EX-13 8 wfc-12312018xex13.htm EXHIBIT 13 Exhibit
Exhibit 13



                                                                                                                                                                                                                                                        
 
 
 
 
Financial Review
 
 
 
 
 
 
 
 
 
Overview
 
 
5

 
Available-for-Sale and Held-to-Maturity Debt Securities
 
 
 
Earnings Performance
 
 
6

 
Loans and Allowance for Credit Losses
 
 
 
Balance Sheet Analysis
 
 
7

 
Premises, Equipment, Lease Commitments and Other Assets
 
 
 
Off-Balance Sheet Arrangements
 
 
8

 
Equity Securities
 
 
 
Risk Management
 
 
9

 
Securitizations and Variable Interest Entities
 
 
 
Capital Management
 
 
10

 
Mortgage Banking Activities
 
 
 
Regulatory Matters
 
 
11

 
Intangible Assets
 
 
 
Critical Accounting Policies
 
 
12

 
Deposits
 
 
 
Current Accounting Developments
 
 
13

 
Short-Term Borrowings
 
 
 
Forward-Looking Statements
 
 
14

 
Long-Term Debt
 
 
 
Risk Factors
 
 
15

 
Guarantees, Pledged Assets and Collateral, and Other Commitments
 
 
 
 
 
 
 
16

 
Legal Actions
 
 
 
 
Controls and Procedures
 
 
17

 
Derivatives
 
 
 
Disclosure Controls and Procedures
 
 
18

 
Fair Values of Assets and Liabilities
 
 
 
Internal Control Over Financial Reporting
 
 
19

 
Preferred Stock
 
 
 
Management’s Report on Internal Control over Financial Reporting
 
 
20

 
Common Stock and Stock Plans
 
 
 
Report of Independent Registered Public Accounting Firm
 
 
21

 
Revenue from Contracts with Customers
 
 
 
 
 
 
 
22

 
Employee Benefits and Other Expenses
 
 
 
 
Financial Statements
 
 
23

 
Income Taxes
 
 
 
Consolidated Statement of Income
 
 
24

 
Earnings and Dividends Per Common Share
 
 
 
Consolidated Statement of Comprehensive Income
 
 
25

 
Other Comprehensive Income
 
 
 
Consolidated Balance Sheet
 
 
26

 
Operating Segments
 
 
 
Consolidated Statement of Changes in Equity
 
 
27

 
Parent-Only Financial Statements
 
 
 
Consolidated Statement of Cash Flows
 
 
28

 
Regulatory and Agency Capital Requirements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to Financial Statements
 
 
 
 
 
 
 
1

 
Summary of Significant Accounting Policies
 
 
 
 
Report of Independent Registered Public Accounting Firm
 
2

 
Business Combinations
 
 
 
 
Quarterly Financial Data
 
3

 
Cash, Loan and Dividend Restrictions
 
 
 
 
Glossary of Acronyms
 
4

 
Trading Activities
 
 
 
 
 
 

 
Wells Fargo & Company
41


Overview (continued)

This Annual 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” and “Risk Factors” sections, and in the “Regulation and Supervision” section of our Annual Report on Form 10-K for the year ended December 31, 2018 (2018 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 Review1 
Overview
Wells Fargo & Company is a diversified, community-based financial services company with $1.90 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,800 locations, more than 13,000 ATMs, digital (online, mobile and social), and contact centers (phone, email and correspondence), and we have offices in 37 countries and territories to support customers who conduct business in the global economy. With approximately 259,000 active, full-time equivalent team members, we serve one in three households in the United States and ranked No. 26 on Fortune’s 2018 rankings of America’s largest corporations. We ranked fourth in assets and third in the market value of our common stock among all U.S. banks at December 31, 2018
We use our Vision, Values & Goals to guide us toward growth and success. Our vision is to satisfy our customers’ financial needs and help them succeed financially. We aspire to create deep and enduring relationships with our customers by providing them with an exceptional experience and by understanding their needs and delivering the most relevant products, services, advice, and guidance.
We have five primary values, which are based on our vision and guide the actions we take. First, we place customers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime. Second, we value and support our people as a competitive advantage and strive to attract, develop, motivate, and retain the best team members. Third, we strive for the highest ethical standards of integrity, transparency, and principled performance. Fourth, we value and promote diversity and inclusion in all aspects of business and at all levels. Fifth, we look to each of our team members to be a leader in establishing, sharing, and communicating our vision for our customers, communities, team members, and shareholders. In addition to our five primary values, one of our key day-to-day priorities is 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.
____________________________________________
1 
Financial information for periods prior to 2018 has been revised to reflect presentation changes made in connection with our adoption in first quarter 2018 of Accounting Standards Update (ASU) 2016-01 Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report for more information.
 
In keeping with our primary values and risk management priorities, we have six long-term goals for the Company, which entail becoming the financial services leader in the following areas:
Customer service and advice – provide exceptional service and guidance to our customers to help them succeed financially.
Team member engagement – be a company where people feel included, valued, and supported; everyone is respected; and we work as a team.
Innovation – create lasting value for our customers and increased efficiency for our operations through innovative thinking, industry-leading technology, and a willingness to test and learn.
Risk management – set the global standard in
managing all forms of risk.
Corporate citizenship – make a positive contribution to communities through philanthropy, advancing diversity and inclusion, creating economic opportunity, and promoting environmental sustainability.
Shareholder value – deliver long-term value for shareholders.

Federal Reserve Board Consent Order Regarding Governance Oversight and Compliance and Operational Risk Management
On February 2, 2018, the Company entered into a consent order with the Board of Governors of the Federal Reserve System (FRB). As required by the consent order, the Board submitted to the FRB a plan to further enhance the Board’s governance and oversight of the Company, and the Company submitted to the FRB a plan to further improve the Company’s compliance and operational risk management program. The consent order requires the Company, following the FRB’s acceptance and approval of the plans and the Company’s adoption and implementation of the plans, to complete third-party reviews of the enhancements and improvements provided for in the plans. Until these third-party reviews are complete and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets will be limited to the level as of December 31, 2017. Compliance with this asset cap will be measured on a two-quarter daily average basis to allow for management of temporary fluctuations. The Company continues to have constructive dialogue with the FRB on an ongoing basis to clarify expectations, receive feedback, and assess progress under the consent order. In order to have enough time to incorporate this feedback into the Company’s plans in a

42
Wells Fargo & Company
 


thoughtful manner, adopt and implement the final plans as accepted by the FRB, and complete the required third-party reviews, the Company is planning to operate under the asset cap through the end of 2019. As of the end of fourth quarter 2018, our total consolidated assets, as calculated pursuant to the requirements of the consent order, were below our level of total assets as of December 31, 2017. Additionally, after removal of the asset cap, a second third-party review must also be conducted to assess the efficacy and sustainability of the enhancements and improvements.

Consent Orders with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions
On April 20, 2018, the Company entered into consent orders with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance policies and certain mortgage interest rate lock extensions. As required by the consent orders, the Company submitted to the CFPB and OCC an enterprise-wide compliance risk management plan and a plan to enhance the Company’s internal audit program with respect to federal consumer financial law and the terms of the consent orders. In addition, as required by the consent orders, the Company submitted for non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities conducted by the Company.

Retail Sales Practices Matters
As we have previously reported, in September 2016 we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into consent orders with the CFPB and the OCC, in connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains our top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, team members, and other stakeholders, and building a better Company for the future.
Our priority of rebuilding trust has included numerous actions focused on identifying potential financial harm and customer remediation. The Board and management are conducting company-wide reviews of sales practices issues. These reviews are ongoing. In August 2017, a third-party consulting firm completed an expanded data-driven review of retail banking accounts opened from January 2009 to September 2016 to identify financial harm stemming from potentially unauthorized accounts. We have completed financial remediation for the customers identified through the expanded account analysis. Additionally, customer outreach under the $142 million class action lawsuit settlement concerning improper retail sales practices (Jabbari v. Wells Fargo Bank, N.A.), into which the Company entered to provide further remediation to customers, concluded in June 2018 and the period for customers to submit claims closed on July 7, 2018. The settlement administrator will pay claims following the
 
calculation of compensatory damages and favorable resolution of pending appeals in the case.
For additional information regarding sales practices matters, including related legal matters, see the “Risk Factors” section and Note 16 (Legal Actions) to Financial Statements in this Report.

Additional Efforts to Rebuild Trust
Our priority of rebuilding trust has also included an effort to identify other areas or instances where customers may have experienced financial harm. We are working with our regulatory agencies in this effort, and we have accrued for the reasonably estimable remediation costs related to these matters, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators. As part of this effort, we are focused on the following key areas:
Automobile Lending Business The Company is reviewing practices concerning the origination, servicing, and/or collection of consumer automobile loans, including matters related to certain insurance products, and is providing remediation to the extent it identifies affected customers. For example:
In July 2017, the Company announced it would remediate customers who may have been financially harmed due to issues related to automobile collateral protection insurance (CPI) policies purchased through a third-party vendor on their behalf (based on an understanding that the borrowers did not have physical damage insurance coverage on their automobiles as required during the term of their automobile loans). The practice of placing CPI had been previously discontinued by the Company. The Company is in the process of providing remediation to affected customers and/or letters to affected customers through which they may claim or otherwise receive remediation compensation for policies placed between October 15, 2005, and September 30, 2016.
The Company has identified certain issues related to the unused portion of guaranteed automobile protection waiver or insurance agreements between the customer and dealer and, by assignment, the lender, which will result in remediation to customers in certain states. The Company is in the process of providing remediation to affected customers.
Mortgage Interest Rate Lock Extensions In October 2017, the Company announced plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested from September 16, 2013, through February 28, 2017, and to provide refunds, with interest, to customers who believe they should not have paid those fees. The plan to issue refunds follows an internal review that determined a rate lock extension policy implemented in September 2013 was, at times, not consistently applied, resulting in some borrowers being charged fees in cases where the Company was primarily responsible for the delays that made the extensions necessary. Effective March 1, 2017, the Company changed how it manages the mortgage rate lock extension process by establishing a centralized review team that reviews all rate lock extension requests for consistent application of the policy. Although the Company believes a substantial number of the rate lock extension fees during the period in question were appropriately charged under its policy, due to

 
Wells Fargo & Company
43


Overview (continued)

our customer-oriented remediation approach, we have issued refunds and interest to substantially all of our customers who paid rate lock extension fees during the period in question. We have substantially completed the remediation process.
Add-on Products The Company is reviewing practices related to certain consumer “add-on” products, including identity theft and debt protection products that were subject to an OCC consent order entered into in June 2015, as well as home and automobile warranty products, and memberships in discount programs. The products were sold to customers through a number of distribution channels and, in some cases, were acquired by the Company in connection with the purchase of loans. Sales of certain of these products have been discontinued over the past few years primarily due to decisions made by the Company in the normal course of business, and by mid-2017, the Company had ceased selling any of these products to consumers. We are in the process of providing remediation where we identify affected customers, and are also providing refunds to customers who purchased certain products. The review of the Company’s historical practices with respect to these products is ongoing, focusing on, among other topics, sales practices, adequacy of disclosures, customer servicing, and volume and type of customer complaints.
Consumer Deposit Account Freezing/Closing The Company is reviewing procedures regarding the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third-parties or account holders) that affected those accounts. This review is ongoing.
Review of Certain Activities Within Wealth and Investment Management A review of certain activities within Wealth and Investment Management (WIM) being conducted by the Board, in response to inquiries from federal government agencies, is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company’s investment and fiduciary services business. The Board’s review is substantially completed and has not, to date, uncovered evidence of systemic or widespread issues in these businesses. Federal government agencies continue to review this matter.
Fiduciary and Custody Account Fee Calculations The Company is reviewing fee calculations within certain fiduciary and custody accounts in its investment and fiduciary services business, which is part of the wealth management business in WIM. The Company has determined that there have been instances of incorrect fees being applied to certain assets and accounts, resulting in both overcharges and undercharges to customers. These issues include the incorrect set-up and maintenance in the system of record of the values associated with certain assets. Systems, operations, and account-level reviews are underway to determine the extent of any assets and accounts affected, and root cause analyses are being performed with the assistance of third parties. These reviews are ongoing and, as a result of its reviews to date, the Company has suspended the charging of fees on some assets and accounts, has notified the affected customers, and is continuing its analysis of those assets and accounts. The review of
 
customer accounts is ongoing to determine the extent of any additional necessary remediation, including with respect to additional accounts not yet reviewed, which may lead to additional accruals and fee suspensions.
Foreign Exchange Business The Company has completed an assessment, with the assistance of a third party, of its policies, practices, and procedures in its foreign exchange (FX) business. The FX business continues to revise and implement new policies, practices, and procedures, including those related to pricing. The Company has begun providing remediation to customers that may have received pricing inconsistent with commitments made to those customers, and rebates to customers where historic pricing, while consistent with contracts entered into with those customers, does not conform to the Company’s recently implemented standards and pricing. The Company’s review of affected customers is ongoing.
Mortgage Loan Modifications An internal review of the Company’s use of a mortgage loan modification underwriting tool identified a calculation error regarding foreclosure attorneys’ fees affecting certain accounts that were in the foreclosure process between April 13, 2010, and October 2, 2015, when the error was corrected. A subsequent expanded review identified related errors regarding the maximum allowable foreclosure attorneys’ fees permitted for certain accounts that were in the foreclosure process between March 15, 2010, and April 30, 2018, when new controls were implemented. Similar to the initial calculation error, these errors caused an overstatement of the attorneys’ fees that were included for purposes of determining whether a customer qualified for a mortgage loan modification or repayment plan pursuant to the requirements of government-sponsored enterprises (such as Fannie Mae and Freddie Mac), the Federal Housing Administration (FHA), and the U.S. Department of Treasury’s Home Affordable Modification Program (HAMP). Customers were not actually charged the incorrect attorneys’ fees. As previously disclosed, the Company has identified customers who, as a result of these errors, were incorrectly denied a loan modification or were not offered a loan modification or repayment plan in cases where they otherwise would have qualified, as well as instances where a foreclosure was completed after the loan modification was denied or the customer was deemed ineligible to be offered a loan modification or repayment plan. The number of previously disclosed customers affected by these errors may change as a result of ongoing validation, but is not expected to have changed materially upon completion of this validation. The Company has contacted substantially all of the identified customers affected by these errors and has provided remediation as well as the option to pursue no-cost mediation with an independent mediator. The Company’s review of its mortgage loan modification practices is ongoing, and we are providing remediation to the extent we identify additional affected customers as a result of this review.

To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. This effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.

44
Wells Fargo & Company
 


For more information, including related legal and regulatory risk, see the “Risk Factors” section and Note 16 (Legal Actions) to Financial Statements in this Report.

Financial Performance
In 2018, we generated $22.4 billion of net income and diluted earnings per common share (EPS) of $4.28, compared with $22.2 billion of net income and EPS of $4.10 for 2017. We grew average commercial and industrial, and average real estate 1-4 family first mortgage loans compared with 2017, maintained strong capital and liquidity levels, and rewarded our shareholders by increasing our dividend and continuing to repurchase shares of our common stock. Our achievements during 2018 continued to demonstrate the benefit of our diversified business model and our ability to generate consistent financial performance. We remain focused on meeting the financial needs of our customers. Noteworthy financial performance items for 2018 (compared with 2017) included: 
revenue of $86.4 billion, down from $88.4 billion, which included net interest income of $50.0 billion, up $438 million, or 1%;
average loans of $945.2 billion, down 1%;
average deposits of $1.3 trillion, down $28.8 billion, or 2%;
return on assets (ROA) of 1.19% and return on equity (ROE) of 11.53%, up from 1.15% and 11.35%, respectively, a year ago;
our credit results improved with a net charge-off rate of 0.29%, compared with 0.31% a year ago;
nonaccrual loans of $6.5 billion, down $1.2 billion, or 15%, from a year ago; and
$25.8 billion in capital returned to our shareholders through increased common stock dividends and additional net share repurchases, up 78% from a year ago.

Table 1 presents a six-year summary of selected financial data and Table 2 presents selected ratios and per common share data.

Balance Sheet and Liquidity
Our balance sheet remained strong during 2018 with strong credit quality and solid levels of liquidity and capital. Our total assets were $1.90 trillion at December 31, 2018. Cash and other short-term investments decreased $42.5 billion from December 31, 2017, reflecting lower deposit balances. Debt securities grew $11.3 billion, or 2%, from December 31, 2017. Our loan portfolio declined $3.7 billion from December 31, 2017. Growth in commercial and industrial loans and real estate 1-4 family first mortgage loans was more than offset by declines in commercial real estate mortgage, real estate 1-4 family junior lien mortgage and automobile loans.
Deposits at December 31, 2018, were down $49.8 billion, or 4%, from 2017. The decline was driven by a decrease in commercial deposits from financial institutions, which includes actions the Company took in the first half of 2018 in response to the asset cap, and a decline in consumer and small business banking deposits. Our average deposit cost increased 21 basis points from a year ago driven by an increase in Wholesale Banking and Wealth and Investment Management deposit rates.
 
 
Credit Quality
Credit quality remained solid in 2018, driven by continued strong performance in the commercial and consumer real estate portfolios. Performance in several of our commercial and consumer loan portfolios remained near historically low loss levels and reflected our long-term risk focus. Net charge-offs were $2.7 billion, or 0.29% of average loans, in 2018, compared with $2.9 billion, or 0.31%, in 2017.
Net losses in our commercial portfolio were $429 million, or 9 basis points of average commercial loans, in 2018, compared with $446 million, or 9 basis points, in 2017, driven by decreased losses in our commercial and industrial loan portfolio. Net consumer losses decreased to 52 basis points of average consumer loans in 2018, compared with 55 basis points in 2017. Losses in our consumer real estate portfolios declined $93 million in 2018 to a net recovery position. The consumer loss levels reflected decreased losses in our automobile and other revolving and installment loan portfolios, lower losses in our residential real estate portfolios due to the benefit of the improving housing market, and our continued focus on originating high quality loans.
The allowance for credit losses of $10.7 billion at December 31, 2018, declined $1.3 billion from the prior year. Our provision for credit losses in 2018 was $1.7 billion, compared with $2.5 billion in 2017, reflecting a release of $1.0 billion in the allowance for credit losses, compared with a release of $400 million in 2017. The release in 2018 and 2017 was due to strong underlying credit performance.
Nonperforming assets (NPAs) at the end of 2018 were $6.9 billion, down 16% from the end of 2017. Nonaccrual loans declined $1.2 billion from the prior year end while foreclosed assets were down $191 million from 2017.

Capital
Our financial performance in 2018 allowed us to maintain a solid capital position with total equity of $197.1 billion at December 31, 2018, compared with $208.1 billion at December 31, 2017. We returned $25.8 billion to shareholders in 2018 ($14.5 billion in 2017) through common stock dividends and net share repurchases, and our net payout ratio (which is the ratio of (i) common stock dividends and share repurchases less issuances and stock compensation-related items, divided by (ii) net income applicable to common stock) was 125%. During 2018 we increased our quarterly common stock dividend from $0.39 to $0.43 per share. Our common shares outstanding declined by 310.4 million shares, or 6%, as we continued to reduce our common share count through the repurchase of 375.5 million common shares during the year. We expect our share count to continue to decline in 2019 as a result of anticipated net share repurchases.
We believe an important measure of our capital strength is the Common Equity Tier 1 ratio on a fully phased-in basis, which was 11.74% as of December 31, 2018, down from 11.98% a year ago, but still well above our internal target of 10%. 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.

 
Wells Fargo & Company
45


Overview (continued)

Table 1: Six-Year Summary of Selected Financial Data
(in millions, except per share amounts)
2018

 
2017

 
2016

 
2015

 
2014

 
2013

 
%
Change
2018/
2017

 
Five-year
compound
growth
rate 

Income statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
49,995

 
49,557

 
47,754

 
45,301

 
43,527

 
42,800

 
1
 %
 
3

Noninterest income
36,413

 
38,832

 
40,513

 
40,756

 
40,820

 
40,980

 
(6
)
 
(2
)
Revenue
86,408

 
88,389


88,267


86,057


84,347


83,780

 
(2
)
 
1

Provision for credit losses
1,744

 
2,528

 
3,770

 
2,442

 
1,395

 
2,309

 
(31
)
 
(5
)
Noninterest expense
56,126

 
58,484

 
52,377

 
49,974

 
49,037

 
48,842

 
(4
)
 
3

Net income before noncontrolling interests
22,876

 
22,460

 
22,045

 
23,276

 
23,608

 
22,224

 
2

 
1

Less: Net income from noncontrolling interests
483

 
277

 
107

 
382

 
551

 
346

 
74

 
7

Wells Fargo net income
22,393

 
22,183


21,938


22,894


23,057


21,878

 
1

 

Earnings per common share
4.31

 
4.14

 
4.03

 
4.18

 
4.17

 
3.95

 
4

 
2

Diluted earnings per common share
4.28

 
4.10

 
3.99

 
4.12

 
4.10

 
3.89

 
4

 
2

Dividends declared per common share
1.640

 
1.540

 
1.515

 
1.475

 
1.350

 
1.150

 
6

 
7

Balance sheet (at year end)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
$
484,689

 
473,366

 
459,038

 
394,744

 
350,661

 
298,241

 
2
 %
 
10

Loans
953,110

 
956,770

 
967,604

 
916,559

 
862,551

 
822,286

 

 
3

Allowance for loan losses
9,775

 
11,004

 
11,419

 
11,545

 
12,319

 
14,502

 
(11
)
 
(8
)
Goodwill
26,418

 
26,587

 
26,693

 
25,529

 
25,705

 
25,637

 
(1
)
 
1

Equity securities
55,148

 
62,497

 
49,110

 
40,266

 
44,005

 
32,227

 
(12
)
 
11

Assets
1,895,883

 
1,951,757

 
1,930,115

 
1,787,632

 
1,687,155

 
1,523,502

 
(3
)
 
4

Deposits
1,286,170

 
1,335,991

 
1,306,079

 
1,223,312

 
1,168,310

 
1,079,177

 
(4
)
 
4

Long-term debt
229,044

 
225,020

 
255,077

 
199,536

 
183,943

 
152,998

 
2

 
8

Wells Fargo stockholders’ equity
196,166

 
206,936

 
199,581

 
192,998

 
184,394

 
170,142

 
(5
)
 
3

Noncontrolling interests
900

 
1,143

 
916

 
893

 
868

 
866

 
(21
)
 
1

Total equity
197,066

 
208,079

 
200,497

 
193,891

 
185,262

 
171,008

 
(5
)
 
3




46
Wells Fargo & Company
 


Table 2: Ratios and Per Common Share Data
 
Year ended December 31, 
 
 
2018

 
2017

 
2016

Profitability ratios
 
 
 
 
 
Wells Fargo net income to average assets (ROA)
1.19
%
 
1.15

 
1.16

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)
11.53

 
11.35

 
11.49

Return on average tangible common equity (ROTCE) (1)
13.73

 
13.55

 
13.85

Efficiency ratio (2)
65.0

 
66.2

 
59.3

Capital ratios (3)
 
 
 
 
 
At year end:
 
 
 
 
 
Wells Fargo common stockholders’ equity to assets
9.20

 
9.38

 
9.14

Total equity to assets
10.39

 
10.66

 
10.39

Risk-based capital (4):
 
 
 
 
 
Common Equity Tier 1
11.74

 
12.28

 
11.13

Tier 1 capital
13.46

 
14.14

 
12.82

Total capital
16.60

 
17.46

 
16.04

Tier 1 leverage
9.07

 
9.35

 
8.95

Average balances:
 
 
 
 
 
Average Wells Fargo common stockholders’ equity to average assets
9.50

 
9.37

 
9.40

Average total equity to average assets
10.77

 
10.64

 
10.64

Per common share data
 
 
 
 
 
Dividend payout (5)
38.3

 
37.6

 
38.0

Book value (6)
$
38.06

 
37.44

 
35.18

(1)
Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities, but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it enables investors and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.
(2)
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(3)
See the “Capital Management” section and Note 28 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.
(4)
The risk-based capital ratios were calculated under the lower of Standardized or Advanced Approach determined pursuant to Basel III. Beginning January 1, 2018, the requirements for calculating common equity tier 1 and tier 1 capital, along with risk-weighted assets, became fully phased-in; Accordingly, the information presented reflects fully phased-in common equity tier 1 capital, tier 1 capital and risk-weighted assets but reflects total capital still in accordance with Transition Requirements. See the “Capital Management” section and Note 28 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.
(5)
Dividend payout ratio is dividends declared per common share as a percentage of diluted earnings per common share.
(6)
Book value per common share is common stockholders’ equity divided by common shares outstanding.



 
Wells Fargo & Company
47


Earnings Performance (continued)

Earnings Performance
Wells Fargo net income for 2018 was $22.4 billion ($4.28 diluted earnings per common share), compared with $22.2 billion ($4.10 diluted per share) for 2017 and $21.9 billion ($3.99 diluted per share) for 2016. Our financial performance in 2018 benefited from a $438 million increase in net interest income, a $784 million decrease in our provision for credit losses, and a $2.4 billion decrease in noninterest expense, partially offset by a $2.4 billion decrease in noninterest income, and a $745 million increase in income tax expense.
 
Revenue, the sum of net interest income and noninterest income, was $86.4 billion in 2018, compared with $88.4 billion in 2017 and $88.3 billion in 2016. The decrease in revenue for 2018 compared with 2017 was predominantly due to a decrease in noninterest income, reflecting decreases in mortgage banking income, insurance income, service charges on deposit accounts, and net gains (losses) from debt and equity securities, partially offset by an increase in all other noninterest income. Our diversified sources of revenue generated by our businesses continued to be balanced between net interest income and noninterest income. In 2018, net interest income of $50.0 billion represented 58% of revenue, compared with $49.6 billion (56%) in 2017 and $47.8 billion (54%) in 2016. Table 3 presents the components of revenue and noninterest expense as a percentage of revenue for year-over-year results.
See later in this section for discussions of net interest income, noninterest income and noninterest expense.


48
Wells Fargo & Company
 


Table 3: Net Interest Income, Noninterest Income and Noninterest Expense as a Percentage of Revenue
 
Year ended December 31, 
 
(in millions)
2018

 
% of revenue 

 
2017

 
% of revenue 

 
2016

 
% of revenue 

Interest income (on a taxable-equivalent basis)
 
 
 
 
 
 
 
 
 
 
 
Debt securities
$
14,947

 
17
 %
 
$
14,084

 
15
 %
 
$
12,328

 
14
 %
Mortgage loans held for sale (MLHFS)
777

 
1

 
786

 
1

 
784

 
1

Loans held for sale (LHFS)
140

 

 
50

 
3

 
38

 

Loans
44,086

 
51

 
41,551

 
47

 
39,630

 
45

Equity securities
999

 
1

 
821

 
1

 
669

 
1

Other interest income
4,359

 
5

 
2,941

 
3

 
1,457

 
2

Total interest income (on a taxable-equivalent basis)
65,308

 
76

 
60,233

 
68

 
54,906

 
62

Interest expense (on a taxable-equivalent basis)
 
 
 
 
 
 
 
 
 
 
 
Deposits
5,622

 
7

 
3,013

 
3

 
1,395

 
2

Short-term borrowings
1,719

 
2

 
761

 
1

 
333

 

Long-term debt
6,703

 
8

 
5,157

 
6

 
3,830

 
5

Other interest expense
610

 
1

 
424

 

 
354

 

Total interest expense (on a taxable-equivalent basis)
14,654

 
17

 
9,355

 
11

 
5,912

 
7

Net interest income (on a taxable-equivalent basis)
50,654

 
59

 
50,878

 
57

 
48,994

 
55

Taxable-equivalent adjustment
(659
)
 
(1
)
 
(1,321
)
 
(1
)
 
(1,240
)
 
(1
)
Net interest income (A) 
49,995

 
58

 
49,557

 
56

 
47,754

 
54

Noninterest income
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
4,716

 
5

 
5,111

 
6

 
5,372

 
6

Trust and investment fees (1)
14,509

 
17

 
14,495

 
16

 
14,243

 
16

Card fees
3,907

 
5

 
3,960

 
4

 
3,936

 
5

Other fees (1)
3,384

 
4

 
3,557

 
4

 
3,727

 
4

Mortgage banking (1)
3,017

 
3

 
4,350

 
5

 
6,096

 
7

Insurance
429

 

 
1,049

 
1

 
1,268

 
2

Net gains from trading activities
602

 
1

 
542

 
1

 
610

 
1

Net gains on debt securities
108

 

 
479

 
1

 
942

 
1

Net gains from equity securities
1,515

 
2

 
1,779

 
2

 
1,103

 
1

Lease income
1,753

 
2

 
1,907

 
2

 
1,927

 
2

Other (1)
2,473

 
3

 
1,603

 
2

 
1,289

 
1

Total noninterest income (B)
36,413

 
42

 
38,832

 
44

 
40,513

 
46

Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
Salaries
17,834

 
21

 
17,363

 
20

 
16,552

 
19

Commission and incentive compensation
10,264

 
12

 
10,442

 
12

 
10,247

 
12

Employee benefits
4,926

 
6

 
5,566

 
6

 
5,094

 
6

Equipment
2,444

 
3

 
2,237

 
3

 
2,154

 
2

Net occupancy
2,888

 
3

 
2,849

 
3

 
2,855

 
3

Core deposit and other intangibles
1,058

 
1

 
1,152

 
1

 
1,192

 
1

FDIC and other deposit assessments
1,110

 
1

 
1,287

 
1

 
1,168

 
1

Operating losses
3,124

 
4

 
5,492

 
6

 
1,608

 
2

Outside professional services
3,306

 
4

 
3,813

 
4

 
3,138

 
4

Other (2)
9,172

 
11

 
8,283

 
9

 
8,369

 
9

Total noninterest expense
56,126

 
65

 
58,484

 
66

 
52,377

 
59

Revenue (A) + (B)
$
86,408

 
 
 
$
88,389

 
 
 
$
88,267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
See Table 7 – Noninterest Income in this Report for additional detail.
(2)
See Table 8 – Noninterest Expense in this Report for additional detail.


 
Wells Fargo & Company
49


Earnings Performance (continued)

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. 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 5 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a 21% and 35% federal statutory tax rate for the periods ending December 31, 2018 and 2017, respectively.
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 variable sources of interest income, such as resolutions from purchased credit-impaired (PCI) loans, loan fees, periodic dividends, and collection of interest on nonaccrual loans, can vary from period to period.
Net interest income on a taxable-equivalent basis was $50.7 billion in 2018, compared with $50.9 billion in 2017, and $49.0 billion in 2016. The decrease in net interest income in 2018, compared with 2017, was driven by:
lower loan swap income due to unwinding the receive-fixed loan swap portfolio;
lower tax-equivalent net interest income from updated tax-equivalent factors reflecting new tax law;
a smaller balance sheet and unfavorable mix;
higher premium amortization; and
unfavorable hedge ineffectiveness accounting results;
partially offset by:
the net repricing benefit of higher interest rates; and
higher variable income.

The increase in net interest income for 2017, compared with 2016, was driven by growth in earning assets and the benefit of higher interest rates, partially offset by growth and repricing of long-term debt. Deposit interest expense also increased in 2017, largely due to an increase in wholesale and Wealth and Investment Management (WIM) deposit pricing resulting from higher interest rates.
Net interest margin on a taxable-equivalent basis
was 2.91% in 2018, compared with 2.87% in 2017 and 2.86% in 2016. The increase in net interest margin in 2018, compared with 2017, was driven by:
the net repricing benefit of higher interest rates;
runoff of lower yielding assets and other favorable mix; and
higher variable income;
partially offset by:
lower loan swap income due to unwinding the receive-fixed loan swap portfolio;
lower tax-equivalent net interest income from updated tax-equivalent factors reflecting new tax law;
higher premium amortization; and
unfavorable hedge ineffectiveness accounting results.

 
The slight increase in net interest margin in 2017, compared with 2016, was due to the repricing benefits of earning assets from higher interest rates exceeding the repricing costs of deposits and market based funding sources.
Table 4 presents the components of earning assets and funding sources as a percentage of earning assets to provide a more meaningful analysis of year-over-year changes that influenced net interest income.
Average earning assets decreased $38.1 billion in 2018 compared with 2017. The decrease was driven by:
average loans decreased $10.9 billion in 2018;
average interest-earning deposits decreased $45.5 billion in 2018;
partially offset by:
average federal funds sold and securities purchased under resale agreements increased $3.9 billion in 2018;
average debt securities increased $13.8 billion in 2018; and
average equity securities increased $2.0 billion in 2018.

Deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Deposits include noninterest-bearing deposits, interest-bearing checking, market rate and other savings, savings certificates, other time deposits, and deposits in foreign offices. Average deposits decreased to $1.28 trillion in 2018, compared with $1.30 trillion in 2017, and represented 135% of average loans in 2018, compared with 136% in 2017. Average deposits were 73% of average earning assets in both 2018 and 2017.
Table 5 presents the individual components of net interest income and the net interest margin. The effect on interest income and costs of earning asset and funding mix changes described above, combined with rate changes during 2018, are analyzed in Table 6.

50
Wells Fargo & Company
 


Table 4: Average Earning Assets and Funding Sources as a Percentage of Average Earning Assets
 
Year ended December 31,
 
 
2018
 
 
2017
 
(in millions)
Average
balance

 
% of earning assets

 
Average
balance

 
% of earning
assets

Earning assets
 
 
 
 
 
 
 
Interest-earning deposits with banks
$
156,366

 
9
%
 
$
201,864

 
12
%
Federal funds sold, securities purchased under resale agreements
78,547

 
5

 
74,697

 
4

Debt securities:
 
 


 
 
 


Trading debt securities
83,526

 
5

 
74,475

 
4

Available-for-sale debt securities:
 
 


 
 
 


Securities of U.S. Treasury and federal agencies
6,618

 

 
15,966

 
1

Securities of U.S. states and political subdivisions
47,884

 
3

 
52,658

 
3

Mortgage-backed securities:
 
 


 
 
 


Federal agencies
156,052

 
9

 
145,310

 
8

Residential and commercial
7,769

 

 
11,839

 
1

Total mortgage-backed securities
163,821

 
9

 
157,149

 
9

Other debt securities
46,875

 
3

 
48,714

 
3

Total available-for-sale debt securities
265,198

 
15

 
274,487

 
16

Held-to-maturity debt securities:
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
44,735

 
3

 
44,705

 
3

Securities of U.S. states and political subdivisions
6,253

 

 
6,268

 

Federal agency mortgage-backed securities
94,216

 
5

 
78,330

 
4

Other debt securities
361

 

 
2,194

 

Held-to-maturity debt securities
145,565

 
8

 
131,497

 
7

Total debt securities
494,289

 
28

 
480,459

 
27

Mortgage loans held for sale (1)
18,394

 
1

 
20,780

 
1

Loans held for sale (1)
2,526

 

 
1,487

 

Commercial loans:
 
 


 
 
 


Commercial and industrial – U.S.
275,656

 
16

 
272,034

 
16

Commercial and industrial – Non-U.S.
60,718

 
4

 
57,198

 
3

Real estate mortgage
122,947

 
7

 
129,990

 
7

Real estate construction
23,609

 
1

 
24,813

 
1

Lease financing
19,392

 
1

 
19,128

 
1

Total commercial loans
502,322

 
29

 
503,163

 
28

Consumer loans:
 
 


 
 
 


Real estate 1-4 family first mortgage
284,178

 
16

 
277,751

 
16

Real estate 1-4 family junior lien mortgage
36,687

 
2

 
42,780

 
3

Credit card
36,780

 
2

 
35,600

 
2

Automobile
48,115

 
3

 
57,900

 
3

Other revolving credit and installment
37,115

 
2

 
38,935

 
2

Total consumer loans
442,875

 
25

 
452,966

 
26

Total loans (1)
945,197

 
54

 
956,129

 
54

Equity securities
38,092

 
2

 
36,105

 
2

Other
5,071

 
1

 
5,069

 

Total earning assets
$
1,738,482

 
100
%
 
$
1,776,590

 
100
%
Funding sources
 
 


 
 
 


Deposits:
 
 


 
 
 


Interest-bearing checking
$
63,243

 
4
%
 
$
49,474

 
3
%
Market rate and other savings
684,882

 
39

 
682,053

 
39

Savings certificates
20,653

 
1

 
22,190

 
1

Other time deposits
84,822

 
5

 
61,625

 
3

Deposits in foreign offices
63,945

 
4

 
123,816

 
7

Total interest-bearing deposits
917,545

 
53

 
939,158

 
53

Short-term borrowings
104,267

 
6

 
98,922

 
6

Long-term debt
224,268

 
13

 
246,195

 
14

Other liabilities
27,648

 
1

 
21,872

 
1

Total interest-bearing liabilities
1,273,728

 
73

 
1,306,147

 
74

Portion of noninterest-bearing funding sources
464,754

 
27

 
470,443

 
26

Total funding sources
$
1,738,482

 
100
%
 
$
1,776,590

 
100
%
Noninterest-earning assets
 
 
 
 
 
 
 
Cash and due from banks
$
18,777

 
 
 
18,622

 
 
Goodwill
26,453

 
 
 
26,629

 
 
Other
105,180

 
 
 
111,164

 
 
Total noninterest-earning assets
$
150,410

 
 
 
156,415

 
 
Noninterest-bearing funding sources
 
 
 
 
 
 
 
Deposits
$
358,312

 
 
 
365,464

 
 
Other liabilities
53,496

 
 
 
55,740

 
 
Total equity
203,356

 
 
 
205,654

 
 
Noninterest-bearing funding sources used to fund earning assets
(464,754
)
 
 
 
(470,443
)
 
 
Net noninterest-bearing funding sources
$
150,410

 
 
 
156,415

 
 
Total assets
$
1,888,892

 
 
 
1,933,005

 
 
 
 
 
 
 
 
 
 
(1)
Nonaccrual loans are included in their respective loan categories.

 
Wells Fargo & Company
51


Earnings Performance (continued)

Table 5: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)(2)
 
 
 
 
 
2018

 
 
 
 
 
2017

(in millions) 
Average 
balance 

 
Yields/ 
rates 

 
Interest 
income/ 
expense 

 
Average 
balance 

 
Yields/ 
rates 

 
Interest 
income/ 
expense 

Earning assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits with banks (3)
$
156,366

 
1.82
%
 
$
2,854

 
201,864

 
1.07
%
 
$
2,162

Federal funds sold and securities purchased under resale agreements (3)
78,547

 
1.82

 
1,431

 
74,697

 
0.98

 
735

Debt securities (4):
 
 
 
 
 
 
 
 
 
 
 
Trading debt securities
83,526

 
3.42

 
2,856

 
74,475

 
3.16

 
2,356

Available-for-sale debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
6,618

 
1.70

 
112

 
15,966

 
1.49

 
239

Securities of U.S. states and political subdivisions
47,884

 
3.77

 
1,806

 
52,658

 
3.95

 
2,082

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Federal agencies
156,052

 
2.79

 
4,348

 
145,310

 
2.60

 
3,782

Residential and commercial
7,769

 
4.62

 
358

 
11,839

 
5.33

 
631

Total mortgage-backed securities
163,821

 
2.87

 
4,706

 
157,149

 
2.81

 
4,413

Other debt securities
46,875

 
4.22

 
1,980

 
48,714

 
3.68

 
1,794

Total available-for-sale debt securities
265,198

 
3.24

 
8,604

 
274,487

 
3.11

 
8,528

Held-to-maturity debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
44,735

 
2.19

 
980

 
44,705

 
2.19

 
979

Securities of U.S. states and political subdivisions
6,253

 
4.34

 
271

 
6,268

 
5.32

 
334

Federal agency and other mortgage-backed securities
94,216

 
2.36

 
2,221

 
78,330

 
2.34

 
1,832

Other debt securities
361

 
4.00

 
15

 
2,194

 
2.50

 
55

Held-to-maturity debt securities
145,565

 
2.40

 
3,487

 
131,497

 
2.43

 
3,200

Total debt securities
494,289

 
3.02

 
14,947

 
480,459

 
2.93

 
14,084

Mortgage loans held for sale (5)
18,394

 
4.22

 
777

 
20,780

 
3.78

 
786

Loans held for sale (5)
2,526

 
5.56

 
140

 
1,487

 
3.40

 
50

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial – U.S.
275,656

 
4.16

 
11,465

 
272,034

 
3.75

 
10,196

Commercial and industrial – Non-U.S.
60,718

 
3.53

 
2,143

 
57,198

 
2.86

 
1,639

Real estate mortgage
122,947

 
4.29

 
5,279

 
129,990

 
3.74

 
4,859

Real estate construction
23,609

 
4.94

 
1,167

 
24,813

 
4.10

 
1,017

Lease financing
19,392

 
4.74

 
919

 
19,128

 
3.74

 
715

Total commercial loans
502,322

 
4.18

 
20,973

 
503,163

 
3.66

 
18,426

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
284,178

 
4.04

 
11,481

 
277,751

 
4.03

 
11,206

Real estate 1-4 family junior lien mortgage
36,687

 
5.38

 
1,975

 
42,780

 
4.82

 
2,062

Credit card
36,780

 
12.72

 
4,678

 
35,600

 
12.23

 
4,355

Automobile
48,115

 
5.18

 
2,491

 
57,900

 
5.34

 
3,094

Other revolving credit and installment
37,115

 
6.70

 
2,488

 
38,935

 
6.18

 
2,408

Total consumer loans
442,875

 
5.22

 
23,113

 
452,966

 
5.11

 
23,125

Total loans (5)
945,197

 
4.66

 
44,086

 
956,129

 
4.35

 
41,551

Equity securities
38,092

 
2.62

 
999

 
36,105

 
2.27

 
821

Other
5,071

 
1.46

 
74

 
5,069

 
0.85

 
44

Total earning assets
$
1,738,482

 
3.76
%
 
$
65,308

 
1,776,590

 
3.40
%
 
$
60,233

Funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking
$
63,243

 
0.96
%
 
$
606

 
49,474

 
0.49
%
 
$
242

Market rate and other savings
684,882

 
0.31

 
2,157

 
682,053

 
0.14

 
983

Savings certificates
20,653

 
0.57

 
118

 
22,190

 
0.30

 
67

Other time deposits
84,822

 
2.25

 
1,906

 
61,625

 
1.43

 
880

Deposits in foreign offices
63,945

 
1.30

 
835

 
123,816

 
0.68

 
841

Total interest-bearing deposits
917,545

 
0.61

 
5,622

 
939,158

 
0.32

 
3,013

Short-term borrowings
104,267

 
1.65

 
1,719

 
98,922

 
0.77

 
761

Long-term debt
224,268

 
2.99

 
6,703

 
246,195

 
2.09

 
5,157

Other liabilities
27,648

 
2.21

 
610

 
21,872

 
1.94

 
424

Total interest-bearing liabilities
1,273,728

 
1.15

 
14,654

 
1,306,147

 
0.72

 
9,355

Portion of noninterest-bearing funding sources
464,754

 

 

 
470,443

 

 

Total funding sources
$
1,738,482

 
0.85

 
14,654

 
1,776,590

 
0.53

 
9,355

Net interest margin and net interest income on a taxable-equivalent basis (6)
 
 
2.91
%
 
$
50,654

 
 
 
2.87
%
 
$
50,878

Noninterest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
18,777

 
 
 
 
 
18,622

 
 
 
 
Goodwill
26,453

 
 
 
 
 
26,629

 
 
 
 
Other
105,180

 
 
 
 
 
111,164

 
 
 
 
Total noninterest-earning assets
$
150,410

 
 
 
 
 
156,415

 
 
 
 
Noninterest-bearing funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
358,312

 
 
 
 
 
365,464

 
 
 
 
Other liabilities
53,496

 
 
 
 
 
55,740

 
 
 
 
Total equity
203,356

 
 
 
 
 
205,654

 
 
 
 
Noninterest-bearing funding sources used to fund earning assets
(464,754
)
 
 
 
 
 
(470,443
)
 
 
 
 
Net noninterest-bearing funding sources
$
150,410

 
 
 
 
 
156,415

 
 
 
 
Total assets
$
1,888,892

 
 
 
 
 
1,933,005

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Our average prime rate was 4.91% for the year ended December 31, 2018, 4.10% for the year ended December 31, 2017, 3.51% for the year ended December 31, 2016, and 3.26% for the year ended December 31, 2015, and 3.25% for the year ended December 31, 2014. The average three-month London Interbank Offered Rate (LIBOR) was 2.31%, 1.26%, 0.74%, 0.32%, and 0.23% for the same years, respectively.
(2)
Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3)
Financial information for the prior periods has been revised to reflect the impact of our adoption of Accounting Standards Update (ASU) 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash in which we changed the presentation of our cash and cash equivalents to include both cash and due from banks as well as interest-earning deposits with banks, which are inclusive of any restricted cash.


52
Wells Fargo & Company
 



 
 
 
 
2016

 
 
 
 
 
2015

 
 
 
 
 
2014

Average 
balance 

 
Yields/ 
rates 

 
Interest 
income/ 
expense 

 
Average 
balance 

 
Yields/ 
rates 

 
Interest 
income/ 
expense 

 
Average 
balance 

 
Yields/ 
rates 

 
Interest 
income/ 
expense 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
225,955

 
0.51
%
 
$
1,161

 
222,773

 
0.27
%
 
$
605

 
209,686

 
0.26
%
 
$
554

61,763

 
0.48

 
296

 
44,059

 
0.30

 
133

 
31,596

 
0.38

 
119