EX-12.B 5 wfc-06302018xex12b.htm EXHIBIT 12.B Exhibit


 
 
 
 
 
 
 
 
 
 
EXHIBIT 12(b)
WELLS FARGO & COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
 
 
 
 
 
 
 
 
 
 
  
  
 
Quarter ended June 30,
 
 
Six months ended June 30,
 
(in millions)
 
2018

 
2017

 
2018

 
2017

Earnings including interest on deposits (1)(2): 
 
 
 
 
 
 
 
 
  
Income before income tax expense
 
$
7,119

 
8,139

 
$
13,820

 
15,997

  
Less: Net income from noncontrolling interests
 
123

 
38

 
314

 
129

  
Income before income tax expense and after noncontrolling interests
 
6,996

 
8,101

 
13,506

 
15,868

  
Fixed charges
 
3,577

 
2,326

 
6,788

 
4,320

  
 
 
10,573

 
10,427

 
20,294

 
20,188

 
 
 
 
 
 
 
 
 
 
Preferred dividend requirement
 
$
394

 
406

 
$
804

 
807

Tax factor (based on effective tax rate)
 
1.35

 
1.38

 
1.31

 
1.38

 
 
 
 
 
 
 
 
 
Preferred dividends (3)
 
$
532

 
562

 
$
1,052

 
1,114

Fixed charges (1):
 
 
 
 
 
 
 
 
  
Interest expense
 
3,474

 
2,223

 
6,583

 
4,112

  
Estimated interest component of net rental expense
 
103

 
103

 
205

 
208

  
  
 
3,577

 
2,326

 
6,788

 
4,320

  
Fixed charges and preferred dividends
 
$
4,109

 
2,888

 
$
7,840

 
5,434

 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges and preferred dividends (4)
 
2.57

 
3.61

 
2.59

 
3.72

 
 
 
 
 
 
 
 
 
Earnings excluding interest on deposits: (2)
 
 
 
 
 
 
 
 
  
Income before income tax expense and after noncontrolling interests
 
$
6,996

 
8,101

 
$
13,506

 
15,868

  
Fixed charges
 
2,309

 
1,649

 
4,430

 
3,107

  
  
 
9,305

 
9,750

 
17,936

 
18,975

 
 
 
 
 
 
 
 
 
 
Preferred dividends (3)
 
532

 
562

 
1,052

 
1,114

Fixed charges:
 
 
 
 
 
 
 
 
  
Interest expense
 
3,474

 
2,223

 
6,583

 
4,112

  
Less: Interest on deposits
 
1,268

 
677

 
2,358

 
1,213

  
Estimated interest component of net rental expense
 
103

 
103

 
205

 
208

  
  
 
2,309

 
1,649

 
4,430

 
3,107

  
Fixed charges and preferred dividends
 
$
2,841

 
2,211

 
$
5,482

 
4,221

 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges and preferred dividends (4)
 
3.28

 
4.41

 
3.27

 
4.50

 
 
 
 
 
 
 
 
 
 
(1)
As defined in Item 503(d) of Regulation S-K.
(2)
Financial information for the prior period has been revised to reflect the impact of the adoption of ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.
(3)
The preferred dividends were increased to amounts representing the pretax earnings that would be required to cover such dividend requirements.
(4)
These computations are included herein in compliance with Securities and Exchange Commission regulations. However, management believes that fixed charge ratios are not meaningful measures for the business of the Company because of two factors. First, even if there was no change in net income, the ratios would decline with an increase in the proportion of income which is tax-exempt or, conversely, they would increase with a decrease in the proportion of income which is tax-exempt. Second, even if there was no change in net income, the ratios would decline if interest income and interest expense increase by the same amount due to an increase in the level of interest rates or, conversely, they would increase if interest income and interest expense decrease by the same amount due to a decrease in the level of interest rates.


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