UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

Commission file number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)

Delaware	No. 41-0449260
(State of incorporation)	(I.R.S. Employer Identification No.)

420 Montgomery Street, San Francisco, California 94163

(Address of principal executive offices)  (Zip Code)

Registrant’s telephone number, including area code:  1-866-249-3302 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    þ	Accelerated filer  o
Non‑accelerated filer    o (Do not check if a smaller reporting company)	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Shares Outstanding
	July 31, 2015
Common stock, $1-2/3 par value	5,133,359,268

FORM 10-Q
CROSS-REFERENCE INDEX
PART I	Financial Information
Item 1.	Financial Statements			Page
	Consolidated Statement of Income			69
	Consolidated Statement of Comprehensive Income			70
	Consolidated Balance Sheet			71
	Consolidated Statement of Changes in Equity			72
	Consolidated Statement of Cash Flows			74
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	75
	2	—	Business Combinations	77
	3	—	Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments	77
	4	—	Investment Securities	78
	5	—	Loans and Allowance for Credit Losses	85
	6	—	Other Assets	103
	7	—	Securitizations and Variable Interest Entities	104
	8	—	Mortgage Banking Activities	112
	9	—	Intangible Assets	115
	10	—	Guarantees, Pledged Assets and Collateral	116
	11	—	Legal Actions	120
	12	—	Derivatives	121
	13	—	Fair Values of Assets and Liabilities	128
	14	—	Preferred Stock	149
	15	—	Employee Benefits	152
	16	—	Earnings Per Common Share	153
	17	—	Other Comprehensive Income	154
	18	—	Operating Segments	156
	19	—	Regulatory and Agency Capital Requirements	157
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2
	Overview			3
	Earnings Performance			5
	Balance Sheet Analysis			16
	Off-Balance Sheet Arrangements			19
	Risk Management			20
	Capital Management			58
	Regulatory Reform			64
	Critical Accounting Policies			64
	Current Accounting Developments			65
	Forward-Looking Statements			66
	Risk Factors			67
	Glossary of Acronyms			158
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			44
Item 4.	Controls and Procedures			68
PART II	Other Information
Item 1.	Legal Proceedings			159
Item 1A.	Risk Factors			159
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			159
Item 6.	Exhibits			160
Signature				160
Exhibit Index				161

1

PART I - FINANCIAL INFORMATION

FINANCIAL REVIEW

Summary Financial Data
						% Change
	Quarter ended					June 30, 2015 from				Six months ended
($ in millions, except per share amounts)	June 30, 2015			March 31, 2015	June 30, 2014	March 31, 2015		June 30, 2014		June 30, 2015	June 30, 2014	% Change
For the Period
Wells Fargo net income	$	5,719		5,804	5,726	(1	)%	—		11,523	11,619	(1	)%
Wells Fargo net income applicable to common stock	5,363			5,461	5,424	(2	)	(1	)	10,824	11,031	(2	)
Diluted earnings per common share	1.03			1.04	1.01	(1	)	2		2.07	2.06	—
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)	1.33		%	1.38	1.47	(4	)	(10	)	1.35	1.52	(11	)
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE)	12.71			13.17	13.40	(3	)	(5	)	12.94	13.86	(7	)
Efficiency ratio (1)	58.5			58.8	57.9	(1	)	1		58.6	57.9	1
Total revenue	21,318			21,278	21,066	—		1		42,596	41,691	2
Pre-tax pre-provision profit (PTPP) (2)	8,849			8,771	8,872	1		—		17,620	17,549	—
Dividends declared per common share	0.375			0.35	0.35	7		7		0.725	0.65	12
Average common shares outstanding	5,151.9			5,160.4	5,268.4	—		(2	)	5,156.1	5,265.6	(2	)
Diluted average common shares outstanding	5,220.5			5,243.6	5,350.8	—		(2	)	5,233.2	5,353.2	(2	)
Average loans	$	870,446		863,261	831,043	1		5		866,873	827,436	5
Average assets	1,729,278			1,707,798	1,564,003	1		11		1,718,597	1,545,060	11
Average core deposits (3)	1,079,160			1,063,234	991,727	1		9		1,071,241	982,814	9
Average retail core deposits (4)	741,500			731,413	698,763	1		6		736,484	694,726	6
Net interest margin	2.97		%	2.95	3.15	1		(6	)	2.96	3.17	(7	)
At Period End
Investment securities	$	340,769		324,736	279,069	5		22		340,769	279,069	22
Loans	888,459			861,231	828,942	3		7		888,459	828,942	7
Allowance for loan losses	11,754			12,176	13,101	(3	)	(10	)	11,754	13,101	(10	)
Goodwill	25,705			25,705	25,705	—		—		25,705	25,705	—
Assets	1,720,617			1,737,737	1,598,874	(1	)	8		1,720,617	1,598,874	8
Core deposits (3)	1,082,634			1,086,993	1,007,485	—		7		1,082,634	1,007,485	7
Wells Fargo stockholders' equity	189,558			188,796	180,859	—		5		189,558	180,859	5
Total equity	190,676			189,964	181,549	—		5		190,676	181,549	5
Capital ratios (5)(6):
Total equity to assets	11.08		%	10.93	11.35	1		(2	)	11.08	11.35	(2	)
Risk-based capital:
Common Equity Tier 1	10.78			10.69	11.31	NM		NM		10.78	11.31	NM
Tier 1 capital	12.28			12.20	12.72	NM		NM		12.28	12.72	NM
Total capital	14.45			15.08	15.89	NM		NM		14.45	15.89	NM
Tier 1 leverage	9.45			9.48	9.86	NM		NM		9.45	9.86	NM
Common shares outstanding	5,145.2			5,162.9	5,249.9	—		(2	)	5,145.2	5,249.9	(2	)
Book value per common share	$	32.96		32.70	31.18	1		6		32.96	31.18	6
Common stock price:
High	58.26			56.29	53.05	3		10		58.26	53.05	10
Low	53.56			50.42	46.72	6		15		50.42	44.17	14
Period end	56.24			54.40	52.56	3		7		56.24	52.56	7
Team members (active, full-time equivalent)	265,800			266,000	263,500	—		1		265,800	263,500	1

NM - Not meaningful

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(2) 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.

(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).

(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.

(5) The risk-based capital ratios presented were calculated: (a) under the Basel III Standardized Approach with Transition Requirements at June 30 and March 31, 2015, except for total capital ratio at June 30, 2015, which was calculated under the Basel III Advanced Approach with Transition Requirements, and (b) under the Basel III General Approach at June 30, 2014.

(6) See the "Capital Management" section and Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.

2

Overview (continued)

This Quarterly Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” section, and the “Risk Factors” and “Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, 2014 (2014 Form 10-K).

When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. See the Glossary of Acronyms for terms used throughout this Report.

Financial Review

Overview

Wells Fargo & Company is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the internet (wellsfargo.com) and mobile banking, and we have offices in 36 countries to support customers who conduct business in the global economy. With approximately 266,000 active, full-time equivalent team members, we serve one in three households in the United States and rank No. 30 on Fortune’s 2015 rankings of America’s largest corporations. We ranked fourth in assets and first in the market value of our common stock among all U.S. banks at June 30, 2015.

We use our Vision and Values to guide us toward growth and success. Our vision is to satisfy our customers’ financial needs, help them succeed financially, be recognized as the premier financial services company in our markets and be one of America’s great companies. Important to our strategy to achieve this vision is to increase the number of our products our customers use and to offer them all of the financial products that fulfill their financial needs. We aspire to create deep and enduring relationships with our customers by discovering their needs and delivering the most relevant products, services, advice, and guidance.

We have six primary values, which are based on our vision and provide the foundation for everything we do. First, we value and support our people as a competitive advantage and strive to attract, develop, retain and motivate the most talented people we can find. Second, we strive for the highest ethical standards with our team members, our customers, our communities and our shareholders. Third, with respect to our customers, we strive to base our decisions and actions on what is right for them in everything we do. Fourth, for team members we strive to build and sustain a diverse and inclusive culture – one where they feel valued and respected for who they are as well as for the skills and experiences they bring to our company. Fifth, we also look to each of our team members to be leaders in establishing, sharing and communicating our vision. Sixth, we strive to make risk management a competitive advantage by working hard to ensure that appropriate controls are in place to reduce risks to our customers, maintain and increase our competitive market position, and protect Wells Fargo’s long-term safety, soundness and reputation.

Financial Performance

Wells Fargo net income was $5.7 billion in second quarter 2015 with diluted earnings per share (EPS) of $1.03, compared with $5.7 billion and $1.01, respectively, a year ago. Our results

reflected the benefit of our diversified business model, and our financial strength and competitive positioning allowed us to capture opportunities for growth - both organically and through acquisitions.

Compared with a year ago:

• revenue grew 1%, with 4% growth in net interest income;

• our total loans reached a record $888.5 billion, an increase of $59.5 billion, or 7%, even with the planned runoff in our non-strategic/liquidating portfolios, and our core loan portfolio grew by $68.5 billion, or 9%; 

• our liquidating portfolio declined $9.0 billion and was only 6% of our total loans, down from 8% a year ago;

• our deposit franchise continued to generate strong customer and balance growth, with average deposits up $83.8 billion, or 8%, and we grew the number of primary consumer checking customers by 5.6% (May 2015 compared with May 2014);

• our credit performance continued to improve with total net charge-offs down $67 million, or 9%, and represented only 30 basis points (annualized) of average loans; and

• we increased the quarterly dividend rate on our common stock by 7% to $0.375 per share.

Balance Sheet and Liquidity

Our balance sheet continued to strengthen in second quarter 2015 as we increased our liquidity position, generated core loan and deposit growth, experienced continued improvement in credit quality and maintained strong capital levels. We have been able to grow our loans on a year-over-year basis for 16 consecutive quarters (for the past 13 quarters year-over-year loan growth has been 3% or greater) despite the planned runoff from our non-strategic/liquidating portfolios. Our non-strategic/liquidating loan portfolios decreased $2.2 billion during the quarter and our core loan portfolio increased $29.4 billion, which included $11.5 billion from the GE Capital loan purchase and associated financing transaction announced in first quarter 2015. Our investment securities increased by $16.0 billion during the quarter, driven primarily by purchases of federal agency mortgage-backed securities (MBS), U.S. Treasuries, and municipal securities, which were partially offset by maturities, amortization and sales.

Deposit growth continued in second quarter 2015 with period-end deposits up $17.5 billion, or 1%, from December 31, 2014. This increase reflected growth across both our commercial and consumer businesses. Our average deposit cost was 8 basis points, down 2 basis points from a year ago. We successfully grew our primary consumer checking customers (i.e., customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit) by 5.6% and primary business checking customers by 5.3% from a year ago (May 2015 compared with May 2014). Our ability to consistently grow primary checking customers is important to our results because these customers have more interactions with

3

Overview (continued)

us and are more than twice as profitable as non-primary customers.

Credit Quality

Credit quality improved in second quarter 2015 as losses remained at historically low levels, nonperforming assets (NPAs) continued to decline, and we continued to originate high quality loans, reflecting our long-term risk focus. Net charge-offs were $650 million, or 0.30% (annualized) of average loans, in second quarter 2015, compared with $717 million a year ago (0.35%), a 9% year-over-year decrease in credit losses. Our commercial portfolio net charge-offs were $62 million, or 6 basis points of average commercial loans. Net consumer credit losses declined to 53 basis points of average consumer loans in second quarter 2015 from 62 basis points in second quarter 2014. Our commercial real estate portfolios were in a net recovery position for the tenth consecutive quarter, reflecting our conservative risk discipline and improved market conditions. Losses on our consumer real estate portfolios declined $136 million from a year ago, down 46%, which included a $15 million decline in losses in our core 1-4 family first mortgage portfolio. The lower consumer loss levels reflected the benefit of the improving economy and our continued focus on originating high quality loans. Approximately 63% of the consumer first mortgage portfolio was originated after 2008, when more stringent underwriting standards were implemented.

Our provision for credit losses reflected a release from the allowance for credit losses of $350 million in second quarter 2015, which was $150 million less than what we released a year ago. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions.

In addition to lower net charge-offs and provision expense, NPAs also improved and were down $438 million, or 3%, from March 31, 2015, the eleventh consecutive quarter of decline. Nonaccrual loans declined $67 million from the prior quarter despite an increase in nonaccrual loans in our energy portfolio. The oil and gas portfolio represented only 2% of our total loan portfolio and balances in this portfolio declined by $1.1 billion from first quarter primarily due to pay downs. In addition, foreclosed assets were down $371 million from the prior quarter.

Capital

Our financial performance in second quarter 2015 resulted in strong capital generation, which increased total equity to $190.7 billion at June 30, 2015, up $712 million from the prior quarter. We continued to reduce our common share count through the repurchase of 36.3 million common shares in the quarter. We also entered into a $750 million forward repurchase contract in April 2015 with an unrelated third party that settled in July 2015 for 13.6 million shares. In addition, we entered into a $1.0 billion forward repurchase contract with an unrelated third party in July 2015 that is expected to settle in fourth quarter 2015 for approximately 17.5 million shares. We expect to reduce our common shares outstanding through share repurchases throughout the remainder of 2015. Our dividend payout ratio increased to 36% in second quarter 2015 as we increased the quarterly dividend rate on our common stock by 7%.

We believe an important measure of our capital strength is the Common Equity Tier 1 ratio under Basel III, fully phased-in, which increased to 10.55% at June 30, 2015. Likewise, our other regulatory capital ratios remained strong. See the “Capital Management” section in this Report for more information regarding our capital, including the calculation of our regulatory capital amounts.

4

Earnings Performance (continued)

Earnings Performance

Wells Fargo net income for second quarter 2015 was $5.7 billion ($1.03 diluted earnings per common share), compared with $5.7 billion ($1.01) for second quarter 2014. Net income for the first half of 2015 was $11.5 billion ($2.07), compared with $11.6 billion ($2.06) for the same period a year ago. Our second quarter 2015 earnings reflected execution of our business strategy as we continued to satisfy our customers' financial needs. The key drivers of our financial performance in the second quarter and first half of 2015 were balanced net interest income and noninterest income, diversified sources of fee income, a diversified and growing loan portfolio and strong underlying credit performance.

Revenue, the sum of net interest income and noninterest income, was $21.3 billion in second quarter 2015, compared with $21.1 billion in second quarter 2014. Revenue for the first half of 2015 was $42.6 billion, up 2% from the first half of 2014. The increase in revenue for the second quarter and first half of 2015, compared with the same periods in 2014, was primarily due to an increase in net interest income, reflecting increases in interest income from loans and trading assets. In the second quarter and first half of 2015, net interest income represented 53% and 52% of revenue, respectively, compared with 51% for both the second quarter and first half of 2014.

Noninterest income represented 47% and 48% of revenue for the second quarter and first half of 2015, respectively, compared with 49% for both the second quarter and first half of 2014. The drivers of our noninterest income can differ depending on the interest rate and economic environment. For example, net gains on mortgage loan origination/sales activities were 12% of our fee income in second quarter 2015, up from 7% in the same period a year ago when the refinance market was not as strong. Other businesses, such as equity investments, brokerage and card, contributed more to fee income this quarter, demonstrating the benefit of our diversified business model.

Noninterest expense was $12.5 billion and $25.0 billion in the second quarter and first half of 2015, respectively, compared with $12.2 billion and $24.1 billion in the second quarter and first half of 2014, respectively. The increase for both periods reflected higher personnel expense, including higher commission and incentive compensation, as well as higher operating losses, partially offset by lower travel and entertainment expense.

Net Interest Income

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid on deposits, short-term borrowings and long-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and the net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and securities based on a 35% federal statutory tax rate.

While the Company believes that it has the ability to increase net interest income over time, net interest income and the net interest margin in any one period can be significantly affected by a variety of factors including the mix and overall size of our earning assets portfolio and the cost of funding those assets. In addition, some sources of interest income, such as resolutions from purchased credit-impaired (PCI) loans, loan prepayment fees and collection of interest on nonaccrual loans, can vary from period to period. Net interest income growth has been challenged

during the prolonged low interest rate environment as higher yielding loans and securities have runoff and been replaced with lower yielding assets. The pace of this repricing has slowed in recent quarters.

Net interest income on a taxable-equivalent basis was $11.5 billion and $22.8 billion in the second quarter and first half of 2015, respectively, up from $11.0 billion and $21.8 billion for the same periods a year ago. The net interest margin was 2.97% and 2.96% for the second quarter and first half of 2015, respectively, down from 3.15% and 3.17% for the same periods a year ago. The increase in net interest income in the second quarter and first half of 2015 from the same periods a year ago, was primarily driven by growth in earning assets, including growth in short-term investments, investment securities, commercial and industrial loans, and trading assets, which offset a decrease in earning asset yields. Lower funding expense, due to an increase in noninterest bearing funding sources and reduced deposit costs, also contributed to higher net interest income. The decline in net interest margin in second quarter 2015, compared with the same period a year ago, was primarily driven by higher funding balances, including customer-driven deposit growth and actions we took in 2014 in response to increased regulatory liquidity expectations which raised long-term debt and term deposits. This growth in funding increased cash and federal funds sold and other short-term investments which are dilutive to net interest margin although essentially neutral to net interest income.

Average earning assets increased $153.7 billion in the second quarter and $161.8 billion in the first half of 2015, compared with the same periods a year ago, as average investment securities increased $58.3 billion in the second quarter and $53.9 billion in the first half of 2015 from the same periods a year ago. In addition, average federal funds sold and other short-term investments increased $37.3 billion in the second quarter and $49.8 billion in the first half of 2015 from the same periods a year ago. Average loans increased $39.4 billion in both the second quarter and first half of 2015, compared with the same periods a year ago.

Core deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Core deposits include noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). Average core deposits rose to $1.1 trillion in second quarter 2015 ($1.1 trillion in the first half of 2015), compared with $991.7 billion in second quarter 2014 ($982.8 billion in the first half of 2014), and funded 124% of average loans in both the second quarter and first half of 2015, compared with 119% for the same periods a year ago. Average core deposits decreased to 69% of average earning assets in both the second quarter and first half of 2015, compared with 71% for the same periods a year ago. The cost of these deposits has continued to decline due to a sustained low interest rate environment and a shift in our deposit mix from higher cost certificates of deposit to lower yielding checking and savings products. About 97% of our average core deposits are in checking and savings deposits, one of the highest industry percentages.

5

Table 1:  Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)(2)
	Quarter ended June 30,
						2015						2014
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	267,101		0.28	%	$	186	229,770		0.28	%	$	161
Trading assets	67,615			2.91		492		54,347		3.05		414
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	31,748			1.58		125		6,580		1.78		29
Securities of U.S. states and political subdivisions	47,075			4.13		486		42,721		4.26		456
Mortgage-backed securities:
Federal agencies	97,958			2.65		650		116,475		2.85		831
Residential and commercial	22,677			5.84		331		27,252		6.11		416
Total mortgage-backed securities	120,635			3.25		981		143,727		3.47		1,247
Other debt and equity securities	48,816			3.51		427		48,734		3.76		457
Total available-for-sale securities	248,274			3.25		2,019		241,762		3.62		2,189
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,492			2.19		243		10,829		2.20		59
Securities of U.S. states and political subdivisions	2,090			5.17		27		8		6.00		—
Federal agency mortgage-backed securities	21,044			2.00		105		6,089		2.74		42
Other debt securities	6,270			1.70		26		5,206		1.90		25
Total held-to-maturity securities	73,896			2.18		401		22,132		2.28		126
Total investment securities	322,170			3.01		2,420		263,894		3.51		2,315
Mortgages held for sale (4)	23,456			3.57		209		18,824		4.16		195
Loans held for sale (4)	666			3.51		5		157		2.55		1
Loans:
Commercial:
Commercial and industrial - U.S.	231,551			3.36		1,939		199,246		3.39		1,687
Commercial and industrial - Non U.S.	45,123			1.93		217		43,045		2.06		221
Real estate mortgage	113,089			3.48		982		112,795		3.61		1,016
Real estate construction	20,771			4.12		214		17,458		4.18		182
Lease financing	12,364			5.16		160		12,151		5.68		172
Total commercial	422,898			3.33		3,512		384,695		3.42		3,278
Consumer:
Real estate 1-4 family first mortgage	266,023			4.12		2,740		259,985		4.20		2,729
Real estate 1-4 family junior lien mortgage	57,066			4.23		603		63,305		4.31		680
Credit card	30,373			11.69		885		26,442		11.97		790
Automobile	56,974			5.88		836		53,480		6.34		845
Other revolving credit and installment	37,112			5.88		544		43,136		5.07		545
Total consumer	447,548			5.02		5,608		446,348		5.02		5,589
Total loans (4)	870,446			4.20		9,120		831,043		4.28		8,867
Other	4,859			5.14		64		4,535		5.74		65
Total earning assets	$	1,556,313		3.22	%	$	12,496	1,402,570		3.43	%	$	12,018
Funding sources
Deposits:
Interest-bearing checking	$	38,551		0.05	%	$	5	40,193		0.07	%	$	7
Market rate and other savings	619,837			0.06		87		583,907		0.07		101
Savings certificates	32,454			0.63		52		38,754		0.86		82
Other time deposits	52,238			0.42		55		48,512		0.41		50
Deposits in foreign offices	104,334			0.13		33		94,232		0.15		35
Total interest-bearing deposits	847,414			0.11		232		805,598		0.14		275
Short-term borrowings	84,499			0.09		21		58,845		0.10		14
Long-term debt	185,093			1.34		620		159,233		1.56		620
Other liabilities	16,405			2.03		83		13,589		2.73		93
Total interest-bearing liabilities	1,133,411			0.34		956		1,037,265		0.39		1,002
Portion of noninterest-bearing funding sources	422,902					—		365,305		—		—
Total funding sources	$	1,556,313		0.25		956		1,402,570		0.28		1,002
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.97	%	$	11,540			3.15	%	$	11,016
Noninterest-earning assets
Cash and due from banks	$	17,462						15,956
Goodwill	25,705							25,699
Other	129,798							119,778
Total noninterest-earning assets	$	172,965						161,433
Noninterest-bearing funding sources
Deposits	$	337,890						295,875
Other liabilities	67,595							51,184
Total equity	190,382							179,679
Noninterest-bearing funding sources used to fund earning assets	(422,902		)					(365,305	)
Net noninterest-bearing funding sources	$	172,965						161,433
Total assets	$	1,729,278						1,564,003

(1) Our average prime rate was 3.25% for the quarters ended June 30, 2015 and 2014, and 3.25% for the first six months of both 2015 and 2014. The average three-month London Interbank Offered Rate (LIBOR) was 0.28% and 0.23% for the quarters ended June 30, 2015 and 2014, respectively, and 0.27% and 0.23% for the first six months of 2015 and 2014, 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 $270 million and $225 million for the quarters ended June 30, 2015 and 2014, respectively, and $512 million and $442 million for the first six months of 2015 and 2014, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 35% for the periods presented.

6

	Six months ended June 30,
						2015						2014
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	271,392		0.28	%	$	376	221,573		0.28	%	$	305
Trading assets	65,309			2.89		945		51,306		3.10		795
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	28,971			1.56		225		6,576		1.73		57
Securities of U.S. states and political subdivisions	46,017			4.16		958		42,661		4.32		921
Mortgage-backed securities:
Federal agencies	100,064			2.71		1,356		117,055		2.90		1,695
Residential and commercial	23,304			5.77		673		27,641		6.12		845
Total mortgage-backed securities	123,368			3.29		2,029		144,696		3.51		2,540
Other debt and equity securities	47,938			3.47		827		48,944		3.68		895
Total available-for-sale securities	246,294			3.28		4,039		242,877		3.64		4,413
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	43,685			2.20		477		5,993		2.20		65
Securities of U.S. states and political subdivisions	2,019			5.16		52		4		5.97		—
Federal agency mortgage-backed securities	16,208			1.95		158		6,125		2.93		90
Other debt securities	6,530			1.71		55		5,807		1.88		54
Total held-to-maturity securities	68,442			2.18		742		17,929		2.34		209
Total investment securities	314,736			3.04		4,781		260,806		3.55		4,622
Mortgages held for sale (4)	21,530			3.59		386		17,696		4.13		365
Loans held for sale (4)	683			3.08		10		134		4.08		3
Loans:
Commercial:
Commercial and industrial - U.S.	229,627			3.32		3,783		196,570		3.41		3,328
Commercial and industrial - Non U.S.	45,093			1.90		426		42,616		1.99		421
Real estate mortgage	112,298			3.52		1,963		112,810		3.58		2,006
Real estate construction	20,135			3.83		383		17,265		4.28		366
Lease financing	12,341			5.06		312		12,206		5.90		360
Total commercial	419,494			3.30		6,867		381,467		3.42		6,481
Consumer:
Real estate 1-4 family first mortgage	265,923			4.12		5,481		259,737		4.19		5,434
Real estate 1-4 family junior lien mortgage	57,968			4.25		1,224		64,155		4.31		1,372
Credit card	30,376			11.74		1,768		26,363		12.14		1,588
Automobile	56,492			5.91		1,657		52,642		6.42		1,676
Other revolving credit and installment	36,620			5.94		1,079		43,072		5.03		1,076
Total consumer	447,379			5.03		11,209		445,969		5.02		11,146
Total loans (4)	866,873			4.19		18,076		827,436		4.28		17,627
Other	4,795			5.27		127		4,595		5.73		131
Total earning assets	$	1,545,318		3.21	%	$	24,701	1,383,546		3.46	%	$	23,848
Funding sources
Deposits:
Interest-bearing checking	$	38,851		0.05	%	$	10	38,506		0.07	%	$	13
Market rate and other savings	616,643			0.06		184		581,489		0.07		206
Savings certificates	33,525			0.69		116		39,639		0.87		171
Other time deposits	54,381			0.41		111		47,174		0.42		98
Deposits in foreign offices	104,932			0.13		69		92,650		0.14		66
Total interest-bearing deposits	848,332			0.12		490		799,458		0.14		554
Short-term borrowings	78,141			0.10		39		56,686		0.10		27
Long-term debt	184,432			1.33		1,224		156,528		1.59		1,239
Other liabilities	16,648			2.17		180		13,226		2.72		180
Total interest-bearing liabilities	1,127,553			0.34		1,933		1,025,898		0.39		2,000
Portion of noninterest-bearing funding sources	417,765					—		357,648		—		—
Total funding sources	$	1,545,318		0.25		1,933		1,383,546		0.29		2,000
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.96	%	$	22,768			3.17	%	$	21,848
Noninterest-earning assets
Cash and due from banks	$	17,262						16,159
Goodwill	25,705							25,668
Other	130,312							119,687
Total noninterest-earning assets	$	173,279						161,514
Noninterest-bearing funding sources
Deposits	$	331,745						290,004
Other liabilities	69,779							52,065
Total equity	189,520							177,093
Noninterest-bearing funding sources used to fund earning assets	(417,765		)					(357,648	)
Net noninterest-bearing funding sources	$	173,279						161,514
Total assets	$	1,718,597						1,545,060

7

Noninterest Income
Table 2:  Noninterest Income
							Six months
	Quarter ended June 30,				%		ended June 30,
(in millions)	2015			2014	Change		2015			2014	% Change
Service charges on deposit accounts	$	1,289		1,283	—	%	$	2,504		2,498	—	%
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,399			2,280	5		4,779			4,521	6
Trust and investment management	861			838	3		1,713			1,682	2
Investment banking	450			491	(8	)	895			818	9
Total trust and investment fees	3,710			3,609	3		7,387			7,021	5
Card fees	930			847	10		1,801			1,631	10
Other fees:
Charges and fees on loans	304			342	(11	)	613			709	(14	)
Merchant processing fees	202			183	10		389			355	10
Cash network fees	132			128	3		257			248	4
Commercial real estate brokerage commissions	141			99	42		270			171	58
Letters of credit fees	90			92	(2	)	178			188	(5	)
All other fees	238			244	(2	)	478			464	3
Total other fees	1,107			1,088	2		2,185			2,135	2
Mortgage banking:
Servicing income, net	514			1,035	(50	)	1,037			1,973	(47	)
Net gains on mortgage loan origination/sales activities	1,191			688	73		2,215			1,260	76
Total mortgage banking	1,705			1,723	(1	)	3,252			3,233	1
Insurance	461			453	2		891			885	1
Net gains from trading activities	133			382	(65	)	541			814	(34	)
Net gains on debt securities	181			71	155		459			154	198
Net gains from equity investments	517			449	15		887			1,296	(32	)
Lease income	155			129	20		287			262	10
Life insurance investment income	145			138	5		290			270	7
All other	(285		)	103	NM		(144		)	86	NM
Total	$	10,048		10,275	(2	)	$	20,340		20,285	—

NM - Not meaningful

Noninterest income was $10.0 billion and $10.3 billion for second quarter 2015 and 2014, respectively, and $20.3 billion for both the first half of 2015 and 2014. This income represented 47% and 48% of revenue for the second quarter and first half of 2015, respectively, compared with 49% for both the second quarter and first half of 2014. Many of our businesses, including credit and debit cards, merchant card processing, commercial banking, asset-backed finance, real estate capital markets, international, wealth management and retirement grew noninterest income in the second quarter and first half of 2015. This growth was offset by lower other income driven by the accounting impact related to debt hedges.

Service charges on deposit accounts were $1.3 billion and $2.5 billion in the second quarter and first half of 2015, respectively, unchanged from the second quarter and first half of 2014, respectively. Lower overdraft fees driven by changes implemented in early October 2014, designed to provide customers with more real time information, were offset by higher fees from commercial product sales and commercial product re-pricing.

Brokerage advisory, commissions and other fees are received for providing services to full-service and discount brokerage customers. Income from these brokerage-related activities include asset-based fees, which are based on the market value of the customer’s assets, and transactional commissions based on the number and size of transactions executed at the customer’s

direction. These fees increased to $2.4 billion and $4.8 billion in the second quarter and first half of 2015, respectively, from $2.3 billion and $4.5 billion for the same periods in 2014. The increase in retail brokerage income was predominantly due to higher asset-based fees as a result of higher market values and growth in assets under management. Retail brokerage client assets totaled $1.43 trillion at June 30, 2015, up 1% from $1.42 trillion at June 30, 2014.

We earn trust and investment management fees from managing and administering assets, including mutual funds, corporate trust, personal trust, employee benefit trust and agency assets. Trust and investment management fees are largely based on a tiered scale relative to the market value of the assets under management or administration. These fees increased to $861 million and $1.71 billion in the second quarter and first half of 2015, respectively, from $838 million and $1.68 billion for the same periods in 2014, with growth primarily due to higher market values. At June 30, 2015, these assets totaled $2.4 trillion, compared with $2.5 trillion at June 30, 2014.

We earn investment banking fees from underwriting debt and equity securities, arranging loan syndications, and performing other related advisory services. Investment banking fees decreased to $450 million in second quarter 2015 from $491 million for the same period in 2014, driven by declines in advisory services and equity origination. In the first half of 2015, investment banking fees increased to $895 million from

8

Earnings Performance (continued)

$818 million for the same period in 2014, driven by higher investment grade debt origination reflecting an active domestic market.

Card fees were $930 million and $1.8 billion in the second quarter and first half of 2015, respectively, compared with $847 million and $1.6 billion for the same periods a year ago. The increase was primarily due to account growth and increased purchase activity.

Other fees of $1.11 billion and $2.19 billion in the second quarter and first half of 2015, respectively, increased from $1.09 billion and $2.14 billion for the same periods a year ago as increases in commercial real estate brokerage commissions and merchant processing fees more than offset a decline in charges and fees on loans. Charges and fees on loans decreased to $304 million and $613 million in the second quarter and first half of 2015, respectively, compared with $342 million and $709 million for the same periods a year ago, primarily due to the phase out of the direct deposit advance product during the first half of 2014. Commercial real estate brokerage commissions increased by $42 million and $99 million in the second quarter and first half of 2015, respectively, compared with the same periods a year ago, driven by increased sales and other property-related activities, including financing and advisory services.

Mortgage banking noninterest income, consisting of net servicing income and net gains on loan origination/sales activities, totaled $1.7 billion in both second quarter 2015 and 2014, and totaled $3.3 billion for the first half of 2015, compared with $3.2 billion for the same period a year ago.

In addition to servicing fees, net mortgage loan servicing income includes amortization of commercial mortgage servicing rights (MSRs), changes in the fair value of residential MSRs during the period, as well as changes in the value of derivatives (economic hedges) used to hedge the residential MSRs. Net servicing income for second quarter 2015 included a $107 million net MSR valuation gain ($1.1 billion increase in the fair value of the MSRs and a $946 million hedge loss) and for second quarter 2014 included a $475 million net MSR valuation gain ($835 million decrease in the fair value of the MSRs offset by an $1.3 billion hedge gain). For the first half of 2015, net servicing income included a $215 million net MSR valuation gain ($280 million increase in the fair value of the MSRs and a $65 million hedge loss) and for the same period of 2014 included a $882 million net MSR valuation gain ($1.3 billion decrease in the fair value of the MSRs offset by an $2.2 billion hedge gain). The decrease in net MSR valuation gains in the second quarter and first half of 2015, compared with the same periods in 2014, was primarily attributable to lower hedge gains, MSR valuation adjustments in first quarter 2015 that reflected higher prepayment expectations due to the reduction in FHA mortgage insurance premiums as well as overall lower actual prepayments in the first half of 2014.

Our portfolio of residential and commercial loans serviced for others was $1.81 trillion at June 30, 2015, and $1.86 trillion at December 31, 2014. At June 30, 2015, the ratio of combined residential and commercial MSRs to related loans serviced for others was 0.77%, compared with 0.75% at December 31, 2014. See the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section of this Report for additional information regarding our MSRs risks and hedging approach.

Net gains on mortgage loan origination/sale activities were $1.2 billion and $2.2 billion in the second quarter and first half of 2015, respectively, up from $688 million and $1.3 billion for the same periods a year ago. The increase in the second quarter and first half of 2015, compared with the same periods a year ago, was primarily driven by increased origination volumes and

margins. Mortgage loan originations were $62 billion for second quarter 2015, of which 54% were for home purchases, compared with $47 billion and 74%, respectively, for the same period a year ago. The year-over-year increase was primarily driven by higher refinance activity reflecting lower mortgage interest rates. Mortgage applications were $81 billion and $174 billion in the second quarter and first half of 2015, respectively, compared with $72 billion and $132 billion for the same periods a year ago. The real estate 1-4 family first mortgage unclosed pipeline was $38 billion at June 30, 2015, compared with $30 billion at June 30, 2014. For additional information about our mortgage banking activities and results, see the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section and Note 8 (Mortgage Banking Activities) and Note 13 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

Net gains on mortgage loan origination/sales activities include adjustments to the mortgage repurchase liability. Mortgage loans are repurchased from third parties based on standard representations and warranties, and early payment default clauses in mortgage sale contracts. For the first half of 2015, we released a net $34 million from the repurchase liability, including $18 million in second quarter 2015, compared with a net $20 million release for the first half of 2014, including $26 million in second quarter 2014. For additional information about mortgage loan repurchases, see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section and Note 8 (Mortgage Banking Activities) to Financial Statements in this Report.

We engage in trading activities primarily to accommodate the investment activities of our customers, execute economic hedging to manage certain components of our balance sheet risks and for a very limited amount of proprietary trading for our own account. Net gains from trading activities, which reflect unrealized changes in fair value of our trading positions and realized gains and losses, were $133 million and $541 million in the second quarter and first half of 2015, respectively, compared with $382 million and $814 million for the same periods a year ago. Both second quarter and first half year-over-year decreases were primarily driven by lower economic hedge income and lower deferred compensation gains (offset in employee benefits expense).

Net gains from trading activities do not include interest and dividend income and expense on trading securities. Those amounts are reported within interest income from trading assets and other interest expense from trading liabilities. Interest and fees related to proprietary trading are reported in their corresponding income statement line items. Proprietary trading activities are not significant to our client-focused business model. For additional information about proprietary and other trading, see the “Risk Management – Asset and Liability Management – Market Risk – Trading Activities” section in this Report. 

Net gains on debt and equity securities totaled $698 million for second quarter 2015 and $520 million for second quarter 2014 ($1.3 billion and $1.5 billion for the first half of 2015 and 2014, respectively), net of other-than-temporary impairment (OTTI) write-downs of $96 million and $82 million for second quarter 2015 and 2014, respectively, and $169 million and $217 million for the first half of 2015 and 2014, respectively. The increase in net gains on debt and equity securities in second quarter 2015 compared with the same period a year ago reflects positive operating performance in the portfolio. The decrease in net gains on debt and equity securities in the first half of 2015 compared with the same period a year ago was primarily due to lower net gains from equity investments as our portfolio benefited from strong public and private equity markets in 2014.

9

All other income was $(285) million and $(144) million in the second quarter and first half of 2015, respectively, compared with $103 million and $86 million for the same periods a year ago. All other income includes ineffectiveness recognized on derivatives that qualify for hedge accounting, the results of certain economic hedges, losses on low income housing tax credit investments, foreign currency adjustments, and income from investments accounted for under the equity method of accounting, any of which can cause decreases and net losses in other income. The decrease in other income for the second quarter and first half of 2015, compared with the same periods a year ago, primarily reflected changes in ineffectiveness recognized on interest rate swaps used to hedge our exposure to interest rate risk on long-term debt and cross-currency swaps,

cross-currency interest rate swaps and forward contracts used to hedge our exposure to foreign currency risk and interest rate risk involving non-U.S. dollar denominated long-term debt. A portion of the ineffectiveness recognized was partially offset by benefits from certain economic hedges. The ineffective portion recognized on our fair value hedges was $(287) million and $(114) million in the second quarter and first half of 2015, respectively, compared with $104 million and $224 million for the same periods a year ago. For additional information about derivatives used as part of our asset/liability management, see Note 12 (Derivatives) to Financial Statements in this Report.

Noninterest Expense
Table 3:  Noninterest Expense
						Six months
	Quarter ended June 30,			%		ended June 30,			%
(in millions)	2015		2014	Change		2015		2014	Change
Salaries	$	3,936	3,795	4	%	$	7,787	7,523	4	%
Commission and incentive compensation	2,606		2,445	7		5,291		4,861	9
Employee benefits	1,106		1,170	(5	)	2,583		2,542	2
Equipment	470		445	6		964		935	3
Net occupancy	710		722	(2	)	1,433		1,464	(2	)
Core deposit and other intangibles	312		349	(11	)	624		690	(10	)
FDIC and other deposit assessments	222		225	(1	)	470		468	—
Outside professional services	627		646	(3	)	1,175		1,205	(2	)
Operating losses	521		364	43		816		523	56
Outside data processing	269		259	4		522		500	4
Contract services	238		249	(4	)	463		483	(4	)
Travel and entertainment	172		243	(29	)	330		462	(29	)
Postage, stationery and supplies	180		170	6		351		361	(3	)
Advertising and promotion	169		187	(10	)	287		305	(6	)
Foreclosed assets	117		130	(10	)	252		262	(4	)
Telecommunications	113		111	2		224		225	—
Insurance	156		140	11		296		265	12
Operating leases	64		54	19		126		104	21
All other	481		490	(2	)	982		964	2
Total	$	12,469	12,194	2		$	24,976	24,142	3

Noninterest expense was $12.5 billion in second quarter 2015, up 2% from $12.2 billion a year ago, predominantly due to higher personnel expenses ($7.6 billion, up from $7.4 billion a year ago) and higher operating losses ($521 million, up from $364 million a year ago), partially offset by lower travel and entertainment expense ($172 million, down from $243 million a year ago). For the first half of 2015, noninterest expense was up 3% from the same period a year ago predominantly due to higher personnel expenses ($15.7 billion, up from $14.9 billion a year ago) and higher operating losses ($816 million, up from $523 million a year ago), partially offset by lower travel and entertainment expense ($330 million, down from $462 million a year ago).

Personnel expenses, which include salaries, commissions, incentive compensation and employee benefits, were up $238 million, or 3%, in second quarter 2015 compared with the same quarter last year, and up $735 million, or 5%, for the first half of 2015 compared with the same period in 2014. The increase in both periods was predominantly due to higher revenue-related compensation, annual salary increases and staffing growth across various businesses. These increases were partially offset by lower deferred compensation (offset in trading revenue).

Operating losses were up 43% and 56% in the second quarter and first half of 2015, respectively, compared with the same periods a year ago. The increase for both periods was predominantly due to litigation accruals for various legal matters.

Travel and entertainment expense was down 29% in both the second quarter and first half of 2015, compared with the same periods a year ago, primarily driven by travel expense reduction initiatives.

In general, our noninterest expense continued to reflect ongoing investments in our risk management infrastructure to meet increased regulatory and compliance requirements as well as to address evolving cybersecurity risk.

The efficiency ratio was 58.5% in second quarter 2015, compared with 57.9% in the prior year. The Company expects to operate within its targeted efficiency ratio range of 55 to 59% for full year 2015.

10

Earnings Performance (continued)

Income Tax Expense

Our effective tax rate was 32.6% and 33.4% for second quarter 2015 and 2014, respectively. Our effective tax rate was 30.4% in the first half of 2015, down from 30.7% in the first half of 2014. The effective tax rates for the first half of 2015 and 2014 reflected $359 million and $423 million, respectively, of discrete tax benefits recognized in the first quarter of each period primarily from reductions in reserves for uncertain tax positions due to audit resolutions of prior period matters with U.S. federal and state taxing authorities.

Operating Segment Results

We are organized for management reporting purposes into three operating segments: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. These segments are defined by product type and customer segment and their results are based on our management accounting process, for which there is no comprehensive, authoritative financial accounting guidance equivalent to generally accepted accounting principles (GAAP). Table 4 and the following discussion present our results by operating segment. For additional description of our operating segments, including additional financial information and the underlying management accounting process, see Note 18 (Operating Segments) to Financial Statements in this Report.

Table 4:  Operating Segment Results – Highlights
(income/expense in millions,	Community Banking			Wholesale Banking				Wealth, Brokerage and Retirement				Other (1)				Consolidated Company
average balances in billions)	2015		2014	2015		2014		2015		2014		2015		2014		2015	2014
Quarter ended June 30,
Revenue	$	12,661	12,606	6,083		5,946		3,739		3,550		(1,165	)	(1,036	)	21,318	21,066
Provision (reversal of provision) for credit losses	363		279	(58	)	(49	)	(10	)	(25	)	5		12		300	217
Noninterest expense	7,164		7,020	3,295		3,203		2,775		2,695		(765	)	(724	)	12,469	12,194
Net income	3,358		3,431	2,011		1,952		602		544		(252	)	(201	)	5,719	5,726
Average loans	$	506.5	505.4	343.6		308.1		59.3		51.0		(39.0	)	(33.5	)	870.4	831.0
Average core deposits	685.7		639.8	304.2		265.8		159.4		153.0		(70.1	)	(66.9	)	1,079.2	991.7
Six months ended June 30,
Revenue	$	25,445	25,199	11,995		11,526		7,472		7,018		(2,316	)	(2,052	)	42,596	41,691
Provision (reversal of provision) for credit losses	980		698	(64	)	(142	)	(13	)	(33	)	5		19		908	542
Noninterest expense	14,228		13,794	6,704		6,418		5,606		5,406		(1,562	)	(1,476	)	24,976	24,142
Net income (loss)	7,023		7,275	3,808		3,694		1,163		1,019		(471	)	(369	)	11,523	11,619
Average loans	$	506.5	505.2	340.6		305.0		58.1		50.5		(38.3	)	(33.3	)	866.9	827.4
Average core deposits	677.3		633.2	303.8		262.4		160.4		154.5		(70.3	)	(67.3	)	1,071.2	982.8

(1) Includes corporate items not specific to a business segment and the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for wealth management customers provided in Community Banking stores.

Cross-sell Our cross-sell strategy is to increase the number of products our customers use by offering them all of the financial products that satisfy their financial needs. Our approach is needs-based as some customers will benefit from more products, and some may need fewer. We believe there is continued opportunity to earn more business from our customers as we build lifelong relationships with them. We track our cross-sell activities based on whether the customer is a retail banking household or has a wholesale banking relationship. For additional information regarding our cross-sell metrics, see the "Earnings Performance – Operating Segments – Cross-sell" section in our 2014 Form 10-K.

Operating Segment Results

The following discussion provides a description of each of our operating segments, including cross-sell metrics and financial results.

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 auto, student, and small business lending. These products also include investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. The Community Banking segment also includes the results of our Corporate Treasury activities net of allocations in support of the other operating segments and results of investments in our affiliated venture capital partnerships. Our retail banking household cross-sell was 6.13 products per household in May 2015, compared with 6.17 in May 2014. The May 2015 retail banking household cross-sell ratio reflects the impact of the sale of government guaranteed student loans in fourth quarter 2014. Table 4a provides additional financial information for Community Banking.

11

Table 4a - Community Banking
	Quarter ended June 30,							Six months ended June 30,
(in millions, except average balances which are in billions)	2015			2014		% Change		2015			2014		% Change
Net interest income	$	7,698		7,386		4	%	$	15,259		14,661		4	%
Noninterest income:
Service charges on deposit accounts	832			866		(4	)	1,604			1,683		(5	)
Trust and investment fees:
Brokerage advisory, commissions and other fees	523			447		17		1,029			880		17
Trust and investment management	209			195		7		423			394		7
Investment banking (1)	(24		)	(39	)	(38	)	(60		)	(46	)	30
Total trust and investment fees	708			603		17		1,392			1,228		13
Card fees	859			783		10		1,661			1,504		10
Other fees	571			588		(3	)	1,122			1,181		(5	)
Mortgage banking	1,575			1,660		(5	)	3,010			3,084		(2	)
Insurance	32			32		—		63			64		(2	)
Net gains (losses) from trading activities	(89		)	84		(206	)	(6		)	120		(105	)
Net gains on debt securities	68			11		518		274			21		NM
Net gains from equity investments (2)	323			319		1		613			1,074		(43	)
Other income of the segment	84			274		(69	)	453			579		(22	)
Total noninterest income	4,963			5,220		(5	)	10,186			10,538		(3	)
Total revenue	12,661			12,606		—		25,445			25,199		1
Provision for credit losses	363			279		30		980			698		40
Noninterest expense:
Personnel expense	4,404			4,271		3		8,952			8,530		5
Equipment	422			402		5		858			822		4
Net occupancy	520			535		(3	)	1,054			1,090		(3	)
Core deposit and other intangibles	145			156		(7	)	291			314		(7	)
FDIC and other deposit assessments	140			151		(7	)	287			303		(5	)
Outside professional services	267			258		3		474			482		(2	)
Operating losses	406			322		26		636			441		44
Other expense of the segment	860			925		(7	)	1,676			1,812		(8	)
Total noninterest expense	7,164			7,020		2		14,228			13,794		3
Income before income tax expense and noncontrolling interests	5,134			5,307		(3	)	10,237			10,707		(4	)
Income tax expense	1,707			1,820		(6	)	3,071			3,196		(4	)
Net income from noncontrolling interests (3)	69			56		23		143			236		(39	)
Net income	$	3,358		3,431		(2	)	$	7,023		7,275		(3	)
Average loans	$	506.5		505.4		—		$	506.5		505.2		—
Average core deposits	685.7			639.8		7		677.3			633.2		7

NM - Not meaningful

(1) Represents syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking segment.

(2) Predominantly represents gains resulting from venture capital investments.

(3) Reflects results attributable to noncontrolling interests primarily associated with the Company’s consolidated merchant services joint venture and venture capital investments.

Community Banking reported net income of $3.4 billion, down $73 million, or 2%, from second quarter 2014, and $7 billion for the first half of 2015, down $252 million, or 3%, compared with the same period a year ago. Revenue of $12.7 billion increased $55 million, or 0.4%, from second quarter 2014, and was $25.4 billion for the first half of 2015, an increase of $246 million, or 1%, compared with the same period last year. The increase in revenue for both periods was due to higher net interest income, trust and investment fees, gains on sale of debt securities, and debit and credit card fees, partially offset by lower gains on equity investments and trading activities, and lower mortgage banking income. Average core deposits increased $45.9 billion, or 7%, from second quarter 2014 and $44.1 billion, or 7 %, from the first half of 2014. Primary consumer checking customers as of May 2015 (customers who actively use their

checking account with transactions such as debit card purchases, online bill payments, and direct deposit) were up 5.6% from May 2014.Noninterest expense increased 2% from second quarter 2014 and 3% from the first half of 2014 driven by higher personnel expenses and operating losses, partially offset by lower travel, occupancy, and other expenses.Net loan charge-offs decreased $97 million from second quarter 2014 and $269 million from the first half of 2014 primarily due to improvement in the consumer real estate portfolios. The provision for credit losses increased $84 million from second quarter 2014 and $282 million from the first half of 2014 as the improvement in net charge-offs was more than offset by a lower allowance release.

12

Earnings Performance (continued)

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products and business segments include Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment

Finance, Wells Fargo Securities, Principal Investments, Asset Backed Finance, and Asset Management. Wholesale Banking cross-sell was 7.3 products per relationship in second quarter 2015, up from 7.2 in second quarter 2014. Table 4b provides additional financial information for Wholesale Banking.

Table 4b - Wholesale Banking
	Quarter ended June 30,							Six months ended June 30,
(in millions, except average balances which are in billions)	2015			2014		% Change		2015			2014		% Change
Net interest income	$	3,068		2,953		4	%	$	5,989		5,844		2	%
Noninterest income:
Service charges on deposit accounts	456			416		10		899			814		10
Trust and investment fees:
Brokerage advisory, commissions and other fees	84			81		4		169			157		8
Trust and investment management	459			450		2		912			910		—
Investment banking	476			533		(11	)	960			870		10
Total trust and investment fees	1,019			1,064		(4	)	2,041			1,937		5
Card fees	70			64		9		139			126		10
Other fees	535			499		7		1,061			952		11
Mortgage banking	130			63		106		243			149		63
Insurance	368			379		(3	)	712			740		(4	)
Net gains from trading activities	224			234		(4	)	507			594		(15	)
Net gains on debt securities	112			59		90		173			128		35
Net gains from equity investments	187			127		47		264			215		23
Other income of the segment	(86		)	88		(198	)	(33		)	27		(222	)
Total noninterest income	3,015			2,993		1		6,006			5,682		6
Total revenue	6,083			5,946		2		11,995			11,526		4
Reversal of provision for credit losses	(58		)	(49	)	18		(64		)	(142	)	(55	)
Noninterest expense:
Personnel expense	1,828			1,702		7		3,779			3,492		8
Equipment	38			32		19		85			92		(8	)
Net occupancy	114			111		3		227			222		2
Core deposit and other intangibles	85			105		(19	)	170			201		(15	)
FDIC and other deposit assessments	67			58		16		146			128		14
Outside professional services	254			274		(7	)	490			517		(5	)
Operating losses	48			29		66		85			48		77
Other expense of the segment	861			892		(3	)	1,722			1,718		—
Total noninterest expense	3,295			3,203		3		6,704			6,418		4
Income before income tax expense and noncontrolling interests	2,846			2,792		2		5,355			5,250		2
Income tax expense	840			838		—		1,546			1,552		—
Net income from noncontrolling interests	(5		)	2		(350	)	1			4		(75	)
Net income	$	2,011		1,952		3		$	3,808		3,694		3
Average loans	$	343.6		308.1		12		$	340.6		305.0		12
Average core deposits	304.2			265.8		14		303.8			262.4		16

Wholesale Banking had net income of $2.0 billion in second quarter 2015, up $59 million, or 3%, from second quarter 2014. In the first half of 2015, net income of $3.8 billion increased $114 million, or 3%, from the same period a year ago. The higher results for both second quarter and the first half of 2015 were driven by increased revenues which were partially offset by increased expenses. Revenue increased $137 million, or 2%, from second quarter 2014 and $469 million, or 4%, from the first half of 2014 on both increased net interest income and noninterest

income. Net interest income increased driven by loan growth, which included the GE Capital loan purchase and financing transaction, and other earning asset growth. Noninterest income increased primarily due to higher mortgage banking income driven by originations and sales of commercial mortgage loans, higher service charges on deposits as a result of increased treasury management fees, increased other fees related to higher commercial real estate brokerage commissions and higher gains on debt and equity investments.

13

Average loans of $343.6 billion in second quarter 2015 increased $35.5 billion, or 12%, from second quarter 2014, driven by broad based growth across most customer segments. Average core deposits of $304.2 billion increased $38.4 billion, or 14%, from second quarter 2014 reflecting continued customer liquidity. Noninterest expense increased 3% from second quarter 2014 and 4% from the first half of 2014, primarily due to higher personnel expenses related to growth initiatives, compliance, and regulatory requirements. The provision for credit losses remained in a net recovery position for the second quarter and first half of 2015 with the amount of reversal increasing $9 million from second quarter 2014 but decreasing $78 million from the first half of 2014 driven by lower net credit recoveries.

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client's financial needs. Wealth Management provides

affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and fiduciary services. Abbot Downing, a Wells Fargo business, provides comprehensive wealth management services to ultra-high net worth families and individuals as well as endowments and foundations. Brokerage serves customers' advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing retirement and trust services (including 401(k) and pension plan record keeping) for institutional clients and reinsurance services for the life insurance industry. Wealth, Brokerage and Retirement cross-sell was 10.53 products per retail banking household in May 2015, up from 10.44 a year ago. Table 4c provides additional financial information for Wealth, Brokerage and Retirement.

Table 4c - Wealth, Brokerage and Retirement
	Quarter ended June 30,							Six months ended June 30,
(in millions, except average balances which are in billions)	2015			2014		% Change		2015			2014		% Change
Net interest income	$	865		775		12	%	$	1,726		1,543		12	%
Noninterest income:
Service charges on deposit accounts	6			5		20		10			9		11
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,316			2,199		5		4,610			4,363		6
Trust and investment management	409			396		3		816			788		4
Investment banking (1)	(2		)	(3	)	(33	)	(5		)	(6	)	(17	)
Total trust and investment fees	2,723			2,592		5		5,421			5,145		5
Card fees	1			1		—		2			2		—
Other fees	4			5		(20	)	8			9		(11	)
Mortgage banking	(1		)	—		NM		(3		)	(1	)	200
Insurance	61			42		45		116			81		43
Net gains from trading activities	(2		)	64		(103	)	40			100		(60	)
Net gains on debt securities	1			1		—		12			5		140
Net gains from equity investments	7			3		133		10			7		43
Other income of the segment	74			62		19		130			118		10
Total noninterest income	2,874			2,775		4		5,746			5,475		5
Total revenue	3,739			3,550		5		7,472			7,018		6
Reversal of provision for credit losses	(10		)	(25	)	(60	)	(13		)	(33	)	(61	)
Noninterest expense:
Personnel expense	1,831			1,813		1		3,763			3,660		3
Equipment	11			13		(15	)	23			24		(4	)
Net occupancy	105			103		2		210			206		2
Core deposit and other intangibles	82			88		(7	)	163			175		(7	)
FDIC and other deposit assessments	26			28		(7	)	63			63		—
Outside professional services	114			122		(7	)	226			222		2
Operating losses	69			14		393		99			38		161
Other expense of the segment	537			514		4		1,059			1,018		4
Total noninterest expense	2,775			2,695		3		5,606			5,406		4
Income before income tax expense and noncontrolling interests	974			880		11		1,879			1,645		14
Income tax expense	369			334		10		713			624		14
Net income from noncontrolling interests	3			2		50		3			2		50
Net income	$	602		544		11		$	1,163		1,019		14
Average loans	$	59.3		51.0		16		$	58.1		50.5		15
Average core deposits	159.4			153.0		4		160.4			154.5		4

NM - Not meaningful

(1) Represents syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking segment.

14

Earnings Performance (continued)

Wealth, Brokerage and Retirement reported net income of $602 million in second quarter 2015, up 11% from second quarter 2014. Net income for the first half of 2015 was $1.2 billion, up 14% compared with the same period a year ago. Growth in net income for both periods was driven by revenue growth. Revenue was up 5% from second quarter 2014 and up 6% from the first half of 2014, primarily due to higher asset-based fees and net interest income. Average loans in second quarter 2015 of $59.3 billion were up 16% from second quarter 2014. First half 2015 average loans increased 15% from the same period a year ago. Average loan growth was driven by growth in non-conforming mortgages, commercial and security-based lending. Average core deposits in second quarter 2015 of $159.4 billion were up 4% from second quarter 2014. First half 2015 average core deposits increased 4% from the same period a year ago. Noninterest expense was up 3% from second quarter 2014 and up 4% from the first half of 2014 largely due to increased personnel expenses, largely broker commissions, and higher operating losses reflecting increased litigation accruals. Total provision for credit losses increased $15 million and $20 million from the second quarter and first half of 2014, respectively, driven primarily by lower allowance releases. 

15

Balance Sheet Analysis 

At June 30, 2015, our assets totaled $1.7 trillion, up $33.5 billion from December 31, 2014. The predominant areas of asset growth were in investment securities, which increased $27.8 billion, loans, which increased $25.9 billion (including $11.5 billion from the GE Capital loan purchase and financing transaction) and mortgages held for sale, which increased $5.9 billion. A decrease in federal funds sold and other short-term investments of $26.2 billion combined with deposit growth of $17.5 billion, an increase in short-term borrowings of $19.4 billion, and total equity growth of $5.4 billion from December 31, 2014, were the

predominant sources that funded our asset growth in the first half of 2015. Equity growth benefited from $7.1 billion in earnings net of dividends paid.

The following discussion provides additional information about the major components of our balance sheet. Information regarding our capital and changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

Investment Securities
Table 5:  Investment Securities – Summary
	June 30, 2015				December 31, 2014
(in millions)	Amortized Cost		Net  unrealized gain	Fair value	Amortized Cost	Net unrealized gain	Fair value
Available-for-sale securities:
Debt securities	$	253,785	4,395	258,180	247,747	6,019	253,766
Marketable equity securities	1,145		1,342	2,487	1,906	1,770	3,676
Total available-for-sale securities	254,930		5,737	260,667	249,653	7,789	257,442
Held-to-maturity debt securities	80,102		213	80,315	55,483	876	56,359
Total investment securities (1)	$	335,032	5,950	340,982	305,136	8,665	313,801

(1) Available-for-sale securities are carried on the balance sheet at fair value. Held-to-maturity securities are carried on the balance sheet at amortized cost.

Table 5 presents a summary of our investment securities portfolio, which increased $27.8 billion from December 31, 2014, predominantly due to purchases of U.S. Treasury securities and Federal agency mortgage-backed securities. The total net unrealized gains on available-for-sale securities were $5.7 billion at June 30, 2015, down from $7.8 billion at December 31, 2014, due primarily to an increase in interest rates. For a discussion of our investment management objectives and practices, see the "Balance Sheet Analysis" section of our 2014 Form 10-K. Also, see the “Risk Management - Asset/Liability Management” section in this Report for information on our use of investments to manage liquidity and interest rate risk.

We analyze securities for other-than-temporary impairment (OTTI) quarterly or more often if a potential loss-triggering event occurs. Of the $169 million in OTTI write-downs recognized in earnings in the first half of 2015, $51 million related to debt securities and $117 million related to nonmarketable equity investments, which are included in other assets. For a discussion of our OTTI accounting policies and underlying considerations and analysis see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K and Note 4 (Investment Securities) to Financial Statements in this Report.

At June 30, 2015, investment securities included $50.5 billion of municipal bonds, of which 93.0% were rated “A-” or better based predominantly on external and, in some cases, internal ratings. Additionally, some of the securities in our total municipal bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are substantially all investment grade and were generally underwritten in accordance with our own investment standards prior to the determination to purchase, without relying on the bond insurer’s guarantee in making the investment decision. The credit quality of our

municipal bond holdings are monitored as part of our ongoing impairment analysis.

The weighted-average expected maturity of debt securities available-for-sale was 6.6 years at June 30, 2015. Because 48% of this portfolio is MBS, the expected remaining maturity is shorter than the remaining contractual maturity because borrowers generally have the right to prepay obligations before the underlying mortgages mature. The estimated effects of a 200 basis point increase or decrease in interest rates on the fair value and the expected remaining maturity of the MBS available-for-sale portfolio are shown in Table 6.

Table 6:  Mortgage-Backed Securities Available-for-Sale
(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At June 30, 2015
Actual	$	123.8	2.8		4.9
Assuming a 200 basis point:
Increase in interest rates	112.8		(8.2	)	6.7
Decrease in interest rates	128.3		7.3		2.6

The weighted-average expected maturity of debt securities held-to-maturity was 6.5 years at June 30, 2015. See Note 4 (Investment Securities) to Financial Statements in this Report for a summary of investment securities by security type.

16

Balance Sheet Analysis (continued)

Loan Portfolio

Total loans were $888.5 billion at June 30, 2015, up$25.9 billion from December 31, 2014. Table 7 provides a summary of total outstanding loans by core and non-strategic/liquidating loan portfolios. Loans in the core portfolio grew$30.3 billion from December 31, 2014, primarily due to growth in commercial and industrial and real estate construction loans within the

commercial loan portfolio segment, which included the GE Capital loan purchase and associated financing transaction announced in first quarter 2015. Non-strategic/liquidating portfolios decreased by $4.4 billion. Additional information on the non-strategic and liquidating loan portfolios is included in Table 12 in the “Risk Management – Credit Risk Management” section in this Report.

Table 7:  Loan Portfolios
	June 30, 2015					December 31, 2014
(in millions)	Core		Liquidating		Total	Core	Liquidating		Total
Commercial	$	437,430	592		438,022	413,701	1,125		414,826
Consumer	394,670		55,767		450,437	388,062	59,663		447,725
Total loans	$	832,100	56,359		888,459	801,763	60,788		862,551
Change from prior year-end	$	30,337	(4,429	)	25,908	60,343	(20,078	)	40,265

A discussion of average loan balances and a comparative detail of average loan balances is included in Table 1 under “Earnings Performance – Net Interest Income” earlier in this Report. Additional information on total loans outstanding by portfolio segment and class of financing receivable is included in the “Risk Management – Credit Risk Management” section in this Report. Period-end balances and other loan related information are in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report. 

Table 8 shows contractual loan maturities for loan categories normally not subject to regular periodic principal reduction and the contractual distribution of loans in those categories to changes in interest rates.

Table 8:  Maturities for Selected Commercial Loan Categories
	June 30, 2015					December 31, 2014
(in millions)	Within one  year		After one year through five years	After  five years	Total	Within one year	After one year through  five years	After five years	Total
Selected loan maturities:
Commercial and industrial	$	79,986	182,824	22,007	284,817	76,216	172,801	22,778	271,795
Real estate mortgage	17,980		65,933	35,782	119,695	17,485	61,092	33,419	111,996
Real estate construction	6,981		12,939	1,389	21,309	6,079	11,312	1,337	18,728
Total selected loans	$	104,947	261,696	59,178	425,821	99,780	245,205	57,534	402,519
Distribution of loans to changes in interest rates:
Loans at fixed interest rates	$	18,523	27,268	22,001	67,792	15,574	25,429	20,002	61,005
Loans at floating/variable interest rates	86,424		234,428	37,177	358,029	84,206	219,776	37,532	341,514
Total selected loans	$	104,947	261,696	59,178	425,821	99,780	245,205	57,534	402,519

17

Deposits

Deposits totaled $1.2 trillion at both June 30, 2015, and December 31, 2014. Table 9 provides additional information regarding deposits. Deposit growth of $17.5 billion from December 31, 2014, reflected continued customer-driven growth as well as liquidity-related issuances of term deposits. Information regarding the impact of deposits on net interest

income and a comparison of average deposit balances is provided in “Earnings Performance – Net Interest Income” and Table 1 earlier in this Report. Total core deposits were $1.1 trillion at June 30, 2015, up $28.3 billion from December 31, 2014.

Table 9:  Deposits
($ in millions)	Jun 30, 2015		% of total deposits		Dec 31, 2014		% of total deposits		% % Change
Noninterest-bearing	$	343,581	28	%	$	321,962	27	%	7
Interest-bearing checking	42,950		4		41,713		4		3
Market rate and other savings	597,865		50		585,530		50		2
Savings certificates	31,500		3		35,354		3		(11	)
Foreign deposits (1)	66,738		6		69,789		6		(4	)
Core deposits	1,082,634		91		1,054,348		90		3
Other time and savings deposits	68,110		6		76,322		7		(11	)
Other foreign deposits	35,084		3		37,640		3		(7	)
Total deposits	$	1,185,828	100	%	$	1,168,310	100	%	1

(1) Reflects Eurodollar sweep balances included in core deposits.

Fair Value of Financial Instruments

We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. See our 2014 Form 10-K for a description of our critical accounting policy related to fair value of financial instruments and a discussion of our fair value measurement techniques.

Table 10 presents the summary of the fair value of financial instruments recorded at fair value on a recurring basis, and the amounts measured using significant Level 3 inputs (excluding derivative netting adjustments). The fair value of the remaining assets and liabilities were measured using valuation methodologies involving market-based or market-derived information (collectively Level 1 and 2 measurements).

Table 10:  Fair Value Level 3 Summary
	June 30, 2015				December 31, 2014
($ in billions)	Total balance			Level 3 (1)	Total balance	Level 3 (1)
Assets carried at fair value	$	386.7		29.9	378.1	32.3
As a percentage of total assets	22		%	2	22	2
Liabilities carried at fair value	$	30.6		2.0	34.9	2.3
As a percentage of total liabilities	2		%	*	2	*

* Less than 1%.

(1) Excludes derivative netting adjustments.

See Note 13 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for additional information on fair value measurements and a description of the Level 1, 2 and 3 fair value hierarchy.

Equity

Total equity was $190.7 billion at June 30, 2015 compared with $185.3 billion at December 31, 2014. The increase was predominantly driven by a $7.1 billion increase in retained earnings from earnings net of dividends paid, and a $2.4 billion increase in preferred stock, partially offset by a net reduction in common stock due to repurchases.

18

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include commitments to lend and purchase securities, transactions with unconsolidated entities, guarantees, derivatives, and other commitments. These transactions are designed to (1) meet the financial needs of customers, (2) manage our credit, market or liquidity risks, and/or (3) diversify our funding sources.

Commitments to Lend and Purchase Securities

We enter into commitments to lend funds to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we make commitments, we are exposed to credit risk. However, the maximum credit risk for these commitments will generally be lower than the contractual amount because a portion of these commitments are expected to expire without being used by the customer. For more information on lending commitments, see Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report. We also enter into commitments to purchase securities under resale agreements. For more information on commitments to purchase securities under resale agreements, see Note 3 (Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

We routinely enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions. For more information on securitizations, including sales proceeds and cash flows from securitizations, see Note 7 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Certain Contingent Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, securities lending and other indemnifications, written put options, recourse obligations and other types of guarantee arrangements.

For more information on guarantees and certain contingent arrangements, see Note 10 (Guarantees, Pledged Assets and Collateral) to Financial Statements in this Report.

Derivatives

We primarily use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the balance sheet at fair value and volume can be measured in terms of the notional amount, which is generally not exchanged, but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments.

For more information on derivatives, see Note 12 (Derivatives) to Financial Statements in this Report.

Other Commitments

We also have other off-balance sheet transactions, including obligations to make rental payments under noncancelable operating leases and commitments to purchase certain debt and equity securities. Our operating lease obligations are discussed in Note 7 (Premises, Equipment, Lease Commitments and Other Assets) to Financial Statements in our 2014 Form 10-K. For more information on commitments to purchase debt and equity securities, see the “Off-Balance Sheet Arrangements” section in our 2014 Form 10-K.

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Risk Management

Financial institutions must manage a variety of business risks that can significantly affect their financial performance. Among the key risks that we must manage are operational risks, credit risks, and asset/liability management risks, which include interest rate,market, and liquidity and funding risks. Our risk culture is strongly rooted in ourVision and Values, and in order to succeed in our mission of satisfying our customers’ financial needs and helping them succeed financially, our business practices and operating model must support prudent risk management practices.For more information about how we manage these risks, see the “Risk Management” section in our 2014 Form 10-K. The discussion that follows provides an update regarding these risks.

Operational Risk Management

Operational risk is the risk of loss resulting from inadequate or failed internal controls and processes, people and systems, or resulting from external events. These losses may be caused by events such as fraud, breaches of customer privacy, business disruptions, inappropriate employee behavior, vendors that do not perform their responsibilities and regulatory fines and penalties.

Information security is a significant operational risk for financial institutions such as Wells Fargo, and includes the risk of losses resulting from cyber attacks. Wells Fargo and other financial institutions continue to be the target of various evolving and adaptive cyber attacks, including malware and denial-of-service, as part of an effort to disrupt the operations of financial institutions, potentially test their cybersecurity capabilities, or obtain confidential, proprietary or other information. Wells Fargo has not experienced any material losses relating to these or other cyber attacks. Addressing cybersecurity risks is a priority for Wells Fargo, and we continue to develop and enhance our controls, processes and systems in order to protect our networks, computers, software and data from attack, damage or unauthorized access. We are also proactively involved in industry cybersecurity efforts and working with other parties, including our third-party service providers and governmental agencies, to continue to enhance defenses and improve resiliency to cybersecurity threats. See the “Risk Factors” section in our 2014 Form 10-K for additional information regarding the risks associated with a failure or breach of our operational or security systems or infrastructure, including as a result of cyber attacks.

Credit Risk Management

We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk exists with many of our assets and exposures such as debt security holdings, certain derivatives, and loans. The following discussion focuses on our loan portfolios, which represent the largest component of assets on our balance sheet for which we have credit risk. Table 11 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table 11:  Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable
(in millions)	Jun 30, 2015		Dec 31, 2014
Commercial:
Commercial and industrial	$	284,817	271,795
Real estate mortgage	119,695		111,996
Real estate construction	21,309		18,728
Lease financing	12,201		12,307
Total commercial	438,022		414,826
Consumer:
Real estate 1-4 family first mortgage	267,868		265,386
Real estate 1-4 family junior lien mortgage	56,164		59,717
Credit card	31,135		31,119
Automobile	57,801		55,740
Other revolving credit and installment	37,469		35,763
Total consumer	450,437		447,725
Total loans	$	888,459	862,551

We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our existing loan portfolios. We employ various credit risk management and monitoring activities to mitigate risks associated with multiple risk factors affecting loans we hold, could acquire or originate including:

• Loan concentrations and related credit quality

• Counterparty credit risk

• Economic and market conditions

• Legislative or regulatory mandates

• Changes in interest rates

• Merger and acquisition activities

• Reputation risk

Our credit risk management oversight process is governed centrally, but provides for decentralized management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.

A key to our credit risk management is adherence to a well-controlled underwriting process, which we believe is appropriate for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.

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Risk Management - Credit Risk Management (continued)

Credit Quality OverviewCredit quality continued to improve during second quarter 2015 due in part to improving economic conditions, in particular the housing market, as well as our proactive credit risk management activities. In particular:

• Although commercial nonaccrual loans increased to $2.5 billion at June 30, 2015, compared with $2.2 billion at December 31, 2014, consumer nonaccrual loans declined to $9.9 billion at June 30, 2015, compared with $10.6 billion at December 31, 2014. The increase in commercial nonaccrual loans was primarily driven by deterioration in the oil and gas portfolio, and the decrease in consumer nonaccrual loans was primarily driven by credit improvement in real estate 1-4 family first mortgage loans. Nonaccrual loans represented 1.40% of total loans at June 30, 2015, compared with 1.49% at December 31, 2014.

• Net charge-offs (annualized) as a percentage of average total loans improved to 0.30% and 0.32% in the second quarter and first half of 2015, respectively, compared with 0.35% and 0.38% respectively, for the same periods a year ago. Net charge-offs (annualized) as a percentage of our average commercial and consumer portfolios were 0.06% and 0.53% in second quarter and 0.05% and 0.56% in the first half of 2015, respectively, compared with 0.03% and 0.62%, respectively, in second quarter, and 0.02% and 0.68%, respectively, in the first half of 2014.

• Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $27 million and $729 million in our commercial and consumer portfolios, respectively, at June 30, 2015, compared with $47 million and $873 million at December 31, 2014.

Various economic indicators such as home prices influenced our evaluation of the allowance and provision for credit losses. Accordingly:

• Our provision for credit losses was $300 million in second quarter 2015 and $908 million during the first half of 2015, compared with $217 million and $542 million, respectively, for the same periods a year ago.

• The allowance for credit losses decreased to $12.6 billion, or 1.42% of total loans, at June 30, 2015 from $13.2 billion, or 1.53%, at December 31, 2014.

Additional information on our loan portfolios and our credit quality trends follows.

Non-Strategic and Liquidating Loan PortfoliosWe continually evaluate and, when appropriate, modify our credit policies to address appropriate levels of risk. We may designate certain portfolios and loan products as non-strategic or liquidating after which we cease their continued origination and actively work to limit losses and reduce our exposures.

Table 12 identifies our non-strategic and liquidating loan portfolios. They consist primarily of the Pick-a-Pay mortgage portfolio and PCI loans acquired from Wachovia, certain portfolios from legacy Wells Fargo Home Equity and Wells Fargo Financial, and our Education Finance government guaranteed student loan portfolio. The total balance of our non-strategic and liquidating loan portfolios has decreased 70% since the merger with Wachovia at December 31, 2008, and decreased 7% from the end of 2014.

Additional information regarding the liquidating PCI and Pick-a-Pay loan portfolios is provided in the discussion of loan portfolios that follows.

Table 12:  Non-Strategic and Liquidating Loan Portfolios
	Outstanding balance
	June 30,		December 31,
(in millions)	2015		2014	2008
Commercial:
Legacy Wachovia commercial and industrial and commercial real estate PCI loans (1)	$	592	1,125	18,704
Total commercial	592		1,125	18,704
Consumer:
Pick-a-Pay mortgage (1)(2)	42,222		45,002	95,315
Legacy Wells Fargo Financial debt consolidation (3)	10,702		11,417	25,299
Liquidating home equity	2,566		2,910	10,309
Legacy Wachovia other PCI loans (1)	262		300	2,478
Legacy Wells Fargo Financial indirect auto (3)	15		34	18,221
Education Finance - government insured	—		—	20,465
Total consumer	55,767		59,663	172,087
Total non-strategic and liquidating loan portfolios	$	56,359	60,788	190,791

(1) Net of purchase accounting adjustments related to PCI loans.

(2) Includes PCI loans of $20.4 billion, $21.5 billion and $37.6 billion at June 30, 2015, and December 31, 2014 and 2008, respectively.

(3) When we refer to “legacy Wells Fargo”, we mean Wells Fargo excluding Wachovia Corporation (Wachovia).

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PURCHASED CREDIT-IMPAIRED (PCI) LOANSLoans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are PCI loans. A nonaccretable difference is established for PCI loans to absorb losses expected on the contractual amounts of those loans in excess of the fair value recorded at the date of acquisition. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses. Substantially all of our PCI loans were acquired in the Wachovia acquisition on December 31, 2008. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. The carrying value of PCI loans totaled $21.6 billion at June 30, 2015, down from $23.3 billion and $58.8 billion at December 31, 2014 and December 31, 2008, respectively, and $3.0 billion in nonaccretable difference remains at June 30, 2015, to absorb losses on PCI loans. Such loans are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

Since December 31, 2008, we have released over $10.6 billion in nonaccretable difference, including $8.6 billion transferred from the nonaccretable difference to the accretable yield and $2.0 billion released to income through loan resolutions. Also, we have provided $1.7 billion for losses on certain PCI loans or pools of PCI loans that have had credit-related decreases to cash flows expected to be collected. Through June 30, 2015, cumulative losses on PCI loans were $8.9 billion lower than our December 31, 2008 initial expectation of $41.0 billion.

For additional information on PCI loans, see the “Risk Management - Credit Risk Management - Purchased Credit-Impaired Loans” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K, and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

22

Risk Management - Credit Risk Management (continued)

Significant Loan Portfolio ReviewsMeasuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, FICO scores, economic trends by geographic areas, loan-level risk grading for certain portfolios (typically commercial) and other indications of credit risk. Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following discussion provides additional characteristics and analysis of our significant portfolios. See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information for each of the following portfolios.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCINGFor purposes of portfolio risk management, we aggregate commercial and industrial loans and lease financing according to market segmentation and standard industry codes. We generally subject commercial and industrial loans and lease financing to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized divided between special mention, substandard, doubtful and loss categories.

The commercial and industrial loans and lease financing portfolio totaled $297.0 billion, or 33% of total loans, at June 30, 2015. The annualized net charge-off rate for this portfolio was 0.11% and 0.10% in the second quarter and first half of 2015, respectively, compared with 0.10% and 0.09% in for the same periods a year ago. At June 30, 2015, 0.37% of this portfolio was nonaccruing, compared with 0.20% at December 31, 2014. In addition, $16.5 billion of this portfolio was rated as criticized in accordance with regulatory guidance at June 30, 2015, compared with $16.7 billion at December 31, 2014. 

A majority of our commercial and industrial loans and lease financing portfolio is secured by short-term assets, such as accounts receivable, inventory and securities, as well as long-lived assets, such as equipment and other business assets. Generally, the collateral securing this portfolio represents a secondary source of repayment.

Table 13 provides a breakout of commercial and industrial loans and lease financing by industry, and includes $45.1 billion of foreign loans at June 30, 2015, that were reported in a separate foreign loan class in prior periods. Foreign loans totaled $13.6 billion within the investor category, $17.5 billion within the financial institutions category and $1.5 billion within the oil and gas category.

The investors category includes loans to special purpose vehicles (SPVs) formed by sponsoring entities to invest in financial assets backed predominantly by commercial and residential real estate or corporate cash flow, and are repaid from the asset cash flows or the sale of assets by the SPV. We limit loan amounts to a percentage of the value of the underlying assets, as determined by us, based primarily on analysis of underlying credit risk and other factors such as asset duration and ongoing performance.

We provide financial institutions with a variety of relationship focused products and services, including loans supporting short-term trade finance and working capital needs. The $17.5 billion of foreign loans in the financial institutions category were primarily originated by our Global Financial Institutions (GFI) business.

Slightly more than half of our oil and gas loans were to businesses in the exploration and production (E&P) sector. Most of these E&P loans are secured by oil and/or gas reserves and have underlying borrowing base arrangements which include regular (typically semi-annual) “redeterminations” that consider refinements to borrowing structure and prices used to determine borrowing limits. All other oil and gas loans were to midstream and services and equipment companies. Driven by a drop in energy prices and the results of our spring redeterminations, our oil and gas nonaccrual loans increased to $508 million at June 30, 2015, compared with $76 million at December 31, 2014.

Table 13:  Commercial and Industrial Loans and Lease Financing by Industry (1)
	June 30, 2015
(in millions)	Nonaccrual loans		Total portfolio	(2)	% of total loans
Investors	$	27	46,858		5	%
Financial institutions	62		35,635		4
Oil and gas	508		17,378		2
Cyclical retailers	18		14,788		2
Food and beverage	16		14,709		2
Healthcare	32		14,311		2
Industrial equipment	20		14,109		1
Real estate lessor	3		13,296		1
Public administration	9		8,400		1
Technology	32		8,347		1
Transportation	42		7,969		1
Business services	23		6,977		1
Other	315		94,241	(3)	10
Total	$	1,107	297,018		33	%

(1) Industry categories are based on the North American Industry Classification System and the amounts reported include foreign loans. See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for a breakout of commercial foreign loans.

(2) Includes $86 million of PCI loans, which are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

(3) No other single industry had total loans in excess of $6.1 billion. 

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COMMERCIAL REAL ESTATE (CRE) We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized divided between special mention, substandard, doubtful and loss categories. The CRE portfolio, which included $9.5 billion of foreign CRE loans, totaled $141.0 billion, or 16%, of total loans at June 30, 2015, and consisted of $119.7 billion of mortgage loans and $21.3 billion of construction loans.

During second quarter 2015, we closed $11.5 billion in loans under agreements announced on April 10, 2015, to purchase commercial real estate loans from GE Capital and provide financing to Blackstone Mortgage Trust for its purchase of a GE Capital commercial mortgage portfolio. We expect the remaining balance of approximately $400 million of loans under these agreements to close in third quarter 2015. The loans purchased from GE Capital were recorded at fair value, which reflected a lifetime credit loss adjustment and therefore did not initially require additions to the allowance as would typically be

associated with commercial loan growth.

Table 14 summarizes CRE loans by state and property type with the related nonaccrual totals. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of combined CRE loans are in California and Texas which represented 27% and 8% of the total CRE portfolio, respectively. By property type, the largest concentrations are office buildings at 27% and apartments at 15% of the portfolio. CRE nonaccrual loans totaled 1.0% of the CRE outstanding balance at June 30, 2015, compared with 1.3% at December 31, 2014. At June 30, 2015, we had $8.1 billion of criticized CRE mortgage loans, compared with $7.9 billion at December 31, 2014, and $842 million of criticized CRE construction loans, down from $949 million at December 31, 2014.

At June 30, 2015, the recorded investment in PCI CRE loans totaled $787 million, down from $12.3 billion when acquired at December 31, 2008, reflecting principal payments, loan resolutions and write-downs.

Table 14:  CRE Loans by State and Property Type
	June 30, 2015
	Real estate mortgage				Real estate construction			Total
(in millions)	Nonaccrual loans		Total portfolio	(1)	Nonaccrual loans	Total portfolio	(1)	Nonaccrual loans	Total portfolio	(1)	% of total loans
By state:
California	$	296	34,066		9	3,983		305	38,049		4	%
Texas	83		8,982		1	2,060		84	11,042		1
Florida	144		8,035		4	1,955		148	9,990		1
New York	33		7,334		14	1,779		47	9,113		1
North Carolina	77		3,940		7	842		84	4,782		1
Arizona	55		3,726		1	502		56	4,228		*
Washington	32		3,433		—	784		32	4,217		*
Georgia	104		3,516		21	478		125	3,994		*
Illinois	4		3,260		1	332		5	3,592		*
Virginia	15		2,464		3	912		18	3,376		*
Other	407		40,939		104	7,682		511	48,621	(2)	5
Total	$	1,250	119,695		165	21,309		1,415	141,004		16	%
By property:
Office buildings	$	333	35,790		—	2,870		333	38,660		4	%
Apartments	46		13,756		—	7,347		46	21,103		2
Industrial/warehouse	223		12,551		—	1,272		223	13,823		2
Retail (excluding shopping center)	162		12,561		—	807		162	13,368		2
Real estate - other	136		11,221		—	350		136	11,571		1
Shopping center	66		9,987		—	1,197		66	11,184		1
Hotel/motel	35		9,875		—	1,138		35	11,013		1
Institutional	42		3,148		—	572		42	3,720		*
Land (excluding 1-4 family)	1		382		26	2,468		27	2,850		*
Agriculture	54		2,454		1	38		55	2,492		*
Other	152		7,970		138	3,250		290	11,220		1
Total	$	1,250	119,695		165	21,309		1,415	141,004		16	%

* Less than 1%.

(1) Includes a total of $787 million PCI loans, consisting of $681 million of real estate mortgage and $106 million of real estate construction, which are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.

(2) Includes 40 states; no state had loans in excess of $3.4 billion.

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Risk Management - Credit Risk Management (continued)

FOREIGN LOANS AND COUNTRY RISK EXPOSURE We classify loans for financial statement and certain regulatory purposes as foreign primarily based on whether the borrower’s primary address is outside of the United States. At June 30, 2015, foreign loans totaled $55.2 billion and included the purchase of $3.8 billion of loans from GE Capital. Foreign loans represented approximately 6% of our total consolidated loans outstanding at June 30, 2015, compared with $50.6 billion, or approximately 6% of total consolidated loans outstanding, at December 31, 2014. Foreign loans were approximately 3% of our consolidated total assets at June 30, 2015 and at December 31, 2014.

Our foreign country risk monitoring process incorporates frequent dialogue with our financial institution customers, counterparties and regulatory agencies, enhanced by centralized monitoring of macroeconomic and capital markets conditions in the respective countries. We establish exposure limits for each country through a centralized oversight process based on customer needs, and in consideration of relevant economic, political, social, legal, and transfer risks. We monitor exposures closely and adjust our country limits in response to changing conditions.

We evaluate our individual country risk exposure on an ultimate country of risk basis, which is normally based on the country of residence of the guarantor or collateral location, and is different from the reporting based on the borrower’s primary address. Our largest single foreign country exposure on an ultimate risk basis at June 30, 2015, was the United Kingdom, which totaled $22.8 billion, or approximately 1% of our total assets, and included $4.4 billion of sovereign claims. Our United Kingdom sovereign claims arise predominantly from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.

We conduct periodic stress tests of our significant country risk exposures, analyzing the direct and indirect impacts on the risk of loss from various macroeconomic and capital markets scenarios. We do not have significant exposure to foreign country risks because our foreign portfolio is relatively small. However, we have identified exposure to increased loss from U.S. borrowers associated with the potential impact of a regional or worldwide economic downturn on the U.S. economy. We mitigate these potential impacts on the risk of loss through our normal risk management processes which include active monitoring and, if necessary, the application of aggressive loss mitigation strategies.

Table 15 provides information regarding our top 20 exposures by country (excluding the U.S.) and our Eurozone exposure, on an ultimate risk basis. We had no exposure to Greece and our exposure to Puerto Rico (considered part of U.S. exposure) is primarily through automobile lending and was not material to our consolidated country risk exposure.

25

Table 15:  Select Country Exposures
	Lending (1)			Securities (2)		Derivatives and other (3)		Total exposure
(in millions)	Sovereign		Non- sovereign	Sovereign	Non- sovereign	Sovereign	Non- sovereign	Sovereign	Non- sovereign (4)	Total
June 30, 2015
Top 20 country exposures:
United Kingdom	$	4,400	12,857	—	3,254	—	2,307	4,400	18,418	22,818
Canada	—		12,643	28	1,276	—	404	28	14,323	14,351
Bermuda	—		2,976	—	143	—	33	—	3,152	3,152
China	—		3,034	—	69	6	17	6	3,120	3,126
Cayman Islands	—		3,066	—	—	—	57	—	3,123	3,123
Ireland	24		2,350	—	441	—	18	24	2,809	2,833
Netherlands	—		2,173	—	460	—	31	—	2,664	2,664
Brazil	—		2,637	—	3	—	4	—	2,644	2,644
Luxembourg	—		2,005	—	150	—	14	—	2,169	2,169
Germany	24		1,378	—	513	—	42	24	1,933	1,957
France	—		394	—	993	—	258	—	1,645	1,645
Turkey	—		1,633	—	—	—	2	—	1,635	1,635
India	—		1,326	6	153	—	—	6	1,479	1,485
Australia	11		815	—	551	—	39	11	1,405	1,416
Switzerland	—		1,062	—	269	—	63	—	1,394	1,394
Mexico	—		1,103	—	48	1	151	1	1,302	1,303
Chile	—		1,215	—	22	1	35	1	1,272	1,273
South Korea	—		1,183	6	23	9	24	15	1,230	1,245
Jersey, C.I.	—		1,203	—	40	—	1	—	1,244	1,244
Guernsey	—		1,173	—	—	—	—	—	1,173	1,173
Total top 20 country exposures	$	4,459	56,226	40	8,408	17	3,500	4,516	68,134	72,650
Eurozone exposure:
Eurozone countries included in Top 20 above (5)	$	48	8,300	—	2,557	—	363	48	11,220	11,268
Spain	—		209	—	33	—	6	—	248	248
Italy	—		129	—	92	—	12	—	233	233
Austria	—		178	—	12	—	2	—	192	192
Belgium	—		108	—	19	—	2	—	129	129
Other Eurozone exposure (6)	18		26	—	8	—	7	18	41	59
Total Eurozone exposure	$	66	8,950	—	2,721	—	392	66	12,063	12,129

(1) Lending exposure includes funded loans and unfunded commitments, leveraged leases, and money market placements presented on a gross basis prior to the deduction of impairment allowance and collateral received under the terms of the credit agreements. For the countries listed above, includes $48 million in PCI loans, predominantly to customers in the Netherlands and Germany, and $1.4 billion in defeased leases secured largely by U.S. Treasury and government agency securities, or government guaranteed.

(2) Represents exposure on debt and equity securities of foreign issuers.

(3) Represents counterparty exposure on foreign exchange and derivative contracts, and securities resale and lending agreements. This exposure is presented net of counterparty netting adjustments and reduced by the amount of cash collateral. It includes credit default swaps (CDS) predominantly used to manage our U.S. and London-based cash credit trading businesses, which sometimes results in selling and purchasing protection on the identical reference entity. Generally, we do not use market instruments such as CDS to hedge the credit risk of our investment or loan positions, although we do use them to manage risk in our trading businesses. At June 30, 2015, the gross notional amount of our CDS sold that reference assets in the Top 20 or Eurozone countries was $2.5 billion, which was offset by the notional amount of CDS purchased of $2.6 billion. We did not have any CDS purchased or sold that reference pools of assets that contain sovereign debt or where the reference asset was solely the sovereign debt of a foreign country.

(4) For countries presented in the table, total non-sovereign exposure comprises $19.5 billion exposure to financial institutions and $49.5 billion to non-financial corporations at June 30, 2015.

(5) Consists of exposure to Netherlands, Ireland, Luxembourg, Germany and France included in Top 20.

(6) Includes non-sovereign exposure to Portugal in the amount of $25 million. We had no non-sovereign exposure to Greece, and no sovereign debt exposure to either of these countries at June 30, 2015.

26

Risk Management - Credit Risk Management (continued)

REAL ESTATE 1-4 FAMILY FIRST AND JUNIOR LIEN MORTGAGE LOANS Our real estate 1-4 family first and junior lien mortgage loans primarily include loans we have made to customers and retained as part of our asset/liability management strategy. These loans, as presented in Table 16, include the Pick-a-Pay portfolio acquired from Wachovia which is discussed later

in this Report. These loans also include other purchased loans and loans included on our balance sheet as a result of consolidation of variable interest entities (VIEs).

Table 16:  Real Estate 1-4 Family First and Junior Lien Mortgage Loans
	June 30, 2015				December 31, 2014
(in millions)	Balance		% of portfolio		Balance		% of portfolio
Real estate 1-4 family first mortgage
Core portfolio	$	214,831	66	%	$	208,852	64	%
Non-strategic and liquidating loan portfolios:
Pick-a-Pay mortgage	42,222		13		45,002		14
PCI and liquidating first mortgage	10,815		4		11,532		4
Total non-strategic and liquidating loan portfolios	53,037		17		56,534		18
Total real estate 1-4 family first mortgage loans	267,868		83		265,386		82
Real estate 1-4 family junior lien mortgage
Core portfolio	53,456		16		56,631		17
Non-strategic and liquidating loan portfolios	2,708		1		3,086		1
Total real estate 1-4 family junior lien mortgage loans	56,164		17		59,717		18
Total real estate 1-4 family mortgage loans	$	324,032	100	%	$	325,103	100	%

The real estate 1-4 family mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan terms. Interest-only loans were approximately 10% and 12% of total loans at June 30, 2015, and December 31, 2014, respectively. We believe we have manageable adjustable-rate mortgage (ARM) reset risk across our owned mortgage loan portfolios. We do not offer option ARM products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. The option ARMs we do have are included in the Pick-a-Pay portfolio which was acquired from Wachovia and are part of our liquidating loan portfolios. Since our acquisition of the Pick-a-Pay loan portfolio at the end of 2008, the option payment portion of the portfolio has reduced from 86% to 40% at June 30, 2015, as a result of our modification activities and customers exercising their option to convert to fixed payments. For more information, see the “Pick-a-Pay Portfolio” section in this Report.

We continue to modify real estate 1-4 family mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For more information on our participation in the U.S. Treasury’s Making Home Affordable (MHA) programs, see the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our 2014 Form 10-K.

Part of our credit monitoring includes tracking delinquency, FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire real estate 1-4 family mortgage loan portfolio. These credit risk indicators, which exclude government insured/guaranteed loans, continued to improve in second quarter 2015 on the non-PCI mortgage portfolio. Loans 30 days or more delinquent at June 30, 2015, totaled $8.9 billion, or 3%, of total non-PCI mortgages, compared with $10.2 billion, or 3%, at December 31, 2014. Loans with FICO scores lower than 640 totaled $24.0 billion at June 30, 2015, or 8% of total non-PCI mortgages, compared with $25.8 billion, or 9%, at December 31, 2014. Mortgages with a LTV/CLTV greater than 100% totaled $18.5 billion at June 30, 2015, or 6% of total non-PCI mortgages,

compared with $20.3 billion, or 7%, at December 31, 2014. Information regarding credit quality indicators, including PCI credit quality indicators, can be found in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Real estate 1-4 family first and junior lien mortgage loans by state are presented in Table 17. Our real estate 1-4 family mortgage loans to borrowers in California represented approximately 13% of total loans at June 30, 2015, located mostly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 5% of total loans. We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family mortgage portfolio as part of our credit risk management process. Our underwriting and periodic review of loans secured by residential real estate collateral includes appraisals or estimates from automated valuation models (AVMs) to support property values. Additional information about AVMs and our policy for their use can be found in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our 2014 Form 10-K.

27

Table 17:  Real Estate 1-4 Family First and Junior Lien Mortgage Loans by State
	June 30, 2015
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans
Real estate 1-4 family loans (excluding PCI):
California	$	83,733	15,513	99,246	11	%
New York	18,951		2,541	21,492	2
Florida	14,174		5,118	19,292	2
New Jersey	11,306		4,636	15,942	2
Virginia	7,079		3,131	10,210	1
Texas	8,010		829	8,839	1
Pennsylvania	5,760		2,851	8,611	1
North Carolina	5,960		2,500	8,460	1
Washington	6,250		1,373	7,623	1
Other (1)	62,155		17,591	79,746	9
Government insured/ guaranteed loans (2)	23,889		—	23,889	3
Total	$	247,267	56,083	303,350	34	%
Real estate 1-4 family PCI loans:
California	$	14,321	22	14,343	2	%
Florida	1,487		13	1,500	*
New Jersey	714		13	727	*
Other (3)	4,079		33	4,112	*
Total	$	20,601	81	20,682	2	%
Total	$	267,868	56,164	324,032	36	%

* Less than 1%.

(1) Consists of 41 states; no state had loans in excess of $7.3 billion.

(2) Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

(3) Consists of 45 states; no state had loans in excess of $505 million.

28

Risk Management - Credit Risk Management (continued)

First Lien Mortgage PortfolioThe credit performance associated with our real estate 1-4 family first lien mortgage portfolio continued to improve in second quarter 2015, as measured through net charge-offs and nonaccrual loans. Net charge-offs (annualized) as a percentage of average total loans improved to 0.10% and 0.11% in the second quarter and first half of 2015, respectively, compared with 0.21% and 0.24%, respectively, for the same periods a year ago. Nonaccrual loans were $8.0 billion at June 30, 2015, compared with $8.6 billion at December 31, 2014. Improvement in the credit performance was

driven by both an improving economic and housing environment and declining balances in non-strategic and liquidating loans, which have been replaced with higher quality assets originated after 2008 generally utilizing tighter underwriting standards. Real estate 1-4 family first lien mortgage loans originated after 2008 have resulted in minimal losses to date and were approximately 63% of our total real estate 1-4 family first lien mortgage portfolio as of June 30, 2015. First lien mortgage portfolios by state are presented in Table 18.

Table 18: First Lien Mortgage Portfolios Performance (1)
	Outstanding balance			% of loans two payments or more past due			Loss (recovery) rate (annualized) quarter ended
(in millions)	Jun 30, 2015		Dec 31, 2014	Jun 30, 2015		Dec 31, 2014	Jun 30, 2015		Mar 31, 2015	Dec 31, 2014	Sep 30, 2014		Jun 30, 2014
Core portfolio:
California	$	71,468	67,038	0.69	%	0.83	—		—	0.01	—		0.01
New York	17,700		16,102	1.78		1.97	0.04		0.04	0.06	0.09		0.09
Florida	11,107		10,991	3.20		3.78	0.10		0.05	0.04	0.10		0.12
New Jersey	9,625		9,203	3.70		3.95	0.12		0.19	0.21	0.25		0.33
Texas	6,764		6,646	1.16		1.48	(0.01	)	0.01	0.01	(0.02	)	0.01
Other	74,278		72,604	2.04		2.34	0.11		0.15	0.12	0.14		0.16
Total	190,942		182,584	1.63		1.89	0.06		0.08	0.07	0.08		0.10
Government insured/guaranteed loans	23,889		26,268
Total core portfolio including government insured/guaranteed loans	214,831		208,852	1.63		1.89	0.06		0.08	0.07	0.08		0.10
Non-strategic and liquidating portfolios	32,436		34,822	14.40		15.55	0.46		0.58	0.62	0.83		0.99
Total first lien mortgages	$	247,267	243,674	3.49	%	4.08	0.12		0.16	0.16	0.21		0.26

(1) Excludes PCI loans because their losses were generally reflected in PCI accounting adjustments at the date of acquisition.

Our total real estate 1-4 family first lien mortgage portfolio increased $2.7 billion in second quarter 2015 and $2.5 billion in the first half of 2015. Growth in this portfolio has been largely offset by runoff in our real estate 1-4 family first lien mortgage non-strategic and liquidating portfolios. Excluding this runoff, our core real estate 1-4 family first lien mortgage portfolio increased $4.5 billion in second quarter 2015 and $6.0 billion in the first half of 2015, as we retained $14.7 billion and $25.9 billion in non-conforming originations, primarily consisting of loans that exceed conventional conforming loan amount limits established by federal government-sponsored entities (GSEs), in the second quarter and first half of 2015, respectively.

29

Pick‑a‑Pay Portfolio The Pick-a-Pay portfolio was one of the consumer residential first lien mortgage portfolios we acquired from Wachovia and a majority of the portfolio was identified as PCI loans.

The Pick-a-Pay portfolio includes loans that offer payment options (Pick-a-Pay option payment loans), and also includes loans that were originated without the option payment feature, loans that no longer offer the option feature as a result of our modification efforts since the acquisition, and loans where the customer voluntarily converted to a fixed-rate product. The Pick-a-Pay portfolio is included in the consumer real estate 1-4 family

first mortgage class of loans throughout this Report. Table 19 provides balances by types of loans as of June 30, 2015, as a result of modification efforts, compared to the types of loans included in the portfolio at acquisition. Total adjusted unpaid principal balance of PCI Pick-a-Pay loans was $25.2 billion at June 30, 2015, compared with $61.0 billion at acquisition. Primarily due to modification efforts, the adjusted unpaid principal balance of option payment PCI loans has declined to 15% of the total Pick-a-Pay portfolio at June 30, 2015, compared with 51% at acquisition.

Table 19:  Pick-a-Pay Portfolio - Comparison to Acquisition Date
					December 31,
	June 30, 2015				2014				2008
(in millions)	Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total
Option payment loans	$	18,545	40	%	$	20,258	41	%	$	99,937	86	%
Non-option payment adjustable-rate and fixed-rate loans	6,241		13		6,776		14		15,763		14
Full-term loan modifications	22,132		47		22,674		45		—		—
Total adjusted unpaid principal balance	$	46,918	100	%	$	49,708	100	%	$	115,700	100	%
Total carrying value	$	42,222			45,002				95,315

(1) Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

 Table 20 reflects the geographic distribution of the Pick-a-Pay portfolio broken out between PCI loans and all other loans. The LTV ratio is a useful metric in evaluating future real estate 1-4 family first mortgage loan performance, including potential charge-offs. Because PCI loans were initially recorded at fair value, including write-downs for expected credit losses, the ratio of the carrying value to the current collateral value will be lower compared with the LTV based on the adjusted unpaid principal balance. For informational purposes, we have included both ratios for PCI loans in the following table.

30

Risk Management - Credit Risk Management (continued)

Table 20:  Pick-a-Pay Portfolio (1)
	June 30, 2015
	PCI loans								All other loans
(in millions)	Adjusted unpaid principal balance (2)		Current LTV ratio (3)		Carrying value (4)		Ratio of carrying value to current value (5)		Carrying value (4)		Ratio of carrying value to current value (5)
California	$	17,529	76	%	$	14,308	62	%	$	10,583	55	%
Florida	1,996		85		1,450		60		2,188		69
New Jersey	839		83		687		63		1,425		70
New York	550		76		487		61		683		66
Texas	220		59		200		53		851		47
Other states	4,063		81		3,288		65		6,072		68
Total Pick-a-Pay loans	$	25,197	78		$	20,420	62		$	21,802	61

(1) The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2015.

(2) Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

(3) The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas.

(4) Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include the nonaccretable difference and the accretable yield and, for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs.

(5) The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value.

In second quarter 2015, we completed nearly 1,000 proprietary and Home Affordability Modification Program (HAMP) Pick-a-Pay loan modifications. We have completed nearly 131,000 modifications since the Wachovia acquisition, resulting in $6.1 billion of principal forgiveness to our Pick-a-Pay customers. There remains $16 million of conditional forgiveness that can be earned by borrowers through performance over a three-year period.

Due to better than expected performance observed on the PCI portion of the Pick-a-Pay portfolio compared with the original acquisition estimates, we have reclassified $6.0 billion from the nonaccretable difference to the accretable yield since acquisition. Our cash flows expected to be collected have been favorably affected by lower expected defaults and losses as a result of observed and forecasted economic strengthening, particularly in housing prices, and our loan modification efforts. These factors are expected to reduce the frequency and severity of defaults and keep these loans performing for a longer period, thus increasing future principal and interest cash flows. The resulting increase in the accretable yield will be realized over the remaining life of the portfolio, which is estimated to have a weighted-average remaining life of approximately 11.2 years at June 30, 2015. The weighted average remaining life decreased slightly from December 31, 2014 due to the passage of time. The accretable yield percentage at June 30, 2015, was 6.21%, up from 6.15% at the end of 2014 due to favorable changes in the expected timing and composition of cash flows resulting from improving credit and prepayment expectations. Fluctuations in the accretable yield are driven by changes in interest rate indices for variable rate PCI loans, prepayment assumptions, and expected principal and interest payments over the estimated life of the portfolio, which will be affected by the pace and degree of improvements in the U.S. economy and housing markets and projected lifetime performance resulting from loan modification activity. Changes in the projected timing of cash flow events, including loan liquidations, modifications and short sales, can also affect the accretable yield and the estimated weighted-average life of the portfolio.

The predominant portion of our PCI loans is included in the Pick-a-Pay portfolio. For further information on the judgment involved in estimating expected cash flows for PCI loans, see the “Critical Accounting Policies – Purchased Credit-Impaired Loans” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K.

For further information on the Pick-a-Pay portfolio, including recast risk, deferral of interest and loan modifications, see the "Risk Management - Credit Risk Management - Pick-a-Pay Portfolio" section in our 2014 Form 10-K.

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Junior Lien Mortgage Portfolio  The junior lien mortgage portfolio consists of residential mortgage lines and loans that are subordinate in rights to an existing lien on the same property. It is not unusual for these lines and loans to have draw periods, interest only payments, balloon payments, adjustable rates and similar features. The majority of our junior lien loan products are amortizing payment loans with fixed interest rates and repayment periods between five to 30 years. 

We continuously monitor the credit performance of our junior lien mortgage portfolio for trends and factors that influence the frequency and severity of loss. We have observed that the severity of loss for junior lien mortgages is high and generally not affected by whether we or a third party own or service the related first lien mortgage, but the frequency of delinquency is typically lower when we own or service the first lien mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced senior lien where we also hold a junior lien. To capture this inherent loss content, we use the experience of our junior lien mortgages behind delinquent first liens that are owned or serviced by us adjusted for any observed differences in delinquency and loss rates associated with junior lien mortgages behind third party first lien mortgages. We incorporate this inherent loss content into our allowance for loan losses. Our allowance process for junior liens considers the relative

difference in loss experience for junior liens behind first lien mortgage loans we own or service, compared with those behind first lien mortgage loans owned or serviced by third parties. In addition, our allowance process for junior liens that are current, but are in their revolving period, considers the inherent loss where the borrower is delinquent on the corresponding first lien mortgage loans.

Table 21 shows the credit attributes of the core and liquidating junior lien mortgage portfolios and lists the top five states by outstanding balance for the core portfolio. Loans to California borrowers represent the largest state concentration in each of these portfolios. The decrease in outstanding balances since December 31, 2014, predominantly reflects loan paydowns. As of June 30, 2015, 19% of the outstanding balance of the junior lien mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior liens with a CLTV ratio in excess of 100%, 2.68% were two payments or more past due. CLTV means the ratio of the total loan balance of first mortgages and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. The unsecured portion (the outstanding amount that was in excess of the most recent property collateral value) of the outstanding balances of these loans totaled 8% of the junior lien mortgage portfolio at June 30, 2015.

Table 21:  Junior Lien Mortgage Portfolios (1)
	Outstanding balance			% of loans two payments or more past due			Loss rate (annualized) quarter ended
(in millions)	Jun 30, 2015		Dec 31, 2014	Jun 30, 2015		Dec 31, 2014	Jun 30, 2015	Mar 31, 2015	Dec 31, 2014	Sep 30, 2014	Jun 30, 2014
Core portfolio
California	$	14,604	15,535	1.92	%	2.07	0.17	0.30	0.33	0.44	0.47
Florida	5,002		5,283	2.50		2.96	0.75	1.10	1.22	1.29	1.23
New Jersey	4,530		4,705	3.10		3.43	1.03	1.15	1.37	1.38	1.45
Virginia	3,014		3,160	1.88		2.18	0.71	1.05	1.03	0.59	0.86
Pennsylvania	2,822		2,942	2.37		2.72	0.96	1.18	1.15	1.04	1.24
Other	23,484		25,006	2.04		2.20	0.65	0.84	0.78	0.83	1.05
Total	53,456		56,631	2.15		2.36	0.58	0.77	0.77	0.81	0.94
Liquidating portfolio	2,627		2,985	4.22		4.77	2.25	2.43	2.92	2.61	2.46
Total core and liquidating portfolios	$	56,083	59,616	2.24	%	2.49	0.66	0.85	0.88	0.90	1.02

(1) Excludes PCI loans because their losses were generally reflected in PCI accounting adjustments at the date of acquisition.

32

Risk Management - Credit Risk Management (continued)

Our junior lien, as well as first lien, lines of credit products generally have a draw period of 10 years (with some up to 15 or 20 years) with variable interest rate and payment options during the draw period of (1) interest only or (2) 1.5% of outstanding principal balance plus accrued interest. During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. Certain lines and loans have been structured with a balloon payment, which requires full repayment of the outstanding balance at the end of the term period. The conversion of lines or loans to fully amortizing or balloon payoff may result in a significant payment increase, which can affect some borrowers’ ability to repay the outstanding balance.

On a monthly basis, we monitor the payment characteristics of borrowers in our junior lien portfolio. In June 2015, approximately 47% of these borrowers paid only the minimum amount due and approximately 48% paid more than the minimum amount due. The rest were either delinquent or paid less than the minimum amount due. For the borrowers with an

interest only payment feature, approximately 38% paid only the minimum amount due and approximately 58% paid more than the minimum amount due.

The lines that enter their amortization period may experience higher delinquencies and higher loss rates than the ones in their draw or term period. We have considered this increased inherent risk in our allowance for credit loss estimate.

In anticipation of our borrowers reaching the end of their contractual commitment, we have created a program to inform, educate and help these borrowers transition from interest-only to fully-amortizing payments or full repayment. We monitor the performance of the borrowers moving through the program in an effort to refine our ongoing program strategy.

Table 22 reflects the outstanding balance of our portfolio of junior lien lines and loans and senior lien lines segregated into scheduled end of draw or end of term periods and products that are currently amortizing, or in balloon repayment status. It excludes real estate 1-4 family first lien line reverse mortgages,which total $2.3 billion, because they are predominantly insured by the FHA, and it excludes PCI loans, which total $110 million, because their losses were generally reflected in our nonaccretable difference established at the date of acquisition.

Table 22:  Junior Lien Mortgage Line and Loan and Senior Lien Mortgage Line Portfolios Payment Schedule
						Scheduled end of draw / term
(in millions)	Outstanding balance June 30, 2015			Remainder of 2015		2016		2017		2018		2019		2020 and thereafter (1)		Amortizing
Junior residential lines	$	49,816		2,739		5,656		6,059		3,291		1,294		24,846		5,931
Junior loans (2)	6,267			39		75		85		9		7		1,033		5,019
Total junior lien (3)(4)	56,083			2,778		5,731		6,144		3,300		1,301		25,879		10,950
First lien lines	16,688			555		820		869		1,000		436		11,505		1,503
Total (3)(4)	$	72,771		3,333		6,551		7,013		4,300		1,737		37,384		12,453
% of portfolios	100		%	5	%	9	%	10	%	6	%	2	%	51	%	17	%

(1) The annual scheduled end of draw or term ranges from $1.6 billion to $9.4 billion and averages $5.3 billion per year for 2020 and thereafter. Loans that convert in 2025 and thereafter have draw periods that generally extend to 15 or 20 years.

(2) Junior loans within the term period predominantly represent principal and interest products that require a balloon payment upon the end of the loan term. Amortizing junior loans include $62 million of balloon loans that have reached end of term and are now past due.

(3) Lines in their draw period are predominantly interest-only. The unfunded credit commitments for junior and first lien lines totaled $68.8 billion at June 30, 2015.

(4) Includes scheduled end-of-term balloon payments totaling $205 million, $325 million, $440 million, $478 million, $422 million and $1.8 billion for 2015, 2016, 2017, 2018, 2019, and 2020 and thereafter, respectively. Amortizing lines include $133 million of end-of-term balloon payments, which are past due. At June 30, 2015, $425 million, or 6% of outstanding lines of credit that are amortizing, are 30 or more days past due compared to $1.1 billion, or 2% for lines in their draw period.

CREDIT CARDSOur credit card portfolio totaled $31.1 billion at June 30, 2015, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 3.21% for second quarter 2015, compared with 3.20% for second quarter 2014 and 3.20% and 3.39% for the first half of 2015 and 2014, respectively.

AUTOMOBILEOur automobile portfolio, predominantly composed of indirect loans, totaled $57.8 billion at June 30, 2015. The net charge-off rate (annualized) for our automobile portfolio was 0.48% for second quarter 2015, compared with 0.35% for second quarter 2014 and 0.60% and 0.52% for the first half of 2015 and 2014, respectively.

OTHER REVOLVING CREDIT AND INSTALLMENT Other revolving credit and installment loans totaled $37.5 billion at June 30, 2015, and primarily included student and security-based loans. Student loans totaled $12.0 billion at June 30, 2015. The net charge-off rate (annualized) for other revolving credit and installment loans was 1.26% for second quarter 2015, compared with 1.22% for second quarter 2014 and 1.29% and 1.26% for the first half of 2015 and 2014, respectively.

33

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)Table 23 summarizes nonperforming assets (NPAs) for each of the last four quarters. The decrease in nonaccrual loans during second quarter 2015 reflected increases in commercial and industrial nonaccrual loans primarily due to deterioration in the oil and gas portfolio, which was more than offset by credit improvement across other portfolios, most significantly in real estate 1-4 family first mortgages.

We generally place loans on nonaccrual status when:

• the full and timely collection of interest or principal becomes uncertain (generally based on an assessment of the borrower’s financial condition and the adequacy of collateral, if any);

• they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest

or principal, unless both well-secured and in the process of collection;

• part of the principal balance has been charged off (including loans discharged in bankruptcy);

• for junior lien mortgages, we have evidence that the related first lien mortgage may be 120 days past due or in the process of foreclosure regardless of the junior lien delinquency status; or

• performing consumer loans are discharged in bankruptcy, regardless of their delinquency status.

Table 23:  Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
	June 30, 2015					March 31, 2015					December 31, 2014					September 30, 2014
($ in millions)	Balance			% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	1,079		0.38	%	$	663		0.24	%	$	538		0.20	%	$	614		0.24	%
Real estate mortgage	1,250			1.04		1,324			1.18		1,490			1.33		1,636			1.46
Real estate construction	165			0.77		182			0.91		187			1.00		217			1.20
Lease financing	28			0.23		23			0.19		24			0.20		27			0.22
Total commercial (1)	2,522			0.58		2,192			0.53		2,239			0.54		2,494			0.63
Consumer:
Real estate 1-4 family first mortgage (2)	8,045			3.00		8,345			3.15		8,583			3.23		8,785			3.34
Real estate 1-4 family junior lien mortgage	1,710			3.04		1,798			3.11		1,848			3.09		1,903			3.13
Automobile	126			0.22		133			0.24		137			0.25		143			0.26
Other revolving credit and installment	40			0.11		42			0.12		41			0.11		40			0.11
Total consumer	9,921			2.20		10,318			2.31		10,609			2.37		10,871			2.46
Total nonaccrual loans (3)(4)(5)	12,443			1.40		12,510			1.45		12,848			1.49		13,365			1.59
Foreclosed assets:
Government insured/guaranteed (6)	588					772					982					1,140
Non-government insured/guaranteed	1,370					1,557					1,627					1,691
Total foreclosed assets	1,958					2,329					2,609					2,831
Total nonperforming assets	$	14,401		1.62	%	$	14,839		1.72	%	$	15,457		1.79	%	$	16,196		1.93	%
Change in NPAs from prior quarter	$	(438	)			(618		)			(739		)			(781		)

(1) Includes LHFS of $0 million at June 30, 2015 and $1 million at March 31, 2015, December 31 and September 30, 2014.

(2) Includes MHFS of $144 million, $144 million, $177 million, and $182 million at June 30 and March 31,2015 and December 31 and September 30, 2014, respectively.

(3) Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms.

(4) Real estate 1-4 family mortgage loans predominantly insured by the FHA or guaranteed by the VA and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status because they are insured or guaranteed.

(5) See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further information on impaired loans.

(6) Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Foreclosure of certain government guaranteed residential real estate mortgage loans that meet criteria specified by Accounting Standards Update (ASU) 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure, effective as of January 1, 2014 are excluded from this table and included in Accounts Receivable in Other Assets. For more information on ASU 2014-14 and the classification of certain government-guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K.

34

Risk Management - Credit Risk Management (continued)

Table 24 provides an analysis of the changes in nonaccrual loans.

Table 24:  Analysis of Changes in Nonaccrual Loans
	Quarter ended
(in millions)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014
Commercial
Balance, beginning of period	$	2,192		2,239		2,494		2,798		3,027
Inflows	840			496		410		342		433
Outflows:
Returned to accruing	(20		)	(67	)	(64	)	(37	)	(81	)
Foreclosures	(11		)	(24	)	(45	)	(18	)	(32	)
Charge-offs	(117		)	(107	)	(141	)	(124	)	(120	)
Payments, sales and other (1)	(362		)	(345	)	(415	)	(467	)	(429	)
Total outflows	(510		)	(543	)	(665	)	(646	)	(662	)
Balance, end of period	2,522			2,192		2,239		2,494		2,798
Consumer
Balance, beginning of period	10,318			10,609		10,871		11,174		11,623
Inflows	1,098			1,341		1,454		1,529		1,673
Outflows:
Returned to accruing	(668		)	(686	)	(678	)	(817	)	(1,107	)
Foreclosures	(108		)	(111	)	(114	)	(148	)	(132	)
Charge-offs	(229		)	(265	)	(278	)	(289	)	(348	)
Payments, sales and other (1)	(490		)	(570	)	(646	)	(578	)	(535	)
Total outflows	(1,495		)	(1,632	)	(1,716	)	(1,832	)	(2,122	)
Balance, end of period	9,921			10,318		10,609		10,871		11,174
Total nonaccrual loans	$	12,443		12,510		12,848		13,365		13,972

(1) Other outflows include the effects of VIE deconsolidations and adjustments for loans carried at fair value.

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our policy, offset by reductions for loans that are paid down, charged off, sold, foreclosed, or are no longer classified as nonaccrual as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities. Also, reductions can come from borrower repayments even if the loan remains on nonaccrual.

While nonaccrual loans are not free of loss content, we believe exposure to loss is significantly mitigated by the following factors at June 30, 2015:

• 99% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 98% are secured by real estate and 72% have a combined LTV (CLTV) ratio of 80% or less.

• losses of $429 million and $3.4 billion have already been recognized on 21% of commercial nonaccrual loans and 52% of consumer nonaccrual loans, respectively. Generally, when a consumer real estate loan is 120 days past due (except when required earlier by guidance issued by bank regulatory agencies), we transfer it to nonaccrual status. When the loan reaches 180 days past due, or is discharged in bankruptcy, it is our policy to write these loans down to net realizable value (fair value of collateral less estimated costs to sell), except for modifications in their trial period that are not written down as long as trial payments are made on time. Thereafter, we reevaluate each loan regularly and record additional write-downs if needed.

• 76% of commercial nonaccrual loans were current on interest.

• the risk of loss of all nonaccrual loans has been considered and we believe is adequately covered by the allowance for loan losses.

• $2.0 billion of consumer loans discharged in bankruptcy and classified as nonaccrual were 60 days or less past due, of which $1.8 billion were current.

We continue to work with our customers experiencing financial difficulty to determine if they can qualify for a loan modification so that they can stay in their homes. Under both our proprietary modification programs and the MHA programs, customers may be required to provide updated documentation, and some programs require completion of payment during trial periods to demonstrate sustained performance before the loan can be removed from nonaccrual status. In addition, for loans in foreclosure in certain states, including New York and New Jersey, the foreclosure timeline has significantly increased due to backlogs in an already complex process. Therefore, some loans may remain on nonaccrual status for a long period.

Table 25 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

35

Table 25:  Foreclosed Assets
(in millions)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014
Summary by loan segment
Government insured/guaranteed	$	588		772		982		1,140		1,257
PCI loans:
Commercial	305			329		352		394		457
Consumer	160			197		212		214		208
Total PCI loans	465			526		564		608		665
All other loans:
Commercial	458			548		565		579		634
Consumer	447			483		498		504		449
Total all other loans	905			1,031		1,063		1,083		1,083
Total foreclosed assets	$	1,958		2,329		2,609		2,831		3,005
Analysis of changes in foreclosed assets
Balance, beginning of period	$	2,329		2,609		2,831		3,005		3,422
Net change in government insured/guaranteed (1)	(184		)	(210	)	(158	)	(117	)	(352	)
Additions to foreclosed assets (2)	300			356		362		364		421
Reductions:
Sales	(531		)	(451	)	(462	)	(421	)	(493	)
Write-downs and gains (losses) on sales	44			25		36		—		7
Total reductions	(487		)	(426	)	(426	)	(421	)	(486	)
Balance, end of period	$	1,958		2,329		2,609		2,831		3,005

(1) Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA. The net change in government insured/guaranteed foreclosed assets is made up of inflows from mortgages held for investment and MHFS, and outflows when we are reimbursed by FHA/VA. Transfers from government insured/guaranteed loans to foreclosed assets amounted to $73 million, $49 million, $45 million, $41 million and $43 million for the quarters ended June 30 and March 31,2015 and December 31,September 30, and June 30, 2014, respectively.

(2) Predominantly include loans moved into foreclosure from nonaccrual status, PCI loans transitioned directly to foreclosed assets and repossessed automobiles.

Foreclosed assets at June 30, 2015, included $1.2 billion of foreclosed residential real estate that had collateralized commercial and consumer loans, of which 51% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining foreclosed assets balance of $800 million has been written down to estimated net realizable value. Foreclosed assets at June 30, 2015, decreased slightly, compared with December 31, 2014. Of the $2.0 billion in foreclosed assets at June 30, 2015, 33% have been in the foreclosed assets portfolio one year or less.

36

Risk Management - Credit Risk Management (continued)

TROUBLED DEBT RESTRUCTURINGS (TDRs)

Table 26:  Troubled Debt Restructurings (TDRs)
(in millions)	Jun 30, 2015		Mar 31, 2015	Dec 31, 2014	Sep 30, 2014	Jun 30, 2014
Commercial:
Commercial and industrial	$	808	779	724	836	950
Real estate mortgage	1,740		1,838	1,880	2,034	2,179
Real estate construction	236		247	314	328	391
Lease financing	2		2	2	3	5
Total commercial TDRs	2,786		2,866	2,920	3,201	3,525
Consumer:
Real estate 1-4 family first mortgage	17,692		18,003	18,226	18,366	18,582
Real estate 1-4 family junior lien mortgage	2,381		2,424	2,437	2,464	2,463
Credit Card	315		326	338	358	379
Automobile	112		124	127	135	151
Other revolving credit and installment	58		54	49	45	38
Trial modifications	450		432	452	473	469
Total consumer TDRs (1)	21,008		21,363	21,629	21,841	22,082
Total TDRs	$	23,794	24,229	24,549	25,042	25,607
TDRs on nonaccrual status	$	6,889	6,982	7,104	7,313	7,638
TDRs on accrual status (1)	16,905		17,247	17,445	17,729	17,969
Total TDRs	$	23,794	24,229	24,549	25,042	25,607

(1) TDR loans include $1.9 billion, $2.1 billion, $2.1 billion, $2.1 billion, and $2.2 billion at June 30 and March 31, 2015, and December 31, September 30, and June 30, 2014, respectively, of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and accruing.

Table 26 provides information regarding the recorded investment of loans modified in TDRs. The allowance for loan losses for TDRs was $3.2 billion and $3.6 billion at June 30, 2015, and December 31, 2014, respectively. See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs. In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged off to the extent not done so prior to the modification. We sometimes delay the timing on the repayment of a portion of principal (principal forbearance) and charge off the amount of forbearance if that amount is not considered fully collectible.

For more information on our nonaccrual policies when a restructuring is involved, see the "Risk Management - Credit Risk Management - Troubled Debt Restructurings (TDRs)" section of our 2014 Form 10-K.

Table 27 provides an analysis of the changes in TDRs. Loans modified more than once are reported as TDR inflows only in the period they are first modified. Other than resolutions such as foreclosures, sales and transfers to held for sale, we may remove loans held for investment from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new loan.

37

Table 27:  Analysis of Changes in TDRs
						Quarter ended
(in millions)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014
Commercial:
Balance, beginning of quarter	$	2,866		2,920		3,201		3,525		3,781
Inflows (1)	372			310		232		208		276
Outflows
Charge-offs	(20		)	(26	)	(62	)	(42	)	(28	)
Foreclosures	(5		)	(11	)	(27	)	(12	)	(8	)
Payments, sales and other (2)	(427		)	(327	)	(424	)	(478	)	(496	)
Balance, end of quarter	2,786			2,866		2,920		3,201		3,525
Consumer:
Balance, beginning of quarter	21,363			21,629		21,841		22,082		22,698
Inflows (1)	747			755		957		946		1,003
Outflows
Charge-offs	(71		)	(88	)	(99	)	(120	)	(139	)
Foreclosures	(242		)	(245	)	(252	)	(303	)	(283	)
Payments, sales and other (2)	(807		)	(668	)	(797	)	(768	)	(1,073	)
Net change in trial modifications (3)	18			(20	)	(21	)	4		(124	)
Balance, end of quarter	21,008			21,363		21,629		21,841		22,082
Total TDRs	$	23,794		24,229		24,549		25,042		25,607

(1) Inflows include loans that both modify and resolve within the period as well as advances on loans that modified in a prior period.

(2) Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. No loans were removed from TDR classification for the quarters ended June 30 and March 31, 2015, and December 31, September 30 and June 30, 2014, as a result of being refinanced or restructured at market terms and qualifying as new loans.

(3) Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or otherwise resolved. Our experience is that substantially all of the mortgages that enter a trial payment period program are successful in completing the program requirements.

38

Risk Management - Credit Risk Management (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

Loans 90 days or more past due as to interest or principal are still accruing if they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans are not included in past due and still accruing loans even though they are 90 days or more contractually past due. These PCI loans are considered to be accruing because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Excluding insured/guaranteed loans, loans 90 days or more past due and still accruing at June 30, 2015, were down $164 million, or 18%, from December 31, 2014, due to payoffs, modifications and other loss mitigation activities, declines in non-strategic and liquidating portfolios, and credit stabilization.

Loans 90 days or more past due and still accruing whose repayments are predominantly insured by the FHA or guaranteed by the VA for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program (FFELP) were $14.4 billion at June 30, 2015, down from $16.9 billion at December 31, 2014, due to seasonally lower delinquencies.

Table 28 reflects non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 28:  Loans 90 Days or More Past Due and Still Accruing
(in millions)	Jun 30, 2015		Mar 31, 2015	Dec 31, 2014	Sep 30, 2014	Jun 30, 2014
Loans 90 days or more past due and still accruing:
Total (excluding PCI (1)):	$	15,161	16,344	17,810	18,295	18,582
Less: FHA insured/VA guaranteed (2)(3)	14,359		15,453	16,827	16,628	16,978
Less: Student loans guaranteed under the FFELP (4)	46		50	63	721	707
Total, not government insured/guaranteed	$	756	841	920	946	897
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	17	31	31	35	52
Real estate mortgage	10		43	16	37	53
Real estate construction	—		—	—	18	16
Total commercial	27		74	47	90	121
Consumer:
Real estate 1-4 family first mortgage (3)	220		221	260	327	311
Real estate 1-4 family junior lien mortgage (3)	65		55	83	78	70
Credit card	304		352	364	302	266
Automobile	51		47	73	64	48
Other revolving credit and installment	89		92	93	85	81
Total consumer	729		767	873	856	776
Total, not government insured/guaranteed	$	756	841	920	946	897

(1) PCI loans totaled $3.4 billion, $3.6 billion, $3.7 billion, $4.0 billion, and $4.0 billion at June 30 and March 31,2015, and December 31,September 30, and June 30,2014, respectively.

(2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

(3) Includes mortgages held for sale 90 days or more past due and still accruing.

(4) Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP. In fourth quarter 2014, substantially all government guaranteed loans were sold.

39

NET CHARGE-OFFS
Table 29:  Net Charge-offs
																					Quarter ended
	Jun 30, 2015					Mar 31, 2015					Dec 31, 2014					Sep 30, 2014					Jun 30, 2014
($ in millions)	Net loan charge- offs			% of  avg.  loans(1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)
Commercial:
Commercial and industrial	$	81		0.12	%	$	64		0.10	%	$	82		0.12	%	$	67		0.11	%	$	60		0.10	%
Real estate mortgage	(15		)	(0.05	)	(11		)	(0.04	)	(25		)	(0.09	)	(37		)	(0.13	)	(10		)	(0.04	)
Real estate construction	(6		)	(0.11	)	(9		)	(0.19	)	(26		)	(0.56	)	(58		)	(1.27	)	(20		)	(0.47	)
Lease financing	2			0.06		—			—		1			0.05		4			0.10		1			0.05
Total commercial	62			0.06		44			0.04		32			0.03		(24		)	(0.02	)	31			0.03
Consumer:
Real estate 1-4 family first mortgage	67			0.10		83			0.13		88			0.13		114			0.17		137			0.21
Real estate 1-4 family junior lien mortgage	94			0.66		123			0.85		134			0.88		140			0.90		160			1.02
Credit card	243			3.21		239			3.19		221			2.97		201			2.87		211			3.20
Automobile	68			0.48		101			0.73		132			0.94		112			0.81		46			0.35
Other revolving credit and installment	116			1.26		118			1.32		128			1.45		125			1.46		132			1.22
Total consumer	588			0.53		664			0.60		703			0.63		692			0.62		686			0.62
Total	$	650		0.30	%	$	708		0.33	%	$	735		0.34	%	$	668		0.32	%	$	717		0.35	%

(1) Quarterly net charge-offs (recoveries) as a percentage of average respective loans are annualized.

Table 29 presents net charge-offs for second quarter 2015 and the previous four quarters. Net charge-offs in second quarter 2015 were $650 million (0.30% of average total loans outstanding) compared with $717 million (0.35%) in second quarter 2014.

Due to higher dollar amounts associated with individual commercial and industrial and CRE loans, loss recognition tends to be irregular and varies more, compared with consumer loan portfolios. We continued to have improvement in our residential real estate secured portfolios.

ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio and unfunded credit commitments at the balance sheet date, excluding loans carried at fair value. The detail of the changes in the allowance for credit losses by portfolio segment (including charge-offs and recoveries by loan class) is in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

We apply a disciplined process and methodology to establish our allowance for credit losses each quarter. This process takes into consideration many factors, including historical and forecasted loss trends, loan-level credit quality ratings and loan grade-specific characteristics. The process involves subjective and complex judgments. In addition, we review a variety of credit metrics and trends. These credit metrics and trends, however, do not solely determine the amount of the allowance as we use several analytical tools. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength, and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of defaults and losses after default within each credit risk rating. Our estimation approach for the consumer portfolio uses forecasted losses that represent our best estimate of inherent loss based on historical experience, quantitative and other mathematical techniques over the loss emergence period. For additional information on our allowance for credit losses, see the “Critical Accounting Policies – Allowance for Credit Losses” section in our 2014 Form 10-K and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 30 presents the allocation of the allowance for credit losses by loan segment and class for the most recent quarter end and last four year ends.

40

Risk Management - Credit Risk Management (continued)

Table 30:  Allocation of the Allowance for Credit Losses (ACL)
	June 30, 2015				December 31, 2014				December 31, 2013				December 31, 2012				December 31, 2011
(in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:
Commercial and industrial	$	3,557	32	%	$	3,506	32	%	$	3,040	29	%	$	2,789	28	%	$	2,810	27	%
Real estate mortgage	1,321		14		1,576		13		2,157		14		2,284		13		2,570		14
Real estate construction	1,225		2		1,097		2		775		2		552		2		893		2
Lease financing	176		1		198		1		131		1		89		2		85		2
Total commercial	6,279		49		6,377		48		6,103		46		5,714		45		6,358		45
Consumer:
Real estate 1-4 family first mortgage	2,388		30		2,878		31		4,087		32		6,100		31		6,934		30
Real estate 1-4 family junior lien mortgage	1,564		6		1,566		7		2,534		8		3,462		10		3,897		11
Credit card	1,232		4		1,271		4		1,224		3		1,234		3		1,294		3
Automobile	542		7		516		6		475		6		417		6		555		6
Other revolving credit and installment	609		4		561		4		548		5		550		5		630		5
Total consumer	6,335		51		6,792		52		8,868		54		11,763		55		13,310		55
Total	$	12,614	100	%	$	13,169	100	%	$	14,971	100	%	$	17,477	100	%	$	19,668	100	%
	June 30, 2015				December 31, 2014				December 31, 2013				December 31, 2012				December 31, 2011
Components:
Allowance for loan losses	$	11,754			12,319				14,502				17,060				19,372
Allowance for unfunded credit commitments	860				850				469				417				296
Allowance for credit losses	$	12,614			13,169				14,971				17,477				19,668
Allowance for loan losses as a percentage of total loans	1.32			%	1.43				1.76				2.13				2.52
Allowance for loan losses as a percentage of total net charge-offs (1)	451				418				322				189				171
Allowance for credit losses as a percentage of total loans	1.42				1.53				1.82				2.19				2.56
Allowance for credit losses as a percentage of total nonaccrual loans	101				103				96				85				92

(1) Total net charge-offs are annualized for quarter ended June 30, 2015.

In addition to the allowance for credit losses, there was $3.0 billion at June 30, 2015, and $2.9 billion at December 31, 2014, of nonaccretable difference to absorb losses for PCI loans. The allowance for credit losses is lower than otherwise would have been required without PCI loan accounting. As a result of PCI loans, certain ratios of the Company may not be directly comparable with credit-related metrics for other financial institutions. Additionally, loans purchased at fair value generally reflect a lifetime credit loss adjustment and therefore do not initially require additions to the allowance as is typically associated with loan growth. For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

The ratio of the allowance for credit losses to total nonaccrual loans may fluctuate significantly from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength and the value and marketability of collateral. Over one-half of nonaccrual loans were real estate 1-4 family first and junior lien mortgage loans at June 30, 2015.

The allowance for credit losses declined in second quarter 2015, which reflected continued credit improvement, particularly in residential real estate portfolios and primarily associated with continued improvement in the housing market. Total provision for credit losses was $300 million in second quarter 2015, compared with $217 million in second quarter 2014.

We believe the allowance for credit losses of $12.6 billion at June 30, 2015, was appropriate to cover credit losses inherent in the loan portfolio, including unfunded credit commitments, at that date. The allowance for credit losses is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the allowance for credit losses to changes in the economic and business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions. Our process for determining the allowance for credit losses is discussed in the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of

41

Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES 

In connection with our sales and securitization of residential mortgage loans to various parties, we have established a mortgage repurchase liability, initially at fair value, related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, whether or not we currently service those loans, based on a combination of factors. Our mortgage repurchase liability estimation process also incorporates a forecast of repurchase demands associated with mortgage insurance rescission activity.

Because we retain the servicing for most of the mortgage loans we sell or securitize, we believe the quality of our residential mortgage loan servicing portfolio provides helpful information in

evaluating our repurchase liability. Of the $1.7 trillion in the residential mortgage loan servicing portfolio at June 30, 2015, 95% was current and less than 2% was subprime at origination. Our combined delinquency and foreclosure rate on this portfolio was 5.13% at June 30, 2015, compared with 5.79% at December 31, 2014. Three percent of this portfolio is private label securitizations for which we originated the loans and therefore have some repurchase risk.

The overall level of unresolved repurchase demands and mortgage insurance rescissions outstanding at June 30, 2015, was down from a year ago both in number of outstanding loans and in total dollar balances as we continued to work through the new demands and mortgage insurance rescissions.

Table 31 provides the number of unresolved repurchase demands and mortgage insurance rescissions.

Table 31:  Unresolved Repurchase Demands and Mortgage Insurance Rescissions
	Government sponsored entities			Private			Mortgage insurance rescissions with no demand (1)			Total
($ in millions)	Number of loans	Original loan balance (2)		Number of loans	Original loan balance (2)		Number of loans	Original loan balance (2)		Number of loans	Original loan balance (2)
2015
June 30,	385	$	83	148	$	24	107	$	27	640	$	134
March 31,	526	$	118	161	$	29	108	$	28	795	$	175
2014
December 31,	546	118		173	34		120	31		839	183
September 30,	426	93		322	75		233	52		981	220
June 30,	678	149		362	80		305	66		1,345	295
March 31,	599	126		391	89		409	90		1,399	305

(1) As part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. If the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Similar to repurchase demands, we evaluate mortgage insurance rescission notices for validity and appeal for reinstatement if the rescission was not based on a contractual breach. When investor demands are received due to lack of mortgage insurance, they are reported as unresolved repurchase demands based on the applicable investor category for the loan (GSE or private).

(2) While the original loan balances related to these demands are presented above, the establishment of the repurchase liability is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property.

Table 32 summarizes the changes in our mortgage repurchase liability.

Table 32:  Changes in Mortgage Repurchase Liability
	Quarter ended											Six months ended
(in millions)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Sep 30, 2014		Jun 30, 2014		Jun 30, 2015		Jun 30 2014
Balance, beginning of period	$	586		615		669		766		799		615		899
Provision for repurchase losses:
Loan sales	13			10		10		12		12		23		22
Change in estimate (1)	(31		)	(26	)	(49	)	(93	)	(38	)	(57	)	(42	)
Total additions (reductions)	(18		)	(16	)	(39	)	(81	)	(26	)	(34	)	(20	)
Losses	(11		)	(13	)	(15	)	(16	)	(7	)	(24	)	(113	)
Balance, end of period	$	557		586		615		669		766		557		766

(1) Results from changes in investor demand, mortgage insurer practices, credit and the financial stability of correspondent lenders.

Our liability for mortgage repurchases, included in “Accrued expenses and other liabilities” in our consolidated balance sheet, represents our best estimate of the probable loss that we expect to incur for various representations and warranties in the contractual provisions of our sales of mortgage loans. The liability was $557 million at June 30, 2015 and $766 million at June 30, 2014. In second quarter 2015, we released $18 million, which increased net gains on mortgage loan origination/sales activities, compared with a release of $26 million in second

quarter 2014. The release in second quarter 2015 was primarily due to a re-estimation of our liability based on recently observed trends.

Total losses charged to the repurchase liability were $11 million in second quarter 2015, compared with $7 million a year ago.

Because of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that

42

Risk Management - Credit Risk Management (continued)

are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses in excess of our recorded liability was $934 million at June 30, 2015, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

For additional information on our repurchase liability, see the “Risk Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our 2014 Form 10-K and Note 8 (Mortgage Banking Activities) to Financial Statements in this Report.

RISKS RELATING TO SERVICING ACTIVITIES In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors.

In connection with our servicing activities we have entered into various settlements with federal and state regulators to resolve certain alleged servicing issues and practices. In general, these settlements required us to provide customers with loan modification relief, refinancing relief, and foreclosure prevention and assistance, as well as imposed certain monetary penalties on us.    

In particular, on February 28, 2013, we entered into amendments to an April 2011 Consent Order with both the Office of the Comptroller of the Currency (OCC) and the FRB, which effectively ceased the Independent Foreclosure Review program created by such Consent Order and replaced it with an accelerated remediation commitment to provide foreclosure prevention actions on $1.2 billion of residential mortgage loans, subject to a process to be administered by the OCC and the FRB. During 2014, we reported sufficient foreclosure prevention actions to the monitor of the accelerated remediation process to meet the $1.2 billion financial commitment.    

In June 2015, we entered into an additional amendment to the April 2011 Consent Order with the OCC to address 15 of the 98 actionable items contained in the April 2011 Consent Order that were still considered open. This amendment requires that we remediate certain activities associated with our mortgage loan servicing practices and allows for the OCC to take additional supervisory action, including possible civil money penalties, if we do not comply with the terms of this amended Consent Order. In addition, this amendment prohibits us from acquiring new mortgage servicing rights or entering into new mortgage servicing contracts, other than mortgage servicing associated with originating mortgage loans or purchasing loans from correspondent clients in our normal course of business. Additionally, this amendment prohibits any new off-shoring of new mortgage servicing activities and requires OCC approval to outsource or sub-service any new mortgage servicing activities.

For additional information about the risks and various settlements related to our servicing activities, see “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” in our 2014 Form 10-K.

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Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. Primary oversight of interest rate risk and market risk resides with the Finance Committee of our Board of Directors (Board), which oversees the administration and effectiveness of financial risk management policies and processes used to assess and manage these risks. Primary oversight of liquidity and funding resides with the Risk Committee of the Board. At the management level we utilize a Corporate Asset/Liability Management Committee (Corporate ALCO), which consists of senior financial, risk, and business executives, to oversee these risks and report on them periodically to the Board’s Finance Committee and Risk Committee as appropriate. Each of our principal lines of business has its own asset/liability management committee and process linked to the Corporate ALCO process. As discussed in more detail for trading activities below, we employ separate management level oversight specific to market risk. Market risk, in its broadest sense, refers to the possibility that losses will result from the impact of adverse changes in market rates and prices on our trading and non-trading portfolios and financial instruments.

INTEREST RATE RISK Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

• assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally falling, earnings will initially decline);

• assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is falling, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates);

• short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding costs differently);

• the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates decline sharply, MBS held in the investment securities portfolio may prepay significantly earlier than anticipated, which could reduce portfolio income); or

• interest rates may also have a direct or indirect effect on loan demand, collateral values, credit losses, mortgage origination volume, the fair value of MSRs and other financial instruments, the value of the pension liability and other items affecting earnings.

We assess interest rate risk by comparing outcomes under various earnings simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. These simulations require assumptions regarding how changes in interest rates and related market conditions could influence drivers of earnings and balance sheet composition such as loan origination demand, prepayment speeds, deposit balances and mix, as well as pricing strategies.

Our risk measures include both net interest income sensitivity and interest rate sensitive noninterest income and expense impacts. We refer to the combination of these exposures as interest rate sensitive earnings. In general, the Company is positioned to benefit from higher interest rates. Currently, our profile is such that net interest income will benefit from higher interest rates as our assets reprice faster and to a greater degree than our liabilities, and, in response to lower market rates, our assets will reprice downward and to a greater degree than our liabilities. Our interest rate sensitive noninterest income and expense is largely driven by mortgage activity, and tends to move in the opposite direction of our net interest income. So, in response to higher interest rates, mortgage activity, primarily refinancing activity, generally declines. And in response to lower rates, mortgage activity generally increases. Mortgage results in our simulations are also impacted by the valuation of MSRs and related hedge positions. See the “Risk Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for more information.

The degree to which these sensitivities offset each other is dependent upon the timing and magnitude of changes in interest rates, and the slope of the yield curve. During a transition to a higher or lower interest rate environment, a reduction or increase in interest-sensitive earnings from the mortgage banking business could occur quickly, while the benefit or detriment from balance sheet repricing could take more time to develop. For example, our lower rate scenarios (scenario 1 and scenario 2) in the following table initially measure a decline in long-term interest rates versus our most likely scenario. Although the performance in these rate scenarios contain initial benefit from increased mortgage banking activity, the result is lower earnings relative to the most likely scenario over time given pressure on net interest income. The higher rate scenarios (scenario 3 and scenario 4) measure the impact of varying degrees of rising short-term and long-term interest rates over the course of the forecast horizon relative to the most likely scenario, both resulting in positive earnings sensitivity.

As of June 30, 2015, our most recent simulations estimate earnings at risk over the next 24 months under a range of both lower and higher interest rates. The results of the simulations are summarized in Table 33, indicating cumulative net income after tax earnings sensitivity relative to the most likely earnings plan over the 24 month horizon (a positive range indicates a beneficial earnings sensitivity measurement relative to the most likely earnings plan and a negative range indicates a detrimental earnings sensitivity relative to the most likely earnings plan). 

44

Asset/Liability Management (continued)

Table 33:  Earnings Sensitivity Over 24 Month Horizon Relative to Most Likely Earnings Plan
	Most		Lower rates		Higher rates
	likely		Scenario 1	Scenario 2	Scenario 3	Scenario 4
Ending rates:
Federal funds	2.11	%	0.25	1.85	2.36	5.00
10-year treasury (1)	3.55		1.80	3.05	4.05	5.95
Earnings relative to most likely	N/A		(0)-(1)%	(0)-(1)	0 - 5	0 - 5

(1) U.S. Constant Maturity Treasury Rate

We use the investment securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to hedge our interest rate exposures. See the “Balance Sheet Analysis – Investment Securities” section in this Report for more information on the use of the available-for-sale and held-to-maturity securities portfolios. The notional or contractual amount, credit risk amount and fair value of the derivatives used to hedge our interest rate risk exposures as of June 30, 2015,and December 31, 2014, are presented in Note 12 (Derivatives) to Financial Statements in this Report. We use derivatives for asset/liability management in two main ways:

• to convert the cash flows from selected asset and/or liability instruments/portfolios including investments, commercial loans and long-term debt, from fixed-rate payments to floating-rate payments, or vice versa; and

• to economically hedge our mortgage origination pipeline, funded mortgage loans and MSRs using interest rate swaps, swaptions, futures, forwards and options.

MORTAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. For a discussion of mortgage banking interest rate and market risk, see pages 87-89 of our 2014 Form 10-K.

While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by Treasury and LIBOR index-based financial instruments used as economic hedges for such ARMs. Additionally, hedge-carry income on our economic hedges for the MSRs may not continue if the spread between short-term and long-term rates decreases, we shift composition of the hedge to more interest rate swaps, or there are other changes in the market for mortgage forwards that affect the implied carry.

The total carrying value of our residential and commercial MSRs was $13.9 billion at June 30, 2015, and $14.0 billion at December 31, 2014. The weighted-average note rate on our portfolio of loans serviced for others was 4.41% at June 30, 2015, and 4.45% at December 31, 2014. The carrying value of our total MSRs represented 0.77% of mortgage loans serviced for others at June 30, 2015, and 0.75% at December 31, 2014.

MARKET RISK - TRADING ACTIVITIESThe Finance Committee of our Board of Directors reviews the acceptable market risk appetite for our trading activities. We engage in trading activities primarily to accommodate the investment and risk management activities of our customers (which involves transactions that are recorded as trading assets and liabilities on our balance sheet), to execute economic hedging to manage certain balance sheet risks and, to a very limited degree, for proprietary trading for our own account. These activities primarily occur within our Wholesale businesses and to a lesser extent other divisions of the Company. All of our trading assets and liabilities, including securities, foreign exchange transactions, commodity transactions, and derivatives are carried at fair value. Income earned related to these trading activities include net interest income and changes in fair value related to trading assets and liabilities. Net interest income earned on trading assets and liabilities is reflected in the interest income and interest expense components of our income statement. Changes in fair value of trading assets and liabilities are reflected in net gains on trading activities, a component of noninterest income in our income statement.

Table 34 presents total revenue from trading activities.

Table 34:  Income from Trading Activities
	Quarter ended June 30,						Six months ended June 30,
(in millions)		2015			2014		2015		2014
Interest income (1)		$	483		407		928		781
Less: Interest expense (2)		83			93		180		180
Net interest income		400			314		748		601
Noninterest income:
Net gains from trading activities (3):
Customer accommodation		258			242		555		602
Economic hedges and other (4)		(125		)	142		(14	)	208
Proprietary trading		—			(2	)	—		4
Total net trading gains		133			382		541		814
Total trading-related net interest and noninterest income		$	533		696		1,289		1,415

(1) Represents interest and dividend income earned on trading securities.

(2) Represents interest and dividend expense incurred on trading securities we have sold but have not yet purchased.

(3) Represents realized gains (losses) from our trading activity and unrealized gains (losses) due to changes in fair value of our trading positions, attributable to the type of business activity.

(4) Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.

Customer accommodation  Customer accommodation activities are conducted to help customers manage their investment and risk management needs. We engage in market-making activities or act as an intermediary to purchase or sell financial instruments in anticipation of or in response to customer needs. This category also includes positions we use to manage our exposure to customer transactions.

For the majority of our customer accommodation trading, we serve as intermediary between buyer and seller. For example, we may purchase or sell a derivative to a customer who wants to manage interest rate risk exposure. We typically enter into offsetting derivative or security positions with a separate counterparty or exchange to manage our exposure to the derivative with our customer. We earn income on this activity based on the transaction price difference between the customer

45

and offsetting derivative or security positions, which is reflected in the fair value changes of the positions recorded in net gains on trading activities.

Customer accommodation trading also includes net gains related to market-making activities in which we take positions to facilitate customer order flow. For example, we may own securities recorded as trading assets (long positions) or sold securities we have not yet purchased, recorded as trading liabilities (short positions), typically on a short-term basis, to facilitate support of buying and selling demand from our customers. As a market maker in these securities, we earn income due to: (1) the difference between the price paid or received for the purchase and sale of the security (bid-ask spread), (2) the net interest income, and (3) the change in fair value of the long or short positions during the short-term period held on our balance sheet. Additionally, we may enter into separate derivative or security positions to manage our exposure related to our long or short security positions. Income earned on this type of market-making activity is reflected in the fair value changes of these positions recorded in net gains on trading activities.

Economic hedges and other Economic hedges in trading are not designated in a hedge accounting relationship and exclude economic hedging related to our asset/liability risk management and substantially all mortgage banking risk management activities. Economic hedging activities include the use of trading securities to economically hedge risk exposures related to non-trading activities or derivatives to hedge risk exposures related to trading assets or trading liabilities. Economic hedges are unrelated to our customer accommodation activities. Other activities include financial assets held for investment purposes that we elected to carry at fair value with changes in fair value recorded to earnings in order to mitigate accounting measurement mismatches or avoid embedded derivative accounting complexities.

Proprietary trading Proprietary tradingconsists of security or derivative positions executed for our own account based upon market expectations or to benefit from price differences between financial instruments and markets. Proprietary trading activity has been substantially restricted by the Dodd-Frank Act provisions known as the “Volcker Rule.” Accordingly, we reduced and have exited certain business activities in anticipation of the rule’s compliance date. As discussed within this section and the noninterest income section of our financial results, proprietary trading activity is insignificant to our business and financial results. For more details on the Volcker Rule, see the “Regulatory Reform” section in our 2014 Form 10-K.

Daily Trading-Related Revenue Table 35 provides information on the distribution of daily trading-related revenues for the Company’s trading portfolio. This trading-related revenue is defined as the change in value of the trading assets and trading liabilities, trading-related net interest income, and trading-related intra-day gains and losses. Net trading-related revenue does not include activity related to long-term positions held for economic hedging purposes, period-end adjustments, and other activity not representative of daily price changes driven by market factors.

46

Asset/Liability Management (continued)

Table 35:  Distribution of Daily Trading-Related Revenues 

Market risk is the risk of possible economic loss from adverse changes in market risk factors such as interest rates, credit spreads, foreign exchange rates, equity, commodity prices, mortgage rates, and market liquidity. Market risk is intrinsic to the Company’s sales and trading, market making, investing, and risk management activities.

The Company uses Value-at-Risk (VaR) metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. These market risk measures are monitored at both the business unit level and at aggregated levels on a daily basis. Our corporate market risk management function aggregates and monitors all exposures to ensure risk measures are within our established risk appetite. Changes to the market risk profile are analyzed and reported on a daily basis. The Company monitors various market risk exposure measures from a variety of perspectives, which include line of business, product, risk type, and legal entity.

VaR is a statistical risk measure used to estimate the potential loss from adverse moves in the financial markets. The VaR measures assume that historical changes in market values (historical simulation analysis) are representative of the potential future outcomes and measure the expected loss over a given time interval (for example, 1 day or 10 days) at a given confidence level. Our historical simulation analysis approach uses historical observations of daily changes in each of the market risk factors from each trading day in the previous 12 months. The risk drivers of each market risk exposure are updated on a daily basis. We measure and report VaR for 1-day and 10-day holding periods at a 99% confidence level. This means that we would expect to incur single day losses greater than predicted by VaR estimates for the measured positions one time in every 100 trading days. We treat

data from all historical periods as equally relevant and consider using data for the previous 12 months as appropriate for determining VaR. We believe using a 12-month look back period helps ensure the Company’s VaR is responsive to current market conditions.

VaR measurement between different financial institutions is not readily comparable due to modeling and assumption differences from company to company. VaR measures are more useful when interpreted as an indication of trends rather than an absolute measure to be compared across financial institutions.

VaR models are subject to limitations which include, but are not limited to, the use of historical changes in market factors that may not accurately reflect future changes in market factors, and the inability to predict market liquidity in extreme market conditions. All limitations such as model inputs, model assumptions, and calculation methodology risk are monitored by the Corporate Market Risk Group and the Corporate Model Risk Group.

The VaR models measure exposure to the following categories:

• credit risk – exposures from corporate credit spreads, asset-backed security spreads, and mortgage prepayments.

• interest rate risk – exposures from changes in the level, slope, and curvature of interest rate curves and the volatility of interest rates.

• equity risk – exposures to changes in equity prices and volatilities of single name, index, and basket exposures.

• commodity risk – exposures to changes in commodity prices and volatilities.

47

• foreign exchange risk– exposures to changes in foreign exchange rates and volatilities.

 VaR is a primary market risk management measure for the assets and liabilities classified as trading and is used as a supplemental analysis tool to monitor exposures classified as available for sale (AFS) and other exposures that we carry at fair value.

Trading VaR is the measure used to provide insight into the market risk exhibited by the Company’s trading positions. The Company calculates Trading VaR for risk management purposes

to establish line of business and Company-wide risk limits. Trading VaR is calculated based on all trading positions classified as trading assets or trading liabilities on our balance sheet.

Table 36 shows the results of the Company’s Trading General VaR by risk category. As presented in the table, average Trading General VaR was $16 million for the quarter ended June 30, 2015, compared with $18 million for the quarter ended March 31, 2015. The decrease was primarily driven by changes in portfolio composition.

Table 36:  Trading 1-Day 99% General VaR Risk Category
				Quarter ended
	June 30, 2015							March 31, 2015
(in millions)	Period end			Average		Low	High	Period end		Average		Low	High
Company Trading General VaR Risk Categories
Credit	$	18		17		10	22	14		11		7	19
Interest rate	18			14		7	21	20		15		6	28
Equity	15			11		8	15	9		10		8	11
Commodity	1			1		1	2	1		1		—	2
Foreign exchange	1			1		—	7	1		1		—	1
Diversification benefit (1)	(38		)	(28	)			(27	)	(20	)
Company Trading General VaR	$	15		16				18		18

(1) The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification effect arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

Sensitivity Analysis  Given the inherent limitations of the VaR models, the Company uses other measures, including sensitivity analysis, to measure and monitor risk. Sensitivity analysis is the measure of exposure to a single risk factor, such as a 0.01% increase in interest rates or a 1% increase in equity prices. We conduct and monitor sensitivity on interest rates, credit spreads, volatility, equity, commodity, and foreign exchange exposure. Sensitivity analysis complements VaR as it provides an indication of risk relative to each factor irrespective of historical market moves.

Stress Testing While VaR captures the risk of loss due to adverse changes in markets using recent historical market data, stress testing captures the Company’s exposure to extreme but low probability market movements. Stress scenarios estimate the risk of losses based on management’s assumptions of abnormal but severe market movements such as severe credit spread widening or a large decline in equity prices. These scenarios assume that the market moves happen instantaneously and no repositioning or hedging activity takes place to mitigate losses as events unfold (a conservative approach since experience demonstrates otherwise).

An inventory of scenarios is maintained representing both historical and hypothetical stress events that affect a broad range of market risk factors with varying degrees of correlation and differing time horizons. Hypothetical scenarios assess the impact of large movements in financial variables on portfolio values. Typical examples include a 1% (100 basis point) increase across the yield curve or a 10% decline in equity market indexes. Historical scenarios utilize an event-driven approach: the stress scenarios are based on plausible but rare events, and the analysis addresses how these events might affect the risk factors relevant to a portfolio.

The Company’s stress testing framework is also used in calculating results in support of the Federal Reserve Board’s

Comprehensive Capital Analysis & Review (CCAR) and internal stress tests. Stress scenarios are regularly reviewed and updated to address potential market events or concerns. For more detail on the CCAR process, see the “Capital Management” section in this Report.

Regulatory Market Risk Capital  is based on U.S. regulatory agency risk-based capital regulations that are based on the Basel Committee Capital Accord of the Basel Committee on Banking Supervision. Prior to January 1, 2013, U.S. banking regulators’ market risk capital requirements were subject to Basel I and thereafter based on Basel 2.5. Effective January 1, 2014, the Company must calculate regulatory capital based on the Basel III market risk capital rule, which integrated Basel 2.5, and requires banking organizations with significant trading activities to adjust their capital requirements to better account for the market risks of those activities based on comprehensive and risk sensitive methods and models. The market risk capital rule is intended to cover the risk of loss in value of covered positions due to changes in market conditions.

Composition of Material Portfolio of Covered Positions  The positions that are “covered” by the market risk capital rule are generally a subset of our trading assets and trading liabilities, specifically those held by the Company for the purpose of short-term resale or with the intent of benefiting from actual or expected short-term price movements, or to lock in arbitrage profits. Positions excluded from market risk regulatory capital treatment are subject to the credit risk capital rules applicable to the “non-covered” trading positions.

The material portfolio of the Company’s “covered” positions is predominantly concentrated in the trading assets and trading liabilities managed within Wholesale Banking where the substantial portion of market risk capital resides. Wholesale Banking engages in the fixed income, traded credit, foreign

48

Asset/Liability Management (continued)

exchange, equities, and commodities markets businesses. Other business segments hold small additional trading positions covered under the market risk capital rule.

Regulatory Market Risk Capital Components  The capital required for market risk on the Company’s “covered” positions is determined by internally developed models or standardized specific risk charges. The market risk regulatory capital models are subject to internal model risk management and validation. The models are continuously monitored and enhanced in response to changes in market conditions, improvements in system capabilities, and changes in the Company’s market risk exposure. The Company is required to obtain and has received prior written approval from its regulators before using its internally developed models to calculate the market risk capital charge.

Basel III prescribes various VaR measures in the determination of regulatory capital and RWAs. The Company

uses the same VaR models for both market risk management purposes as well as regulatory capital calculations. For regulatory purposes, we use the following metrics to determine the Company’s market risk capital requirements:

General VaR measures the risk of broad market movements such as changes in the level of credit spreads, interest rates, equity prices, commodity prices, and foreign exchange rates. General VaR uses historical simulation analysis based on 99% confidence level and a 10-day time horizon.

Table 37 shows the General VaR measure categorized by major risk categories. Average 10-day Company Regulatory General VaR was $27 million for the quarter ended June 30, 2015, compared with $20 million for the quarter ended March 31, 2015. The increase was primarily driven by changes in portfolio composition.

Table 37:  Regulatory 10-Day 99% General VaR by Risk Category
				Quarter ended
	June 30, 2015							March 31, 2015
(in millions)	Period end			Average		Low	High	Period end		Average		Low	High
Wholesale Regulatory General VaR Risk Categories
Credit	$	47		43		19	60	30		33		23	42
Interest rate	58			40		21	67	56		50		26	94
Equity	7			8		3	13	11		10		4	19
Commodity	3			4		2	7	2		2		1	4
Foreign exchange	4			6		1	20	7		4		1	7
Diversification benefit (1)	(90		)	(76	)			(87	)	(79	)
Wholesale Regulatory General VaR	$	29		25		14	39	19		20		12	43
Company Regulatory General VaR	30			27		13	41	19		20		11	43

(1) The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification benefit arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

Specific Risk measures the risk of loss that could result from factors other than broad market movements, or name-specific market risk. Specific Risk uses Monte Carlo simulation analysis based on a 99% confidence level and a 10-day time horizon.

Total VaR (as presented in Table 38) is composed of General VaR and Specific Risk and uses the previous 12 months of historical market data in compliance with regulatory requirements.

Total Stressed VaR (as presented in Table 38) uses a historical period of significant financial stress over a continuous 12 month period using historically available market data and is composed of Stressed General VaR and Stressed Specific Risk. Total Stressed VaR uses the same methodology and models as Total VaR. 

Incremental Risk Charge (as presented in Table 38) captures losses due to both issuer default and migration risk at the 99.9% confidence level over the one-year capital horizon under the assumption of constant level of risk or a constant position assumption. The model covers all non-securitized credit-sensitive products.

The Company calculates Incremental Risk by generating a portfolio loss distribution using Monte Carlo simulation, which assumes numerous scenarios, where an assumption is made that the portfolio’s composition remains constant for a one-year time horizon. Individual issuer credit grade migration and issuer default risk is modeled through generation of the issuer’s credit rating transition based upon statistical modeling. Correlation between credit grade migration and default is captured by a multifactor proprietary model which takes into account industry classifications as well as regional effects. Additionally, the impact of market and issuer specific concentrations is reflected in the modeling framework by assignment of a higher charge for portfolios that have increasing concentrations in particular issuers or sectors. Lastly, the model captures product basis risk; that is, it reflects the material disparity between a position and its hedge.

Table 38 provides information on Total VaR, Total Stressed VaR and the Incremental Risk Charge results for the quarter ended June 30, 2015. For the Incremental Risk Charge, the required capital for market risk at quarter end equals the average for the quarter. 

49

Table 38:  Market Risk Regulatory Capital Modeled Components
	Quarter ended June 30, 2015					June 30, 2015
(in millions)	Average		Low	High	Quarter end	Risk- based capital (1)	Risk- weighted assets (1)
Total VaR	$	57	52	64	58	171	2,139
Total Stressed VaR	319		270	416	348	956	11,955
Incremental Risk Charge	371		330	402	367	371	4,634

(1) Results represent the risk-based capital and RWAs based on the VaR and Incremental Risk Charge models.

Securitized Products ChargeBasel III requires a separate market risk capital charge for positions classified as a securitization or re-securitization. The primary criteria for classification as a securitization are whether there is a transfer of risk and whether the credit risk associated with the underlying exposures has been separated into at least two tranches reflecting different levels of seniority. Covered trading securitizations positions include consumer and commercial asset-backed securities (ABS), commercial mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS), and collateralized loan and other debt obligations (CLO/CDO) positions. The securitization capital requirements are the greater of the capital requirements of the net long or short exposure, and are capped at the maximum loss that could be incurred on any given transaction.

Table 39 shows the aggregate net fair market value of securities and derivative securitization positions by exposure type that meet the regulatory definition of a covered trading securitization position atJune 30, 2015, and December 31, 2014.

Table 39: Covered Securitization Positions by Exposure Type (Market Value)
(in millions)	ABS			CMBS	RMBS	CLO/CDO
June 30, 2015
Securitization exposure:
Securities	$	930		949	735	734
Derivatives	6			12	9	(30	)
Total	$	936		961	744	704
December 31, 2014
Securitization exposure:
Securities	$	752		709	689	553
Derivatives	(1		)	5	23	(31	)
Total	$	751		714	712	522

SECURITIZATION DUE DILIGENCE AND RISK MONITORING The market risk capital rule requires that the Company conduct due diligence on the risk of each position within three days of the purchase of a securitization position. The Company’s due diligence provides an understanding of the features that would materially affect the performance of a securitization or re-securitization. The due diligence analysis is re-performed on a quarterly basis for each securitization and re-securitization position. The Company uses an automated solution to track the due diligence associated with securitization activity. The Company aims to manage the risks associated with securitization and re-securitization positions through the use of offsetting positions and portfolio diversification.

Standardized Specific Risk Charge For debt and equity positions that are not evaluated by the approved internal specific risk models, a regulatory prescribed standard specific risk charge is applied. The standard specific risk add-on for sovereign entities, public sector entities, and depository institutions is based on the Organization for Economic Co-operation and Development (OECD) country risk classifications (CRC) and the remaining contractual maturity of the position. These risk add-ons for debt positions range from 0.25% to 12%. The add-on for corporate debt is based on creditworthiness and the remaining contractual maturity of the position. All other types of debt positions are subject to an 8% add-on. The standard specific risk add-on for equity positions is generally 8%.

Comprehensive Risk Charge / Correlation Trading The market risk capital rule requires capital for correlation trading positions. The Company's remaining correlation trading exposure covered under the market risk capital rule matured in fourth quarter 2014.

Table 40 summarizes the market risk-based capital requirements charge and market RWAs in accordance with the Basel III market risk capital rule as of June 30, 2015, and as of December 31, 2014. The market RWAs are calculated as the sum of the components in the table below.

50

Asset/Liability Management (continued)

Table 40:  Market Risk Regulatory Capital and RWAs
	June 30, 2015			December 31, 2014
(in millions)	Risk- based capital		Risk- weighted assets	Risk- based capital	Risk- weighted assets
Total VaR	$	171	2,139	146	1,822
Total Stressed VaR	956		11,955	1,469	18,359
Incremental Risk Charge	371		4,634	345	4,317
Securitized Products Charge	678		8,470	766	9,577
Standardized Specific Risk Charge	1,198		14,978	1,177	14,709
De minimis Charges (positions not included in models)	12		144	66	829
Total	$	3,386	42,320	3,969	49,613

RWA RollforwardTable 41depicts the changes in the market risk regulatory capital and RWAs under Basel III for the first half and second quarter of2015.

Table 41:  Analysis of Changes in Market Risk Regulatory Capital and RWAs
(in millions)	Risk- based capital			Risk- weighted assets
Balance, December 31, 2014	$	3,969		49,613
Total VaR	25			317
Total Stressed VaR	(513		)	(6,404	)
Incremental Risk Charge	26			317
Securitized Products Charge	(88		)	(1,107	)
Standardized Specific Risk Charge	21			269
De minimis Charges	(54		)	(685	)
Balance, June 30, 2015	$	3,386		42,320
Balance, March 31, 2015	$	3,807		47,589
Total VaR	24			303
Total Stressed VaR	(85		)	(1,054	)
Incremental Risk Charge	(7		)	(97	)
Securitized Products Charge	(35		)	(446	)
Standardized Specific Risk Charge	(301		)	(3,758	)
De minimis Charges	(17		)	(217	)
Balance, June 30, 2015	$	3,386		42,320

All changes to market risk regulatory capital and RWAs in the first half and second quarter of 2015 were associated with changes in positions due to normal trading activity.

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VaRBacktestingThe market risk capital rule requires backtesting as one form of validation of the VaR model. Backtesting is a comparison of the daily VaR estimate with the actual clean profit and loss (clean P&L) as defined by the market risk capital rule. Clean P&L is the change in the value of the Company’s covered trading positions that would have occurred had previous end-of-day covered trading positions remained unchanged (therefore, excluding fees, commissions, net interest income, and intraday trading gains and losses). The backtesting analysis compares the daily Total VaR for each of the trading days in the preceding 12 months with the net clean P&L. Clean P&L does not include credit adjustments and other activity not representative of daily price changes driven by market risk factors. The clean P&L measure of revenue is used to evaluate the performance of the Total VaR and is not comparable to our actual daily trading net revenues, as reported elsewhere in this Report.

Any observed clean P&L loss in excess of the Total VaR is considered a market risk regulatory capital backtesting exception.

The actual number of exceptions (that is, the number of business days for which the clean P&L losses exceed the corresponding 1-day, 99% Total VaR measure) over the preceding 12 months is used to determine the capital multiplier for the capital calculation. The number of actual backtesting exceptions is dependent on current market performance relative to historic market volatility. This capital multiplier increases from a minimum of three to a maximum of four, depending on the number of exceptions. No backtesting exceptions occurred over the preceding 12 months. Backtesting is also performed at granular levels within the Company.

Table 42 shows daily Total VaR (1-day, 99%) used for regulatory market risk capital backtesting for the 12 months ended June 30, 2015. The Company’s average Total VaR for second quarter 2015 was $22 million with a low of $20 million and a high of $25 million.

Table 42: Daily Total 1-Day 99% VaR Measure (Rolling 12 Months)

Market Risk Governance  The Finance Committee of our Board has primary oversight over market risk-taking activities of the Company and reviews the acceptable market risk appetite. The Corporate Risk Group’s Market Risk Committee, which reports to the Finance Committee of the Board, is responsible for governance and oversight of market risk-taking activities across the Company as well as the establishment of market risk appetite and associated limits. The Corporate Market Risk Group, which is part of the Corporate Risk Group, administers and monitors compliance with the requirements established by the Market Risk Committee. The Corporate Market Risk Group has oversight responsibilities in identifying, measuring and monitoring the Company’s market risk. The group is responsible for developing corporate market risk policy, creating quantitative market risk models, establishing independent risk limits, calculating and analyzing market risk capital, and reporting aggregated and line-of-business market risk information. Limits are regularly reviewed to ensure they remain relevant and within the market

risk appetite for the Company. An automated limits-monitoring system enables a daily comprehensive review of multiple limits mandated across businesses. Limits are set with inner boundaries that will be periodically breached to promote an ongoing dialogue of risk exposure within the Company. Each line of business that exposes the Company to market risk has direct responsibility for managing market risk in accordance with defined risk tolerances and approved market risk mandates and hedging strategies. We measure and monitor market risk for both management and regulatory capital purposes.

52

Asset/Liability Management (continued)

Model Risk ManagementThe market risk capital models are governed by our Corporate Model Risk Committee (CMoR) policies and procedures, which include model validation. The purpose of model validation includes ensuring the model is appropriate for its intended use and that appropriate controls exist to help mitigate the risk of invalid results. Model validation assesses the adequacy and appropriateness of the model, including reviewing its key components such as inputs, processing components, logic or theory, output results and supporting model documentation. Validation also includes ensuring significant unobservable model inputs are appropriate given observable market transactions or other market data within the same or similar asset classes. This ensures modeled approaches are appropriate given similar product valuation techniques and are in line with their intended purpose. The Corporate Model Risk group provides oversight of model validation and assessment processes.

All internal valuation models are subject to ongoing review by business-unit-level management, and all models are subject to additional oversight by a corporate-level risk management department. Corporate oversight responsibilities include evaluating the adequacy of business unit risk management programs, maintaining company-wide model validation policies and standards, and reporting the results of these activities to management.

MARKET RISK - EQUITY INVESTMENTSWe are directly and indirectly affected by changes in the equity markets. We make and manage direct equity investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board. The Board’s policy is to review business developments, key risks and historical returns for the private equity investment portfolio at least annually. Management reviews these investments at least quarterly and assesses them for possible OTTI. For nonmarketable investments, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment’s cash flows and capital needs, the viability of its business model and our exit strategy. Nonmarketable investments include private equity investments accounted for under the cost method, equity method and fair value option.

As part of our business to support our customers, we trade public equities, listed/OTC equity derivatives and convertible bonds. We have parameters that govern these activities. We also have marketable equity securities in the available-for-sale securities portfolio, including securities relating to our venture capital activities. We manage these investments within capital risk limits approved by management and the Board and monitored by Corporate ALCO and the Corporate Market Risk Committee. Gains and losses on these securities are recognized in net income when realized and periodically include OTTI charges.

Changes in equity market prices may also indirectly affect our net income by (1) the value of third party assets under management and, hence, fee income, (2) borrowers whose ability to repay principal and/or interest may be affected by the stock market, or (3) brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

Table 43 provides information regarding our marketable and nonmarketable equity investments as of June 30, 2015, and December 31, 2014.

Table 43:  Nonmarketable and Marketable Equity Investments
(in millions)	Jun 30, 2015		Dec 31, 2014
Nonmarketable equity investments:
Cost method:
Private equity and other (1)	$	2,461	2,300
Federal bank stock	4,400		4,733
Total cost method	6,861		7,033
Equity method:
LIHTC investments (2)	7,887		7,278
Private equity and other	4,911		5,132
Total equity method	12,798		12,410
Fair value (3)	2,636		2,512
Total nonmarketable equity investments (4)	$	22,295	21,955
Marketable equity securities:
Cost (1)	$	1,145	1,906
Net unrealized gains	1,342		1,770
Total marketable equity securities (5)	$	2,487	3,676

(1) Reflects auction rate perpetual preferred equity securities that were reclassified at the beginning of second quarter 2015 with a cost basis of $689 million (fair value of $640 million) from available-for-sale securities because they do not trade on a qualified exchange.

(2) Represents low income housing tax credit investments.

(3) Represents nonmarketable equity investments for which we have elected the fair value option. See Note 6 (Other Assets) and Note 13 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for additional information.

(4) Included in other assets on the balance sheet. See Note 6 (Other Assets) to Financial Statements in this Report for additional information.

(5) Included in available-for-sale securities. See Note 4 (Investment Securities) to Financial Statements in this Report for additional information.

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LIQUIDITY AND FUNDING The objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To achieve this objective, the Board of Directors establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are monitored on a monthly basis by the Corporate ALCO and on a quarterly basis by the Board of Directors. These guidelines are established and monitored for both the consolidated company and for the Parent on a stand-alone basis to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries.

We maintain liquidity in the form of cash, cash equivalents and unencumbered high-quality, liquid securities. These assets

make up our primary sources of liquidity, which are presented in Table 44. Our cash is primarily on deposit with the Federal Reserve. Securities included as part of our primary sources of liquidity are comprised of U.S. Treasury and federal agency debt, and mortgage-backed securities issued by federal agencies within our investment securities portfolio. We believe these securities provide quick sources of liquidity through sales or by pledging to obtain financing, regardless of market conditions. Some of these securities are within the held-to-maturity portion of our investment securities portfolio and as such are not intended for sale but may be pledged to obtain financing. Some of the legal entities within our consolidated group of companies are subject to various regulatory, tax, legal and other restrictions that can limit the transferability of their funds. We believe we maintain adequate liquidity at these entities in consideration of such funds transfer restrictions.

Table 44:  Primary Sources of Liquidity
	June 30, 2015				December 31, 2014
(in millions)	Total		Encumbered	Unencumbered	Total		Encumbered	Unencumbered
Interest-earning deposits	$	187,959	—	187,959	$	219,220	—	219,220
Securities of U.S. Treasury and federal agencies (1)	81,036		4,711	76,325	67,352		856	66,496
Mortgage-backed securities of federal agencies (2)	127,416		68,457	58,959	115,730		80,324	35,406
Total	$	396,411	73,168	323,243	$	402,302	81,180	321,122

(1) Included in encumbered securities at December 31, 2014, were securities with a fair value of $152 million which were purchased in December 2014, but settled in January 2015.

(2) Included in encumbered securities at June 30, 2015, were securities with a fair value of $2.0 billion that were purchased in June 2015, but settled in July 2015. Included in encumbered securities at December 31, 2014, were securities with a fair value of $5 million, which were purchased in December 2014, but settled in January 2015.

In addition to our primary sources of liquidity shown in Table 44, liquidity is also available through the sale or financing of other securities including trading and/or available-for-sale securities, as well as through the sale, securitization or financing of loans, to the extent such securities and loans are not encumbered. In addition, other securities in our held-to-maturity portfolio, to the extent not encumbered, may be pledged to obtain financing.

Core customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. Both at June 30, 2015, and December 31, 2014 core deposits were 122% of total loans. Additional funding is provided by long-term debt, other foreign deposits, and short-term borrowings.

Table 45 shows selected information for short-term borrowings, which generally mature in less than 30 days.

54

Asset/Liability Management (continued)

Table 45:  Short-Term Borrowings
	Quarter ended
(in millions)	Jun 30 2015		Mar 31, 2015	Dec 31, 2014	Sep 30, 2014	Jun 30, 2014
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	71,439	64,400	51,052	48,164	45,379
Commercial paper	621		3,552	2,456	4,365	4,261
Other short-term borrowings	10,903		9,745	10,010	10,398	12,209
Total	$	82,963	77,697	63,518	62,927	61,849
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	72,429	58,881	51,509	47,088	42,233
Commercial paper	2,433		3,040	3,511	4,587	5,221
Other short-term borrowings	9,637		9,791	9,656	10,610	11,391
Total	$	84,499	71,712	64,676	62,285	58,845
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	71,811	66,943	51,052	48,164	45,379
Commercial paper (2)	2,713		3,552	3,740	4,665	5,175
Other short-term borrowings (3)	10,903		10,068	10,010	10,990	12,209

(1) Highest month-end balance in each of the last five quarters was in May and February 2015, and December, September and June 2014.

(2) Highest month-end balance in each of the last five quarters was in April and March 2015, and November, July and April 2014.

(3) Highest month-end balance in each of the last five quarters was in June and February 2015, and December, July and June 2014.

We access domestic and international capital markets for long-term funding (generally greater than one year) through issuances of registered debt securities, private placements and asset-backed secured funding. Investors in the long-term capital markets, as well as other market participants, generally will consider, among other factors, a company’s debt rating in making investment decisions. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, the level and quality of earnings, and rating agency assumptions regarding the probability and extent of federal financial assistance or support for certain large financial institutions. Adverse changes in these factors could result in a reduction of our credit rating; however, our debt securities do not contain credit rating covenants.

In light of industry changes and regulatory developments related to the Title II Orderly Liquidation Authority of the Dodd-Frank Act, rating agencies have recently adopted changes to various aspects of their ratings methodologies. As a result, several of our ratings were upgraded during second quarter 2015. Moody’s Investors Service (Moody’s) upgraded the long-term issuer rating of Wells Fargo Bank, N.A. as well as its long-term deposit, senior debt, subordinated debt and junior subordinated debt ratings. Moody’s also upgraded the rating of the Parent’s non-cumulative preferred stock. Fitch Ratings, Inc. upgraded Wells Fargo Bank, N.A.’s issuer default rating as well as the rating on the bank’s long-term deposits and senior debt. In addition, on June 24, 2015, DBRS confirmed all of the Company’s ratings. Standard and Poor’s Ratings Services (S&P) is continuing its reassessment of whether to continue incorporating the likelihood of extraordinary government support into the ratings of eight bank holding companies, including the Parent. S&P has indicated that this reassessment will be finalized sometime in 2015. Both the Parent and Wells Fargo Bank, N.A. remain among the top-rated financial firms in the U.S.

See the “Risk Factors” section in our 2014 Form 10-K for additional information on the potential impact a credit rating downgrade would have on our liquidity and operations, as well as Note 12 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain derivative instruments in the event our credit ratings were to fall below investment grade.

The credit ratings of the Parent and Wells Fargo Bank, N.A. as of June 30, 2015, are presented in Table 46.

55

Table 46:  Credit Ratings as of June 30, 2015
	Wells Fargo & Company		Wells Fargo Bank, N.A.
	Senior debt	Short-term borrowings	Long-term deposits	Short-term borrowings
Moody's	A2	P-1	Aa1	P-1
S&P	A+	A-1	AA-	A-1+
Fitch Ratings, Inc.	AA-	F1+	AA+	F1+
DBRS	AA	R-1*	AA**	R-1**
* middle    **high

On September 3, 2014, the FRB, OCC and FDIC issued a final rule that implements a quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires banking institutions, such as Wells Fargo, to hold high-quality liquid assets, such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash, in an amount equal to or greater than its projected net cash outflows during a 30-day stress period. The final LCR rule will be phased-in beginning January 1, 2015, and requires full compliance with a minimum 100% LCR by January 1, 2017. The FRB also recently finalized rules imposing enhanced liquidity management standards on large bank holding companies (BHC) such as Wells Fargo. We continue to analyze these rules and other regulatory proposals that may affect liquidity risk management to determine the level of operational or compliance impact to Wells Fargo. For additional information see the “Capital Management” and “Regulatory Reform” sections in this Report and in our 2014 Form 10-K.

Parent Under SEC rules, our Parent is classified as a “well-known seasoned issuer,” which allows it to file a registration statement that does not have a limit on issuance capacity. In May 2014, the Parent filed a registration statement with the SEC for the issuance of senior and subordinated notes, preferred stock and other securities. The Parent’s ability to issue debt and other securities under this registration statement is limited by the debt issuance authority granted by the Board. The Parent is currently authorized by the Board to issue $60 billion in outstanding short-term debt and $170 billion in outstanding long-term debt. At June 30, 2015, the Parent had available $42.2 billion in short-term debt issuance authority and $59.2 billion in long-term debt issuance authority. The Parent’s debt issuance authority granted by the Board includes short-term and long-term debt issued to affiliates. During the first half of 2015, the Parent issued $13.0 billion of senior notes, of which $7.9 billion were registered with the SEC. In addition, during the first half of 2015, the Parent issued $835 million of subordinated notes, all of which were registered with the SEC. Also, in July 2015, the Parent issued $3.5 billion of senior notes and $2.5 billion of subordinated notes, all of which were registered with the SEC.

The Parent’s proceeds from securities issued were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the proceeds from securities issued in the future will be used for the same purposes. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise.

Table 47 provides information regarding the Parent’s medium-term note (MTN) programs, which are covered by the long-term debt issuance authority granted by the Board. The Parent may issue senior and subordinated debt securities under Series N & O, and the European and Australian programmes. Under Series K, the Parent may issue senior debt securities linked to one or more indices or bearing interest at a fixed or floating rate.

Table 47:  Medium-Term Note (MTN) Programs
			June 30, 2015
(in billions)	Date established		Debt issuance authority		Available for issuance
MTN program:
Series N & O (1) (2)	May 2014		NA(2)		NA(2)
Series K (1) (3)	April 2010		$	25.0	$	21.3
European (4) (5)	December 2009		25.0		7.5
European (4) (6)	August 2013		10.0		8.7
Australian (4) (7)	June 2005	AUD	10.0		7.8

(1) SEC registered.

(2) Not applicable (NA) - The Parent can issue an indeterminate amount of debt securities, subject to the long-term debt issuance authority granted by the Board described above.

(3) As amended in April 2012 and March 2015.

(4) Not registered with the SEC. May not be offered in the United States without applicable exemptions from registration.

(5) As amended in April 2012, April 2013, April 2014 and March 2015. For securities to be admitted to listing on the Official List of the United Kingdom Financial Conduct Authority and to trade on the Regulated Market of the London Stock Exchange.

(6) As amended in May 2014 and April 2015, for securities that will not be admitted to listing, trading and/or quotation by any stock exchange or quotation system, or will be admitted to listing, trading and/or quotation by a stock exchange or quotation system that is not considered to be a regulated market.

(7) As amended in October 2005, March 2010 and September 2013.

Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. is authorized by its board of directors to issue $100 billion in outstanding short-term debt and $125 billion in outstanding long-term debt. At June 30, 2015, Wells Fargo Bank, N.A. had available $99.8 billion in short-term debt issuance authority and $72.8 billion in long-term debt issuance authority. In April 2015, Wells Fargo Bank, N.A. established a $100 billion bank note program under which, subject to any other debt outstanding under the limits described above, it may issue $50 billion in outstanding short-term senior notes and $50 billion in outstanding long-term senior or subordinated notes. At June 30, 2015, Wells Fargo Bank, N.A. had remaining issuance capacity under the bank note program of $50 billion in short-term senior notes and $50 billion in long-term senior or subordinated notes. In addition, as of June 30, 2015, Wells Fargo Bank, N.A. had outstanding advances of $26.6 billion across the Federal Home Loan Bank System.

56

Asset/Liability Management (continued)

Wells Fargo Canada Corporation In February 2014, Wells Fargo Canada Corporation (WFCC), an indirect wholly owned Canadian subsidiary of the Parent, qualified with the Canadian provincial securities commissions a base shelf prospectus for the distribution from time to time in Canada of up to $7.0 billion Canadian dollars (CAD) in medium-term notes. At June 30, 2015, CAD $7.0 billion still remained available for future issuance under this prospectus. All medium-term notes issued by WFCC are unconditionally guaranteed by the Parent. 

FEDERAL HOME LOAN BANK MEMBERSHIPThe Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLBs based in Dallas, Des Moines and San Francisco. Each member of the FHLBs is required to maintain a minimum investment in capital stock of the applicable FHLB. The board of directors of each FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Board. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a future event, potential future payments to the FHLBs are not determinable.

57

Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. Our potential sources of capital primarily include retention of earnings net of dividends, as well as issuances of common and preferred stock. Retained earnings increased $7.1 billion from December 31, 2014, predominantly from Wells Fargo net income of $11.5 billion, less common and preferred stock dividends of $4.5 billion. During second quarter 2015, we issued 18.6 million shares of common stock and repurchased 36.3 million shares of common stock in open market transactions, private transactions and from employee benefit plans, at a cost of $2.0 billion. We also entered into a $750 million forward repurchase contract in April 2015 with an unrelated third party that settled in July 2015 for 13.6 million shares. In addition, we entered into a $1.0 billion forward repurchase contract with an unrelated third party in July 2015 that is expected to settle in fourth quarter 2015 for approximately 17.5 million shares. For additional information about our forward repurchase agreements, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Regulatory Capital Guidelines

The Company and each of our insured depository institutions are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures. See Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information. Also see the "Capital Management" section in our 2014 Form 10-K for background and history of the various regulatory capital adequacy rules, minimum regulatory requirements and transition periods we follow.

RISK-BASED CAPITAL AND RISK-WEIGHTED ASSETS In December 2010, the Basel Committee on Banking Supervision (BCBS) finalized a set of revised international guidelines for determining regulatory capital known as “Basel III.” These guidelines were developed in response to the 2008 financial crisis and were intended to address many of the weaknesses identified in the previous Basel standards, as well as in the banking sector that contributed to the crisis including excessive leverage, inadequate and low quality capital and insufficient liquidity buffers.

In July 2013, federal banking regulators approved final and interim final rules to implement the BCBS Basel III capital guidelines for U.S. banking organizations. These final capital rules, among other things:

• implement in the United States the Basel III regulatory capital reforms including those that revise the definition of capital, increase minimum capital ratios, and introduce a minimum Common Equity Tier 1 (CET1) ratio of 4.5% and a capital conservation buffer of 2.5% (for a total minimum CET1 ratio of 7.0%) and a potential countercyclical buffer of up to 2.5%, which would be imposed by regulators at their discretion if it is determined that a period of excessive credit growth is contributing to an increase in systemic risk;

• require a Tier 1 capital to average total consolidated assets ratio of 4% and introduce, for large and internationally active bank holding companies (BHCs), a Tier 1 supplementary leverage ratio (SLR) of 3% that incorporates off-balance sheet exposures;

• revise Basel I rules for calculating RWAs to enhance risk sensitivity under a standardized approach;

• modify the existing Basel II advanced approaches rules for calculating RWAs to implement Basel III;

• deduct certain assets from CET1, such as deferred tax assets that could not be realized through net operating loss carry- backs, significant investments in non-consolidated financial entities, and MSRs, to the extent any one category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1;

• eliminate the accumulated other comprehensive income or loss filter that applies under RBC rules over a five-year phase-in period beginning in 2014; and

• comply with the Dodd-Frank Act provision prohibiting the reliance on external credit ratings.

We were required to comply with the final Basel III capital rules beginning January 2014, with certain provisions subject to phase-in periods. The Basel III capital rules are scheduled to be fully phased in by the end of 2021. Based on the final capital rules, our CET1 ratio under the final Basel III capital rules calculated on a fully phased-in basis under the Standardized Approach exceeded the minimum of 9.0% by 155 basis points at June 30, 2015. The 9.0% minimum includes a 2% G-SIB surcharge as discussed later in this section under “Other Regulatory Capital Items."

In March 2015, the FRB and OCC directed the Company and its subsidiary national banks to exit the parallel run phase and begin using the Basel III Advanced Approaches capital framework, in addition to the Standardized Approach, to determine our risk-based capital requirements starting in second quarter 2015. Consistent with the Collins Amendment to the Dodd-Frank Act, we must report the lower of our CET1, tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy.

The tables that follow provide information about our risk-based capital and related ratios as calculated under Basel III capital guidelines on a fully phased-in basis (as opposed to with Transition Requirements). For banking industry regulatory reporting purposes, we report our capital in accordance with Transition Requirements but are managing our capital based on a fully phased-in calculation. For information about our capital requirements calculated in accordance with Transition Requirements, see Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

Table 48 summarizes our Basel III CET1, tier 1 capital, total capital, risk-weighted assets and capital ratios on a fully phased-in basis at June 30, 2015 and December 31, 2014. As of June 30, 2015, our CET1 ratio was lower using RWAs calculated under the Standardized Approach.

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Capital Management (continued)

Table 48: Capital Components and Ratios Under Basel III (Fully Phased-In) (1)
		June 30, 2015						December 31, 2014
(in billions)		Advanced Approach				Standardized Approach		General Approach
Common Equity Tier 1	(A)	$	139.9			139.9		137.1
Tier 1 Capital	(B)	159.6				159.6		154.7
Total Capital	(C)	183.4				194.0		192.9
Risk-Weighted Assets	(D)	1,317.8				1,325.6		1,242.5
Common Equity Tier 1 Capital Ratio	(A)/(D)	10.62		%		10.55	*	11.04
Tier 1 Capital Ratio	(B)/(D)	12.11				12.04	*	12.45
Total Capital Ratio	(C)/(D)	13.92			*	14.63		15.53

*Denotes the lowest capital ratio as determined under the Basel III Advanced and Standardized Approaches.

(1) Fully phased-in regulatory capital amounts, ratios and RWAs are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See Table 49 for information regarding the calculation and components of CET1, Tier 1 capital, total capital and RWAs, as well as the corresponding reconciliation of our regulatory capital amounts to total equity.

Table 49 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at June 30, 2015 and under the General Approach at December 31, 2014.

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Table 49: Risk-Based Capital Calculation and Components Under Basel III
		June 30, 2015					December 31, 2014
(in billions)		Advanced Approach			Standardized Approach		General Approach
Total equity		$	190.7		190.7		185.3
Noncontrolling interests		(1.1		)	(1.1	)	(0.9	)
Total Wells Fargo stockholders' equity		189.6			189.6		184.4
Adjustments:
Preferred stock		(20.0		)	(20.0	)	(18.0	)
Cumulative other comprehensive income		—			—		(2.6	)
Goodwill and other intangible assets (1)		(29.1		)	(29.1	)	(26.3	)
Investment in certain subsidiaries and other		(0.6		)	(0.6	)	(0.4	)
Common Equity Tier 1 (Fully Phased-In)		139.9			139.9		137.1
Effect of Transition Requirements		1.0			1.0		—
Common Equity Tier 1 (Transition Requirements)		$	140.9		140.9		137.1
Common Equity Tier 1 (Fully Phased-In)		$	139.9		139.9		137.1
Preferred stock		20.0			20.0		18.0
Qualifying hybrid securities and noncontrolling interests		—			—		—
Other		(0.3		)	(0.3	)	(0.4	)
Total Tier 1 capital (Fully Phased-In)	(A)	159.6			159.6		154.7
Effect of Transition Requirements		0.8			0.8		—
Total Tier 1 capital (Transition Requirements)		$	160.4		160.4		154.7
Total Tier 1 capital (Fully Phased-In)		$	159.6		159.6		154.7
Long-term debt and other instruments qualifying as Tier 2		22.1			22.1		25.0
Qualifying allowance for credit losses (2)		2.0			12.6		13.2
Other		(0.3		)	(0.3	)	—
Total Tier 2 capital (Fully Phased-In)	(B)	23.8			34.4		38.2
Effect of Transition Requirements		3.2			3.2		—
Total Tier 2 capital (Transition Requirements)		$	27.0		37.6		38.2
Total qualifying capital (Fully Phased-In)	(A+B)	$	183.4		194.0		192.9
Total Effect of Transition Requirements		4.0			4.0		—
Total qualifying capital (Transition Requirements)		$	187.4		198.0		192.9
Risk-Weighted Assets (RWAs) (3)(4):
Credit risk		$	1,014.7		1,283.3		1,192.9
Market risk		42.3			42.3		49.6
Operational risk		260.8			N/A		N/A
Total RWAs (Fully Phased-In)		$	1,317.8		1,325.6		1,242.5
Credit risk		$	994.0		1,263.8		1,192.9
Market risk		42.3			42.3		49.6
Operational risk		260.8			N/A		N/A
Total RWAs (Transition Requirements)		$	1,297.1		1,306.1		1,242.5

(1) Goodwill and other intangible assets are net of any associated deferred tax liabilities.

(2) Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in Tier 2 Capital, to the extent the excess allowance does not exceed 0.6% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of Standardized credit RWAs, with any excess allowance for credit losses being deducted from total RWAs.

(3) RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of operating loss resulting from inadequate or failed internal processes or systems.

(4) Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs. The risk weights and categories were changed by Basel III for the Standardized Approach and will generally result in higher RWAs than result from the General Approach risk weights and categories.

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Capital Management (continued)

Table 50 presents the changes in Common Equity Tier 1 under the Advanced Approach for the six months ended June 30, 2015.

Table 50: Analysis of Changes in Common Equity Tier 1 Under Basel III
(in billions)
Common Equity Tier 1 (General Approach) at December 31, 2014	$	137.1
Effect of changes in rules	(0.4		)
Common Equity Tier 1 (Fully Phased-In) at December 31, 2014	136.7
Net income	10.8
Common stock dividends	(3.7		)
Common stock issued, repurchased, and stock compensation-related items	(2.5		)
Goodwill and other intangible assets (net of any associated deferred tax liabilities)	—
Other	(1.4		)
Change in Common Equity Tier 1	3.2
Common Equity Tier 1 (Fully Phased-In) at June 30, 2015	$	139.9

Table 51presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the six months ended June 30, 2015.

Table 51: Analysis of Changes in Basel III RWAs
(in billions)	Advanced Approach			Standardized Approach
Basel III RWAs (General Approach) at December 31, 2014	$	1,242.5		1,242.5
Effect of changes in rules	68.0			62.9
Basel III RWAs (Fully Phased-In) at December 31, 2014	1,310.5			1,305.4
Net change in credit risk RWAs	0.7			27.4
Net change in market risk RWAs	(7.3		)	(7.3	)
Net change in operational risk RWAs	13.9			N/A
Total change in RWAs	7.3			20.1
Basel III RWAs (Fully Phased-In) at June 30, 2015	1,317.8			1,325.5
Effect of Transition Requirements	(20.7		)	(19.4	)
Basel III RWAs (Transition Requirements) at June 30, 2015	$	1,297.1		1,306.1

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SUPPLEMENTARY LEVERAGE RATIO In April 2014, federal banking regulators finalized a rule that enhances the SLR requirements for BHCs, like Wells Fargo, and their insured depository institutions. The SLR consists of Tier 1 capital under Basel III divided by the Company’s total leverage exposure. Total leverage exposure consists of the total average on-balance sheet assets, plus off-balance sheet exposures, such as undrawn commitments and derivative exposures, less amounts permitted to be deducted for Tier 1 capital. The rule, which becomes effective on January 1, 2018, will require a covered BHC to maintain a SLR of at least 5% to avoid restrictions on capital distributions and discretionary bonus payments. The rule will also require that all of our insured depository institutions maintain a SLR of 6% under applicable regulatory capital adequacy guidelines. In September 2014, federal banking regulators finalized additional changes to the SLR requirements to implement revisions to the Basel III leverage framework finalized by the BCBS in January 2014. These additional changes, among other things, modify the methodology for including off-balance sheet items, including credit derivatives, repo-style transactions and lines of credit, in the denominator of the SLR, and will become effective on January 1, 2018. At June 30, 2015, our SLR for the Company was 7.8% assuming full phase-in of the Basel III Advanced Approach capital framework. Based on our review, our current leverage levels would exceed the applicable requirements for each of our insured depository institutions as well. The fully phased-in SLR is considered a non-GAAP financial measure that is used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s leverage exposure. See Table 52 for information regarding the calculation and components of the SLR.

Table 52: Basel III Fully Phased-In SLR
(in billions)	June 30, 2015
Tier 1 capital	$	159.6
Total average assets	1,729.3
Less: deductions from Tier 1 capital	29.7
Total adjusted average assets	1,699.6
Adjustments:
Derivative exposures	48.4
Repo-style transactions	6.5
Other off-balance sheet exposures	289.5
Total adjustments	344.4
Total leverage exposure	$	2,044.0
Supplementary leverage ratio	7.8		%

OTHER REGULATORY CAPITAL ITEMS The FRB has also indicated that it is in the process of considering new rules to address the amount of equity and unsecured debt a company must hold to facilitate its orderly liquidation, often referred to as Total Loss Absorbing Capacity (TLAC). In November 2014, the Financial Stability Board (FSB) issued policy proposals on TLAC for public consultation. Under the FSB’s TLAC proposal, global systemically important banks (G-SIBs) would be required to hold loss absorbing equity and unsecured debt of 16-20% of RWAs, with at least 33% of this total being unsecured debt rather than equity. The FRB will likely propose related rules sometime after the FSB’s public consultation on the TLAC proposal ends.

In addition, in July 2015, the FRB finalized a rule to implement an additional CET1 capital surcharge on those U.S. banking organizations, such as the Company, that have been designated by the FSB as G-SIBs. The G-SIB surcharge will be in addition to the minimum Basel III 7.0% CET1 requirement.

Under the rule, a G-SIB will annually calculate its surcharge under two methods and use the higher of the two surcharges. The first method will consider the G-SIB’s size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with a methodology developed by the BCBS and FSB. The second will use similar inputs, but will replace substitutability with use of short-term wholesale funding and will generally result in higher surcharges than the BCBS methodology. Under the rule, estimated surcharges for G-SIBs will range from 1.0-4.5% of a firm’s RWAs. Based on year-end 2014 data, the FRB estimated that the Company’s G-SIB surcharge would be 2% of the Company’s RWAs. However, because the G-SIB surcharge will be calculated annually based on data that can differ over time, the amount of the surcharge is subject to change in future periods. The G-SIB surcharge will be phased in beginning on January 1, 2016 and become fully effective on January 1, 2019.

In addition, as discussed in the “Risk Management - Asset/Liability Management - Liquidity and Funding” section in this Report, a final rule regarding the U.S. implementation of the Basel III LCR was issued by the FRB, OCC and FDIC in September 2014.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers' financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed Basel III capital requirements including the G-SIB surcharge. Accordingly, based on the final Basel III capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios, we currently target a long-term CET1 capital ratio at or in excess of 10%, which assumes a 2% G-SIB surcharge. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, planned capital actions, changes in our risk profile and other factors.

Under the FRB’s capital plan rule, large BHCs are required to submit capital plans annually for review to determine if the FRB has any objections before making any capital distributions. The rule requires updates to capital plans in the event of material changes in a BHC’s risk profile, including as a result of any significant acquisitions. The FRB assesses the overall financial condition, risk profile, and capital adequacy of BHCs while considering both quantitative and qualitative factors when evaluating capital plans.

Our 2015 CCAR, which was submitted on January 2, 2015, included a comprehensive capital plan supported by an assessment of expected uses and sources of capital over a given planning horizon under a range of expected and stress scenarios, similar to the process the FRB used to conduct the CCAR in 2014. As part of the 2015 CCAR, the FRB also generated a supervisory stress test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance. The FRB reviewed the supervisory stress results both as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and by taking into account the Company’s proposed capital actions. The FRB published its supervisory stress test results as required under the Dodd-Frank Act on March 5, 2015. On March 11, 2015, the FRB notified us that it did not object to our capital plan included in the 2015 CCAR. The capital plan included an increase

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Capital Management (continued)

in our second quarter 2015 common stock dividend rate to $0.375 per share, which was approved by the Board on April 28, 2015.

In addition to CCAR, federal banking regulators also require stress tests to evaluate whether an institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions. These stress testing requirements set forth the timing and type of stress test activities large BHCs and banks must undertake as well as rules governing stress testing controls, oversight and disclosure requirements. The FRB recently finalized rules amending the existing capital plan and stress testing rules to move the start date of capital plan and stress testing cycles to the first and third quarters of each year beginning in 2016 and to limit a large BHC’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan. As required under the FRB’s stress testing rule, we completed a mid-cycle stress test based on March 31, 2015, data and scenarios developed by the Company. We submitted the results of the mid-cycle stress test to the FRB and disclosed a summary of the results in July 2015.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward transactions, and similar transactions. Additionally, we may enter into plans to purchase stock that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including the FRB’s response to our capital plan and to changes in our risk profile.

In March 2014, the Board authorized the repurchase of 350 million shares of our common stock. At June 30, 2015, we had remaining authority to repurchase approximately 156 million shares, subject to regulatory and legal conditions. For more information about share repurchases during second quarter 2015, see Part II, Item 2 in this Report.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Securities Exchange Act of 1934 including a limitation on the daily volume of repurchases. Rule 10b-18 imposes an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in our best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In connection with our participation in the Capital Purchase Program (CPP), a part of the Troubled Asset Relief Program (TARP), we issued to the U.S. Treasury Department warrants to purchase 110,261,688 shares of our common stock with an original exercise price of $34.01 per share expiring on October 28, 2018. The terms of the warrants require the exercise price to be adjusted under certain circumstances when the Company’s quarterly common stock dividend exceeds $0.34 per share, which began occurring in second quarter 2014. Accordingly, with each quarterly common stock dividend above $0.34 per share, we must calculate whether an adjustment to the exercise price is required by the terms of the warrants, including whether certain minimum thresholds have been met to trigger an adjustment, and notify the holders of any such change. The Board authorized the repurchase by the Company of up to $1 billion of the warrants. At June 30, 2015, there were 36,022,503 warrants outstanding, exercisable at $33.962 per share, and $452 million of unused warrant repurchase authority. Depending on market conditions, we may purchase from time to time additional warrants in privately negotiated or open market transactions, by tender offer or otherwise.

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Regulatory Reform

Since the enactment of the Dodd-Frank Act in 2010, the U.S. financial services industry has been subject to a significant increase in regulation and regulatory oversight initiatives. This increased regulation and oversight has substantially changed how most U.S. financial services companies conduct business and has increased their regulatory compliance costs.

The following supplements our discussion of the significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Reform” and “Risk Factors” sections of our 2014 Form 10-K. 

REGULATION OF CONSUMER FINANCIAL PRODUCTSThe Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB) to ensure consumers receive clear and accurate disclosures regarding financial products and to protect them from hidden fees and unfair or abusive practices. With respect to residential mortgage lending, the CFPB issued a number of final rules in 2013 implementing new origination, notification and other requirements that generally became effective in January 2014. In November 2013, the CFPB also finalized rules integrating disclosures required of lenders and settlement agents under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). These rules combine existing separate disclosure forms under the TILA and RESPA into new integrated forms and provide additional limitations on the fees and charges that may be increased from the estimates provided by lenders.These rules were originally scheduled to take effect on August 1, 2015, but the CFPB has adopted an amendment to change the effective date to October 3, 2015. With respect to non-

residential mortgage lending, in November 2014, the CFPB issued a proposed rule to expand consumer protections for prepaid products such as prepaid cards. The proposal would make prepaid cards subject to similar consumer protections as more traditional debit and credit cards such as fraud protection and expanded access to account information.

In addition to these rulemaking activities, the CFPB is continuing its on-going supervisory examination activities of the financial services industry with respect to a number of consumer businesses and products, including mortgage lending and servicing, fair lending requirements, student lending activities, and auto finance. At this time, the Company cannot predict the full impact of the CFPB’s rulemaking and supervisory authority on our business practices or financial results.

"LIVING WILL" REQUIREMENTS AND RELATED MATTERS Rules adopted by the FRB and the FDIC under the Dodd-Frank Act require large financial institutions, including Wells Fargo, to prepare and periodically revise resolution plans, so-called “living-wills,” that would facilitate their resolution in the event of material distress or failure. Wells Fargo submitted its third annual resolution plan under these rules on June 29, 2015. Our national bank subsidiary, Wells Fargo Bank, N.A., is also required to prepare a resolution plan for the FDIC under separate regulatory authority and submitted its third annual resolution plan on June 29, 2015.

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Five of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern:

• the allowance for credit losses;

• PCI loans;

• the valuation of residential MSRs;

• the fair valuation of financial instruments; and

• income taxes.

Management and the Board's Audit and Examination Committee have reviewed and approved these critical accounting policies. These policies are described further in the “Financial Review – Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2014 Form 10-K.

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Current Accounting Developments (continued)

Current Accounting Developments

The following table provides accounting pronouncements applicable to us that have been issued by the FASB but are not yet effective.

Standard	Description	Effective date and financial statement impact
Accounting Standards Update (ASU or Update) 2015-07 - Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent)	The Update eliminates the disclosure requirement to categorize investments within the fair value hierarchy that are measured at fair value using net asset value as a practical expedient.	The guidance is effective for us in first quarter 2016 with retrospective application. Early adoption is permitted. The Update will not affect our consolidated financial statements as it impacts only the fair value disclosure requirements for certain investments.
ASU 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs	The Update changes the balance sheet presentation for debt issuance costs. Under the new guidance, debt issuance costs should be reported as a deduction from debt liabilities rather than as a deferred charge classified as an asset.	The Update is effective for us in first quarter 2016 with retrospective application. Early adoption is permitted. We are evaluating the impact this Update will have on our consolidated financial statements.
ASU 2015-02 - Consolidation (Topic 810): Amendments to the Consolidation Analysis	The Update primarily amends the criteria companies use to evaluate whether they should consolidate certain variable interest entities that have fee arrangements and the criteria used to determine whether partnerships and similar entities are variable interest entities. The Update also excludes certain money market funds from the consolidation guidance.	The changes are effective for us in first quarter 2016 with early adoption permitted. We are evaluating the impact the Update will have on our consolidated financial statements.
ASU 2015-01 - Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items	The Update removes the concept of extraordinary items from GAAP and eliminates the requirement for extraordinary items to be separately presented in the statement of income.	The Update is effective for us in first quarter 2016 with prospective or retrospective application. Early adoption is permitted. The Update will not have a material impact on our consolidated financial statements.
ASU 2014-16 - Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or Equity	The Update clarifies that the nature of host contracts in hybrid financial instruments that are issued in share form should be determined based on the entire instrument, including the embedded derivative.	The Update is effective for us in first quarter 2016 with retrospective application. The Update will not have a material impact on our consolidated financial statements.
ASU 2014-13 - Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity	The Update provides a measurement alternative to companies that consolidate collateralized financing entities (CFEs), such as collateralized debt obligation and collateralized loan obligation structures. Under the new guidance, companies can measure both the financial assets and financial liabilities of a CFE using the more observable fair value of the financial assets or of the financial liabilities.	These changes are effective for us in first quarter 2016 with early adoption permitted at the beginning of an annual period. The guidance can be applied either retrospectively or by a modified retrospective approach. The Update will not have a material impact on our consolidated financial statements.

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Standard	Description	Effective date and financial statement impact
ASU 2014-12 - Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period	The Update provides accounting guidance for employee share-based payment awards with specific performance targets. The Update clarifies that performance targets should be treated as performance conditions if the targets affect vesting and could be achieved after the requisite service period.	The Update is effective for us in first quarter 2016 with early adoption permitted and can be applied prospectively or retrospectively. The Update will not have a material impact on our consolidated financial statements.
ASU 2014-09 - Revenue from Contracts With Customers (Topic 606)	The Update modifies the guidance companies use to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance also requires new qualitative and quantitative disclosures, including information about contract balances and performance obligations.	In July 2015, the FASB approved a one year deferral of the effective date. Accordingly, the Update is effective for us in first quarter 2018 with retrospective application to prior periods presented or as a cumulative effect adjustment in the period of adoption. Early adoption is permitted in first quarter 2017. We are evaluating the impact the Update will have on our consolidated financial statements.

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 levels or targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of

these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

• current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and the overall slowdown in global economic growth;

• our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

• financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

• the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications;

• the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;

• negative effects relating to our mortgage servicing and foreclosure practices, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;

• our ability to realize our efficiency ratio target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in

66

Forward-Looking Statements (continued)

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 low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;

• a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our investment securities portfolio;

• the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;

• reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions;

• a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks;

• the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

• fiscal and monetary policies of the Federal Reserve Board; and

• the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014.

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, 2014, 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.

Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. For a discussion of risk factors that could adversely affect our financial results and condition, and the value of, and return on, an investment in the Company, we refer you to the “Risk Factors” section of our 2014 Form 10-K.

67

Controls and Procedures

Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of June 30, 2015, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2015.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during second quarter 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

68

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended June 30,				Six months ended June 30,
(in millions, except per share amounts)	2015			2014	2015	2014
Interest income
Trading assets	$	483		407	928	781
Investment securities	2,181			2,112	4,325	4,222
Mortgages held for sale	209			195	386	365
Loans held for sale	5			1	10	3
Loans	9,098			8,852	18,036	17,598
Other interest income	250			226	504	436
Total interest income	12,226			11,793	24,189	23,405
Interest expense
Deposits	232			275	490	554
Short-term borrowings	21			14	39	26
Long-term debt	620			620	1,224	1,239
Other interest expense	83			93	180	180
Total interest expense	956			1,002	1,933	1,999
Net interest income	11,270			10,791	22,256	21,406
Provision for credit losses	300			217	908	542
Net interest income after provision for credit losses	10,970			10,574	21,348	20,864
Noninterest income
Service charges on deposit accounts	1,289			1,283	2,504	2,498
Trust and investment fees	3,710			3,609	7,387	7,021
Card fees	930			847	1,801	1,631
Other fees	1,107			1,088	2,185	2,135
Mortgage banking	1,705			1,723	3,252	3,233
Insurance	461			453	891	885
Net gains from trading activities	133			382	541	814
Net gains on debt securities (1)	181			71	459	154
Net gains from equity investments (2)	517			449	887	1,296
Lease income	155			129	287	262
Other	(140		)	241	146	356
Total noninterest income	10,048			10,275	20,340	20,285
Noninterest expense
Salaries	3,936			3,795	7,787	7,523
Commission and incentive compensation	2,606			2,445	5,291	4,861
Employee benefits	1,106			1,170	2,583	2,542
Equipment	470			445	964	935
Net occupancy	710			722	1,433	1,464
Core deposit and other intangibles	312			349	624	690
FDIC and other deposit assessments	222			225	470	468
Other	3,107			3,043	5,824	5,659
Total noninterest expense	12,469			12,194	24,976	24,142
Income before income tax expense	8,549			8,655	16,712	17,007
Income tax expense	2,763			2,869	5,042	5,146
Net income before noncontrolling interests	5,786			5,786	11,670	11,861
Less: Net income from noncontrolling interests	67			60	147	242
Wells Fargo net income	$	5,719		5,726	11,523	11,619
Less: Preferred stock dividends and other	356			302	699	588
Wells Fargo net income applicable to common stock	$	5,363		5,424	10,824	11,031
Per share information
Earnings per common share	$	1.04		1.02	2.10	2.09
Diluted earnings per common share	1.03			1.01	2.07	2.06
Dividends declared per common share	0.375			0.35	0.725	0.65
Average common shares outstanding	5,151.9			5,268.4	5,156.1	5,265.6
Diluted average common shares outstanding	5,220.5			5,350.8	5,233.2	5,353.2

(1) Total other-than-temporary impairment (OTTI) losses were $10 million and $3 million for second quarter 2015 and 2014, respectively. Of total OTTI, losses of $20 million and $13 million were recognized in earnings, and reversal of losses of $(10) million and $(10) million were recognized as non-credit-related OTTI in other comprehensive income for second quarter 2015 and 2014, respectively. Total other-than-temporary impairment losses (reversal of losses) were $4 million and $(11) million for the first half of 2015 and 2014, respectively. Of total OTTI, losses of $51 million and $20 million were recognized in earnings, and reversal of losses of $(47) million and $(31) million were recognized as non-credit-related OTTI in other comprehensive income for the first half of 2015 and 2014, respectively.

(2) Includes OTTI losses of $76 million and $69 million for second quarter 2015 and 2014, respectively, and $118 million and $197 million for the first half of 2015 and 2014, respectively. 

The accompanying notes are an integral part of these statements.

69

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended June 30,					Six months ended June 30,
(in millions)	2015			2014		2015		2014
Wells Fargo net income	$	5,719		5,726		11,523		11,619
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized gains (losses) arising during the period	(1,969		)	2,085		(1,576	)	4,810
Reclassification of net gains to net income	(218		)	(150	)	(518	)	(544	)
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period	(488		)	212		464		256
Reclassification of net gains on cash flow hedges to net income	(268		)	(115	)	(502	)	(221	)
Defined benefit plans adjustments:
Net actuarial losses arising during the period	—			(12	)	(11	)	(12	)
Amortization of net actuarial loss, settlements and other to net income	30			20		73		38
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	10			17		(45	)	—
Reclassification of net losses to net income	—			—		—		6
Other comprehensive income (loss), before tax	(2,903		)	2,057		(2,115	)	4,333
Income tax (expense) benefit related to other comprehensive income	1,040			(816	)	812		(1,647	)
Other comprehensive income (loss), net of tax	(1,863		)	1,241		(1,303	)	2,686
Less: Other comprehensive income (loss) from noncontrolling interests	(154		)	(124	)	147		(45	)
Wells Fargo other comprehensive income (loss), net of tax	(1,709		)	1,365		(1,450	)	2,731
Wells Fargo comprehensive income	4,010			7,091		10,073		14,350
Comprehensive income (loss) from noncontrolling interests	(87		)	(64	)	294		197
Total comprehensive income	$	3,923		7,027		10,367		14,547

The accompanying notes are an integral part of these statements.

70

Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Jun 30, 2015			Dec 31, 2014
Assets	(Unaudited)
Cash and due from banks	$	19,687		19,571
Federal funds sold, securities purchased under resale agreements and other short-term investments	232,247			258,429
Trading assets	80,236			78,255
Investment securities:
Available-for-sale, at fair value	260,667			257,442
Held-to-maturity, at cost (fair value $80,315 and $56,359)	80,102			55,483
Mortgages held for sale (includes $21,539 and $15,565 carried at fair value) (1)	25,447			19,536
Loans held for sale (includes $0 and $1 carried at fair value) (1)	621			722
Loans (includes $5,651 and $5,788 carried at fair value) (1)	888,459			862,551
Allowance for loan losses	(11,754		)	(12,319	)
Net loans	876,705			850,232
Mortgage servicing rights:
Measured at fair value	12,661			12,738
Amortized	1,262			1,242
Premises and equipment, net	8,692			8,743
Goodwill	25,705			25,705
Other assets (includes $2,636 and $2,512 carried at fair value) (1)	96,585			99,057
Total assets (2)	$	1,720,617		1,687,155
Liabilities
Noninterest-bearing deposits	$	343,582		321,963
Interest-bearing deposits	842,246			846,347
Total deposits	1,185,828			1,168,310
Short-term borrowings	82,963			63,518
Accrued expenses and other liabilities	81,399			86,122
Long-term debt	179,751			183,943
Total liabilities (3)	1,529,941			1,501,893
Equity
Wells Fargo stockholders' equity:
Preferred stock	21,649			19,213
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 and 5,481,811,474 shares	9,136			9,136
Additional paid-in capital	60,154			60,537
Retained earnings	114,093			107,040
Cumulative other comprehensive income	2,068			3,518
Treasury stock – 336,576,217 shares and 311,462,276 shares	(15,707		)	(13,690	)
Unearned ESOP shares	(1,835		)	(1,360	)
Total Wells Fargo stockholders' equity	189,558			184,394
Noncontrolling interests	1,118			868
Total equity	190,676			185,262
Total liabilities and equity	$	1,720,617		1,687,155

(1) Parenthetical amounts represent assets and liabilities for which we have elected the fair value option.

(2) Our consolidated assets at June 30, 2015, and December 31, 2014, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash and due from banks, $122 million and $117 million; Trading assets, $1 million and $0 million; Investment securities, $690 million and $875 million; Net loans, $5.1 billion and $4.5 billion; Other assets, $302 million and $316 million, and Total assets, $6.2 billion and $5.8 billion, respectively.

(3) Our consolidated liabilities at June 30, 2015, and December 31, 2014, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Accrued expenses and other liabilities, $60 million and $49 million; Long-term debt, $1.5 billion and $1.6 billion; and Total liabilities, $1.5 billion and $1.7 billion, respectively.

The accompanying notes are an integral part of these statements.

71

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
	Preferred stock					Common stock
(in millions, except shares)	Shares		Amount			Shares		Amount
Balance January 1, 2014	10,881,195		$	16,267		5,257,162,705		$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						50,949,650
Common stock repurchased (1)						(72,897,568	)
Preferred stock issued to ESOP	1,217,000		1,217
Preferred stock released by ESOP
Preferred stock converted to common shares	(735,699	)	(735		)	14,679,903
Common stock warrants repurchased/exercised
Preferred stock issued	80,000		2,000
Common stock dividends
Preferred stock dividends
Tax benefit from stock incentive compensation
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	561,301		2,482			(7,268,015	)	—
Balance June 30, 2014	11,442,496		$	18,749		5,249,894,690		$	9,136
Balance January 1, 2015	11,138,818		$	19,213		5,170,349,198		$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						52,509,675
Common stock repurchased (1)						(84,705,380	)
Preferred stock issued to ESOP	826,598		826
Preferred stock released by ESOP
Preferred stock converted to common shares	(391,014	)	(390		)	7,081,764
Common stock warrants repurchased/exercised
Preferred stock issued	80,000		2,000
Common stock dividends
Preferred stock dividends
Tax benefit from stock incentive compensation
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	515,584		2,436			(25,113,941	)	—
Balance June 30, 2015	11,654,402		$	21,649		5,145,235,257		$	9,136

(1) For the first half of 2015, includes $750 million related to a private forward repurchase transaction entered into in second quarter 2015 that settled in third quarter 2015 for 13.6 million shares of common stock. For the first half of 2014, includes $1.0 billion related to a private forward repurchase transaction entered into in second quarter 2014 that settled in July 2014 for 19.5 million shares of common stock.

The accompanying notes are an integral part of these statements.

72

						Wells Fargo stockholders' equity
Additional paid-in capital		Retained earnings		Cumulative other comprehensive income		Treasury stock		Unearned ESOP shares		Total Wells Fargo stockholders' equity		Noncontrolling interests		Total equity
60,296		92,361		1,386		(8,104	)	(1,200	)	170,142		866		171,008
		11,619								11,619		242		11,861
				2,731						2,731		(45	)	2,686
(1	)									(1	)	(373	)	(374	)
(176	)					1,749				1,573				1,573
(500	)					(3,479	)			(3,979	)			(3,979	)
108								(1,325	)	—				—
(66	)							801		735				735
182						553				—				—
										—				—
(5	)									1,995				1,995
44		(3,467	)							(3,423	)			(3,423	)
		(587	)							(587	)			(587	)
330										330				330
538										538				538
(824	)					10				(814	)			(814	)
(370	)	7,565		2,731		(1,167	)	(524	)	10,717		(176	)	10,541
59,926		99,926		4,117		(9,271	)	(1,724	)	180,859		690		181,549
60,537		107,040		3,518		(13,690	)	(1,360	)	184,394		868		185,262
		11,523								11,523		147		11,670
				(1,450	)					(1,450	)	147		(1,303	)
										—		(44	)	(44	)
(397	)					2,226				1,829				1,829
						(4,586	)			(4,586	)			(4,586	)
74								(900	)	—				—
(35	)							425		390				390
65						325				—				—
(32	)									(32	)			(32	)
(3	)									1,997				1,997
34		(3,771	)							(3,737	)			(3,737	)
		(699	)							(699	)			(699	)
409										409				409
542										542				542
(1,040	)					18				(1,022	)			(1,022	)
(383	)	7,053		(1,450	)	(2,017	)	(475	)	5,164		250		5,414
60,154		114,093		2,068		(15,707	)	(1,835	)	189,558		1,118		190,676

73

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Six months ended June 30,
(in millions)	2015			2014
Cash flows from operating activities:
Net income before noncontrolling interests	$	11,670		11,861
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	908			542
Changes in fair value of MSRs, MHFS and LHFS carried at fair value	(90		)	1,040
Depreciation, amortization and accretion	1,558			1,303
Other net gains	(3,125		)	(118	)
Stock-based compensation	1,178			1,144
Excess tax benefits related to stock incentive compensation	(409		)	(330	)
Originations of MHFS	(94,133		)	(68,250	)
Proceeds from sales of and principal collected on mortgages originated for sale	67,608			54,849
Proceeds from sales of and principal collected on LHFS	6			192
Purchases of LHFS	(27		)	(102	)
Net change in:
Trading assets	19,792			2,679
Deferred income taxes	(364		)	(470	)
Accrued interest receivable	(382		)	3
Accrued interest payable	186			326
Other assets	2,284			(6,170	)
Other accrued expenses and liabilities	(5,796		)	1,103
Net cash provided (used) by operating activities	864			(398	)
Cash flows from investing activities:
Net change in:
Federal funds sold, securities purchased under resale agreements and other short-term investments	26,044			(23,667	)
Available-for-sale securities:
Sales proceeds	10,143			1,670
Prepayments and maturities	15,847			16,573
Purchases	(34,968		)	(10,954	)
Held-to-maturity securities:
Paydowns and maturities	2,821			3,422
Purchases	(22,734		)	(20,637	)
Nonmarketable equity investments:
Sales proceeds	1,894			1,897
Purchases	(792		)	(1,565	)
Loans:
Loans originated by banking subsidiaries, net of principal collected	(22,290		)	(29,987	)
Proceeds from sales (including participations) of loans held for investment	5,248			9,209
Purchases (including participations) of loans	(10,873		)	(2,783	)
Principal collected on nonbank entities’ loans	5,220			6,455
Loans originated by nonbank entities	(6,452		)	(6,054	)
Net cash paid for acquisitions	—			(174	)
Proceeds from sales of foreclosed assets and short sales	3,962			4,299
Net cash from purchases and sales of MSRs	(45		)	(72	)
Other, net	(1,151		)	(377	)
Net cash used by investing activities	(28,126		)	(52,745	)
Cash flows from financing activities:
Net change in:
Deposits	17,756			39,400
Short-term borrowings	19,445			7,966
Long-term debt:
Proceeds from issuance	13,835			18,493
Repayment	(18,104		)	(6,733	)
Preferred stock:
Proceeds from issuance	1,997