Wells Fargo Reports Third Quarter 2019 Net Income of $4.6 Billion

  • 18

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/

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