Diluted EPS of $0.92 included the impact of a discrete
litigation accrual of $(0.35) per share and a gain on the sale of
our Institutional Retirement and Trust business of $0.20 per
share
Wells Fargo & Company (NYSE:WFC):
- Financial results:
- Net income of $4.6 billion, compared with $6.0 billion in third
quarter 2018
- Diluted earnings per share (EPS) of $0.92, compared with $1.13
- Third quarter 2019 included a $1.6 billion, or $(0.35) per
share, discrete litigation accrual (not tax-deductible) for
previously disclosed retail sales practices matters, and a $1.1
billion, or $0.20 per share, gain from the previously announced
sale of our Institutional Retirement and Trust (IRT) business
- Revenue of $22.0 billion, up from $21.9 billion
- Net interest income of $11.6 billion, down $947 million
- Noninterest income of $10.4 billion, up $1.0 billion
- Noninterest expense of $15.2 billion, up $1.4 billion
- Average deposits of $1.3 trillion, up $25.0 billion
- Average loans of $949.8 billion, up $10.3 billion
- Credit quality:
- Provision expense of $695 million, up $115 million from third
quarter 2018
- Net charge-offs of $645 million, down $35 million
- Net charge-offs of 0.27% of average loans (annualized), down
from 0.29%
- Reserve build1 of $50 million, compared with a $100 million
reserve release1 in third quarter 2018
- Nonaccrual loans of $5.5 billion, down $1.2 billion, or
17%
- Strong capital position while returning more capital to
shareholders:
- Common Equity Tier 1 ratio (fully phased-in) of 11.6%2
- Returned $9.0 billion to shareholders through common stock
dividends and net share repurchases, up 2% from $8.9 billion in
third quarter 2018
- Quarterly common stock dividend of $0.51 per share, up 19% from
$0.43 per share
- Period-end common shares outstanding down 442.4 million shares,
or 9%
- Third quarter 2019 included the partial redemption of our
Series K Preferred Stock, which reduced diluted EPS by $0.05 per
share, while third quarter 2018 included the redemption of our
Series J Preferred Stock, which reduced diluted EPS by $0.03 per
share
Financial results reported in this document are preliminary.
Final financial results and other disclosures will be reported in
our Quarterly Report on Form 10-Q for the quarter ended September
30, 2019, and may differ materially from the results and
disclosures in this document due to, among other things, the
completion of final review procedures, the occurrence of subsequent
events, or the discovery of additional information.
Selected Financial Information
Quarter ended
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Earnings
Diluted earnings per common share
$
0.92
1.30
1.13
Wells Fargo net income (in billions)
4.61
6.21
6.01
Return on assets (ROA)
0.95
%
1.31
1.27
Return on equity (ROE)
9.00
13.26
12.04
Return on average tangible common equity
(ROTCE) (a)
10.70
15.78
14.33
Asset Quality
Net charge-offs (annualized) as a % of
average total loans
0.27
%
0.28
0.29
Allowance for credit losses as a % of
total loans
1.11
1.12
1.16
Allowance for credit losses as a % of
annualized net charge-offs
415
405
406
Other
Revenue (in billions)
$
22.0
21.6
21.9
Efficiency ratio (b)
69.1
%
62.3
62.7
Average loans (in billions)
$
949.8
947.5
939.5
Average deposits (in billions)
1,291.4
1,269.0
1,266.4
Net interest margin
2.66
%
2.82
2.94
(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 $4.6
billion, or $0.92 per diluted common share, for third quarter 2019,
compared with $6.0 billion, or $1.13 per share, for third quarter
2018, and $6.2 billion, or $1.30 per share, for second quarter
2019.
Interim Chief Executive Officer Allen Parker said, “We continued
to make progress on our top priorities during the third quarter,
and we're all looking forward to Charlie Scharf's joining Wells
Fargo on October 21 as the company’s Chief Executive Officer and
President. It’s been an honor for me to serve as the interim Chief
Executive Officer over the past six months, and I want to thank
both our management team and all our team members for their hard
work during this period of transition. Our continued efforts to
transform Wells Fargo and our unwavering commitment to serve our
customers resulted during the third quarter in higher branch
customer experience survey scores, growth in primary consumer
checking customers, and increased loan and deposit balances. We
have more work ahead, but I’m confident that our focused efforts
and the fundamental strengths of Wells Fargo will continue to
enable us to achieve success.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo
reported $4.6 billion of net income in the third quarter and
diluted earnings per share of $0.92, which included the impact of a
$1.6 billion, or $(0.35) per share, discrete litigation accrual for
previously disclosed retail sales practices matters, as well as a
$1.1 billion, or $0.20 per share, gain from the sale of our
Institutional Retirement and Trust business. Business fundamentals
were strong as both loans and deposits grew from the second quarter
and from a year ago. Our net charge-off rate remained near historic
lows, and we had strong capital returns, including increasing our
quarterly common stock dividend by 19% and reducing our common
shares outstanding by 9% compared with a year ago, while
maintaining a strong capital position.”
Net Interest Income
Net interest income in the third quarter was $11.6 billion, down
$470 million from second quarter 2019, primarily due to balance
sheet repricing driven by the impact of the lower interest rate
environment, as well as higher mortgage-backed securities (MBS)
premium amortization, partially offset by the benefit of one
additional day in the quarter and favorable balance sheet growth
and mix.
The net interest margin was 2.66%, down 16 basis points from the
prior quarter primarily due to balance sheet repricing driven by
the impact of the lower interest rate environment, as well as
higher MBS premium amortization.
Noninterest Income
Noninterest income in the third quarter was $10.4 billion, up
$896 million from second quarter 2019. Third quarter noninterest
income included higher other income and market sensitive revenue3,
partially offset by lower mortgage banking income.
- Trust and investment fees were $3.6 billion, flat compared with
second quarter 2019. Higher asset-based fees in retail brokerage
advisory and asset management, reflecting higher market valuations,
and higher investment banking income on increased advisory fees,
were offset by lower trust and investment management fees due to
the sale of our IRT business on July 1, 2019.
- Mortgage banking income was $466 million, down from $758
million in second quarter 2019. Net mortgage servicing income was a
loss of $142 million, down from a gain of $277 million in the
second quarter, driven by the impact of higher prepayment rate
estimates on the valuation of our residential mortgage servicing
rights asset. Net gains on mortgage loan originations and sales
activities were $608 million, up from $481 million in the second
quarter. Residential held-for-sale mortgage loan originations
increased in the third quarter to $38 billion from $33 billion in
the second quarter, primarily due to lower mortgage loan interest
rates. The production margin on residential held-for-sale mortgage
loan originations4 increased to 1.21% from 0.98% in the second
quarter.
- Market sensitive revenue3 was $1.2 billion, up from $871
million in second quarter 2019, predominantly due to higher net
gains from equity securities, driven by gains from our affiliated
venture capital and private equity partnerships, partially offset
by a $91 million decrease in deferred compensation plan investment
results in the third quarter (largely offset by lower employee
benefits expense).
- Other income was $1.5 billion and included a $1.1 billion gain
from the previously announced sale of our IRT business and $302
million of gains from the sales of $510 million of Pick-a-Pay
purchased credit-impaired (PCI) and other PCI residential mortgage
loans.
Noninterest Expense
Noninterest expense in the third quarter was $15.2 billion, up
$1.8 billion from the prior quarter. Third quarter expenses
included operating losses of $1.9 billion, predominantly reflecting
litigation accruals for a variety of matters, including a $1.6
billion discrete litigation accrual (not tax-deductible) for
previously disclosed retail sales practices matters. Additionally,
salaries, and commissions and incentive compensation expense
increased in the third quarter. These increases were partially
offset by lower employee benefits expense driven by a $109 million
decrease in deferred compensation expense (largely offset by lower
net gains from equity securities). The efficiency ratio was 69.1%
in third quarter 2019, compared with 62.3% in the second
quarter.
Income Taxes
The Company’s effective income tax rate was 22.1% for third
quarter 2019 and included net discrete income tax expense of $443
million predominantly related to the non-tax deductible treatment
of a $1.6 billion discrete litigation accrual. The effective income
tax rate in second quarter 2019 was 17.3%. The Company currently
expects the effective income tax rate in fourth quarter 2019 to be
approximately 17.5%, excluding the impact of any unanticipated
discrete items.
Loans
Average loans were $949.8 billion in the third quarter, up $2.3
billion from the second quarter. Period-end loan balances were
$954.9 billion at September 30, 2019, up $5.0 billion from June 30,
2019. Commercial loans were flat compared with June 30, 2019.
Consumer loans increased $5.0 billion from the prior quarter,
reflecting the following:
- Real estate 1-4 family first mortgage loans increased $4.2
billion, as $19.3 billion of held-for-investment mortgage loan
originations and the purchase of $1.0 billion of loans as a result
of exercising servicer cleanup calls to terminate over 20 pre-2008
securitizations were partially offset by paydowns, as well as the
sale of $510 million of PCI loans
- Real estate 1-4 family junior lien mortgage loans decreased
$1.2 billion, as paydowns continued to exceed originations
- Credit card loans increased $809 million, primarily due to
seasonality
- Automobile loans increased $1.1 billion, driven by $6.9 billion
of originations, which were up 9% from the prior quarter
Period-End Loan Balances
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Commercial
$
512,332
512,245
512,226
513,405
501,886
Consumer
442,583
437,633
436,023
439,705
440,414
Total loans
$
954,915
949,878
948,249
953,110
942,300
Change from prior quarter
$
5,037
1,629
(4,861
)
10,810
(1,965
)
Debt and Equity Securities
Debt securities include available-for-sale and held-to-maturity
debt securities, as well as debt securities held for trading.
Period-end debt securities were $503.5 billion at September 30,
2019, up $21.5 billion from the second quarter. Debt securities
available-for-sale and held-to-maturity increased $12.6 billion as
purchases of approximately $29.6 billion, predominantly federal
agency MBS in the available-for-sale portfolio, were partially
offset by runoff and sales. Debt securities held for trading
increased $8.9 billion predominantly due to a higher inventory of
U.S. Treasuries.
Net unrealized gains on available-for-sale debt securities were
$3.1 billion at September 30, 2019, compared with $2.5 billion at
June 30, 2019, primarily due to lower long-term interest rates in
the third quarter, partially offset by wider credit spreads.
Equity securities include marketable and non-marketable equity
securities, as well as equity securities held for trading.
Period-end equity securities were $63.9 billion at September 30,
2019, up $2.3 billion from the second quarter.
Deposits
Total average deposits for third quarter 2019 were $1.3
trillion, up $22.4 billion from the prior quarter primarily due to
higher commercial deposits, as well as higher retail banking
deposits reflecting continued promotional rates and offers. The
average deposit cost for third quarter 2019 was 71 basis points, up
1 basis point from the prior quarter and 24 basis points from a
year ago.
Capital
The Company's Common Equity Tier 1 ratio (fully phased-in) was
11.6%2 and continued to exceed both the regulatory minimum of 9%
and our current internal target of 10%. In third quarter 2019, the
Company repurchased 159.1 million shares of its common stock,
which, net of issuances, reduced period-end common shares
outstanding by 150.4 million. The Company paid a quarterly common
stock dividend of $0.51 per share.
The Company redeemed 1,550,000 shares of its Fixed-to-Floating
Rate Non-Cumulative Perpetual Class A Preferred Stock, Series K, on
September 16, 2019, which reduced diluted earnings per common share
in third quarter 2019 by $0.05 per share as a result of eliminating
the purchase accounting discount recorded on these shares at the
time of the Wachovia acquisition. Following the partial redemption,
1,802,000 shares of the Series K Preferred Stock remain
outstanding.
As of September 30, 2019, our eligible external total loss
absorbing capacity (TLAC) as a percentage of total risk-weighted
assets was 23.3%5, compared with the required minimum of 22.0%.
Credit Quality
Net Loan Charge-offs
The quarterly loss rate in the third quarter was 0.27%
(annualized), down from 0.28% in the prior quarter and from 0.29% a
year ago. Commercial and consumer losses were 0.11% and 0.46%,
respectively. Total credit losses were $645 million in third
quarter 2019, down $8 million from second quarter 2019. Commercial
losses decreased $26 million primarily driven by higher recoveries,
while consumer losses increased $18 million primarily due to lower
recoveries.
Net Loan Charge-Offs
Quarter ended
September 30, 2019
June 30, 2019
September 30, 2018
($ in millions)
Net loan
charge-
offs
As a % of
average
loans (a)
Net loan
charge-
offs
As a % of
average
loans (a)
Net loan
charge-
offs
As a % of
average
loans (a)
Commercial:
Commercial and industrial
$
147
0.17
%
$
159
0.18
%
$
148
0.18
%
Real estate mortgage
(8
)
(0.02
)
4
0.01
(1
)
—
Real estate construction
(8
)
(0.14
)
(2
)
(0.04
)
(2
)
(0.04
)
Lease financing
8
0.17
4
0.09
7
0.14
Total commercial
139
0.11
165
0.13
152
0.12
Consumer:
Real estate 1-4 family first mortgage
(5
)
(0.01
)
(30
)
(0.04
)
(25
)
(0.04
)
Real estate 1-4 family junior lien
mortgage
(22
)
(0.28
)
(19
)
(0.24
)
(9
)
(0.10
)
Credit card
319
3.22
349
3.68
299
3.22
Automobile
76
0.65
52
0.46
130
1.10
Other revolving credit and installment
138
1.60
136
1.56
133
1.44
Total consumer
506
0.46
488
0.45
528
0.47
Total
$
645
0.27
%
$
653
0.28
%
$
680
0.29
%
(a) Quarterly net charge-offs (recoveries)
as a percentage of average loans are annualized.
Nonperforming Assets
Nonperforming assets decreased $317 million, or 5%, from second
quarter 2019 to $6.0 billion. Nonaccrual loans decreased $377
million from second quarter 2019 to $5.5 billion. Commercial
nonaccrual loans decreased $158 million predominantly driven by the
commercial and industrial, and the real estate mortgage portfolios.
Consumer nonaccrual loans decreased $219 million largely driven by
lower nonaccruals in the real estate 1-4 family first mortgage
portfolio.
Nonperforming Assets (Nonaccrual Loans
and Foreclosed Assets)
September 30, 2019
June 30, 2019
September 30, 2018
($ in millions)
Total
balances
As a
% of
total
loans
Total balances
As a
% of
total
loans
Total
balances
As a
% of
total
loans
Commercial:
Commercial and industrial
$
1,539
0.44
%
$
1,634
0.47
%
$
1,555
0.46
%
Real estate mortgage
669
0.55
737
0.60
603
0.50
Real estate construction
32
0.16
36
0.17
44
0.19
Lease financing
72
0.37
63
0.33
96
0.49
Total commercial
2,312
0.45
2,470
0.48
2,298
0.46
Consumer:
Real estate 1-4 family first mortgage
2,261
0.78
2,425
0.85
3,267
1.15
Real estate 1-4 family junior lien
mortgage
819
2.66
868
2.71
983
2.78
Automobile
110
0.24
115
0.25
118
0.26
Other revolving credit and installment
43
0.12
44
0.13
48
0.13
Total consumer
3,233
0.73
3,452
0.79
4,416
1.00
Total nonaccrual loans (a)
5,545
0.58
5,922
0.62
6,714
0.71
Foreclosed assets:
Government insured/guaranteed
59
68
87
Non-government insured/guaranteed
378
309
435
Total foreclosed assets
437
377
522
Total nonperforming assets
$
5,982
0.63
%
$
6,299
0.66
%
$
7,236
0.77
%
Change from prior quarter:
Total nonaccrual loans (a)
$
(377
)
$
(983
)
$
(412
)
Total nonperforming assets
(317
)
(1,042
)
(389
)
(a) Financial information for periods prior to December 31, 2018,
has been revised to exclude mortgage loans held for sale (MLHFS),
loans held for sale (LHFS) and loans held at fair value. For
additional information, see the “Five Quarter Nonperforming Assets”
table on page 33.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for
unfunded commitments, totaled $10.6 billion at September 30, 2019,
up $10 million from June 30, 2019, and included a $50 million
reserve build1 in third quarter 2019. The allowance coverage for
total loans was 1.11%, compared with 1.12% in second quarter 2019.
The allowance covered 4.1 times annualized third quarter net
charge-offs, compared with 4.0 times in the prior quarter. The
allowance coverage for nonaccrual loans was 191% at September 30,
2019, compared with 179% at June 30, 2019.
Business Segment Performance
Wells Fargo defines its operating segments by product type and
customer segment. Segment net income for each of the three business
segments was:
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Community Banking
$
999
3,147
2,816
Wholesale Banking
2,644
2,789
2,851
Wealth and Investment Management
1,280
602
732
Community Banking offers a
complete line of diversified financial products and services for
consumers and small businesses including checking and savings
accounts, credit and debit cards, and automobile, student,
mortgage, home equity and small business lending, as well as
referrals to Wholesale Banking and Wealth and Investment Management
business partners. The Community Banking segment also includes the
results of our Corporate Treasury activities net of allocations
(including funds transfer pricing, capital, liquidity and certain
corporate expenses) in support of the other operating segments and
results of investments in our affiliated venture capital and
private equity partnerships.
Selected Financial Information
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Total revenue
$
11,239
11,805
11,816
Provision for credit losses
608
479
547
Noninterest expense
8,766
7,212
7,467
Segment net income
999
3,147
2,816
(in billions)
Average loans
459.0
457.7
460.9
Average assets
1,033.9
1,024.8
1,024.9
Average deposits
789.7
777.6
760.9
Third Quarter 2019 vs. Second Quarter 2019
- Net income of $999 million, down $2.1 billion, or 68%
- Revenue was $11.2 billion, down $566 million, or 5%, driven by
lower net interest income, mortgage banking income, and gains from
the sale of PCI mortgage loans, partially offset by higher net
gains from equity securities
- Noninterest expense of $8.8 billion increased $1.6 billion, or
22%, predominantly due to higher operating losses reflecting
litigation accruals for a variety of matters, including a $1.6
billion discrete litigation accrual (not tax-deductible)
- Provision for credit losses increased $129 million, reflecting
a reserve build1 in third quarter 2019, compared with a reserve
release1 in second quarter 2019
Third Quarter 2019 vs. Third Quarter 2018
- Net income was down $1.8 billion, or 65%
- Revenue was down $577 million, or 5%, driven by lower net
interest income, mortgage banking income, and other income,
partially offset by higher net gains from equity securities
- Noninterest expense increased $1.3 billion, or 17%,
predominantly due to higher operating losses reflecting litigation
accruals for a variety of matters, including a $1.6 billion
discrete litigation accrual (not tax-deductible), as well as higher
personnel expense, partially offset by lower FDIC expense and core
deposit and other intangibles amortization expense
- Provision for credit losses increased $61 million, reflecting a
reserve build1 in third quarter 2019, compared with a reserve
release1 in third quarter 2018
Business Metrics and Highlights
- Primary consumer checking customers6,7of 24.3 million, up 1.5%
from a year ago. The sale of 52 branches and $1.8 billion of
deposits which closed in fourth quarter 2018 reduced the growth
rate by 0.4%
- Branch customer experience surveys completed during third
quarter 2019 reflected higher scores from the previous quarter,
with both ‘Customer Loyalty’ and ‘Overall Satisfaction with Most
Recent Visit’ scores reaching new three year highs
- Debit card point-of-sale purchase volume8 of $92.6 billion in
the third quarter, up 6% year-over-year
- General purpose credit card point-of-sale purchase volume of
$20.4 billion in the third quarter, up 5% year-over-year
- 30.2 million digital (online and mobile) active customers,
including 24.2 million mobile active customers7,9
- 5,393 retail bank branches as of the end of third quarter 2019,
reflecting 130 branch consolidations in the first nine months of
2019
- Home Lending
- Originations of $58 billion, up from $53 billion in the prior
quarter, primarily due to lower mortgage loan interest rates
- Originations of loans held-for-sale and loans
held-for-investment were $38 billion and $20 billion,
respectively
- Production margin on residential held-for-sale mortgage loan
originations4 of 1.21%, up from 0.98% in the prior quarter
- Applications of $85 billion, down from $90 billion in the prior
quarter, driven primarily by seasonality
- Unclosed application pipeline of $44 billion at quarter end,
flat compared with the prior quarter
- Automobile originations of $6.9 billion in the third quarter,
up 45% from the prior year, reflecting our renewed emphasis on
growing auto loans following the restructuring of the business
- Small Business Lending10 originations of $646 million, up 3%
from the prior year
- Wells Fargo tied for #1 in overall performance in the Dynatrace
Mobile Banking Scorecard (September 2019)
- Wells Fargo named #1 overall in the Dynatrace Mortgage-Home
Equity Scorecard (August 2019)
- Wells Fargo named #1 overall in the Dynatrace Small Business
Banker Scorecard (July 2019)
Wholesale Banking provides
financial solutions to businesses across the United States and
globally with annual sales generally in excess of $5 million.
Products and businesses include Commercial Banking, Commercial Real
Estate, Corporate and Investment Banking, Credit Investment
Portfolio, Treasury Management, and Commercial Capital.
Selected Financial Information
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Total revenue
$
6,942
7,065
7,304
Provision for credit losses
92
28
26
Noninterest expense
3,889
3,882
3,935
Segment net income
2,644
2,789
2,851
(in billions)
Average loans
474.3
474.0
462.8
Average assets
869.2
852.2
827.2
Average deposits
422.0
410.4
413.6
Third Quarter 2019 vs. Second Quarter 2019
- Net income of $2.6 billion, down $145 million, or 5%
- Revenue of $6.9 billion decreased $123 million, or 2%, driven
by lower net interest income primarily related to the impact of
lower interest rates, lower other income, and lower treasury
management fees, partially offset by higher commercial real estate
brokerage commissions, market sensitive revenue3, investment
banking fees, and mortgage banking income
- Noninterest expense of $3.9 billion, flat compared with the
prior quarter, as higher personnel expense was offset by lower
lease expense
Third Quarter 2019 vs. Third Quarter 2018
- Net income decreased $207 million, or 7%
- Revenue decreased $362 million, or 5%, predominantly due to
lower net interest income, other income, lease income, and treasury
management fees, partially offset by higher market sensitive
revenue3, commercial real estate brokerage commissions, investment
banking fees, and mortgage banking income
- Noninterest expense decreased $46 million, or 1%, on lower FDIC
expense, core deposit and other intangibles amortization, and lease
expense, partially offset by higher personnel expense, and higher
regulatory and risk related expense
Business Metrics and Highlights
- #1 Total business banking and middle market banking market
share in the U.S.11
- #1 Commercial real estate lender in the U.S.12
- #1 Asset-based lending bookrunner13
- Commercial card spend volume14 of $8.8 billion, up 6% from the
prior year on increased transaction volumes, and up 1% compared
with second quarter 2019
- 1.9 billion of ACH payment transactions originated15, up 14%
from the prior year, and up 2% from second quarter 2019
- U.S. investment banking market share of 3.5% year-to-date
201916, compared with 3.3% year-to-date 201816
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, 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 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)
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Total revenue
$
5,141
4,050
4,226
Provision (reversal of provision) for
credit losses
3
(1
)
6
Noninterest expense
3,431
3,246
3,243
Segment net income
1,280
602
732
(in billions)
Average loans
75.9
75.0
74.6
Average assets
84.7
83.8
83.8
Average deposits
142.4
143.5
159.8
Third Quarter 2019 vs. Second Quarter 2019
- Net income of $1.3 billion, up $678 million, or 113%
- Revenue of $5.1 billion increased $1.1 billion, or 27%,
predominantly due to a $1.1 billion gain from the sale of our IRT
business, partially offset by lower net interest income and lower
net gains from equity securities on decreased deferred compensation
plan investment results (largely offset by lower employee benefits
expense)
- Noninterest expense of $3.4 billion increased $185 million, or
6%, primarily due to higher equipment expense which included a $103
million impairment of capitalized software reflecting a
reevaluation of software under development, as well as higher
operating losses, partially offset by lower employee benefits
expense from decreased deferred compensation plan expense (largely
offset by lower net gains from equity securities)
Third Quarter 2019 vs. Third Quarter 2018
- Net income up $548 million, or 75%
- Revenue increased $915 million, or 22%, primarily driven by a
$1.1 billion gain from the sale of our IRT business, partially
offset by lower net interest income and lower net gains from equity
securities on decreased deferred compensation plan investment
results (largely offset by lower employee benefits expense)
- Noninterest expense increased $188 million, or 6%, primarily
driven by higher equipment expense which included a $103 million
impairment of capitalized software, as well as higher personnel
expense and operating losses, partially offset by lower core
deposit and other intangibles amortization expense, and lower
employee benefits expense from decreased deferred compensation plan
expense (largely offset by lower net gains from equity
securities)
Business Metrics and Highlights
Total WIM Segment
- WIM total client assets of $1.9 trillion, down 1% from a year
ago, primarily driven by net outflows, partially offset by higher
market valuations
- Average loan balances up 2% compared with a year ago
- Third quarter 2019 closed referred investment assets (referrals
resulting from the WIM/Community Banking partnership) up 3%
compared with third quarter 2018
Retail Brokerage
- Client assets of $1.6 trillion, down 1% from the prior
year
- Advisory assets of $569 billion, up 2% from the prior year,
primarily driven by higher market valuations, partially offset by
net outflows
- IRA assets of $415 billion, down 1% from the prior year
Wealth Management
- Client assets of $230 billion, down 4% from the prior year,
primarily driven by net outflows
Asset Management
- Total assets under management of $503 billion, up 4% from the
prior year, as money market fund net inflows and higher market
valuations were partially offset by equity and fixed income net
outflows
Conference Call
The Company will host a live conference call on Tuesday, October
15, at 8:00 a.m. PT (11:00 a.m. ET). You may listen to the call by
dialing 866-872-5161 (U.S. and Canada) or 440-424-4922
(International). The call will also be available online at
https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/
and https://engage.vevent.com/rt/wells_fargo_ao~9277488.
A replay of the conference call will be available beginning at
12:00 p.m. PT (3:00 p.m. ET) on Tuesday, October 15 through
Tuesday, October 29. Please dial 855-859-2056 (U.S. and Canada) or
404-537-3406 (International) and enter Conference ID #9277488. 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~9277488.
End Notes
1 Reserve build represents the amount by which the provision for
credit losses exceeds net charge-offs, while reserve release
represents the amount by which net charge-offs exceed the provision
for credit losses.
2 See table on page 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.
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 The TLAC ratio is a preliminary estimate.
6 Customers who actively use their checking account with
transactions such as debit card purchases, online bill payments,
and direct deposit.
7 Data as of August 2019, comparisons with August 2018.
8 Combined consumer and business debit card purchase volume
dollars.
9 Digital and mobile active customers is the number of consumer
and small business customers who have logged on via a digital or
mobile device in the prior 90 days.
10 Small Business Lending includes credit card, lines of credit
and loan products (primarily under $100,000 sold through our retail
banking branches).
11 Barlow Research, rolling eight quarter data (3Q17-2Q19).
Business banking companies defined as companies with $5 million to
$25 million in annual sales, and middle market banking companies
defined as companies with $25 million to $500 million in annual
sales.
12 MBA Commercial Real Estate/Multifamily 2019 Mid-Year
Origination Volumes report (July 2019).
13 Thomson Reuters LPC U.S. league tables, year-to-date through
September 30, 2019.
14 Includes commercial card volume for the entire company.
15 Includes ACH payment transactions originated by the entire
company.
16 Year-to-date through September. Source: Dealogic U.S.
investment banking fee market share.
Forward-Looking Statements
This document contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. In
addition, we may make forward-looking statements in our other
documents filed or furnished with the SEC, and our management may
make forward-looking statements orally to analysts, investors,
representatives of the media and others. Forward-looking statements
can be identified by words such as “anticipates,” “intends,”
“plans,” “seeks,” “believes,” “estimates,” “expects,” “target,”
“projects,” “outlook,” “forecast,” “will,” “may,” “could,”
“should,” “can” and similar references to future periods. In
particular, forward-looking statements include, but are not limited
to, statements we make about: (i) the future operating or financial
performance of the Company, including our outlook for future
growth; (ii) our noninterest expense and efficiency ratio; (iii)
future credit quality and performance, including our expectations
regarding future loan losses and allowance levels; (iv) the
appropriateness of the allowance for credit losses; (v) our
expectations regarding net interest income and net interest margin;
(vi) loan growth or the reduction or mitigation of risk in our loan
portfolios; (vii) future capital or liquidity levels or targets and
our estimated Common Equity Tier 1 ratio under Basel III capital
standards; (viii) the performance of our mortgage business and any
related exposures; (ix) the expected outcome and impact of legal,
regulatory and legislative developments, as well as our
expectations regarding compliance therewith; (x) future common
stock dividends, common share repurchases and other uses of
capital; (xi) our targeted range for return on assets, return on
equity, and return on tangible common equity; (xii) the outcome of
contingencies, such as legal proceedings; and (xiii) the Company’s
plans, objectives and strategies.
Forward-looking statements are not based on historical facts but
instead represent our current expectations and assumptions
regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you, therefore, against relying on any of
these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that
could cause actual results to differ materially from those in the
forward-looking statements include the following, without
limitation:
- current and future economic and market conditions, including
the effects of declines in housing prices, high unemployment rates,
U.S. fiscal debt, budget and tax matters, geopolitical matters, and
any slowdown in global economic growth;
- our capital and liquidity requirements (including under
regulatory capital standards, such as the Basel III capital
standards) and our ability to generate capital internally or raise
capital on favorable terms;
- financial services reform and other current, pending or future
legislation or regulation that could have a negative effect on our
revenue and businesses, including the Dodd-Frank Act and other
legislation and regulation relating to bank products and
services;
- developments in our mortgage banking business, including the
extent of the success of our mortgage loan modification efforts,
the amount of mortgage loan repurchase demands that we receive, any
negative effects relating to our mortgage servicing, loan
modification or foreclosure practices, and the effects of
regulatory or judicial requirements or guidance impacting our
mortgage banking business and any changes in industry
standards;
- our ability to realize any efficiency ratio or expense target
as part of our expense management initiatives, including as a
result of business and economic cyclicality, seasonality, changes
in our business composition and operating environment, growth in
our businesses and/or acquisitions, and unexpected expenses
relating to, among other things, litigation and regulatory
matters;
- the effect of the current interest rate environment or changes
in interest rates on our net interest income, net interest margin
and our mortgage originations, mortgage servicing rights and
mortgage loans held for sale;
- significant turbulence or a disruption in the capital or
financial markets, which could result in, among other things,
reduced investor demand for mortgage loans, a reduction in the
availability of funding or increased funding costs, and declines in
asset values and/or recognition of other-than-temporary impairment
on securities held in our debt securities and equity securities
portfolios;
- the effect of a fall in stock market prices on our investment
banking business and our fee income from our brokerage, asset and
wealth management businesses;
- negative effects from the retail banking sales practices matter
and from other instances where customers may have experienced
financial harm, including on our legal, operational and compliance
costs, our ability to engage in certain business activities or
offer certain products or services, our ability to keep and attract
customers, our ability to attract and retain qualified team
members, and our reputation;
- resolution of regulatory matters, litigation, or other legal
actions, which may result in, among other things, additional costs,
fines, penalties, restrictions on our business activities,
reputational harm, or other adverse consequences;
- a failure in or breach of our operational or security systems
or infrastructure, or those of our third-party vendors or other
service providers, including as a result of cyber attacks;
- the effect of changes in the level of checking or savings
account deposits on our funding costs and net interest margin;
- fiscal and monetary policies of the Federal Reserve Board;
and
- the other risk factors and uncertainties described under “Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2018.
In addition to the above factors, we also caution that the
amount and timing of any future common stock dividends or
repurchases will depend on the earnings, cash requirements and
financial condition of the Company, market conditions, capital
requirements (including under Basel capital standards), common
stock issuance requirements, applicable law and regulations
(including federal securities laws and federal banking
regulations), and other factors deemed relevant by the Company’s
Board of Directors, and may be subject to regulatory approval or
conditions.
For more information about factors that could cause actual
results to differ materially from our expectations, refer to our
reports filed with the Securities and Exchange Commission,
including the discussion under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2018, as filed with
the Securities and Exchange Commission and available on its website
at www.sec.gov.
Any forward-looking statement made by us speaks only as of the
date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or
otherwise, except as may be required by law.
Forward-looking Non-GAAP Financial
Measures. From time to time management may discuss
forward-looking non-GAAP financial measures, such as
forward-looking estimates or targets for return on average tangible
common equity. We are unable to provide a reconciliation of
forward-looking non-GAAP financial measures to their most directly
comparable GAAP financial measures because we are unable to
provide, without unreasonable effort, a meaningful or accurate
calculation or estimation of amounts that would be necessary for
the reconciliation due to the complexity and inherent difficulty in
forecasting and quantifying future amounts or when they may occur.
Such unavailable information could be significant to future
results.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,500 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 32 countries and territories to support customers who
conduct business in the global economy. With approximately 261,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 29 on
Fortune’s 2019 rankings of America’s largest corporations.
Wells Fargo & Company and
Subsidiaries
QUARTERLY FINANCIAL
DATA
TABLE OF CONTENTS
Pages
Summary
Information
Summary Financial Data
17
Income
Consolidated Statement of Income
19
Consolidated Statement of Comprehensive
Income
21
Condensed Consolidated Statement of
Changes in Total Equity
21
Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis)
22
Five Quarter Average Balances, Yields and
Rates Paid (Taxable-Equivalent Basis)
24
Noninterest Income and Noninterest
Expense
25
Five Quarter Deferred Compensation Plan
Investment Results
27
Balance
Sheet
Consolidated Balance Sheet
28
Trading Activities
30
Debt Securities
30
Equity Securities
31
Loans
Loans
32
Nonperforming Assets
33
Loans 90 Days or More Past Due and Still
Accruing
33
Changes in Allowance for Credit Losses
35
Equity
Tangible Common Equity
36
Common Equity Tier 1 Under Basel III
37
Operating
Segments
Operating Segment Results
38
Other
Mortgage Servicing and other related
data
40
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
Quarter ended
% Change Sep 30, 2019 from
Nine months ended
($ in millions, except per share
amounts)
Sep 30, 2019
Jun 30, 2019
Sep 30, 2018
Jun 30, 2019
Sep 30, 2018
Sep 30, 2019
Sep 30, 2018
% Change
For the Period
Wells Fargo net income
$
4,610
6,206
6,007
(26
)%
(23
)
$
16,676
16,329
2
%
Wells Fargo net income applicable to
common stock
4,037
5,848
5,453
(31
)
(26
)
15,392
14,978
3
Diluted earnings per common share
0.92
1.30
1.13
(29
)
(19
)
3.43
3.07
12
Profitability ratios (annualized):
Wells Fargo net income to average assets
(ROA)
0.95
%
1.31
1.27
(27
)
(25
)
1.17
%
1.15
2
Wells Fargo net income applicable to
common stock to average Wells Fargo common stockholders’ equity
(ROE)
9.00
13.26
12.04
(32
)
(25
)
11.64
11.08
5
Return on average tangible common equity
(ROTCE)(1)
10.70
15.78
14.33
(32
)
(25
)
13.85
13.19
5
Efficiency ratio (2)
69.1
62.3
62.7
11
10
65.3
65.4
—
Total revenue
$
22,010
21,584
21,941
2
—
$
65,203
65,428
—
Pre-tax pre-provision profit (PTPP)
(3)
6,811
8,135
8,178
(16
)
(17
)
22,639
22,641
—
Dividends declared per common share
0.51
0.45
0.43
13
19
1.41
1.21
17
Average common shares outstanding
4,358.5
4,469.4
4,784.0
(2
)
(9
)
4,459.1
4,844.8
(8
)
Diluted average common shares
outstanding
4,389.6
4,495.0
4,823.2
(2
)
(9
)
4,489.5
4,885.0
(8
)
Average loans
$
949,760
947,460
939,462
—
1
$
949,076
944,813
—
Average assets
1,927,415
1,900,627
1,876,283
1
3
1,903,873
1,892,209
1
Average total deposits
1,291,375
1,268,979
1,266,378
2
2
1,274,246
1,278,185
—
Average consumer and small business
banking deposits (4)
749,529
742,671
743,503
1
1
745,370
751,030
(1
)
Net interest margin
2.66
%
2.82
2.94
(6
)
(10
)
2.79
%
2.90
(4
)
At Period End
Debt securities
$
503,528
482,067
472,283
4
7
$
503,528
472,283
7
Loans
954,915
949,878
942,300
1
1
954,915
942,300
1
Allowance for loan losses
9,715
9,692
10,021
—
(3
)
9,715
10,021
(3
)
Goodwill
26,388
26,415
26,425
—
—
26,388
26,425
—
Equity securities
63,884
61,537
61,755
4
3
63,884
61,755
3
Assets
1,943,950
1,923,388
1,872,981
1
4
1,943,950
1,872,981
4
Deposits
1,308,495
1,288,426
1,266,594
2
3
1,308,495
1,266,594
3
Common stockholders' equity
172,827
177,235
176,934
(2
)
(2
)
172,827
176,934
(2
)
Wells Fargo stockholders’ equity
193,304
199,042
198,741
(3
)
(3
)
193,304
198,741
(3
)
Total equity
194,416
200,037
199,679
(3
)
(3
)
194,416
199,679
(3
)
Tangible common equity (1)
144,481
148,864
148,391
(3
)
(3
)
144,481
148,391
(3
)
Common shares outstanding
4,269.1
4,419.6
4,711.6
(3
)
(9
)
4,269.1
4,711.6
(9
)
Book value per common share (5)
$
40.48
40.10
37.55
1
8
$
40.48
37.55
8
Tangible book value per common share
(1)(5)
33.84
33.68
31.49
—
7
33.84
31.49
7
Team members (active, full-time
equivalent)
261,400
262,800
261,700
(1
)
—
261,400
261,700
—
(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) 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)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
For the Quarter
Wells Fargo net income
$
4,610
6,206
5,860
6,064
6,007
Wells Fargo net income applicable to
common stock
4,037
5,848
5,507
5,711
5,453
Diluted earnings per common share
0.92
1.30
1.20
1.21
1.13
Profitability ratios (annualized):
Wells Fargo net income to average assets
(ROA)
0.95
%
1.31
1.26
1.28
1.27
Wells Fargo net income applicable to
common stock to average Wells Fargo common stockholders’ equity
(ROE)
9.00
13.26
12.71
12.89
12.04
Return on average tangible common equity
(ROTCE)(1)
10.70
15.78
15.16
15.39
14.33
Efficiency ratio (2)
69.1
62.3
64.4
63.6
62.7
Total revenue
$
22,010
21,584
21,609
20,980
21,941
Pre-tax pre-provision profit (PTPP)
(3)
6,811
8,135
7,693
7,641
8,178
Dividends declared per common share
0.51
0.45
0.45
0.43
0.43
Average common shares outstanding
4,358.5
4,469.4
4,551.5
4,665.8
4,784.0
Diluted average common shares
outstanding
4,389.6
4,495.0
4,584.0
4,700.8
4,823.2
Average loans
$
949,760
947,460
950,010
946,336
939,462
Average assets
1,927,415
1,900,627
1,883,091
1,879,047
1,876,283
Average total deposits
1,291,375
1,268,979
1,262,062
1,268,948
1,266,378
Average consumer and small business
banking deposits (4)
749,529
742,671
739,654
736,295
743,503
Net interest margin
2.66
%
2.82
2.91
2.94
2.94
At Quarter End
Debt securities
$
503,528
482,067
483,467
484,689
472,283
Loans
954,915
949,878
948,249
953,110
942,300
Allowance for loan losses
9,715
9,692
9,900
9,775
10,021
Goodwill
26,388
26,415
26,420
26,418
26,425
Equity securities
63,884
61,537
58,440
55,148
61,755
Assets
1,943,950
1,923,388
1,887,792
1,895,883
1,872,981
Deposits
1,308,495
1,288,426
1,264,013
1,286,170
1,266,594
Common stockholders' equity
172,827
177,235
176,025
174,359
176,934
Wells Fargo stockholders’ equity
193,304
199,042
197,832
196,166
198,741
Total equity
194,416
200,037
198,733
197,066
199,679
Tangible common equity (1)
144,481
148,864
147,723
145,980
148,391
Common shares outstanding
4,269.1
4,419.6
4,511.9
4,581.3
4,711.6
Book value per common share (5)
$
40.48
40.10
39.01
38.06
37.55
Tangible book value per common share
(1)(5)
33.84
33.68
32.74
31.86
31.49
Team members (active, full-time
equivalent)
261,400
262,800
262,100
258,700
261,700
(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) Book value per common
share is common stockholders' equity divided by common shares
outstanding. Tangible book value per common share is tangible
common equity divided by common shares outstanding.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF
INCOME
Quarter ended September 30,
%
Nine months ended September
30,
%
(in millions, except per share
amounts)
2019
2018
Change
2019
2018
Change
Interest income
Debt securities
$
3,666
3,595
2
%
$
11,388
10,603
7
%
Mortgage loans held for sale
232
210
10
579
587
(1
)
Loans held for sale
20
35
(43
)
64
107
(40
)
Loans
10,982
11,116
(1
)
33,652
32,607
3
Equity securities
247
280
(12
)
693
732
(5
)
Other interest income
1,352
1,128
20
4,112
3,090
33
Total interest income
16,499
16,364
1
50,488
47,726
6
Interest expense
Deposits
2,324
1,499
55
6,563
3,857
70
Short-term borrowings
635
462
37
1,877
1,171
60
Long-term debt
1,780
1,667
7
5,607
4,901
14
Other interest expense
135
164
(18
)
410
446
(8
)
Total interest expense
4,874
3,792
29
14,457
10,375
39
Net interest income
11,625
12,572
(8
)
36,031
37,351
(4
)
Provision for credit losses
695
580
20
2,043
1,223
67
Net interest income after provision for
credit losses
10,930
11,992
(9
)
33,988
36,128
(6
)
Noninterest income
Service charges on deposit accounts
1,219
1,204
1
3,519
3,540
(1
)
Trust and investment fees
3,559
3,631
(2
)
10,500
10,989
(4
)
Card fees
1,027
1,017
1
2,996
2,926
2
Other fees
858
850
1
2,428
2,496
(3
)
Mortgage banking
466
846
(45
)
1,932
2,550
(24
)
Insurance
91
104
(13
)
280
320
(13
)
Net gains from trading activities
276
158
75
862
592
46
Net gains on debt securities
3
57
(95
)
148
99
49
Net gains from equity securities
956
416
130
2,392
1,494
60
Lease income
402
453
(11
)
1,269
1,351
(6
)
Other
1,528
633
141
2,846
1,720
65
Total noninterest income
10,385
9,369
11
29,172
28,077
4
Noninterest expense
Salaries
4,695
4,461
5
13,661
13,289
3
Commission and incentive compensation
2,735
2,427
13
8,177
7,837
4
Employee benefits
1,164
1,377
(15
)
4,438
4,220
5
Equipment
693
634
9
1,961
1,801
9
Net occupancy
760
718
6
2,196
2,153
2
Core deposit and other intangibles
27
264
(90
)
82
794
(90
)
FDIC and other deposit assessments
93
336
(72
)
396
957
(59
)
Other
5,032
3,546
42
11,653
11,736
(1
)
Total noninterest expense
15,199
13,763
10
42,564
42,787
(1
)
Income before income tax
expense
6,116
7,598
(20
)
20,596
21,418
(4
)
Income tax expense
1,304
1,512
(14
)
3,479
4,696
(26
)
Net income before noncontrolling
interests
4,812
6,086
(21
)
17,117
16,722
2
Less: Net income from noncontrolling
interests
202
79
156
441
393
12
Wells Fargo net income
$
4,610
6,007
(23
)
$
16,676
16,329
2
Less: Preferred stock dividends and
other
573
554
3
1,284
1,351
(5
)
Wells Fargo net income applicable to
common stock
$
4,037
5,453
(26
)
$
15,392
14,978
3
Per share information
Earnings per common share
$
0.93
1.14
(18
)
$
3.45
3.09
12
Diluted earnings per common share
0.92
1.13
(19
)
3.43
3.07
12
Average common shares
outstanding
4,358.5
4,784.0
(9
)
4,459.1
4,844.8
(8
)
Diluted average common shares
outstanding
4,389.6
4,823.2
(9
)
4,489.5
4,885.0
(8
)
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF
INCOME
Quarter ended
(in millions, except per share
amounts)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Interest income
Debt securities
$
3,666
3,781
3,941
3,803
3,595
Mortgage loans held for sale
232
195
152
190
210
Loans held for sale
20
20
24
33
35
Loans
10,982
11,316
11,354
11,367
11,116
Equity securities
247
236
210
260
280
Other interest income
1,352
1,438
1,322
1,268
1,128
Total interest income
16,499
16,986
17,003
16,921
16,364
Interest expense
Deposits
2,324
2,213
2,026
1,765
1,499
Short-term borrowings
635
646
596
546
462
Long-term debt
1,780
1,900
1,927
1,802
1,667
Other interest expense
135
132
143
164
164
Total interest expense
4,874
4,891
4,692
4,277
3,792
Net interest income
11,625
12,095
12,311
12,644
12,572
Provision for credit losses
695
503
845
521
580
Net interest income after provision for
credit losses
10,930
11,592
11,466
12,123
11,992
Noninterest income
Service charges on deposit accounts
1,219
1,206
1,094
1,176
1,204
Trust and investment fees
3,559
3,568
3,373
3,520
3,631
Card fees
1,027
1,025
944
981
1,017
Other fees
858
800
770
888
850
Mortgage banking
466
758
708
467
846
Insurance
91
93
96
109
104
Net gains from trading activities
276
229
357
10
158
Net gains on debt securities
3
20
125
9
57
Net gains from equity securities
956
622
814
21
416
Lease income
402
424
443
402
453
Other
1,528
744
574
753
633
Total noninterest income
10,385
9,489
9,298
8,336
9,369
Noninterest expense
Salaries
4,695
4,541
4,425
4,545
4,461
Commission and incentive compensation
2,735
2,597
2,845
2,427
2,427
Employee benefits
1,164
1,336
1,938
706
1,377
Equipment
693
607
661
643
634
Net occupancy
760
719
717
735
718
Core deposit and other intangibles
27
27
28
264
264
FDIC and other deposit assessments
93
144
159
153
336
Other
5,032
3,478
3,143
3,866
3,546
Total noninterest expense
15,199
13,449
13,916
13,339
13,763
Income before income tax
expense
6,116
7,632
6,848
7,120
7,598
Income tax expense
1,304
1,294
881
966
1,512
Net income before noncontrolling
interests
4,812
6,338
5,967
6,154
6,086
Less: Net income from noncontrolling
interests
202
132
107
90
79
Wells Fargo net income
$
4,610
6,206
5,860
6,064
6,007
Less: Preferred stock dividends and
other
573
358
353
353
554
Wells Fargo net income applicable to
common stock
$
4,037
5,848
5,507
5,711
5,453
Per share information
Earnings per common share
$
0.93
1.31
1.21
1.22
1.14
Diluted earnings per common share
0.92
1.30
1.20
1.21
1.13
Average common shares
outstanding
4,358.5
4,469.4
4,551.5
4,665.8
4,784.0
Diluted average common shares
outstanding
4,389.6
4,495.0
4,584.0
4,700.8
4,823.2
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Quarter ended September 30,
%
Nine months ended September
30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Wells Fargo net income
$
4,610
6,007
(23
)%
$
16,676
16,329
2
%
Other comprehensive income (loss), before
tax:
Debt securities:
Net unrealized gains (losses) arising
during the period
652
(1,468
)
NM
5,192
(5,528
)
NM
Reclassification of net losses to net
income
76
51
49
34
168
(80
)
Derivative and hedging activities:
Net unrealized gains (losses) arising
during the period
10
(24
)
NM
32
(416
)
NM
Reclassification of net losses to net
income
75
79
(5
)
233
216
8
Defined benefit plans adjustments:
Net actuarial and prior service gains
(losses) arising during the period
—
—
—
(4
)
6
NM
Amortization of net actuarial loss,
settlements and other to net income
33
29
14
101
90
12
Foreign currency translation
adjustments:
Net unrealized gains (losses) arising
during the period
(53
)
(9
)
489
3
(94
)
NM
Other comprehensive income (loss),
before tax
793
(1,342
)
NM
5,591
(5,558
)
NM
Income tax benefit (expense) related to
other comprehensive income
(208
)
330
NM
(1,375
)
1,346
NM
Other comprehensive income (loss), net
of tax
585
(1,012
)
NM
4,216
(4,212
)
NM
Less: Other comprehensive loss from
noncontrolling interests
—
—
—
—
(1
)
(100
)
Wells Fargo other comprehensive income
(loss), net of tax
585
(1,012
)
NM
4,216
(4,211
)
NM
Wells Fargo comprehensive
income
5,195
4,995
4
20,892
12,118
72
Comprehensive income from noncontrolling
interests
202
79
156
441
392
13
Total comprehensive income
$
5,397
5,074
6
$
21,333
12,510
71
NM – Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN TOTAL EQUITY
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Balance, beginning of period
$
200,037
198,733
197,066
199,679
206,069
Cumulative effect from change in
accounting policies (1)
—
—
(11
)
—
—
Wells Fargo net income
4,610
6,206
5,860
6,064
6,007
Wells Fargo other comprehensive income
(loss), net of tax
585
1,458
2,173
537
(1,012
)
Noncontrolling interests
117
94
1
(38
)
57
Common stock issued
278
399
1,139
239
156
Common stock repurchased
(7,448
)
(4,898
)
(4,820
)
(7,299
)
(7,382
)
Preferred stock redeemed (2)
(1,550
)
—
—
—
(2,150
)
Preferred stock released by ESOP
142
193
—
268
260
Common stock warrants
repurchased/exercised
—
—
—
(131
)
(36
)
Common stock dividends
(2,230
)
(2,015
)
(2,054
)
(2,016
)
(2,062
)
Preferred stock dividends
(353
)
(358
)
(353
)
(353
)
(399
)
Stock incentive compensation expense
262
247
544
144
202
Net change in deferred compensation and
related plans
(34
)
(22
)
(812
)
(28
)
(31
)
Balance, end of period
$
194,416
200,037
198,733
197,066
199,679
(1) Effective January 1, 2019, we adopted ASU 2016-02 – Leases
(Topic 842) and subsequent related Updates and ASU 2017-08 –
Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):
Premium Amortization on Purchased Callable Debt Securities. (2)
Represents the impact of the partial redemption of preferred stock,
Series K, in third quarter 2019, and 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 September 30,
2019
2018
(in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Interest-earning deposits with banks
$
134,017
2.14
%
$
723
148,565
1.93
%
$
721
Federal funds sold and securities
purchased under resale agreements
105,919
2.24
599
79,931
1.93
390
Debt securities (3):
Trading debt securities
94,737
3.35
794
84,481
3.45
730
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
16,040
2.14
87
6,421
1.65
27
Securities of U.S. states and political
subdivisions
43,305
3.78
409
46,615
3.76
438
Mortgage-backed securities:
Federal agencies
154,134
2.77
1,066
155,525
2.77
1,079
Residential and commercial
5,175
4.02
52
7,318
4.68
85
Total mortgage-backed securities
159,309
2.81
1,118
162,843
2.86
1,164
Other debt securities
42,435
4.12
440
46,353
4.39
512
Total available-for-sale debt
securities
261,089
3.14
2,054
262,232
3.26
2,141
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,770
2.18
247
44,739
2.18
246
Securities of U.S. states and political
subdivisions
8,688
4.01
87
6,251
4.33
68
Federal agency and other mortgage-backed
securities
95,434
2.54
606
95,298
2.27
539
Other debt securities
50
3.58
—
106
5.61
2
Total held-to-maturity debt securities
148,942
2.52
940
146,394
2.33
855
Total debt securities
504,768
3.00
3,788
493,107
3.02
3,726
Mortgage loans held for sale (4)
22,743
4.08
232
19,343
4.33
210
Loans held for sale (4)
1,964
4.17
20
2,619
5.28
35
Commercial loans:
Commercial and industrial - U.S.
284,278
4.21
3,015
273,814
4.22
2,915
Commercial and industrial - Non U.S.
64,016
3.67
593
60,884
3.63
556
Real estate mortgage
121,819
4.36
1,338
121,284
4.35
1,329
Real estate construction
20,686
5.13
267
23,276
5.05
296
Lease financing
19,266
4.34
209
19,512
4.69
229
Total commercial loans
510,065
4.22
5,422
498,770
4.24
5,325
Consumer loans:
Real estate 1-4 family first mortgage
288,383
3.74
2,699
284,133
4.07
2,891
Real estate 1-4 family junior lien
mortgage
31,454
5.66
448
35,863
5.50
496
Credit card
39,204
12.55
1,240
36,893
12.77
1,187
Automobile
46,286
5.13
599
46,963
5.20
616
Other revolving credit and installment
34,368
6.95
601
36,840
6.78
630
Total consumer loans
439,695
5.06
5,587
440,692
5.26
5,820
Total loans (4)
949,760
4.61
11,009
939,462
4.72
11,145
Equity securities
37,075
2.68
249
37,902
2.98
283
Other
6,695
1.77
30
4,702
1.47
16
Total earning assets
$
1,762,941
3.76
%
$
16,650
1,725,631
3.81
%
$
16,526
Funding sources
Deposits:
Interest-bearing checking
$
59,310
1.39
%
$
208
51,177
1.01
%
$
131
Market rate and other savings
711,334
0.66
1,182
693,937
0.35
614
Savings certificates
32,751
1.72
142
20,586
0.62
32
Other time deposits
91,820
2.42
561
87,752
2.35
519
Deposits in foreign offices
51,709
1.77
231
53,933
1.50
203
Total interest-bearing deposits
946,924
0.97
2,324
907,385
0.66
1,499
Short-term borrowings
121,842
2.07
635
105,472
1.74
463
Long-term debt
229,689
3.09
1,780
220,654
3.02
1,667
Other liabilities
26,173
2.06
135
27,108
2.40
164
Total interest-bearing liabilities
1,324,628
1.46
4,874
1,260,619
1.20
3,793
Portion of noninterest-bearing funding
sources
438,313
—
—
465,012
—
—
Total funding sources
$
1,762,941
1.10
4,874
1,725,631
0.87
3,793
Net interest margin and net interest
income on a taxable-equivalent basis (5)
2.66
%
$
11,776
2.94
%
$
12,733
Noninterest-earning assets
Cash and due from banks
$
19,199
18,356
Goodwill
26,413
26,429
Other
118,862
105,867
Total noninterest-earning assets
$
164,474
150,652
Noninterest-bearing funding
sources
Deposits
$
344,451
358,993
Other liabilities
58,241
53,845
Total equity
200,095
202,826
Noninterest-bearing funding sources used
to fund earning assets
(438,313
)
(465,012
)
Net noninterest-bearing funding
sources
$
164,474
150,652
Total assets
$
1,927,415
1,876,283
(1) Our average prime rate was 5.31% and
5.01% for the quarters ended September 30, 2019 and 2018,
respectively. The average three-month London Interbank Offered Rate
(LIBOR) was 2.20% and 2.34% for the same quarters,
respectively.
(2) Yields/rates and amounts include the
effects of hedge and risk management activities associated with the
respective asset and liability categories.
(3) Yields and rates are based on interest
income/expense amounts for the period, annualized based on the
accrual basis for the respective accounts. The average balance
amounts represent amortized cost for the periods presented.
(4) Nonaccrual loans and related income
are included in their respective loan categories.
(5) Includes taxable-equivalent
adjustments of $151 million and $161 million for the quarters ended
September 30, 2019 and 2018, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate utilized was 21% for the periods presented.
Wells Fargo & Company and
Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Nine months ended September
30,
2019
2018
(in millions)
Average
balance
Yields/
rates
Interest
income/
expense
Average
balance
Yields/
rates
Interest
income/
expense
Earning assets
Interest-earning deposits with banks
$
138,591
2.27
%
$
2,352
158,480
1.71
%
$
2,029
Federal funds sold and securities
purchased under resale agreements
95,945
2.36
1,692
79,368
1.69
1,005
Debt securities (3):
Trading debt securities
90,229
3.46
2,338
81,307
3.38
2,062
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
15,178
2.17
246
6,424
1.66
80
Securities of U.S. states and political
subdivisions
45,787
3.95
1,355
47,974
3.68
1,323
Mortgage-backed securities:
Federal agencies
151,806
2.95
3,359
156,298
2.75
3,220
Residential and commercial
5,571
4.12
172
8,140
4.54
277
Total mortgage-backed securities
157,377
2.99
3,531
164,438
2.84
3,497
Other debt securities
44,746
4.33
1,451
47,146
4.14
1,462
Total available-for-sale debt
securities
263,088
3.34
6,583
265,982
3.19
6,362
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,762
2.19
734
44,731
2.19
733
Securities of U.S. states and political
subdivisions
7,277
4.03
220
6,255
4.34
204
Federal agency and other mortgage-backed
securities
95,646
2.64
1,894
93,699
2.32
1,632
Other debt securities
56
3.81
1
460
4.02
14
Total held-to-maturity debt securities
147,741
2.57
2,849
145,145
2.38
2,583
Total debt securities
501,058
3.13
11,770
492,434
2.98
11,007
Mortgage loans held for sale (4)
18,401
4.20
579
18,849
4.15
587
Loans held for sale (4)
1,823
4.72
64
2,706
5.28
107
Commercial loans:
Commercial and industrial - U.S.
285,305
4.39
9,360
273,711
4.08
8,350
Commercial and industrial - Non U.S.
63,252
3.82
1,808
60,274
3.46
1,559
Real estate mortgage
121,703
4.51
4,101
123,804
4.22
3,910
Real estate construction
21,557
5.31
856
23,783
4.82
857
Lease financing
19,262
4.56
659
19,349
4.82
700
Total commercial loans
511,079
4.39
16,784
500,921
4.10
15,376
Consumer loans:
Real estate 1-4 family first mortgage
286,600
3.86
8,296
283,814
4.05
8,613
Real estate 1-4 family junior lien
mortgage
32,610
5.72
1,397
37,308
5.31
1,484
Credit card
38,517
12.69
3,656
36,416
12.73
3,467
Automobile
45,438
5.18
1,762
48,983
5.18
1,899
Other revolving credit and installment
34,832
7.07
1,841
37,371
6.62
1,851
Total consumer loans
437,997
5.17
16,952
443,892
5.21
17,314
Total loans (4)
949,076
4.75
33,736
944,813
4.62
32,690
Equity securities
35,139
2.65
697
38,322
2.57
738
Other
5,275
1.73
68
5,408
1.38
56
Total earning assets
$
1,745,308
3.90
%
$
50,958
1,740,380
3.70
%
$
48,219
Funding sources
Deposits:
Interest-bearing checking
$
57,715
1.42
%
$
615
66,364
0.89
%
$
441
Market rate and other savings
696,943
0.58
3,038
683,279
0.28
1,416
Savings certificates
29,562
1.56
344
20,214
0.46
70
Other time deposits
95,490
2.57
1,836
82,175
2.16
1,331
Deposits in foreign offices
52,995
1.84
730
66,590
1.20
599
Total interest-bearing deposits
932,705
0.94
6,563
918,622
0.56
3,857
Short-term borrowings
115,131
2.18
1,878
103,696
1.51
1,173
Long-term debt
233,186
3.21
5,607
223,485
2.93
4,901
Other liabilities
25,263
2.17
410
27,743
2.14
446
Total interest-bearing liabilities
1,306,285
1.48
14,458
1,273,546
1.09
10,377
Portion of noninterest-bearing funding
sources
439,023
—
—
466,834
—
—
Total funding sources
$
1,745,308
1.11
14,458
1,740,380
0.80
10,377
Net interest margin and net interest
income on a taxable-equivalent basis (5)
2.79
%
$
36,500
2.90
%
$
37,842
Noninterest-earning assets
Cash and due from banks
$
19,428
18,604
Goodwill
26,416
26,463
Other
112,721
106,762
Total noninterest-earning assets
$
158,565
151,829
Noninterest-bearing funding
sources
Deposits
$
341,541
359,563
Other liabilities
56,664
54,088
Total equity
199,383
205,012
Noninterest-bearing funding sources used
to fund earning assets
(439,023
)
(466,834
)
Net noninterest-bearing funding
sources
$
158,565
151,829
Total assets
$
1,903,873
1,892,209
(1) Our average prime rate was 5.43% and
4.78% for first nine months of 2019 and 2018, respectively. The
average three-month London Interbank Offered Rate (LIBOR) was 2.46%
and 2.20% for the same periods, respectively.
(2) Yields/rates and amounts include the
effects of hedge and risk management activities associated with the
respective asset and liability categories.
(3) Yields and rates are based on interest
income/expense amounts for the period. The average balance amounts
represent amortized cost for the periods presented.
(4) Nonaccrual loans and related income
are included in their respective loan categories.
(5) Includes taxable-equivalent
adjustments of $469 million and $491 million for the first nine
months of 2019 and 2018, respectively, predominantly related to
tax-exempt income on certain loans and securities. The federal
statutory tax rate utilized was 21% for the periods presented.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS
AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
($ in billions)
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Average
balance
Yields/
rates
Earning assets
Interest-earning deposits with banks
$
134.0
2.14
%
$
141.0
2.33
%
$
140.8
2.33
%
$
150.1
2.18
%
$
148.6
1.93
%
Federal funds sold and securities
purchased under resale agreements
105.9
2.24
98.1
2.44
83.5
2.40
76.1
2.22
79.9
1.93
Debt securities (3):
Trading debt securities
94.7
3.35
86.5
3.45
89.4
3.58
90.1
3.52
84.5
3.45
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
16.0
2.14
15.4
2.21
14.1
2.14
7.2
1.80
6.4
1.65
Securities of U.S. states and political
subdivisions
43.3
3.78
45.8
4.02
48.3
4.02
47.6
4.05
46.6
3.76
Mortgage-backed securities:
Federal agencies
154.1
2.77
149.8
2.99
151.5
3.10
155.3
2.91
155.5
2.77
Residential and commercial
5.2
4.02
5.6
4.02
6.0
4.31
6.7
4.87
7.3
4.68
Total mortgage-backed securities
159.3
2.81
155.4
3.03
157.5
3.14
162.0
2.99
162.8
2.86
Other debt securities
42.5
4.12
45.0
4.40
46.8
4.46
46.1
4.46
46.4
4.39
Total available-for-sale debt
securities
261.1
3.14
261.6
3.39
266.7
3.48
262.9
3.41
262.2
3.26
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44.8
2.18
44.8
2.19
44.7
2.20
44.7
2.19
44.7
2.18
Securities of U.S. states and political
subdivisions
8.7
4.01
7.0
4.06
6.2
4.03
6.2
4.34
6.3
4.33
Federal agency and other mortgage-backed
securities
95.4
2.54
95.4
2.64
95.9
2.74
95.8
2.46
95.3
2.27
Other debt securities
0.1
3.58
0.1
3.86
0.1
3.96
0.1
3.65
0.1
5.61
Total held-to-maturity debt securities
149.0
2.52
147.3
2.57
146.9
2.63
146.8
2.46
146.4
2.33
Total debt securities
504.8
3.00
495.4
3.16
503.0
3.25
499.8
3.15
493.1
3.02
Mortgage loans held for sale
22.7
4.08
18.5
4.22
13.9
4.37
17.0
4.46
19.3
4.33
Loans held for sale
2.0
4.17
1.6
4.80
1.9
5.25
2.0
6.69
2.6
5.28
Commercial loans:
Commercial and industrial - U.S.
284.3
4.21
285.1
4.47
286.6
4.48
281.4
4.40
273.8
4.22
Commercial and industrial - Non U.S.
64.0
3.67
62.9
3.90
62.8
3.90
62.0
3.73
60.9
3.63
Real estate mortgage
121.8
4.36
121.9
4.58
121.4
4.58
120.4
4.51
121.3
4.35
Real estate construction
20.7
5.13
21.6
5.36
22.4
5.43
23.1
5.32
23.3
5.05
Lease financing
19.3
4.34
19.1
4.71
19.4
4.61
19.5
4.48
19.5
4.69
Total commercial loans
510.1
4.22
510.6
4.47
512.6
4.48
506.4
4.39
498.8
4.24
Consumer loans:
Real estate 1-4 family first mortgage
288.4
3.74
286.2
3.88
285.2
3.96
285.3
4.02
284.1
4.07
Real estate 1-4 family junior lien
mortgage
31.5
5.66
32.6
5.75
33.8
5.75
34.8
5.60
35.9
5.50
Credit card
39.2
12.55
38.2
12.65
38.2
12.88
37.9
12.69
36.9
12.77
Automobile
46.3
5.13
45.2
5.23
44.8
5.19
45.5
5.16
47.0
5.20
Other revolving credit and installment
34.3
6.95
34.7
7.12
35.4
7.14
36.4
6.95
36.8
6.78
Total consumer loans
439.7
5.06
436.9
5.18
437.4
5.26
439.9
5.25
440.7
5.26
Total loans
949.8
4.61
947.5
4.80
950.0
4.84
946.3
4.79
939.5
4.72
Equity securities
37.1
2.68
35.2
2.70
33.1
2.56
37.4
2.79
37.9
2.98
Other
6.6
1.77
4.7
1.76
4.4
1.63
4.2
1.78
4.7
1.47
Total earning assets
$
1,762.9
3.76
%
$
1,742.0
3.94
%
$
1,730.6
4.00
%
$
1,732.9
3.93
%
$
1,725.6
3.81
%
Funding sources
Deposits:
Interest-bearing checking
$
59.3
1.39
%
$
57.5
1.46
%
$
56.3
1.42
%
$
54.0
1.21
%
$
51.2
1.01
%
Market rate and other savings
711.3
0.66
690.7
0.59
688.6
0.50
689.6
0.43
693.9
0.35
Savings certificates
32.8
1.72
30.6
1.62
25.2
1.26
22.0
0.87
20.6
0.62
Other time deposits
91.8
2.42
96.9
2.61
97.8
2.67
92.6
2.46
87.8
2.35
Deposits in foreign offices
51.7
1.77
51.9
1.86
55.4
1.89
56.1
1.66
53.9
1.50
Total interest-bearing deposits
946.9
0.97
927.6
0.96
923.3
0.89
914.3
0.77
907.4
0.66
Short-term borrowings
121.8
2.07
114.8
2.26
108.6
2.23
106.0
2.04
105.5
1.74
Long-term debt
229.7
3.09
236.7
3.21
233.2
3.32
226.6
3.17
220.7
3.02
Other liabilities
26.2
2.06
24.3
2.18
25.3
2.28
27.4
2.41
27.0
2.40
Total interest-bearing liabilities
1,324.6
1.46
1,303.4
1.50
1,290.4
1.47
1,274.3
1.34
1,260.6
1.20
Portion of noninterest-bearing funding
sources
438.3
—
438.6
—
440.2
—
458.6
—
465.0
—
Total funding sources
$
1,762.9
1.10
$
1,742.0
1.12
$
1,730.6
1.09
$
1,732.9
0.99
$
1,725.6
0.87
Net interest margin on a
taxable-equivalent basis
2.66
%
2.82
%
2.91
%
2.94
%
2.94
%
Noninterest-earning assets
Cash and due from banks
$
19.2
19.5
19.6
19.3
18.4
Goodwill
26.4
26.4
26.4
26.4
26.4
Other
118.9
112.7
106.5
100.4
105.9
Total noninterest-earnings assets
$
164.5
158.6
152.5
146.1
150.7
Noninterest-bearing funding
sources
Deposits
$
344.5
341.4
338.8
354.6
359.0
Other liabilities
58.2
56.1
55.6
51.7
53.9
Total equity
200.1
199.7
198.3
198.4
202.8
Noninterest-bearing funding sources used
to fund earning assets
(438.3
)
(438.6
)
(440.2
)
(458.6
)
(465.0
)
Net noninterest-bearing funding
sources
$
164.5
158.6
152.5
146.1
150.7
Total assets
$
1,927.4
1,900.6
1,883.1
1,879.0
1,876.3
(1) Our average prime rate was 5.31% for
the quarter ended September 30, 2019, 5.50% for the quarters ended
June 30 and March 31, 2019, 5.28% for the quarter ended December
31, 2018, and 5.01% for the quarter ended September 30, 2018. The
average three-month London Interbank Offered Rate (LIBOR) was
2.20%, 2.51%, 2.69%, 2.62% and 2.34% for the same quarters,
respectively.
(2) Yields/rates include the effects of
hedge and risk management activities associated with the respective
asset and liability categories.
(3) Yields and rates are based on interest
income/expense amounts for the period, annualized based on the
accrual basis for the respective accounts. The average balance
amounts represent amortized cost for the periods presented.
Wells Fargo & Company and
Subsidiaries
NONINTEREST INCOME
Quarter ended September 30,
%
Nine months ended September
30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Service charges on deposit accounts
$
1,219
1,204
1
%
$
3,519
3,540
(1
)%
Trust and investment fees:
Brokerage advisory, commissions and other
fees
2,346
2,334
1
6,857
7,091
(3
)
Trust and investment management
729
835
(13
)
2,310
2,520
(8
)
Investment banking
484
462
5
1,333
1,378
(3
)
Total trust and investment fees
3,559
3,631
(2
)
10,500
10,989
(4
)
Card fees
1,027
1,017
1
2,996
2,926
2
Other fees:
Lending related charges and fees (1)
349
370
(6
)
1,045
1,126
(7
)
Cash network fees
118
121
(2
)
344
367
(6
)
Commercial real estate brokerage
commissions
170
129
32
356
323
10
Wire transfer and other remittance
fees
121
120
1
355
357
(1
)
All other fees
100
110
(9
)
328
323
2
Total other fees
858
850
1
2,428
2,496
(3
)
Mortgage banking:
Servicing income, net
(142
)
390
NM
499
1,264
(61
)
Net gains on mortgage loan
origination/sales activities
608
456
33
1,433
1,286
11
Total mortgage banking
466
846
(45
)
1,932
2,550
(24
)
Insurance
91
104
(13
)
280
320
(13
)
Net gains from trading activities
276
158
75
862
592
46
Net gains on debt securities
3
57
(95
)
148
99
49
Net gains from equity securities
956
416
130
2,392
1,494
60
Lease income
402
453
(11
)
1,269
1,351
(6
)
Life insurance investment income
173
167
4
499
493
1
All other
1,355
466
191
2,347
1,227
91
Total
$
10,385
9,369
11
$
29,172
28,077
4
NM - Not meaningful
(1) Represents combined amount of previously reported "Charges and
fees on loans" and "Letters of credit fees".
NONINTEREST EXPENSE
Quarter ended September 30,
%
Nine months ended September
30,
%
(in millions)
2019
2018
Change
2019
2018
Change
Salaries
$
4,695
4,461
5
%
$
13,661
13,289
3
%
Commission and incentive compensation
2,735
2,427
13
8,177
7,837
4
Employee benefits
1,164
1,377
(15
)
4,438
4,220
5
Equipment
693
634
9
1,961
1,801
9
Net occupancy (1)
760
718
6
2,196
2,153
2
Core deposit and other intangibles
27
264
(90
)
82
794
(90
)
FDIC and other deposit assessments
93
336
(72
)
396
957
(59
)
Outside professional services
823
761
8
2,322
2,463
(6
)
Contract services
649
593
9
1,836
1,576
16
Operating losses
1,920
605
217
2,405
2,692
(11
)
Leases (2)
272
311
(13
)
869
942
(8
)
Advertising and promotion
266
223
19
832
603
38
Outside data processing
167
166
1
509
492
3
Travel and entertainment
139
141
(1
)
449
450
—
Postage, stationery and supplies
117
120
(3
)
358
383
(7
)
Telecommunications
91
90
1
275
270
2
Foreclosed assets
52
59
(12
)
124
141
(12
)
Insurance
25
26
(4
)
75
76
(1
)
All other
511
451
13
1,599
1,648
(3
)
Total
$
15,199
13,763
10
$
42,564
42,787
(1
)
(1) Represents expenses for both leased
and owned properties.
(2) Represents expenses for assets we
lease to customers.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Service charges on deposit accounts
$
1,219
1,206
1,094
1,176
1,204
Trust and investment fees:
Brokerage advisory, commissions and other
fees
2,346
2,318
2,193
2,345
2,334
Trust and investment management
729
795
786
796
835
Investment banking
484
455
394
379
462
Total trust and investment fees
3,559
3,568
3,373
3,520
3,631
Card fees
1,027
1,025
944
981
1,017
Other fees:
Lending related charges and fees (1)
349
349
347
400
370
Cash network fees
118
117
109
114
121
Commercial real estate brokerage
commissions
170
105
81
145
129
Wire transfer and other remittance
fees
121
121
113
120
120
All other fees
100
108
120
109
110
Total other fees
858
800
770
888
850
Mortgage banking:
Servicing income, net
(142
)
277
364
109
390
Net gains on mortgage loan
origination/sales activities
608
481
344
358
456
Total mortgage banking
466
758
708
467
846
Insurance
91
93
96
109
104
Net gains from trading activities
276
229
357
10
158
Net gains on debt securities
3
20
125
9
57
Net gains from equity securities
956
622
814
21
416
Lease income
402
424
443
402
453
Life insurance investment income
173
167
159
158
167
All other
1,355
577
415
595
466
Total
$
10,385
9,489
9,298
8,336
9,369
(1) Represents combined amount of
previously reported "Charges and fees on loans" and "Letters of
credit fees".
FIVE QUARTER NONINTEREST
EXPENSE
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Salaries
$
4,695
4,541
4,425
4,545
4,461
Commission and incentive compensation
2,735
2,597
2,845
2,427
2,427
Employee benefits
1,164
1,336
1,938
706
1,377
Equipment
693
607
661
643
634
Net occupancy (1)
760
719
717
735
718
Core deposit and other intangibles
27
27
28
264
264
FDIC and other deposit assessments
93
144
159
153
336
Outside professional services
823
821
678
843
761
Contract services
649
624
563
616
593
Operating losses
1,920
247
238
432
605
Leases (2)
272
311
286
392
311
Advertising and promotion
266
329
237
254
223
Outside data processing
167
175
167
168
166
Travel and entertainment
139
163
147
168
141
Postage, stationery and supplies
117
119
122
132
120
Telecommunications
91
93
91
91
90
Foreclosed assets
52
35
37
47
59
Insurance
25
25
25
25
26
All other
511
536
552
698
451
Total
$
15,199
13,449
13,916
13,339
13,763
(1) Represents expenses for both leased
and owned properties.
(2) Represents expenses for assets we
lease to customers.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER DEFERRED COMPENSATION PLAN
INVESTMENT RESULTS
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Net interest income
$
13
18
13
23
14
Net gains (losses) from equity
securities
(4
)
87
345
(452
)
118
Total revenue (losses) from deferred
compensation plan investments
9
105
358
(429
)
132
Employee benefits expense (1)
5
114
357
(428
)
129
Income (loss) before income tax
expense
$
4
(9
)
1
(1
)
3
(1) Represents change in deferred
compensation plan liability.
Wells Fargo & Company and
Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Sep 30, 2019
Dec 31, 2018
%
Change
Assets
Cash and due from banks
$
22,401
23,551
(5
)%
Interest-earning deposits with banks
126,330
149,736
(16
)
Total cash, cash equivalents, and
restricted cash
148,731
173,287
(14
)
Federal funds sold and securities
purchased under resale agreements
103,051
80,207
28
Debt securities:
Trading, at fair value
79,113
69,989
13
Available-for-sale, at fair value
271,236
269,912
—
Held-to-maturity, at cost
153,179
144,788
6
Mortgage loans held for sale
25,448
15,126
68
Loans held for sale
1,532
2,041
(25
)
Loans
954,915
953,110
—
Allowance for loan losses
(9,715
)
(9,775
)
(1
)
Net loans
945,200
943,335
—
Mortgage servicing rights:
Measured at fair value
11,072
14,649
(24
)
Amortized
1,397
1,443
(3
)
Premises and equipment, net
9,315
8,920
4
Goodwill
26,388
26,418
—
Derivative assets
14,680
10,770
36
Equity securities
63,884
55,148
16
Other assets
89,724
79,850
12
Total assets
$
1,943,950
1,895,883
3
Liabilities
Noninterest-bearing deposits
$
355,259
349,534
2
Interest-bearing deposits
953,236
936,636
2
Total deposits
1,308,495
1,286,170
2
Short-term borrowings
123,908
105,787
17
Derivative liabilities
9,948
8,499
17
Accrued expenses and other liabilities
76,532
69,317
10
Long-term debt
230,651
229,044
1
Total liabilities
1,749,534
1,698,817
3
Equity
Wells Fargo stockholders’ equity:
Preferred stock
21,549
23,214
(7
)
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
60,866
60,685
—
Retained earnings
166,320
158,163
5
Cumulative other comprehensive income
(loss)
(1,639
)
(6,336
)
(74
)
Treasury stock – 1,212,669,670 shares and
900,557,866 shares
(61,785
)
(47,194
)
31
Unearned ESOP shares
(1,143
)
(1,502
)
(24
)
Total Wells Fargo stockholders’ equity
193,304
196,166
(1
)
Noncontrolling interests
1,112
900
24
Total equity
194,416
197,066
(1
)
Total liabilities and equity
$
1,943,950
1,895,883
3
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE
SHEET
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Assets
Cash and due from banks
$
22,401
20,880
20,650
23,551
18,791
Interest-earning deposits with banks
126,330
143,547
128,318
149,736
140,732
Total cash, cash equivalents, and
restricted cash
148,731
164,427
148,968
173,287
159,523
Federal funds sold and securities
purchased under resale agreements
103,051
112,119
98,621
80,207
83,471
Debt securities:
Trading, at fair value
79,113
70,208
70,378
69,989
65,188
Available-for-sale, at fair value
271,236
265,983
268,099
269,912
262,964
Held-to-maturity, at cost
153,179
145,876
144,990
144,788
144,131
Mortgage loans held for sale
25,448
22,998
15,016
15,126
19,225
Loans held for sale
1,532
1,181
1,018
2,041
1,765
Loans
954,915
949,878
948,249
953,110
942,300
Allowance for loan losses
(9,715
)
(9,692
)
(9,900
)
(9,775
)
(10,021
)
Net loans
945,200
940,186
938,349
943,335
932,279
Mortgage servicing rights:
Measured at fair value
11,072
12,096
13,336
14,649
15,980
Amortized
1,397
1,407
1,427
1,443
1,414
Premises and equipment, net
9,315
9,435
8,825
8,920
8,802
Goodwill
26,388
26,415
26,420
26,418
26,425
Derivative assets
14,680
13,162
11,238
10,770
11,811
Equity securities
63,884
61,537
58,440
55,148
61,755
Other assets
89,724
76,358
82,667
79,850
78,248
Total assets
$
1,943,950
1,923,388
1,887,792
1,895,883
1,872,981
Liabilities
Noninterest-bearing deposits
$
355,259
340,813
341,399
349,534
352,869
Interest-bearing deposits
953,236
947,613
922,614
936,636
913,725
Total deposits
1,308,495
1,288,426
1,264,013
1,286,170
1,266,594
Short-term borrowings
123,908
115,344
106,597
105,787
105,451
Derivative liabilities
9,948
8,399
7,393
8,499
8,586
Accrued expenses and other liabilities
76,532
69,706
74,717
69,317
71,348
Long-term debt
230,651
241,476
236,339
229,044
221,323
Total liabilities
1,749,534
1,723,351
1,689,059
1,698,817
1,673,302
Equity
Wells Fargo stockholders’ equity:
Preferred stock
21,549
23,021
23,214
23,214
23,482
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,866
60,625
60,409
60,685
60,738
Retained earnings
166,320
164,551
160,776
158,163
154,576
Cumulative other comprehensive income
(loss)
(1,639
)
(2,224
)
(3,682
)
(6,336
)
(6,873
)
Treasury stock
(61,785
)
(54,775
)
(50,519
)
(47,194
)
(40,538
)
Unearned ESOP shares
(1,143
)
(1,292
)
(1,502
)
(1,502
)
(1,780
)
Total Wells Fargo stockholders’ equity
193,304
199,042
197,832
196,166
198,741
Noncontrolling interests
1,112
995
901
900
938
Total equity
194,416
200,037
198,733
197,066
199,679
Total liabilities and equity
$
1,943,950
1,923,388
1,887,792
1,895,883
1,872,981
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER TRADING ASSETS AND
LIABILITIES
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Trading assets
Debt securities
$
79,113
70,208
70,378
69,989
65,188
Equity securities
24,436
23,327
20,933
19,449
26,138
Loans held for sale
1,501
1,118
998
1,469
1,266
Gross trading derivative assets
39,926
34,683
30,002
29,216
30,302
Netting (1)
(26,414
)
(22,827
)
(20,809
)
(19,807
)
(19,188
)
Total trading derivative assets
13,512
11,856
9,193
9,409
11,114
Total trading assets
118,562
106,509
101,502
100,316
103,706
Trading liabilities
Short sales
18,290
15,955
21,586
19,720
23,992
Gross trading derivative liabilities
38,308
33,458
28,994
28,717
29,268
Netting (1)
(29,708
)
(26,417
)
(22,810
)
(21,178
)
(21,842
)
Total trading derivative liabilities
8,600
7,041
6,184
7,539
7,426
Total trading liabilities
$
26,890
22,996
27,770
27,259
31,418
(1) Represents balance sheet netting for
trading derivative asset and liability balances, and trading
portfolio level counterparty valuation adjustments.
FIVE QUARTER DEBT SECURITIES
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Trading debt securities
$
79,113
70,208
70,378
69,989
65,188
Available-for-sale debt securities:
Securities of U.S. Treasury and federal
agencies
16,549
15,319
15,106
13,348
6,187
Securities of U.S. states and political
subdivisions
40,503
45,095
49,700
49,264
48,216
Mortgage-backed securities:
Federal agencies
167,535
155,858
150,663
153,203
153,511
Residential and commercial
5,079
5,443
5,828
7,000
6,939
Total mortgage-backed securities
172,614
161,301
156,491
160,203
160,450
Other debt securities
41,570
44,268
46,802
47,097
48,111
Total available-for-sale debt
securities
271,236
265,983
268,099
269,912
262,964
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal
agencies
44,774
44,766
44,758
44,751
44,743
Securities of U.S. states and political
subdivisions
12,719
7,948
6,163
6,286
6,293
Federal agency and other mortgage-backed
securities (1)
95,637
93,105
94,009
93,685
93,020
Other debt securities
49
57
60
66
75
Total held-to-maturity debt securities
153,179
145,876
144,990
144,788
144,131
Total debt securities
$
503,528
482,067
483,467
484,689
472,283
(1) Predominantly consists of federal
agency mortgage-backed securities.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER EQUITY SECURITIES
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Held for trading at fair value:
Marketable equity securities
$
24,436
23,327
20,933
19,449
26,138
Not held for trading:
Fair value:
Marketable equity securities (1)
6,639
5,379
5,135
4,513
5,705
Nonmarketable equity securities
7,293
7,244
6,518
5,594
6,479
Total equity securities at fair value
13,932
12,623
11,653
10,107
12,184
Equity method:
Low-income housing tax credit
investments
11,068
11,162
10,925
10,999
10,453
Private equity
3,425
3,352
3,890
3,832
3,838
Tax-advantaged renewable energy
3,143
3,051
3,041
3,073
1,967
New market tax credit and other
390
294
305
311
259
Total equity method
18,026
17,859
18,161
18,215
16,517
Other:
Federal Reserve Bank stock and other at
cost (2)
5,021
5,622
5,732
5,643
5,467
Private equity (3)
2,469
2,106
1,961
1,734
1,449
Total equity securities not held for
trading
39,448
38,210
37,507
35,699
35,617
Total equity securities
$
63,884
61,537
58,440
55,148
61,755
(1) Includes $3.5 billion, $3.5 billion, $3.5 billion, $3.2 billion
and $3.6 billion at September 30, June 30 and March 31, 2019, and
December 31 and September 30, 2018, respectively, related to
securities held as economic hedges of our deferred compensation
plan obligations. (2) Includes $5.0 billion, $5.6 billion, $5.7
billion, $5.6 billion and $5.4 billion at September 30, June 30 and
March 31, 2019, and December 31 and September 30, 2018,
respectively, related to investments in Federal Reserve Bank and
Federal Home Loan Bank stock. (3) Represents nonmarketable equity
securities for which we have elected to account for the security
under the measurement alternative.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER LOANS
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Commercial:
Commercial and industrial
$
350,875
348,846
349,134
350,199
338,048
Real estate mortgage
121,936
123,008
122,113
121,014
120,403
Real estate construction
19,921
21,067
21,857
22,496
23,690
Lease financing
19,600
19,324
19,122
19,696
19,745
Total commercial
512,332
512,245
512,226
513,405
501,886
Consumer:
Real estate 1-4 family first mortgage
290,604
286,427
284,545
285,065
284,273
Real estate 1-4 family junior lien
mortgage
30,838
32,068
33,099
34,398
35,330
Credit card
39,629
38,820
38,279
39,025
37,812
Automobile
46,738
45,664
44,913
45,069
46,075
Other revolving credit and installment
34,774
34,654
35,187
36,148
36,924
Total consumer
442,583
437,633
436,023
439,705
440,414
Total loans (1)
$
954,915
949,878
948,249
953,110
942,300
(1) Includes $607 million, $1.2 billion,
$3.2 billion, $5.0 billion, and $6.9 billion of purchased
credit-impaired (PCI) loans at September 30, June 30, and March 31,
2019, and December 31, and September 30, 2018, respectively.
Our foreign loans are reported by respective class of financing
receivable in the table above. Substantially all of our foreign
loan portfolio is commercial loans. The following table presents
total commercial foreign loans outstanding by class of financing
receivable.
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Commercial foreign loans:
Commercial and industrial
$
64,418
63,296
63,158
62,564
61,696
Real estate mortgage
7,056
6,801
7,049
6,731
6,891
Real estate construction
1,262
1,287
1,138
1,011
726
Lease financing
1,197
1,215
1,167
1,159
1,187
Total commercial foreign loans
$
73,933
72,599
72,512
71,465
70,500
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS
(NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Nonaccrual loans:
Commercial:
Commercial and industrial
$
1,539
1,634
1,986
1,486
1,555
Real estate mortgage
669
737
699
580
603
Real estate construction
32
36
36
32
44
Lease financing
72
63
76
90
96
Total commercial
2,312
2,470
2,797
2,188
2,298
Consumer:
Real estate 1-4 family first mortgage
2,261
2,425
3,026
3,183
3,267
Real estate 1-4 family junior lien
mortgage
819
868
916
945
983
Automobile
110
115
116
130
118
Other revolving credit and installment
43
44
50
50
48
Total consumer
3,233
3,452
4,108
4,308
4,416
Total nonaccrual loans (1)(2)(3)
$
5,545
5,922
6,905
6,496
6,714
As a percentage of total loans
0.58
%
0.62
0.73
0.68
0.71
Foreclosed assets:
Government insured/guaranteed
$
59
68
75
88
87
Non-government insured/guaranteed
378
309
361
363
435
Total foreclosed assets
437
377
436
451
522
Total nonperforming assets
$
5,982
6,299
7,341
6,947
7,236
As a percentage of total loans
0.63
%
0.66
0.77
0.73
0.77
(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 at September 30, 2018. (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)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Total (excluding PCI)(2):
$
7,130
7,258
7,870
8,704
8,838
Less: FHA insured/VA guaranteed (3)
6,308
6,478
6,996
7,725
7,906
Total, not government
insured/guaranteed
$
822
780
874
979
932
By segment and class, not government
insured/guaranteed:
Commercial:
Commercial and industrial
$
6
17
42
43
42
Real estate mortgage
28
24
20
51
56
Real estate construction
—
—
5
—
—
Total commercial
34
41
67
94
98
Consumer:
Real estate 1-4 family first mortgage
100
108
117
124
128
Real estate 1-4 family junior lien
mortgage
35
27
28
32
32
Credit card
491
449
502
513
460
Automobile
75
63
68
114
108
Other revolving credit and installment
87
92
92
102
106
Total consumer
788
739
807
885
834
Total, not government
insured/guaranteed
$
822
780
874
979
932
(1) Financial information for periods prior to December 31, 2018
has been revised to exclude MLHFS, LHFS and loans held at fair
value, which reduced “Total, not government insured/guaranteed” by
$1 million at September 30, 2018. (2) PCI loans totaled $119
million, $156 million, $243 million, $370 million and $567 million,
at September 30, June 30 and March 31, 2019, and December 31 and
September 30, 2018, respectively. (3) Represents loans whose
repayments are predominantly insured by the FHA or guaranteed by
the VA.
Wells Fargo & Company and
Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT
LOSSES
Quarter ended September 30,
Nine months ended September
30,
(in millions)
2019
2018
2019
2018
Balance, beginning of period
$
10,603
11,110
10,707
11,960
Provision for credit losses
695
580
2,043
1,223
Interest income on certain impaired loans
(1)
(34
)
(42
)
(112
)
(128
)
Loan charge-offs:
Commercial:
Commercial and industrial
(209
)
(209
)
(590
)
(507
)
Real estate mortgage
(2
)
(9
)
(28
)
(30
)
Real estate construction
—
—
(1
)
—
Lease financing
(12
)
(15
)
(35
)
(52
)
Total commercial
(223
)
(233
)
(654
)
(589
)
Consumer:
Real estate 1-4 family first mortgage
(31
)
(45
)
(101
)
(141
)
Real estate 1-4 family junior lien
mortgage
(27
)
(47
)
(90
)
(141
)
Credit card
(404
)
(376
)
(1,278
)
(1,185
)
Automobile
(156
)
(214
)
(485
)
(730
)
Other revolving credit and installment
(168
)
(161
)
(497
)
(505
)
Total consumer
(786
)
(843
)
(2,451
)
(2,702
)
Total loan charge-offs
(1,009
)
(1,076
)
(3,105
)
(3,291
)
Loan recoveries:
Commercial:
Commercial and industrial
62
61
151
216
Real estate mortgage
10
10
26
46
Real estate construction
8
2
13
12
Lease financing
4
8
15
18
Total commercial
84
81
205
292
Consumer:
Real estate 1-4 family first mortgage
36
70
148
207
Real estate 1-4 family junior lien
mortgage
49
56
140
171
Credit card
85
77
258
231
Automobile
80
84
266
279
Other revolving credit and installment
30
28
95
88
Total consumer
280
315
907
976
Total loan recoveries
364
396
1,112
1,268
Net loan charge-offs
(645
)
(680
)
(1,993
)
(2,023
)
Other
(6
)
(12
)
(32
)
(76
)
Balance, end of period
$
10,613
10,956
10,613
10,956
Components:
Allowance for loan losses
$
9,715
10,021
9,715
10,021
Allowance for unfunded credit
commitments
898
935
898
935
Allowance for credit losses
$
10,613
10,956
10,613
10,956
Net loan charge-offs (annualized) as a
percentage of average total loans
0.27
%
0.29
0.28
0.29
Allowance for loan losses as a percentage
of total loans
1.02
1.06
1.02
1.06
Allowance for credit losses as a
percentage of total loans
1.11
1.16
1.11
1.16
(1) Certain impaired loans with an
allowance calculated by discounting expected cash flows using the
loan’s effective interest rate over the remaining life of the loan
recognize changes in allowance attributable to the passage of time
as interest income.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR
CREDIT LOSSES
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Balance, beginning of quarter
$
10,603
10,821
10,707
10,956
11,110
Provision for credit losses
695
503
845
521
580
Interest income on certain impaired loans
(1)
(34
)
(39
)
(39
)
(38
)
(42
)
Loan charge-offs:
Commercial:
Commercial and industrial
(209
)
(205
)
(176
)
(220
)
(209
)
Real estate mortgage
(2
)
(14
)
(12
)
(12
)
(9
)
Real estate construction
—
—
(1
)
—
—
Lease financing
(12
)
(12
)
(11
)
(18
)
(15
)
Total commercial
(223
)
(231
)
(200
)
(250
)
(233
)
Consumer:
Real estate 1-4 family first mortgage
(31
)
(27
)
(43
)
(38
)
(45
)
Real estate 1-4 family junior lien
mortgage
(27
)
(29
)
(34
)
(38
)
(47
)
Credit card
(404
)
(437
)
(437
)
(414
)
(376
)
Automobile
(156
)
(142
)
(187
)
(217
)
(214
)
Other revolving credit and installment
(168
)
(167
)
(162
)
(180
)
(161
)
Total consumer
(786
)
(802
)
(863
)
(887
)
(843
)
Total loan charge-offs
(1,009
)
(1,033
)
(1,063
)
(1,137
)
(1,076
)
Loan recoveries:
Commercial:
Commercial and industrial
62
46
43
88
61
Real estate mortgage
10
10
6
24
10
Real estate construction
8
2
3
1
2
Lease financing
4
8
3
5
8
Total commercial
84
66
55
118
81
Consumer:
Real estate 1-4 family first mortgage
36
57
55
60
70
Real estate 1-4 family junior lien
mortgage
49
48
43
48
56
Credit card
85
88
85
76
77
Automobile
80
90
96
84
84
Other revolving credit and installment
30
31
34
30
28
Total consumer
280
314
313
298
315
Total loan recoveries
364
380
368
416
396
Net loan charge-offs
(645
)
(653
)
(695
)
(721
)
(680
)
Other
(6
)
(29
)
3
(11
)
(12
)
Balance, end of quarter
$
10,613
10,603
10,821
10,707
10,956
Components:
Allowance for loan losses
$
9,715
9,692
9,900
9,775
10,021
Allowance for unfunded credit
commitments
898
911
921
932
935
Allowance for credit losses
$
10,613
10,603
10,821
10,707
10,956
Net loan charge-offs (annualized) as a
percentage of average total loans
0.27
%
0.28
0.30
0.30
0.29
Allowance for loan losses as a percentage
of:
Total loans
1.02
1.02
1.04
1.03
1.06
Nonaccrual loans
175
164
143
150
149
Nonaccrual loans and other nonperforming
assets
162
154
135
141
138
Allowance for credit losses as a
percentage of:
Total loans
1.11
1.12
1.14
1.12
1.16
Nonaccrual loans
191
179
157
165
163
Nonaccrual loans and other nonperforming
assets
177
168
147
154
151
(1) Certain impaired loans with an
allowance calculated by discounting expected cash flows using the
loan’s effective interest rate over the remaining life of the loan
recognize changes in allowance attributable to the passage of time
as interest income.
Wells Fargo & Company and
Subsidiaries
TANGIBLE COMMON EQUITY (1)
(in millions, except ratios)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Tangible book value per common share
(1):
Total equity
$
194,416
200,037
198,733
197,066
199,679
Adjustments:
Preferred stock
(21,549
)
(23,021
)
(23,214
)
(23,214
)
(23,482
)
Additional paid-in capital on ESOP
preferred stock
(71
)
(78
)
(95
)
(95
)
(105
)
Unearned ESOP shares
1,143
1,292
1,502
1,502
1,780
Noncontrolling interests
(1,112
)
(995
)
(901
)
(900
)
(938
)
Total common stockholders' equity
(A)
172,827
177,235
176,025
174,359
176,934
Adjustments:
Goodwill
(26,388
)
(26,415
)
(26,420
)
(26,418
)
(26,425
)
Certain identifiable intangible assets
(other than MSRs)
(465
)
(493
)
(522
)
(559
)
(826
)
Other assets (2)
(2,295
)
(2,251
)
(2,131
)
(2,187
)
(2,121
)
Applicable deferred taxes (3)
802
788
771
785
829
Tangible common equity
(B)
$
144,481
148,864
147,723
145,980
148,391
Common shares outstanding
(C)
4,269.1
4,419.6
4,511.9
4,581.3
4,711.6
Book value per common share
(A)/(C)
$
40.48
40.10
39.01
38.06
37.55
Tangible book value per common share
(B)/(C)
33.84
33.68
32.74
31.86
31.49
Quarter ended
Nine months ended
(in millions, except ratios)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Sep 30, 2019
Sep 30, 2018
Return on average tangible common equity
(1):
Net income applicable to common stock
(A)
$
4,037
5,848
5,507
5,711
5,453
15,392
14,978
Average total equity
200,095
199,685
198,349
198,442
202,826
199,383
205,012
Adjustments:
Preferred stock
(22,325
)
(23,023
)
(23,214
)
(23,463
)
(24,219
)
(22,851
)
(25,459
)
Additional paid-in capital on ESOP
preferred stock
(78
)
(78
)
(95
)
(105
)
(115
)
(84
)
(132
)
Unearned ESOP shares
1,290
1,294
1,502
1,761
2,026
1,361
2,292
Noncontrolling interests
(1,065
)
(939
)
(899
)
(910
)
(892
)
(968
)
(936
)
Average common stockholders’ equity
(B)
177,917
176,939
175,643
175,725
179,626
176,841
180,777
Adjustments:
Goodwill
(26,413
)
(26,415
)
(26,420
)
(26,423
)
(26,429
)
(26,416
)
(26,463
)
Certain identifiable intangible assets
(other than MSRs)
(477
)
(505
)
(543
)
(693
)
(958
)
(508
)
(1,221
)
Other assets (2)
(2,159
)
(2,155
)
(2,159
)
(2,204
)
(2,083
)
(2,158
)
(2,195
)
Applicable deferred taxes (3)
797
780
784
800
845
787
889
Average tangible common equity
(C)
$
149,665
148,644
147,305
147,205
151,001
148,546
151,787
Return on average common stockholders'
equity (ROE) (annualized)
(A)/(B)
9.00
13.26
12.71
12.89
12.04
11.64
11.08
Return on average tangible common equity
(ROTCE) (annualized)
(A)/(C)
10.70
15.78
15.16
15.39
14.33
13.85
13.19
(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)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Total equity
$
194.4
200.0
198.7
197.1
199.7
Adjustments:
Preferred stock
(21.5
)
(23.0
)
(23.2
)
(23.2
)
(23.5
)
Additional paid-in capital on ESOP
preferred stock
(0.1
)
(0.1
)
(0.1
)
(0.1
)
(0.1
)
Unearned ESOP shares
1.1
1.3
1.5
1.5
1.8
Noncontrolling interests
(1.1
)
(1.0
)
(0.9
)
(0.9
)
(0.9
)
Total common stockholders' equity
172.8
177.2
176.0
174.4
177.0
Adjustments:
Goodwill
(26.4
)
(26.4
)
(26.4
)
(26.4
)
(26.4
)
Certain identifiable intangible assets
(other than MSRs)
(0.5
)
(0.5
)
(0.5
)
(0.6
)
(0.8
)
Other assets (2)
(2.3
)
(2.3
)
(2.1
)
(2.2
)
(2.1
)
Applicable deferred taxes (3)
0.8
0.8
0.8
0.8
0.8
Investment in certain subsidiaries and
other
0.3
0.4
0.3
0.4
0.4
Common Equity Tier 1 (Fully Phased-In)
under Basel III
(A)
144.7
149.2
148.1
146.4
148.9
Total risk-weighted assets (RWAs)
anticipated under Basel III (4)(5)
(B)
$
1,245.8
1,246.7
1,243.1
1,247.2
1,250.2
Common Equity Tier 1 to total RWAs
anticipated under Basel III (Fully Phased-In) (5)
(A)/(B)
11.6
%
12.0
11.9
11.7
11.9
(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 September 30, 2019, is subject to detailed analysis of
considerable data, our CET1 ratio at that date has been estimated
using the Basel III definition of capital under the Basel III
Standardized Approach RWAs. The capital ratio for June 30 and March
31, 2019, and December 31 and September 30, 2018, was calculated
under the Basel III Standardized Approach RWAs. (5) The Company’s
September 30, 2019, RWAs and capital ratio are preliminary
estimates.
Wells Fargo & Company and
Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,
average balances in billions)
Community Banking
Wholesale
Banking
Wealth and
Investment Management
Other (2)
Consolidated
Company
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Quarter ended Sep 30,
Net interest income (3)
$
6,769
7,338
4,382
4,726
989
1,102
(515
)
(594
)
11,625
12,572
Provision (reversal of provision) for
credit losses
608
547
92
26
3
6
(8
)
1
695
580
Noninterest income
4,470
4,478
2,560
2,578
4,152
3,124
(797
)
(811
)
10,385
9,369
Noninterest expense
8,766
7,467
3,889
3,935
3,431
3,243
(887
)
(882
)
15,199
13,763
Income (loss) before income tax expense
(benefit)
1,865
3,802
2,961
3,343
1,707
977
(417
)
(524
)
6,116
7,598
Income tax expense (benefit)
667
925
315
475
426
244
(104
)
(132
)
1,304
1,512
Net income (loss) before noncontrolling
interests
1,198
2,877
2,646
2,868
1,281
733
(313
)
(392
)
4,812
6,086
Less: Net income from noncontrolling
interests
199
61
2
17
1
1
—
—
202
79
Net income (loss)
$
999
2,816
2,644
2,851
1,280
732
(313
)
(392
)
4,610
6,007
Average loans
$
459.0
460.9
474.3
462.8
75.9
74.6
(59.4
)
(58.8
)
949.8
939.5
Average assets
1,033.9
1,024.9
869.2
827.2
84.7
83.8
(60.4
)
(59.6
)
1,927.4
1,876.3
Average deposits
789.7
760.9
422.0
413.6
142.4
159.8
(62.7
)
(67.9
)
1,291.4
1,266.4
Nine months ended Sep 30,
Net interest income (3)
$
21,083
21,879
13,451
13,951
3,127
3,325
(1,630
)
(1,804
)
36,031
37,351
Provision (reversal of provision) for
credit losses
1,797
1,249
254
(30
)
6
(2
)
(14
)
6
2,043
1,223
Noninterest income
13,711
13,573
7,667
7,829
10,143
9,094
(2,349
)
(2,419
)
29,172
28,077
Noninterest expense
23,667
23,459
11,609
12,132
9,980
9,894
(2,692
)
(2,698
)
42,564
42,787
Income (loss) before income tax expense
(benefit)
9,330
10,744
9,255
9,678
3,284
2,527
(1,273
)
(1,531
)
20,596
21,418
Income tax expense (benefit)
1,929
3,147
1,049
1,302
819
630
(318
)
(383
)
3,479
4,696
Net income (loss) before noncontrolling
interests
7,401
7,597
8,206
8,376
2,465
1,897
(955
)
(1,148
)
17,117
16,722
Less: Net income from noncontrolling
interests
432
372
3
15
6
6
—
—
441
393
Net income (loss)
$
6,969
7,225
8,203
8,361
2,459
1,891
(955
)
(1,148
)
16,676
16,329
Average loans
$
458.3
465.0
474.9
464.2
75.1
74.4
(59.2
)
(58.8
)
949.1
944.8
Average assets
1,024.8
1,040.2
855.4
827.6
83.9
84.0
(60.2
)
(59.6
)
1,903.9
1,892.2
Average deposits
777.7
756.4
414.1
424.4
146.3
168.2
(63.9
)
(70.8
)
1,274.2
1,278.2
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is not
necessarily comparable with other similar information for other
financial services companies. We define our operating segments by
product type and customer segment. (2) Includes the elimination of
certain items that are included in more than one business segment,
substantially all of which represents products and services for
Wealth and Investment Management customers served through Community
Banking distribution channels. (3) Net interest income is the
difference between interest earned on assets and the cost of
liabilities to fund those assets. Interest earned includes actual
interest earned on segment assets as well as interest credits for
any funding of a segment available to be provided to other
segments. The cost of liabilities includes actual interest expense
on segment liabilities as well as funding charges for any funding
provided from other segments.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS
(1)
Quarter ended
(income/expense in millions, average
balances in billions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
COMMUNITY BANKING
Net interest income (2)
$
6,769
7,066
7,248
7,340
7,338
Provision for credit losses
608
479
710
534
547
Noninterest income
4,470
4,739
4,502
4,121
4,478
Noninterest expense
8,766
7,212
7,689
7,032
7,467
Income before income tax expense
1,865
4,114
3,351
3,895
3,802
Income tax expense
667
838
424
637
925
Net income before noncontrolling
interests
1,198
3,276
2,927
3,258
2,877
Less: Net income from noncontrolling
interests
199
129
104
89
61
Segment net income
$
999
3,147
2,823
3,169
2,816
Average loans
$
459.0
457.7
458.2
459.7
460.9
Average assets
1,033.9
1,024.8
1,015.4
1,015.9
1,024.9
Average deposits
789.7
777.6
765.6
759.4
760.9
WHOLESALE BANKING
Net interest income (2)
$
4,382
4,535
4,534
4,739
4,726
Provision (reversal of provision) for
credit losses
92
28
134
(28
)
26
Noninterest income
2,560
2,530
2,577
2,187
2,578
Noninterest expense
3,889
3,882
3,838
4,025
3,935
Income before income tax expense
2,961
3,155
3,139
2,929
3,343
Income tax expense
315
365
369
253
475
Net income before noncontrolling
interests
2,646
2,790
2,770
2,676
2,868
Less: Net income from noncontrolling
interests
2
1
—
5
17
Segment net income
$
2,644
2,789
2,770
2,671
2,851
Average loans
$
474.3
474.0
476.4
470.2
462.8
Average assets
869.2
852.2
844.5
839.1
827.2
Average deposits
422.0
410.4
409.8
421.6
413.6
WEALTH AND INVESTMENT
MANAGEMENT
Net interest income (2)
$
989
1,037
1,101
1,116
1,102
Provision (reversal of provision) for
credit losses
3
(1
)
4
(3
)
6
Noninterest income
4,152
3,013
2,978
2,841
3,124
Noninterest expense
3,431
3,246
3,303
3,044
3,243
Income before income tax expense
1,707
805
772
916
977
Income tax expense
426
201
192
231
244
Net income before noncontrolling
interests
1,281
604
580
685
733
Less: Net income (loss) from
noncontrolling interests
1
2
3
(4
)
1
Segment net income
$
1,280
602
577
689
732
Average loans
$
75.9
75.0
74.4
75.2
74.6
Average assets
84.7
83.8
83.2
83.6
83.8
Average deposits
142.4
143.5
153.2
155.5
159.8
OTHER (3)
Net interest income (2)
$
(515
)
(543
)
(572
)
(551
)
(594
)
Provision (reversal of provision) for
credit losses
(8
)
(3
)
(3
)
18
1
Noninterest income
(797
)
(793
)
(759
)
(813
)
(811
)
Noninterest expense
(887
)
(891
)
(914
)
(762
)
(882
)
Loss before income tax benefit
(417
)
(442
)
(414
)
(620
)
(524
)
Income tax benefit
(104
)
(110
)
(104
)
(155
)
(132
)
Net loss before noncontrolling
interests
(313
)
(332
)
(310
)
(465
)
(392
)
Less: Net income from noncontrolling
interests
—
—
—
—
—
Other net loss
$
(313
)
(332
)
(310
)
(465
)
(392
)
Average loans
$
(59.4
)
(59.2
)
(59.0
)
(58.8
)
(58.8
)
Average assets
(60.4
)
(60.2
)
(60.0
)
(59.6
)
(59.6
)
Average deposits
(62.7
)
(62.5
)
(66.5
)
(67.6
)
(67.9
)
CONSOLIDATED COMPANY
Net interest income (2)
$
11,625
12,095
12,311
12,644
12,572
Provision for credit losses
695
503
845
521
580
Noninterest income
10,385
9,489
9,298
8,336
9,369
Noninterest expense
15,199
13,449
13,916
13,339
13,763
Income before income tax expense
6,116
7,632
6,848
7,120
7,598
Income tax expense
1,304
1,294
881
966
1,512
Net income before noncontrolling
interests
4,812
6,338
5,967
6,154
6,086
Less: Net income from noncontrolling
interests
202
132
107
90
79
Wells Fargo net income
$
4,610
6,206
5,860
6,064
6,007
Average loans
$
949.8
947.5
950.0
946.3
939.5
Average assets
1,927.4
1,900.6
1,883.1
1,879.0
1,876.3
Average deposits
1,291.4
1,269.0
1,262.1
1,268.9
1,266.4
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is not
necessarily comparable with other similar information for other
financial services companies. We define our operating segments by
product type and customer segment. (2) Net interest income is the
difference between interest earned on assets and the cost of
liabilities to fund those assets. Interest earned includes actual
interest earned on segment assets as well as interest credits for
any funding of a segment available to be provided to other
segments. The cost of liabilities includes actual interest expense
on segment liabilities as well as funding charges for any funding
provided from other segments. (3) Includes the elimination of
certain items that are included in more than one business segment,
most of which represents products and services for Wealth and
Investment Management customers served through Community Banking
distribution channels.
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE
SERVICING
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
MSRs measured using the fair value
method:
Fair value, beginning of quarter
$
12,096
13,336
14,649
15,980
15,411
Servicing from securitizations or asset
transfers (1)
538
400
341
449
502
Sales and other (2)
(4
)
(1
)
(281
)
(64
)
(2
)
Net additions
534
399
60
385
500
Changes in fair value:
Due to changes in valuation model inputs
or assumptions:
Mortgage interest rates (3)
(718
)
(1,153
)
(940
)
(874
)
582
Servicing and foreclosure costs (4)
13
(22
)
12
763
(9
)
Discount rates (5)
188
(109
)
100
(821
)
(9
)
Prepayment estimates and other (6)
(445
)
206
(63
)
(314
)
(33
)
Net changes in valuation model inputs or
assumptions
(962
)
(1,078
)
(891
)
(1,246
)
531
Changes due to collection/realization of
expected cash flows over time
(596
)
(561
)
(482
)
(470
)
(462
)
Total changes in fair value
(1,558
)
(1,639
)
(1,373
)
(1,716
)
69
Fair value, end of quarter
$
11,072
12,096
13,336
14,649
15,980
(1) Includes impacts associated with exercising cleanup calls on
securitizations as well as our right to repurchase delinquent loans
from Government National Mortgage Association (GNMA) loan
securitization pools. Total reported MSRs may increase upon
repurchase due to servicing liabilities associated with these
delinquent GNMA loans. (2) Includes sales and transfers of MSRs,
which can result in an increase of total reported MSRs if the sales
or transfers are related to nonperforming loan portfolios or
portfolios with servicing liabilities. (3) Includes prepayment
speed changes as well as other valuation changes due to changes in
mortgage interest rates (such as changes in estimated interest
earned on custodial deposit balances). (4) Includes costs to
service and unreimbursed foreclosure costs. (5) Reflects discount
rate assumption change, excluding portion attributable to changes
in mortgage interest rates. (6) Represents changes driven by other
valuation model inputs or assumptions including prepayment speed
estimation changes and other assumption updates. Prepayment speed
estimation changes are influenced by observed changes in borrower
behavior and other external factors that occur independent of
interest rate changes.
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Amortized MSRs:
Balance, beginning of quarter
$
1,407
1,427
1,443
1,414
1,407
Purchases
25
16
24
45
42
Servicing from securitizations or asset
transfers
33
33
26
52
33
Amortization
(68
)
(69
)
(66
)
(68
)
(68
)
Balance, end of quarter
$
1,397
1,407
1,427
1,443
1,414
Fair value of amortized MSRs:
Beginning of quarter
$
1,897
2,149
2,288
2,389
2,309
End of quarter
1,813
1,897
2,149
2,288
2,389
Wells Fargo & Company and
Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE
SERVICING (CONTINUED)
Quarter ended
(in millions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Servicing income, net:
Servicing fees (1)
$
806
830
841
925
890
Changes in fair value of MSRs carried at
fair value:
Due to changes in valuation model inputs
or assumptions (2)
(A)
(962
)
(1,078
)
(891
)
(1,246
)
531
Changes due to collection/realization of
expected cash flows over time
(596
)
(561
)
(482
)
(470
)
(462
)
Total changes in fair value of MSRs
carried at fair value
(1,558
)
(1,639
)
(1,373
)
(1,716
)
69
Amortization
(68
)
(69
)
(66
)
(68
)
(68
)
Net derivative gains (losses) from
economic hedges (3)
(B)
678
1,155
962
968
(501
)
Total servicing income, net
$
(142
)
277
364
109
390
Market-related valuation changes to MSRs,
net of hedge results (2)(3)
(A)+(B)
$
(284
)
77
71
(278
)
30
(1) Includes contractually specified servicing fees, late charges
and other ancillary revenues, net of unreimbursed direct servicing
costs. (2) Refer to the changes in fair value MSRs table on the
previous page for more detail. (3) Represents results from economic
hedges used to hedge the risk of changes in fair value of MSRs.
(in billions)
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Managed servicing portfolio
(1):
Residential mortgage servicing:
Serviced for others
$
1,083
1,107
1,125
1,164
1,184
Owned loans serviced
346
340
331
334
337
Subserviced for others
3
5
26
4
5
Total residential servicing
1,432
1,452
1,482
1,502
1,526
Commercial mortgage servicing:
Serviced for others
551
548
552
543
529
Owned loans serviced
122
123
122
121
121
Subserviced for others
9
9
9
9
9
Total commercial servicing
682
680
683
673
659
Total managed servicing portfolio
$
2,114
2,132
2,165
2,175
2,185
Total serviced for others
$
1,634
1,655
1,677
1,707
1,713
Ratio of MSRs to related loans serviced
for others
0.76
%
0.82
0.88
0.94
1.02
Weighted-average note rate (mortgage loans
serviced for others)
4.29
4.33
4.34
4.32
4.29
(1) The components of our managed
servicing portfolio are presented at unpaid principal balance for
loans serviced and subserviced for others and at book value for
owned loans serviced.
Wells Fargo & Company and
Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL
MORTGAGE PRODUCTION DATA
Quarter ended
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Dec 31, 2018
Sep 30, 2018
Net gains on mortgage loan
origination/sales activities (in millions):
Residential
(A)
$
461
322
232
245
324
Commercial
106
83
47
65
75
Residential pipeline and
unsold/repurchased loan management (1)
41
76
65
48
57
Total
$
608
481
344
358
456
Application data (in billions):
Wells Fargo first mortgage quarterly
applications
$
85
90
64
48
57
Refinances as a percentage of
applications
50
%
44
44
30
26
Wells Fargo first mortgage unclosed
pipeline, at quarter end
$
44
44
32
18
22
Residential real estate
originations:
Purchases as a percentage of
originations
60
%
68
70
78
81
Refinances as a percentage of
originations
40
32
30
22
19
Total
100
%
100
100
100
100
Wells Fargo first mortgage loans (in
billions):
Retail
$
27
26
14
16
18
Correspondent
30
27
18
21
27
Other (2)
1
—
1
1
1
Total quarter-to-date
$
58
53
33
38
46
Held-for-sale
(B)
$
38
33
22
28
33
Held-for-investment
20
20
11
10
13
Total quarter-to-date
$
58
53
33
38
46
Total year-to-date
$
144
86
33
177
139
Production margin on residential
held-for-sale mortgage originations
(A)/(B)
1.21
%
0.98
1.05
0.89
0.97
(1) Largely includes the results of sales of modified GNMA loans,
interest rate management activities and changes in estimate to the
liability for mortgage loan repurchase losses. (2) Consists of home
equity loans and lines.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191015005426/en/
Media Peter Gilchrist, 704-715-3213 peter.gilchrist@wellsfargo.com
Ancel Martinez, 415-222-3858 ancel.martinez@wellsfargo.com or Investor
Relations John M. Campbell, 415-396-0523 john.m.campbell@wellsfargo.com
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