673,631 1,709,478
1,743,678
Equity Wells Fargo stockholders’
equity: Preferred stock
23,214 23,482 25,737 26,227 25,358
Common stock
9,136 9,136 9,136 9,136 9,136 Additional
paid-in capital
60,685 60,738 59,644 60,399 60,893 Retained
earnings
158,163 154,576 150,803 147,928 145,263 Cumulative
other comprehensive income (loss)
(6,336 ) (6,873 )
(5,461 ) (4,921 ) (2,144 ) Treasury stock
(47,194 )
(40,538 ) (32,620 ) (31,246 ) (29,892 ) Unearned ESOP shares
(1,502 ) (1,780 ) (2,051 )
(2,571 ) (1,678 ) Total Wells Fargo stockholders’ equity
196,166 198,741 205,188 204,952 206,936 Noncontrolling
interests
900 938 881
958 1,143 Total equity
197,066 199,679 206,069
205,910 208,079 Total liabilities and
equity
$ 1,895,883 1,872,981
1,879,700 1,915,388
1,951,757
(1) Financial information has been revised
to reflect the impact of the adoption in first quarter 2018 of ASU
2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash in
which we changed the presentation of our cash and cash equivalents
to include both cash and due from banks as well as interest-earning
deposits with banks, which are inclusive of any restricted
cash.
(2) Financial information for the quarter
ended December 31, 2017, has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 – Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER TRADING ASSETS AND
LIABILITIES
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017
Trading
assets Debt securities
$ 69,989 65,188 65,602
59,866 57,624 Equity securities (1)
19,449 26,138 22,978
25,327 30,004 Loans held for sale
1,469 1,266 1,350 1,695
1,023 Gross trading derivative assets
29,216 30,302 30,758
30,644 31,340 Netting (2)
(19,807 )
(19,188 ) (20,687 ) (20,112 ) (19,629 ) Total
trading derivative assets
9,409 11,114
10,071 10,532 11,711
Total trading assets
100,316
103,706 100,001 97,420
100,362
Trading liabilities Short sales
19,720
23,992 21,765 23,303 18,472 Gross trading derivative liabilities
28,717 29,268 29,847 29,717 31,386 Netting (2)
(21,178 ) (21,842 ) (22,311 )
(22,569 ) (23,062 ) Total trading derivative liabilities
7,539 7,426 7,536
7,148 8,324 Total trading liabilities
$ 27,259 31,418
29,301 30,451 26,796
(1) Financial information for the quarter
ended December 31, 2017, has been revised to reflect the impact of
the adoption in first quarter 2018 of ASU 2016-01 and assets held
as economic hedges for our deferred compensation plan obligations
have been reclassified as marketable equity securities not held for
trading.
(2) Represents balance sheet netting for
trading derivative assets and liability balances, and trading
portfolio level counterparty valuation adjustments.
FIVE QUARTER DEBT SECURITIES
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017 Trading
debt securities
$ 69,989 65,188
65,602 59,866 57,624
Available-for-sale debt securities: Securities of U.S. Treasury and
federal agencies
13,348 6,187 6,271 6,279 6,319 Securities
of U.S. states and political subdivisions
49,264 48,216
47,559 49,643 51,326 Mortgage-backed securities: Federal agencies
153,203 153,511 154,556 156,814 160,219 Residential and
commercial
7,000 6,939
8,286 9,264 9,173 Total mortgage-backed
securities
160,203 160,450 162,842 166,078 169,392
Other debt securities
47,097 48,111
49,015 49,656 49,370
Total available-for-sale debt securities
269,912
262,964 265,687 271,656
276,407 Held-to-maturity debt securities: Securities
of U.S. Treasury and federal agencies
44,751 44,743 44,735
44,727 44,720 Securities of U.S. states and political subdivisions
6,286 6,293 6,300 6,307 6,313 Federal agency and other
mortgage-backed securities (1)
93,685 93,020 93,016 89,748
87,527 Other debt securities
66 75
155 664 775 Total
held-to-maturity debt securities
144,788
144,131 144,206 141,446
139,335 Total debt securities
$ 484,689
472,283 475,495 472,968
473,366
(1) Predominantly consists of federal
agency mortgage-backed securities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER EQUITY SECURITIES
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017
Held
for trading at fair value:
Marketable equity securities
$ 19,449 26,138
22,978 25,327 30,004
Not held for
trading: Fair value: Marketable equity securities (1)
4,513 5,705 5,273 4,931 4,356 Nonmarketable equity
securities (2)
5,594 6,479
5,876 5,303 4,867 Total equity
securities at fair value
10,107 12,184
11,149 10,234 9,223
Equity method: LIHTC (3)
10,999 10,453 10,361 10,318 10,269
Private equity
3,832 3,838 3,732 3,840 3,839 Tax-advantaged
renewable energy
3,073 1,967 1,950 1,822 1,950 New market
tax credit and other
311 259
262 268 294 Total equity method
18,215 16,517 16,305
16,248 16,352 Other: Federal bank stock
and other at cost (4)
5,643 5,467 5,673 5,780 5,828 Private
equity (5)
1,734 1,449
1,400 1,346 1,090 Total equity
securities not held for trading
35,699
35,617 34,527 33,608
32,493
Total equity securities $ 55,148
61,755 57,505 58,935
62,497
(1) Includes $3.2 billion, $3.6 billion,
$3.5 billion, $3.5 billion and $3.7 billion at December 31,
September 30, June 30 and March 31, 2018, and December 31, 2017,
respectively, related to securities held as economic hedges of our
deferred compensation plan obligations.
(2) Includes $5.5 billion, $6.3 billion,
$5.5 billion, $5.0 billion and $4.9 billion at December 31,
September 30, June 30 and March 31, 2018, and December 31, 2017,
respectively, related to investments for which we elected the fair
value option.
(3) Represents low-income housing tax
credit investments.
(4) Includes $5.6 billion, $5.4 billion,
$5.6 billion, $5.7 billion and $5.4 billion at December 31,
September 30, June 30 and March 31, 2018, and December 31, 2017,
respectively, related to investments in Federal Reserve Bank and
Federal Home Loan Bank stock.
(5) Represents nonmarketable equity
securities for which we have elected to account for the security
under the measurement alternative.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER LOANS
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017
Commercial: Commercial and industrial
$ 350,199
338,048 336,590 334,678 333,125 Real estate mortgage
121,014
120,403 123,964 125,543 126,599 Real estate construction
22,496 23,690 22,937 23,882 24,279 Lease financing
19,696 19,745 19,614
19,293 19,385 Total commercial
513,405 501,886 503,105
503,396 503,388 Consumer: Real estate 1-4
family first mortgage
285,065 284,273 283,001 282,658
284,054 Real estate 1-4 family junior lien mortgage
34,398
35,330 36,542 37,920 39,713 Credit card
39,025 37,812 36,684
36,103 37,976 Automobile
45,069 46,075 47,632 49,554 53,371
Other revolving credit and installment
36,148
36,924 37,301 37,677
38,268 Total consumer
439,705
440,414 441,160 443,912
453,382 Total loans (1)
$ 953,110
942,300 944,265 947,308
956,770
(1) Includes $5.0 billion, $6.9 billion,
$9.0 billion, $10.7 billion, and $12.8 billion of purchased
credit-impaired (PCI) loans at December 31, September 30, June 30
and March 31, 2018, and December 31, 2017, 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, 2018
Sep 30,2018 Jun 30,2018 Mar 31,2018 Dec
31,2017 Commercial foreign loans:
Commercial and industrial
$ 62,564 61,696
61,732 59,696 60,106 Real estate mortgage
6,731 6,891 7,617
8,082 8,033 Real estate construction
1,011 726 542 668 655
Lease financing
1,159 1,187
1,097 1,077 1,126 Total
commercial foreign loans
$ 71,465
70,500 70,988 69,523
69,920
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS
(NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017 Nonaccrual
loans: Commercial: Commercial and industrial
$ 1,486
1,555 1,559 1,516 1,899 Real estate mortgage
580 603 765 755
628 Real estate construction
32 44 51 45 37 Lease financing
90 96 80 93
76 Total commercial
2,188
2,298 2,455 2,409 2,640
Consumer: Real estate 1-4 family first mortgage
3,183 3,267
3,469 3,673 3,732 Real estate 1-4 family junior lien mortgage
945 983 1,029 1,087 1,086 Automobile
130 118 119 117
130 Other revolving credit and installment
50
48 54 53 58 Total
consumer
4,308 4,416
4,671 4,930 5,006 Total nonaccrual
loans (1)(2)(3)
$ 6,496 6,714
7,126 7,339 7,646 As a
percentage of total loans
0.68 % 0.71 0.75 0.77 0.80
Foreclosed assets: Government insured/guaranteed
$ 88
87 90 103 120 Non-government insured/guaranteed
363
435 409 468
522 Total foreclosed assets
451 522
499 571 642 Total
nonperforming assets
$ 6,947
7,236 7,625 7,910 8,288
As a percentage of total loans
0.73 %
0.77 0.81 0.83 0.87
(1) Financial information for periods
prior to December 31, 2018 has been revised to exclude mortgage
loans held for sale (MLHFS), loans held for sale (LHFS) and loans
held at fair value of $339 million, $360 million, $380 million and
$390 million at September 30, June 30, and March 31, 2018, and
December 31, 2017, respectively.
(2) Excludes PCI loans because they
continue to earn interest income from accretable yield, independent
of performance in accordance with their contractual terms.
(3) Real estate 1-4 family mortgage loans
predominantly insured by the Federal Housing Administration (FHA)
or guaranteed by the Department of Veterans Affairs (VA) are not
placed on nonaccrual status because they are insured or
guaranteed.
LOANS 90 DAYS OR MORE PAST DUE AND
STILL ACCRUING (1)
(in millions)
Dec 31, 2018 Sep 30,2018
Jun 30,2018 Mar 31,2018 Dec 31,2017 Total
(excluding PCI)(2):
$ 8,704 8,838
9,087 10,351 11,532 Less: FHA insured/VA
guaranteed (3)
7,725 7,906
8,246 9,385 10,475
Total, not
government insured/guaranteed $ 979
932 841 966 1,057
By segment and class, not government insured/guaranteed:
Commercial: Commercial and industrial
$ 43 42 23 40
26 Real estate mortgage
51 56 26 23 23 Real estate
construction
— — —
1 — Total commercial
94
98 49 64 49
Consumer: Real estate 1-4 family first mortgage
124 128 132
163 213 Real estate 1-4 family junior lien mortgage
32 32 33
48 60 Credit card
513 460 429 473 492 Automobile
114
108 105 113 143 Other revolving credit and installment
102 106 93 105
100 Total consumer
885
834 792 902 1,008
Total, not government insured/guaranteed $
979 932 841 966
1,057
(1) Financial information for periods
prior to December 31, 2018 has been revised to exclude MLHFS, LHFS
and loans held at fair value, which reduced “Total, not government
insured/guaranteed” by $1 million, $1 million, $1 million and $6
million at September 30, June 30, and March 31, 2018, and December
31, 2017, respectively.
(1) PCI loans totaled $370 million, $567
million, $811 million, $1.0 billion and $1.4 billion, at December
31, September 30 , June 30, and March 31, 2018, and December 31,
2017, respectively.
(2) Represents loans whose repayments are
predominantly insured by the FHA or guaranteed by the VA.
Wells Fargo & Company and SubsidiariesCHANGES 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, 2018
Year endedDec
31,2018
2009-2017 Balance, beginning of period
$
4,409 8,887 10,447 Change in accretable
yield due to acquisitions
— — 161 Accretion into
interest income (1)
(202 ) (1,094 )
(16,983 ) Accretion into noninterest income due to sales (2)
(614 ) (2,374 ) (801 ) Reclassification
from nonaccretable difference for loans with improving
credit-related cash flows (3)
1 403 11,597 Changes in
expected cash flows that do not affect nonaccretable difference (4)
(561 ) (2,789 )
4,466 Balance, end of period
$ 3,033
3,033 8,887
(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, 2018, our carrying
value for PCI loans totaled $5.0 billion and the remainder of
nonaccretable difference established in purchase accounting totaled
$480 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
CHANGES IN ALLOWANCE FOR CREDIT
LOSSES
Quarter ended December 31, Year ended December 31, (in
millions)
2018 2017
2018
2017
Balance, beginning of period $
10,956 12,109
11,960 12,540 Provision
for credit losses
521 651
1,744 2,528 Interest income
on certain impaired loans (1)
(38 ) (49 )
(166
) (186 ) Loan charge-offs: Commercial: Commercial and
industrial
(220 ) (181 )
(727 ) (789 )
Real estate mortgage
(12 ) (4 )
(42 )
(38 ) Real estate construction
— —
— — Lease
financing
(18 ) (14 )
(70
) (45 ) Total commercial
(250 )
(199 )
(839 ) (872 ) Consumer:
Real estate 1-4 family first mortgage
(38 ) (49 )
(179 ) (240 ) Real estate 1-4 family junior lien
mortgage
(38 ) (54 )
(179 ) (279 )
Credit card
(414 ) (398 )
(1,599 )
(1,481 ) Automobile
(217 ) (261 )
(947
) (1,002 ) Other revolving credit and installment
(180 ) (169 )
(685 )
(713 ) Total consumer
(887 )
(931 )
(3,589 ) (3,715 ) Total loan
charge-offs
(1,137 ) (1,130 )
(4,428 ) (4,587 ) Loan recoveries: Commercial:
Commercial and industrial
88 63
304 297 Real estate
mortgage
24 14
70 82 Real estate construction
1 3
13 30 Lease financing
5
4
23 17 Total
commercial
118 84
410 426
Consumer:
Real estate 1-4 family first mortgage
60 72
267 288
Real estate 1-4 family junior lien mortgage
48 61
219
266 Credit card
76 62
307 239 Automobile
84 73
363 319 Other revolving credit and installment
30 27
118
121 Total consumer
298 295
1,274 1,233 Total loan
recoveries
416 379
1,684 1,659 Net loan charge-offs
(721 ) (751 )
(2,744 )
(2,928 ) Other
(11 ) —
(87 ) 6
Balance, end of
period $ 10,707 11,960
10,707 11,960 Components:
Allowance for loan losses
$ 9,775 11,004
9,775
11,004 Allowance for unfunded credit commitments
932
956
932 956
Allowance for credit losses
$ 10,707
11,960
10,707 11,960
Net loan charge-offs (annualized) as a percentage of average
total loans
0.30 % 0.31
0.29 0.31 Allowance
for loan losses as a percentage of total loans
1.03 1.15
1.03 1.15 Allowance for credit losses as a percentage of
total loans
1.12 1.25
1.12 1.25
(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,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017
Balance, beginning of quarter
$ 10,956 11,110 11,313 11,960
12,109 Provision for credit losses
521 580 452 191
651 Interest income on certain impaired loans (1)
(38
) (42 ) (43 ) (43 ) (49 ) Loan charge-offs: Commercial:
Commercial and industrial
(220 ) (209 ) (134 ) (164 )
(181 ) Real estate mortgage
(12 ) (9 ) (19 ) (2 ) (4
) Real estate construction
— — — — — Lease financing
(18 ) (15 ) (20 ) (17 )
(14 ) Total commercial
(250 ) (233 )
(173 ) (183 ) (199 ) Consumer: Real estate 1-4
family first mortgage
(38 ) (45 ) (55 ) (41 ) (49 )
Real estate 1-4 family junior lien mortgage
(38 ) (47
) (47 ) (47 ) (54 ) Credit card
(414 ) (376 ) (404 )
(405 ) (398 ) Automobile
(217 ) (214 ) (216 ) (300 )
(261 ) Other revolving credit and installment
(180
) (161 ) (164 ) (180 ) (169 )
Total consumer
(887 ) (843 )
(886 ) (973 ) (931 ) Total loan charge-offs
(1,137 ) (1,076 ) (1,059 )
(1,156 ) (1,130 ) Loan recoveries: Commercial: Commercial
and industrial
88 61 76 79 63 Real estate mortgage
24
10 19 17 14 Real estate construction
1 2 6 4 3 Lease
financing
5 8 5
5 4 Total commercial
118
81 106 105
84 Consumer: Real estate 1-4 family first mortgage
60
70 78 59 72 Real estate 1-4 family junior lien mortgage
48
56 60 55 61 Credit card
76 77 81 73 62 Automobile
84
84 103 92 73 Other revolving credit and installment
30 28 29 31
27 Total consumer
298 315
351 310 295 Total
loan recoveries
416 396
457 415 379 Net loan charge-offs
(721 ) (680 ) (602 ) (741
) (751 ) Other
(11 ) (12 )
(10 ) (54 ) —
Balance, end of
quarter $ 10,707 10,956
11,110 11,313 11,960
Components: Allowance for loan losses
$ 9,775
10,021 10,193 10,373 11,004 Allowance for unfunded credit
commitments
932 935 917
940 956 Allowance for credit
losses
$ 10,707 10,956
11,110 11,313 11,960 Net
loan charge-offs (annualized) as a percentage of average total
loans
0.30 % 0.29 0.26 0.32 0.31 Allowance for loan
losses as a percentage of: Total loans
1.03 1.06 1.08 1.10
1.15 Nonaccrual loans (2)
150 149 143 141 144 Nonaccrual
loans and other nonperforming assets (2)
141 138 134 131 133
Allowance for credit losses as a percentage of: Total loans
1.12 1.16 1.18 1.19 1.25 Nonaccrual loans (2)
165 163
156 154 156 Nonaccrual loans and other nonperforming assets (2)
154 151 146
143 144
(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.
(2) Financial information for periods
prior to the quarter ended December 31, 2018 has been revised to
exclude MLHFS, LHFS and loans held at fair value.
Wells Fargo & Company and
Subsidiaries
TANGIBLE COMMON EQUITY (1)
(in millions, except ratios)
Dec 31,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017 Tangible book value per common share
(1): Total equity
$ 197,066 199,679 206,069 205,910
208,079 Adjustments: Preferred stock
(23,214 )
(23,482 ) (25,737 ) (26,227 ) (25,358 ) Additional paid-in capital
on ESOP
preferred stock
(95 ) (105 ) (116 ) (146 ) (122 ) Unearned ESOP
shares
1,502 1,780 2,051 2,571 1,678 Noncontrolling
interests
(900 ) (938 )
(881 ) (958 ) (1,143 ) Total common
stockholders' equity (A)
174,359 176,934 181,386 181,150
183,134 Adjustments: Goodwill
(26,418 ) (26,425 )
(26,429 ) (26,445 ) (26,587 ) Certain identifiable intangible
assets
(other than MSRs)
(559 ) (826 ) (1,091 ) (1,357 ) (1,624 ) Other assets
(2)
(2,187 ) (2,121 ) (2,160 ) (2,388 ) (2,155 )
Applicable deferred taxes (3)
785
829 874 918
962 Tangible common equity (B)
$
145,980 148,391 152,580
151,878 153,730 Common shares
outstanding (C)
4,581.3 4,711.6 4,849.1 4,873.9 4,891.6 Book
value per common share (A)/(C)
$ 38.06 37.55 37.41
37.17 37.44 Tangible book value per common share (B)/(C)
31.86 31.49 31.47
31.16 31.43
Quarter ended
Year ended (in millions, except ratios)
Dec 31, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017
Dec 31,
2018 Dec 31,2017 Return on average tangible common
equity (1): Net income
applicable to common stock (A)
$ 5,711 5,453 4,792
4,733 5,740
20,689 20,554 Average total equity
198,442 202,826 206,067 206,180 207,413
203,356
205,654 Adjustments: Preferred stock
(23,463 )
(24,219 ) (26,021 ) (26,157 ) (25,569 )
(24,956 )
(25,592 ) Additional paid-in capital on ESOP preferred stock
(105 ) (115 ) (129 ) (153 ) (129 )
(125
) (139 ) Unearned ESOP shares
1,761 2,026 2,348 2,508
1,896
2,159 2,143 Noncontrolling interests
(910 ) (892 ) (919 ) (997
) (998 )
(929 ) (948 )
Average common stockholders’ equity (B)
175,725 179,626
181,346 181,381 182,613
179,505 181,118 Adjustments:
Goodwill
(26,423 ) (26,429 ) (26,444 ) (26,516 )
(26,579 )
(26,453 ) (26,629 ) Certain identifiable
intangible assets (other than MSRs)
(693 ) (958 )
(1,223 ) (1,489 ) (1,767 )
(1,088 ) (2,176 ) Other
assets (2)
(2,204 ) (2,083 ) (2,271 ) (2,233 ) (2,245
)
(2,197 ) (2,184 ) Applicable deferred taxes (3)
800 845 889
933 1,332
866 1,570 Average tangible common
equity (C)
$ 147,205
151,001 152,297 152,076
153,354
150,633 151,699
Return on average common stockholders' equity (ROE)
(annualized) (A)/(B)
12.89 % 12.04 10.60 10.58 12.47
11.53 11.35 Return on average tangible common equity (ROTCE)
(annualized) (A)/(C)
15.39 14.33
12.62 12.62 14.85
13.73 13.55
(1) Tangible common equity is a non-GAAP
financial measure and represents total equity less preferred
equity, noncontrolling interests, and goodwill and certain
identifiable intangible assets (including goodwill and intangible
assets associated with certain of our nonmarketable equity
securities but excluding mortgage servicing rights), net of
applicable deferred taxes. The methodology of determining tangible
common equity may differ among companies. Management believes that
return on average tangible common equity and tangible book value
per common share, which utilize tangible common equity, are useful
financial measures because they enable investors and others to
assess the Company's use of equity.
(2) Represents goodwill and other
intangibles on nonmarketable equity securities, which are included
in other assets.
(3) Applicable deferred taxes relate to
goodwill and other intangible assets. They were determined by
applying the combined federal statutory rate and composite state
income tax rates to the difference between book and tax basis of
the respective goodwill and intangible assets at period end.
Wells Fargo & Company and
Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III
(FULLY PHASED-IN) (1)
Estimated (in billions, except ratio)
Dec 31, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017 Total equity
$
197.1 199.7 206.1 205.9 208.1 Adjustments: Preferred stock
(23.2 ) (23.5 ) (25.7 ) (26.2 ) (25.4 ) Additional
paid-in capital on ESOP
preferred stock
(0.1 ) (0.1 ) (0.1 ) (0.1 ) (0.1 ) Unearned ESOP
shares
1.5 1.8 2.0 2.6 1.7 Noncontrolling interests
(0.9 ) (0.9 ) (0.9 )
(1.0 ) (1.1 ) Total common stockholders' equity
174.4 177.0 181.4 181.2 183.2 Adjustments: Goodwill
(26.4 ) (26.4 ) (26.4 ) (26.4 ) (26.6 ) Certain
identifiable intangible assets (other than MSRs)
(0.6
) (0.8 ) (1.1 ) (1.4 ) (1.6 ) Other assets (2)
(2.2
) (2.1 ) (2.2 ) (2.4 ) (2.2 ) Applicable deferred taxes (3)
0.8 0.8 0.9 0.9 1.0 Investment in certain subsidiaries and
other
0.4 0.4
0.4 0.4 0.2 Common Equity
Tier 1 (Fully Phased-In) under Basel III (A)
146.4 148.9 153.0
152.3 154.0 Total risk-weighted assets (RWAs)
anticipated under Basel III (4)(5) (B)
$
1,248.4 1,250.2 1,276.3
1,278.1 1,285.6 Common Equity Tier 1 to
total RWAs anticipated under Basel III (Fully Phased-In) (5)
(A)/(B)
11.7 % 11.9 12.0
11.9 12.0
(1) Basel III capital rules, adopted by
the Federal Reserve Board on July 2, 2013, revised the definition
of capital, increased minimum capital ratios, and introduced a
minimum Common Equity Tier 1 (CET1) ratio. The rules are being
phased in through the end of 2021. Fully phased-in capital amounts,
ratios and RWAs are calculated assuming the full phase-in of the
Basel III capital rules. Beginning January 1, 2018, the
requirements for calculating CET1 and tier 1 capital, along with
RWAs, became fully phased-in.
(2) Represents goodwill and other
intangibles on nonmarketable equity securities, which are included
in other assets.
(3) Applicable deferred taxes relate to
goodwill and other intangible assets. They were determined by
applying the combined federal statutory rate and composite state
income tax rates to the difference between book and tax basis of
the respective goodwill and intangible assets at period end.
(4) The final Basel III capital rules
provide for two capital frameworks: the Standardized Approach,
which replaced Basel I, and the Advanced Approach applicable to
certain institutions. Under the final rules, we are subject to the
lower of our CET1 ratio calculated under the Standardized Approach
and under the Advanced Approach in the assessment of our capital
adequacy. Because the final determination of our CET1 ratio and
which approach will produce the lower CET1 ratio as of December 31,
2018, 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,
2018, and December 31, 2017, was calculated under the Basel III
Standardized Approach RWAs.
(5) The Company’s December 31, 2018, RWAs
and capital ratio are preliminary estimates.
Wells Fargo & Company and
Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,average
balances in billions)
CommunityBanking
WholesaleBanking
Wealth andInvestmentManagement
Other (2)
ConsolidatedCompany
2018 2017
2018 2017
2018 2017
2018 2017
2018 2017
Quarter ended Dec 31,
Net interest income (3)
$
7,340 7,239
4,739 4,557
1,116 1,152
(551 ) (635 )
12,644 12,313 Provision
(reversal of provision) for credit losses
534 636
(28
) 20
(3 ) (7 )
18 2
521 651
Noninterest income
4,121 4,481
2,187 2,883
2,841 3,181
(813 ) (808 )
8,336 9,737
Noninterest expense
7,032 10,216
4,025 4,187
3,044
3,246
(762 ) (849
)
13,339 16,800 Income (loss)
before income tax expense (benefit)
3,895 868
2,929
3,233
916 1,094
(620 ) (596 )
7,120
4,599 Income tax expense (benefit)
637
(2,682 )
253 854
231 413
(155 )
(227 )
966 (1,642 ) Net income
(loss) before noncontrolling interests
3,258 3,550
2,676 2,379
685 681
(465 ) (369 )
6,154 6,241 Less: Net income (loss) from noncontrolling
interests
89 78
5
6
(4 ) 6
— —
90
90 Net income (loss)
$ 3,169
3,472
2,671 2,373
689 675
(465 ) (369 )
6,064
6,151 Average loans
$ 459.7
473.2
470.2 463.5
75.2 72.9
(58.8 )
(57.8 )
946.3 951.8 Average assets
1,015.9 1,073.2
839.1 837.2
83.6 83.7
(59.6 ) (58.8 )
1,879.0 1,935.3 Average deposits
759.4 738.3
421.6 465.7
155.5 184.1
(67.6 ) (76.5 )
1,268.9 1,311.6
Year ended Dec 31, Net
interest income (3)
$ 29,219 28,658
18,690
18,810
4,441 4,641
(2,355 ) (2,552 )
49,995 49,557 Provision (reversal of provision) for credit
losses
1,783 2,555
(58 ) (19 )
(5
) (5 )
24 (3 )
1,744 2,528 Noninterest income
17,694 18,360
10,016 11,190
11,935 12,431
(3,232 ) (3,149 )
36,413 38,832 Noninterest
expense
30,491 32,615
16,157 16,624
12,938
12,623
(3,460 )
(3,378 )
56,126 58,484 Income
(loss) before income tax expense (benefit)
14,639 11,848
12,607 13,395
3,443 4,454
(2,151 )
(2,320 )
28,538 27,377 Income tax expense (benefit)
3,784 634
1,555
3,496
861 1,668
(538 ) (881 )
5,662
4,917 Net income (loss) before noncontrolling
interests
10,855 11,214
11,052 9,899
2,582
2,786
(1,613 ) (1,439 )
22,876 22,460 Less:
Net income (loss) from noncontrolling interests
461
276
20 (15 )
2 16
—
—
483 277 Net
income (loss)
$ 10,394 10,938
11,032 9,914
2,580 2,770
(1,613
) (1,439 )
22,393 22,183
Average loans
$ 463.7 475.7
465.7 465.6
74.6 71.9
(58.8 ) (57.1 )
945.2 956.1 Average assets
1,034.1 1,085.5
830.5 822.8
83.9 82.8
(59.6 ) (58.1 )
1,888.9 1,933.0 Average deposits
757.2 729.6
423.7 464.2
165.0 189.0
(70.0 ) (78.2 )
1,275.9 1,304.6
(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.
Effective first quarter 2018, assets and liabilities receive a
funding charge or credit that considers interest rate risk,
liquidity risk, and other product characteristics on a more
granular level. This methodology change affects results across all
three of our reportable operating segments and results for all
periods prior to 2018 have been revised to reflect this methodology
change. Our previously reported consolidated financial results were
not impacted by the methodology change; however, in connection with
the adoption of ASU 2016-01 in first quarter 2018, certain
reclassifications occurred within noninterest income.
(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 as well as interest credits for any funding of a
segment available to be provided to other segments. The cost of
liabilities includes actual interest expense on segment liabilities
as well as funding charges for any funding provided from other
segments.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS
(1)
Quarter ended
(income/expense in millions, average balances in billions)
Dec 31, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017
COMMUNITY BANKING
Net interest income (2)
$ 7,340 7,338 7,346
7,195 7,239 Provision for credit losses
534 547 484 218 636
Noninterest income
4,121 4,478 4,460 4,635 4,481 Noninterest
expense
7,032 7,467 7,290
8,702 10,216 Income before
income tax expense
3,895 3,802 4,032 2,910 868 Income tax
expense (benefit)
637 925
1,413 809 (2,682 ) Net income before
noncontrolling interests
3,258 2,877 2,619 2,101 3,550 Less:
Net income from noncontrolling interests
89
61 123 188 78
Segment net income
$ 3,169
2,816 2,496 1,913
3,472 Average loans
$ 459.7 460.9 463.8 470.5
473.2 Average assets
1,015.9 1,024.9 1,034.3 1,061.9 1,073.2
Average deposits
759.4 760.9
760.6 747.5 738.3
WHOLESALE BANKING Net interest income (2)
$
4,739 4,726 4,693 4,532 4,557 Provision (reversal of
provision) for credit losses
(28 ) 26 (36 ) (20 ) 20
Noninterest income
2,187 2,578 2,504 2,747 2,883 Noninterest
expense
4,025 3,935 4,219
3,978 4,187 Income before income
tax expense
2,929 3,343 3,014 3,321 3,233 Income tax expense
253 475 379
448 854 Net income before noncontrolling
interests
2,676 2,868 2,635 2,873 2,379 Less: Net income
(loss) from noncontrolling interests
5
17 — (2 ) 6 Segment net
income
$ 2,671 2,851
2,635 2,875 2,373 Average
loans
$ 470.2 462.8 464.7 465.1 463.5 Average assets
839.1 827.2 826.4 829.2 837.2 Average deposits
421.6 413.6 414.0
446.0 465.7
WEALTH AND INVESTMENT
MANAGEMENT Net interest income (2)
$ 1,116 1,102
1,111 1,112 1,152 Provision (reversal of provision) for credit
losses
(3 ) 6 (2 ) (6 ) (7 ) Noninterest income
2,841 3,124 2,840 3,130 3,181 Noninterest expense
3,044 3,243 3,361
3,290 3,246 Income before income tax expense
916 977 592 958 1,094 Income tax expense
231
244 147 239
413 Net income before noncontrolling interests
685
733 445 719 681 Less: Net income (loss) from noncontrolling
interests
(4 ) 1 —
5 6 Segment net income
$
689 732 445 714
675 Average loans
$ 75.2 74.6
74.7 73.9 72.9 Average assets
83.6 83.8 84.0 84.2 83.7
Average deposits
155.5 159.8
167.1 177.9 184.1
OTHER (3
) Net interest income (2)
$
(551 ) (594 ) (609 ) (601 ) (635 ) Provision
(reversal of provision) for credit losses
18 1 6 (1 ) 2
Noninterest income
(813 ) (811 ) (792 ) (816 ) (808 )
Noninterest expense
(762 ) (882 )
(888 ) (928 ) (849 ) Loss before income tax
benefit
(620 ) (524 ) (519 ) (488 ) (596 ) Income tax
benefit
(155 ) (132 ) (129 )
(122 ) (227 ) Net loss before noncontrolling
interests
(465 ) (392 ) (390 ) (366 ) (369 ) Less:
Net income from noncontrolling interests
—
— — — —
Other net loss
$ (465 ) (392 )
(390 ) (366 ) (369 ) Average loans
$
(58.8 ) (58.8 ) (59.1 ) (58.5 ) (57.8 ) Average
assets
(59.6 ) (59.6 ) (59.8 ) (59.4 ) (58.8 )
Average deposits
(67.6 ) (67.9 )
(70.4 ) (74.2 ) (76.5 )
CONSOLIDATED COMPANY
Net interest income (2)
$ 12,644 12,572 12,541 12,238
12,313 Provision for credit losses
521 580 452 191 651
Noninterest income
8,336 9,369 9,012 9,696 9,737 Noninterest
expense
13,339 13,763
13,982 15,042 16,800 Income
before income tax expense
7,120 7,598 7,119 6,701 4,599
Income tax expense (benefit)
966 1,512
1,810 1,374 (1,642 ) Net
income before noncontrolling interests
6,154 6,086 5,309
5,327 6,241 Less: Net income from noncontrolling interests
90 79 123 191
90 Wells Fargo net income
$
6,064 6,007 5,186
5,136 6,151 Average loans
$
946.3 939.5 944.1 951.0 951.8 Average assets
1,879.0
1,876.3 1,884.9 1,915.9 1,935.3 Average deposits
1,268.9 1,266.4 1,271.3
1,297.2 1,311.6
(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.
Effective first quarter 2018, assets and liabilities receive a
funding charge or credit that considers interest rate risk,
liquidity risk, and other product characteristics on a more
granular level. This methodology change affects results across all
three of our reportable operating segments and results for all
periods prior to 2018 have been revised to reflect this methodology
change. Our previously reported consolidated financial results were
not impacted by the methodology change; however, in connection with
the adoption of ASU 2016-01 in first quarter 2018, certain
reclassifications occurred within noninterest income.
(2) Net interest income is the difference
between interest earned on assets and the cost of liabilities to
fund those assets. Interest earned includes actual interest earned
on segment assets as well as interest credits for any funding of a
segment available to be provided to other segments. The cost of
liabilities includes actual interest expense on segment liabilities
as well as funding charges for any funding provided from other
segments.
(3) Includes the elimination of certain
items that are included in more than one business segment, most of
which represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE
SERVICING
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017
MSRs measured using the fair value
method: Fair value, beginning of
quarter
$ 15,980 15,411 15,041 13,625 13,338
Servicing from securitizations or asset transfers (1)
449
502 486 573 639 Sales and other (2)
(64 )
(2 ) (1 ) (4 ) (32 ) Net additions
385 500 485
569 607 Changes in fair value: Due to changes
in valuation model inputs or assumptions: Mortgage interest rates
(3)
(874 ) 582 376 1,253 221 Servicing and
foreclosure costs (4)
763 (9 ) 30 34 23 Discount rates (5)
(821 ) (9 ) — — 13 Prepayment estimates and other (6)
(314 ) (33 ) (61 ) 43
(55 ) Net changes in valuation model inputs or
assumptions
(1,246 ) 531
345 1,330 202 Changes due to
collection/realization of expected cash flows over time
(470 ) (462 ) (460 ) (483 )
(522 ) Total changes in fair value
(1,716
) 69 (115 ) 847
(320 ) Fair value, end of quarter
$ 14,649
15,980 15,411 15,041
13,625
(1) Includes impacts associated with
exercising our right to repurchase delinquent loans from Government
National Mortgage Association (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, 2018 Sep 30,2018 Jun
30,2018 Mar 31,2018 Dec 31,2017
Amortized
MSRs: Balance, beginning of
quarter
$ 1,414 1,407 1,411 1,424 1,406 Purchases
45 42 22 18 40 Servicing from securitizations or asset
transfers
52 33 39 34 43 Amortization
(68
) (68 ) (65 ) (65 ) (65 )
Balance, end of quarter
$ 1,443
1,414 1,407 1,411 1,424
Fair value of amortized MSRs: Beginning of quarter
$ 2,389 2,309 2,307 2,025 1,990 End of quarter
2,288 2,389 2,309
2,307 2,025
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE
SERVICING (CONTINUED)
Quarter ended (in millions)
Dec
31, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017
Servicing income, net:
Servicing fees (1)
$ 925 890 905
906 833 Changes in fair value of MSRs carried at fair value: Due to
changes in valuation model inputs or assumptions (2) (A)
(1,246 ) 531 345 1,330 202 Changes due to
collection/realization of expected cash flows over time
(470 ) (462 ) (460 )
(483 ) (522 ) Total changes in fair value of MSRs
carried at fair value
(1,716 ) 69 (115 ) 847 (320 )
Amortization
(68 ) (68 ) (65 ) (65 ) (65 ) Net
derivative gains (losses) from economic hedges (3) (B)
968 (501 ) (319 ) (1,220
) (186 ) Total servicing income, net
$ 109 390 406
468 262 Market-related valuation
changes to MSRs, net of hedge results (2)(3)
(A)+(B)
$ (278 ) 30 26
110 16
(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,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017
Managed servicing portfolio
(1
): Residential
mortgage servicing: Serviced for others
$ 1,164 1,184
1,190 1,201 1,209 Owned loans serviced
334 337 340 337 342
Subserviced for others
4 5
4 5 3 Total residential
servicing
1,502 1,526
1,534 1,543 1,554 Commercial mortgage
servicing: Serviced for others
543 529 518 510 495 Owned
loans serviced
121 121 124 125 127 Subserviced for others
9 9 10 10
9 Total commercial servicing
673
659 652 645 631
Total managed servicing portfolio
$ 2,175
2,185 2,186 2,188
2,185 Total serviced for others
$ 1,707 1,713
1,708 1,711 1,704 Ratio of MSRs to related loans serviced for
others
0.94 % 1.02 0.98 0.96 0.88 Weighted-average
note rate (mortgage loans serviced for others)
4.32
4.29 4.27 4.24
4.23
(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, 2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31,2017
Net gains on mortgage loan
origination/sales activities (in millions):
Residential (A)
$ 245 324 281
324 504 Commercial
65 75 49 76 95 Residential pipeline and
unsold/repurchased loan management (1)
48 57 34 66
67 Total
$ 358
456 364 466 666
Application data (in billions): Wells Fargo first mortgage
quarterly applications
$ 48 57 67 58 63 Refinances as
a percentage of applications
30 % 26 25 35 38 Wells
Fargo first mortgage unclosed pipeline, at quarter end
$ 18 22 26
24 23
Residential real estate
originations: Purchases as a percentage of originations
78 % 81 78 65 64 Refinances as a percentage of
originations
22 19
22 35 36 Total
100 % 100 100
100 100 Wells Fargo first mortgage loans (in
billions): Retail
$ 16 18 21 16 23 Correspondent
21 27 28 27 30 Other (2)
1
1 1 — —
Total quarter-to-date
$ 38
46 50 43 53
Held-for-sale (B)
$ 28 33 37 34 40
Held-for-investment
10 13
13 9 13 Total
quarter-to-date
$ 38
46 50 43 53 Total
year-to-date
$ 177
139 93 43 212
Production margin on residential held-for-sale mortgage
originations (A)/(B)
0.89 %
0.97 0.77 0.94 1.25
(1) Predominantly includes the results of
sales of modified GNMA loans, interest rate management activities
and changes in estimate to the liability for mortgage loan
repurchase losses.
(2) Consists of home equity loans and
lines.
CHANGES IN MORTGAGE REPURCHASE
LIABILITY
Quarter ended (in millions)
Dec 31,
2018 Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31,2017 Balance, beginning of period
$
178 179 181 181 179 Provision for
repurchase losses: Loan sales
5 5 4 3 4 Change in estimate
(1)
(15 ) (4 ) (2 ) 1
2 Net additions (reductions) to provision
(10 ) 1 2 4 6 Losses
(3 )
(2 ) (4 ) (4 ) (4 ) Balance, end of period
$ 165 178 179
181 181
(1) 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: https://www.businesswire.com/news/home/20190115005297/en/
MediaAncel Martinez, 415-222-3858ancel.martinez@wellsfargo.comorInvestor
RelationsJohn M. Campbell, 415-396-0523john.m.campbell@wellsfargo.com
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