EX-99.1 2 wfc2qer7-16x2019exx991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1


 
wfclogo2019a02.jpg
 
News Release
 
 
 
Tuesday, July 16, 2019
Wells Fargo Reports $6.2 Billion in Quarterly Net Income; Diluted EPS of $1.30

Financial results:
Net income of $6.2 billion, compared with $5.2 billion in second quarter 2018
Diluted earnings per share (EPS) of $1.30, compared with $0.98
Revenue of $21.6 billion
Net interest income of $12.1 billion, down $446 million
Noninterest income of $9.5 billion, up $477 million
Noninterest expense of $13.4 billion, down $533 million
Average deposits of $1.3 trillion, down $2.4 billion
Average loans of $947.5 billion, up $3.4 billion
Return on assets (ROA) of 1.31%, return on equity (ROE) of 13.26%, and return on average tangible common equity (ROTCE) of 15.78%1
Credit quality:
Provision expense of $503 million, up $51 million from second quarter 2018
Net charge-offs of $653 million, up $51 million
Net charge-offs of 0.28% of average loans (annualized), up from 0.26%
Reserve release2 of $150 million, equal to the amount released in second quarter 2018
Nonaccrual loans of $5.9 billion, down $1.2 billion, or 17%
Strong capital position while returning more capital to shareholders:
Returned $6.1 billion to shareholders through common stock dividends and net share repurchases, up 52% from $4.0 billion in second quarter 2018
Common Equity Tier 1 ratio (fully phased-in) of 12.0%3, which continued to exceed both the regulatory minimum of 9% and our current internal target of 10%
Received a non-objection to the Company's 2019 Capital Plan submission from the Federal Reserve
As part of the plan, the Company expects to increase its third quarter 2019 common stock dividend to $0.51 per share from $0.45 per share, subject to approval by the Company's Board of Directors. The plan also includes up to $23.1 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from third quarter 2019 through second quarter 2020.


Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.
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 “Tangible Common Equity” tables on page 36.
2 Reserve build represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
3 See table on page 37 for more information on Common Equity Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary estimate and is calculated assuming the full phase-in of the Basel III capital rules.




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Selected Financial Information
 
 
 
Quarter ended
 
 
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

Earnings
 
 
 
 
 
Diluted earnings per common share
$
1.30

 
1.20

 
0.98

Wells Fargo net income (in billions)
6.21

 
5.86

 
5.19

Return on assets (ROA)
1.31
%
 
1.26

 
1.10

Return on equity (ROE)
13.26

 
12.71

 
10.60

Return on average tangible common equity (ROTCE) (a)
15.78

 
15.16

 
12.62

Asset Quality
 
 
 
 
 
Net charge-offs (annualized) as a % of average total loans
0.28
%
 
0.30

 
0.26

Allowance for credit losses as a % of total loans
1.12

 
1.14

 
1.18

Allowance for credit losses as a % of annualized net charge-offs
405

 
384

 
460

Other
 
 
 
 
 
Revenue (in billions)
$
21.6

 
21.6

 
21.6

Efficiency ratio (b)
62.3
%
 
64.4

 
64.9

Average loans (in billions)
$
947.5

 
950.0

 
944.1

Average deposits (in billions)
1,269.0

 
1,262.1

 
1,271.3

Net interest margin
2.82
%
 
2.91

 
2.93

(a)
Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it enables investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 36.
(b)
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
SAN FRANCISCO – Wells Fargo & Company (NYSE:WFC) reported net income of $6.2 billion, or $1.30 per diluted common share, for second quarter 2019, compared with $5.2 billion, or $0.98 per share, for second quarter 2018, and $5.9 billion, or $1.20 per share, for first quarter 2019.
Interim Chief Executive Officer Allen Parker said, “In second quarter 2019, we recorded strong earnings and continued to make progress on our top priorities: focusing on our customers and team members; meeting the expectations of our regulators; and continuing the important transformation of our Company. The commitment of our team members to provide outstanding customer service was reflected in higher customer experience survey scores from our branches, continued growth in primary consumer checking customers, and an increase in referred investment assets as a result of the partnership between our Wealth and Investment Management team and our Community Banking team. During the second quarter, we formed a new Strategic Execution and Operations Office that will focus on achieving operational excellence across our businesses to enable us to execute more effectively on our regulatory priorities and further drive our transformation. Finally, our recent CCAR results demonstrated the strength of our diversified business model, our strong capital position, our sound financial risk management, and our commitment to return excess capital to our shareholders in a prudent manner. I’m confident that all our stakeholders will benefit from the transformational changes we are implementing as we work to build the most customer-focused, efficient, and innovative Wells Fargo ever.”
Chief Financial Officer John Shrewsberry said, “Wells Fargo reported $6.2 billion of net income in the second quarter and diluted earnings per share of $1.30. We grew period-end loans and deposits, as well as pre-tax pre-provision profit, compared with the first quarter and a year ago. Our credit quality remained solid with net charge-offs near historic lows. Additionally, our strong capital position was reflected in our 2019 Capital Plan, which includes an increase in our quarterly common stock dividend rate in third quarter 2019 to $0.51 per share from



- 3 -

$0.45 per share, subject to board approval, as well as up to $23.1 billion of gross common stock repurchases during the four-quarter period beginning in third quarter 2019. ”
Net Interest Income
Net interest income in the second quarter was $12.1 billion, down $216 million from first quarter 2019, driven by balance sheet mix and repricing, including the impacts of higher deposit costs and the lower interest rate environment, as well as higher mortgage-backed securities (MBS) premium amortization, partially offset by the benefit of one additional day in the quarter.
The net interest margin was 2.82%, down 9 basis points from the prior quarter due to balance sheet mix and repricing, including the impacts of higher deposit costs and the lower interest rate environment, as well as higher MBS premium amortization.
Noninterest Income
Noninterest income in the second quarter was $9.5 billion, up $191 million from first quarter 2019. Second quarter noninterest income included higher trust and investment fees, other income, services charges on deposit accounts, and card fees, partially offset by lower market sensitive revenue4.
Service charges on deposit accounts were $1.2 billion, up from $1.1 billion in first quarter 2019, due to seasonally lower fees and higher fee waivers in the first quarter, as well as higher treasury management fees in the second quarter.
Trust and investment fees were $3.6 billion, up from $3.4 billion in first quarter 2019, driven by higher asset-based fees on retail brokerage advisory assets reflecting higher market valuations at March 31, 2019, and higher investment banking fees on increased debt and equity underwriting.
Card fees were $1.0 billion, up from a seasonally lower first quarter of $944 million.
Mortgage banking income was $758 million, up from $708 million in first quarter 2019. Net mortgage servicing income was $277 million, down from $364 million in the first quarter primarily due to the impact of lower interest rates including higher loan payoffs. The production margin on residential held-for-sale mortgage loan originations5 decreased to 0.98% from 1.05% in the first quarter. Residential held-for-sale mortgage loan originations increased in the second quarter to $33 billion from $22 billion in the first quarter, primarily due to seasonality, as well as lower mortgage loan interest rates in the second quarter.
Market sensitive revenue4 was $871 million, down from $1.3 billion in first quarter 2019, and included lower net gains from equity securities driven by a $258 million decrease in deferred compensation plan investment results in the second quarter (largely offset by lower employee benefits expense). Net gains from trading activities decreased $128 million compared with the prior quarter, driven by lower credit trading results. Net gains from debt securities decreased $105 million compared with the prior quarter, which included gains related to the sale of non-agency residential mortgage-backed securities.
Other income was $744 million and included a $721 million gain from the sale of $1.9 billion of Pick-a-Pay purchased credit-impaired (PCI) loans.
4 Market sensitive revenue represents net gains from trading activities, debt securities, and equity securities.
5 Production margin represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage originations. See the “Selected Five Quarter Residential Mortgage Production Data” table on page 42 for more information.



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Noninterest Expense
Noninterest expense in the second quarter declined $467 million from the prior quarter to $13.4 billion, predominantly due to a decline in employee benefits expense and incentive compensation expense, which were seasonally elevated in the first quarter, as well as a $243 million decrease in deferred compensation expense (largely offset by lower net gains from equity securities). These decreases were partially offset by higher outside professional and contract services, salary, and advertising and promotion expense. The efficiency ratio was 62.3% in second quarter 2019, compared with 64.4% in the first quarter.

Income Taxes
The Company’s effective income tax rate was 17.3% for second quarter 2019. The effective income tax rate in first quarter 2019 was 13.1% and included net discrete income tax benefits of $297 million related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity. The Company currently expects the effective income tax rate for the remainder of 2019 to be approximately 18%, excluding the impact of any unanticipated discrete items.
Loans
Average loans were $947.5 billion in the second quarter, down $2.6 billion from the first quarter. Period-end loan balances were $949.9 billion at June 30, 2019, up $1.6 billion from March 31, 2019. Commercial loans were flat compared with March 31, 2019. Consumer loans increased $1.6 billion from the prior quarter, reflecting the following:
Real estate 1-4 family first mortgage loans increased $1.9 billion, as $19.8 billion of held-for-investment mortgage loan originations were partially offset by paydowns, the sale of $1.9 billion of Pick-a-Pay PCI loans, and the reclassification of $1.8 billion of mortgage loans to held for sale
Real estate 1-4 family junior lien mortgage loans decreased $1.0 billion, as paydowns continued to exceed originations
Credit card loans increased $541 million, up from a seasonally lower first quarter
Automobile loans increased $751 million, as originations of $6.3 billion outpaced paydowns, resulting in linked-quarter growth for the first time since third quarter 2016
Period-End Loan Balances
(in millions)
Jun 30,
2019

 
Mar 31,
2019

 
Dec 31,
2018

 
Sep 30,
2018

 
Jun 30,
2018

Commercial
$
512,245

 
512,226

 
513,405

 
501,886

 
503,105

Consumer
437,633

 
436,023

 
439,705

 
440,414

 
441,160

Total loans
$
949,878

 
948,249

 
953,110

 
942,300

 
944,265

Change from prior quarter
$
1,629

 
(4,861
)
 
10,810

 
(1,965
)
 
(3,043
)



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Debt and Equity Securities
Debt securities include available-for-sale and held-to-maturity debt securities, as well as debt securities held for trading. Period-end debt securities were $482.1 billion at June 30, 2019, down $1.4 billion from the first quarter, predominantly due to a net decrease in available-for-sale debt securities. Debt securities purchases of approximately $15.9 billion, predominantly federal agency MBS in the available-for-sale portfolio, were more than offset by runoff and sales.

Net unrealized gains on available-for-sale debt securities were $2.5 billion at June 30, 2019, compared with $853 million at March 31, 2019, primarily due to lower long-term interest rates in the second quarter.
Period-end equity securities, which include marketable and non-marketable equity securities, as well as equity securities held for trading, were $61.5 billion at June 30, 2019, up $3.1 billion from the first quarter.
Deposits
Total average deposits for second quarter 2019 were $1.3 trillion, up $6.9 billion from the prior quarter primarily due to higher retail banking deposits reflecting increased promotional activity, partially offset by lower Wealth and Investment Management deposits. The average deposit cost for second quarter 2019 was 70 basis points, up 5 basis points from the prior quarter and 30 basis points from a year ago.
Capital
The Company's Common Equity Tier 1 ratio (fully phased-in) was 12.0%3 and continued to exceed both the regulatory minimum of 9% and our current internal target of 10%. In second quarter 2019, the Company repurchased 104.9 million shares of its common stock, which, net of issuances, reduced period-end common shares outstanding by 92.4 million. The Company paid a quarterly common stock dividend of $0.45 per share.
In June 2019, the Company received a non-objection to its 2019 Capital Plan from the Federal Reserve. As part of the plan, the Company expects to increase its third quarter 2019 common stock dividend to $0.51 per share, subject to approval by the Company's Board of Directors. The plan also includes up to $23.1 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from third quarter 2019 through second quarter 2020. In addition, the Company may consider redemptions or repurchases of other capital securities as part of the plan.
As of June 30, 2019, our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 24.1%6, compared with the required minimum of 22.0%.
6 The TLAC ratio is a preliminary estimate.



- 6 -

Credit Quality

Net Loan Charge-offs
The quarterly loss rate in the second quarter was 0.28% (annualized), down from 0.30% in the prior quarter, and up from 0.26% a year ago. Commercial and consumer losses were 0.13% and 0.45%, respectively. Total credit losses were $653 million in second quarter 2019, down $42 million from first quarter 2019. Commercial losses increased $20 million, while consumer losses decreased $62 million primarily due to lower automobile losses.
Net Loan Charge-Offs
 
Quarter ended
 
 
June 30, 2019
 
 
March 31, 2019
 
 
June 30, 2018
 
($ in millions)
Net loan 
charge- 
offs 

 
As a % of 
average 
loans (a) 

 
Net loan 
charge- 
offs 

 
As a % of 
average 
loans (a) 

 
Net loan 
charge- 
offs 

 
As a % of 
average 
loans (a) 

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
159

 
0.18
 %
 
$
133

 
0.15
 %
 
$
58

 
0.07
 %
Real estate mortgage
4

 
0.01

 
6

 
0.02

 

 

Real estate construction
(2
)
 
(0.04
)
 
(2
)
 
(0.04
)
 
(6
)
 
(0.09
)
Lease financing
4

 
0.09

 
8

 
0.17

 
15

 
0.32

Total commercial
165

 
0.13

 
145

 
0.11

 
67

 
0.05

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
(30
)
 
(0.04
)
 
(12
)
 
(0.02
)
 
(23
)
 
(0.03
)
Real estate 1-4 family junior lien mortgage
(19
)
 
(0.24
)
 
(9
)
 
(0.10
)
 
(13
)
 
(0.13
)
Credit card
349

 
3.68

 
352

 
3.73

 
323

 
3.61

Automobile
52

 
0.46

 
91

 
0.82

 
113

 
0.93

Other revolving credit and installment
136

 
1.56

 
128

 
1.47

 
135

 
1.44

Total consumer
488

 
0.45

 
550

 
0.51

 
535

 
0.49

Total
$
653

 
0.28
 %
 
$
695

 
0.30
 %
 
$
602

 
0.26
 %
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Quarterly net charge-offs (recoveries) as a percentage of average loans are annualized.



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Nonperforming Assets
Nonperforming assets decreased $1.0 billion, or 14%, from first quarter 2019 to $6.3 billion. Nonaccrual loans decreased $983 million from first quarter 2019 to $5.9 billion. Commercial nonaccrual loans decreased $327 million driven by reductions in the commercial and industrial portfolio reflecting broad-based improvement across industry sectors. Consumer nonaccrual loans decreased $656 million driven by lower nonaccruals in the real estate 1-4 family first mortgage portfolio, which included a $373 million decline related to the reclassification of $1.8 billion of mortgage loans to held for sale.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
 
June 30, 2019
 
 
March 31, 2019
 
 
June 30, 2018
 
($ in millions)
Total 
balances 

 
As a % of 
total 
loans 

 
Total balances 

 
As a 
% of 
total 
loans 

 
Total 
balances 

 
As a 
% of 
total 
loans 

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
1,634

 
0.47
%
 
$
1,986

 
0.57
%
 
$
1,559

 
0.46
%
Real estate mortgage
737

 
0.60

 
699

 
0.57

 
765

 
0.62

Real estate construction
36

 
0.17

 
36

 
0.16

 
51

 
0.22

Lease financing
63

 
0.33

 
76

 
0.40

 
80

 
0.41

Total commercial
2,470

 
0.48

 
2,797

 
0.55

 
2,455

 
0.49

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
2,425

 
0.85

 
3,026

 
1.06

 
3,469

 
1.23

Real estate 1-4 family junior lien mortgage
868

 
2.71

 
916

 
2.77

 
1,029

 
2.82

Automobile
115

 
0.25

 
116

 
0.26

 
119

 
0.25

Other revolving credit and installment
44

 
0.13

 
50

 
0.14

 
54

 
0.14

Total consumer
3,452

 
0.79

 
4,108

 
0.94

 
4,671

 
1.06

Total nonaccrual loans (a)
5,922

 
0.62

 
6,905

 
0.73

 
7,126

 
0.75

Foreclosed assets:
 
 
 
 
 
 
 
 
 
 
 
Government insured/guaranteed
68

 
 
 
75

 
 
 
90

 
 
Non-government insured/guaranteed
309

 
 
 
361

 
 
 
409

 
 
Total foreclosed assets
377

 
 
 
436

 
 
 
499

 
 
Total nonperforming assets
$
6,299

 
0.66
%
 
$
7,341

 
0.77
%
 
$
7,625

 
0.81
%
Change from prior quarter:
 
 
 
 
 
 
 
 
 
 
 
Total nonaccrual loans (a)
$
(983
)
 
 
 
$
409

 
 
 
$
(213
)
 
 
Total nonperforming assets
(1,042
)
 
 
 
394

 
 
 
(285
)
 
 
 
(a)
Financial information for periods prior to December 31, 2018, has been revised to exclude mortgage loans held for sale (MLHFS), loans held for sale (LHFS) and loans held at fair value. For additional information, see the “Five Quarter Nonperforming Assets” table on page 33.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for unfunded commitments, totaled $10.6 billion at June 30, 2019, down $218 million from March 31, 2019. Second quarter 2019 included a $150 million reserve release2 primarily driven by strong overall credit portfolio performance. The allowance coverage for total loans was 1.12%, compared with 1.14% in first quarter 2019. The allowance covered 4.0 times annualized second quarter net charge-offs, compared with 3.8 times in the prior quarter. The allowance coverage for nonaccrual loans was 179% at June 30, 2019, compared with 157% at March 31, 2019.




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Business Segment Performance
Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:
 
Quarter ended 
 
(in millions)
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

Community Banking
$
3,147

 
2,823

 
2,496

Wholesale Banking
2,789

 
2,770

 
2,635

Wealth and Investment Management
602

 
577

 
445

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and automobile, student, mortgage, home equity and small business lending, as well as referrals to Wholesale Banking and Wealth and Investment Management business partners. The Community Banking segment also includes the results of our Corporate Treasury activities net of allocations (including funds transfer pricing, capital, liquidity and certain corporate expenses) in support of the other operating segments and results of investments in our affiliated venture capital and private equity partnerships.
Selected Financial Information
 
Quarter ended 
 
(in millions)
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

Total revenue
$
11,805

 
11,750

 
11,806

Provision for credit losses
479

 
710

 
484

Noninterest expense
7,212

 
7,689

 
7,290

Segment net income
3,147

 
2,823

 
2,496

(in billions)
 
 
 
 
 
Average loans
457.7

 
458.2

 
463.8

Average assets
1,024.8

 
1,015.4

 
1,034.3

Average deposits
777.6

 
765.6

 
760.6

Second Quarter 2019 vs. First Quarter 2019
Net income of $3.1 billion, up $324 million, or 11%
Revenue was $11.8 billion, flat compared with the prior quarter, as higher service charges on deposit accounts, card fees, and other income were predominantly offset by lower net interest income, and lower market sensitive revenue4 reflecting lower deferred compensation plan investment results (largely offset by lower employee benefits expense)
Noninterest expense of $7.2 billion decreased $477 million, or 6%, predominantly driven by lower personnel expense, which was seasonally elevated in the first quarter, as well as lower deferred compensation expense (largely offset by lower net gains from equity securities), partially offset by higher advertising and promotion expense
Provision for credit losses decreased $231 million, primarily due to credit improvement in the automobile and consumer real estate portfolios
Second Quarter 2019 vs. Second Quarter 2018
Net income was up $651 million, or 26%, driven by net discrete tax expense of $481 million in second quarter 2018
Revenue was flat compared with a year ago, as lower net interest income was offset by higher gains from sales of Pick-a-Pay PCI loans and higher service charges on deposit accounts
Noninterest expense decreased $78 million, or 1%, driven by lower core deposit and other intangibles amortization, FDIC expense, and operating losses, partially offset by higher personnel, equipment, and advertising and promotion expense



- 9 -

Business Metrics and Highlights
Primary consumer checking customers7,8 of 24.3 million, up 1.3% from a year ago. The sale of 52 branches and $1.8 billion of deposits which closed in fourth quarter 2018 reduced the growth rate by 0.4%
Branch customer experience surveys completed during second quarter 2019 reflected higher scores from the previous quarter, with both ‘Customer Loyalty’ and ‘Overall Satisfaction with Most Recent Visit’ scores reaching their highest level in more than three years
Debit card point-of-sale purchase volume9 of $93.2 billion in the second quarter, up 6% year-over-year
General purpose credit card point-of-sale purchase volume of $20.4 billion in the second quarter, up 6% year-over-year
30.0 million digital (online and mobile) active customers, including 23.7 million mobile active customers8, 10
5,442 retail bank branches as of the end of second quarter 2019, reflecting 78 branch consolidations in the first half of 2019
Home Lending
Originations of $53 billion, up from $33 billion in the prior quarter, primarily due to seasonality, as well as lower mortgage loan interest rates
Originations of loans held-for-sale and loans held-for-investment were $33 billion and $20 billion, respectively
Production margin on residential held-for-sale mortgage loan originations5 of 0.98%, down from 1.05% in the prior quarter
Applications of $90 billion, up from $64 billion in the prior quarter, driven primarily by seasonality, as well as lower mortgage loan interest rates
Unclosed application pipeline of $44 billion at quarter end, up from $32 billion at March 31, 2019, driven primarily by seasonality, as well as lower mortgage loan interest rates
Automobile originations of $6.3 billion in the second quarter, up 43% from the prior year, reflecting our focus on growing auto loans following the restructuring of the business
For the third year in a row, Wells Fargo was #1 in Nilson's annual ranking of the top 50 U.S. debit card issuers, receiving the top ranking by both purchase volume and number of transactions (April 2019)



7 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.
8 Data as of May 2019, comparisons with May 2018.
9 Combined consumer and business debit card purchase volume dollars.
10 Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device in the prior 90 days.



- 10 -

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $5 million. Products and businesses include Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, Credit Investment Portfolio, Treasury Management, and Commercial Capital.
Selected Financial Information
 
Quarter ended
 
(in millions)
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

Total revenue
$
7,065

 
7,111

 
7,197

Provision (reversal of provision) for credit losses
28

 
134

 
(36
)
Noninterest expense
3,882

 
3,838

 
4,219

Segment net income
2,789

 
2,770

 
2,635

(in billions)
 
 
 
 
 
Average loans
474.0

 
476.4

 
464.7

Average assets
852.2

 
844.5

 
826.4

Average deposits
410.4

 
409.8

 
414.0

Second Quarter 2019 vs. First Quarter 2019
Net income of $2.8 billion, up $19 million, or 1%
Revenue of $7.1 billion decreased $46 million, or 1%, driven by lower market sensitive revenue4, partially offset by higher investment banking fees, mortgage banking fees, commercial real estate brokerage fees, and treasury management fees
Noninterest expense of $3.9 billion increased $44 million, or 1%, reflecting higher regulatory, risk, and technology expense, partially offset by lower personnel expense, which was seasonally elevated in the first quarter
Provision for credit losses decreased $106 million, driven by lower nonaccrual loans and improvement in overall credit quality
Second Quarter 2019 vs. Second Quarter 2018
Net income increased $154 million, or 6%
Revenue decreased $132 million, or 2%, largely due to lower net interest income and treasury management fees, partially offset by higher market sensitive revenue4 and mortgage banking fees
Noninterest expense decreased $337 million, or 8%, on lower operating losses, FDIC expense, and core deposit and other intangibles amortization, partially offset by higher regulatory, risk, and technology expense
Provision for credit losses increased $64 million, reflecting higher loan losses and lower recoveries in second quarter 2019
Business Metrics and Highlights
Commercial card spend volume11 of $8.7 billion, up 6% from the prior year on increased transaction volumes, and up 3% compared with first quarter 2019
U.S. investment banking market share of 3.5% year-to-date 201912, compared with 3.3% year-to-date 201812 
11 Includes commercial card volume for the entire company.
12 Year-to-date through June. Source: Dealogic U.S. investment banking fee market share.



- 11 -

Wealth and Investment Management (WIM) provides a full range of personalized wealth management, investment and retirement products and services to clients across U.S. based businesses including Wells Fargo Advisors, The Private Bank, Abbot Downing, Wells Fargo Institutional Retirement and Trust, and Wells Fargo Asset Management. We deliver financial planning, private banking, credit, investment management and fiduciary services to high-net worth and ultra-high-net worth individuals and families. We also serve clients’ brokerage needs, supply retirement and trust services to institutional clients and provide investment management capabilities delivered to global institutional clients through separate accounts and the Wells Fargo Funds.
Selected Financial Information
 
Quarter ended
 
(in millions)
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

Total revenue
$
4,050

 
4,079

 
3,951

Provision (reversal of provision) for credit losses
(1
)
 
4

 
(2
)
Noninterest expense
3,246

 
3,303

 
3,361

Segment net income
602

 
577

 
445

(in billions)
 
 
 
 
 
Average loans
75.0

 
74.4

 
74.7

Average assets
83.8

 
83.2

 
84.0

Average deposits
143.5

 
153.2

 
167.1

Second Quarter 2019 vs. First Quarter 2019
Net income of $602 million, up $25 million, or 4%
Revenue of $4.1 billion decreased $29 million, or 1%, mostly due to lower net gains from equity securities on lower deferred compensation plan investment results of $97 million (largely offset by lower employee benefits expense), and lower net interest income, partially offset by higher trust and investment fees, up 5% driven by higher asset-based fees
Noninterest expense of $3.2 billion decreased $57 million, or 2%, primarily driven by lower personnel expense, which was seasonally higher in the first quarter, and lower employee benefits expense from deferred compensation plan expense of $95 million (largely offset by lower net gains from equity securities), partially offset by higher broker commissions
Second Quarter 2019 vs. Second Quarter 2018
Net income up $157 million, or 35%
Revenue increased $99 million, or 3%, primarily driven by higher net gains from equity securities primarily on lower other-than-temporary impairment compared with second quarter 2018 which included an impairment of $214 million related to the sale of Wells Fargo Asset Management's (WFAM) ownership stake in The Rock Creek Group, LP (RockCreek), partially offset by lower net interest income and asset-based fees
Noninterest expense decreased $115 million, or 3%, primarily due to lower operating losses and core deposit and other intangibles amortization, partially offset by higher personnel expense



- 12 -

Business Metrics and Highlights
Total WIM Segment 
WIM total client assets of $1.9 trillion, down 1% from a year ago
Average loan balances were flat compared with a year ago
Second quarter 2019 closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) up 1% compared with second quarter 2018, reaching their highest quarterly amount in two years
Retail Brokerage 
Client assets of $1.6 trillion, flat compared with the prior year
Advisory assets of $561 billion, up 3% from the prior year, driven primarily by higher market valuations, partially offset by net outflows
Wealth Management
Client assets of $231 billion, down 3% from the prior year, driven primarily by net outflows, partially offset by higher market valuations
Asset Management
Total assets under management (AUM) of $495 billion, flat compared with the prior year, as higher market valuations and money market fund net inflows were offset by equity and fixed income net outflows, as well as the sale of WFAM's ownership stake in RockCreek and removal of the associated AUM
Retirement
IRA assets of $414 billion, up 3% from the prior year
Institutional Retirement plan assets of $388 billion, flat compared with the prior year
On July 1, 2019, we closed the previously announced sale of our Institutional Retirement and Trust business

Conference Call
The Company will host a live conference call on Tuesday, July 16, at 7:00 a.m. PT (10:00 a.m. ET). You may listen to the call by dialing 866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and https://engage.vevent.com/rt/wells_fargo_ao~5890548.

A replay of the conference call will be available beginning at 11:00 a.m. PT (2:00 p.m. ET) on Tuesday, July 16 through Tuesday, July 30. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #5890548. The replay will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and https://engage.vevent.com/rt/wells_fargo_ao~5890548.



- 13 -

Forward-Looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance levels; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital or liquidity levels or targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets, return on equity, and return on tangible common equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.
Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: 
current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;
our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;
our ability to realize any efficiency ratio or expense target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;
the effect of the current interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;
significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our debt securities and equity securities portfolios;
the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;



- 14 -

negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;
resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;
the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
fiscal and monetary policies of the Federal Reserve Board; and
the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.
In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.
For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.
Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Forward-looking Non-GAAP Financial Measures. From time to time management may discuss forward-looking non-GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.




- 15 -

About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,600 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 263,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations.
 
Media
Ancel Martinez, 415-222-3858
ancel.martinez@wellsfargo.com
or
Investor Relations
John M. Campbell, 415-396-0523
john.m.campbell@wellsfargo.com

# # #





- 16 -

Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
 
 
 
 
Pages
 
 
Summary Information
 
 
 
Income
 
Five Quarter Deferred Compensation Plan Investment Results
 
 
Balance Sheet
 
Trading Activities
Equity Securities
 
 
Loans
 
Changes in Allowance for Credit Losses
 
 
Equity
 
Tangible Common Equity
 
 
Operating Segments
 
 
 
Other
 



- 17 -

Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
 
Quarter ended
 
 
% Change
Jun 30, 2019 from
 
 
Six months ended
 
 
 
($ in millions, except per share amounts)
Jun 30,
2019

 
Mar 31,
2019

 
Jun 30,
2018

 
Mar 31,
2019

 
Jun 30,
2018

 
Jun 30,
2019

 
Jun 30,
2018

 
%
Change

For the Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wells Fargo net income
$
6,206

 
5,860

 
5,186

 
6
 %
 
20

 
$
12,066

 
10,322

 
17
 %
Wells Fargo net income applicable to common stock
5,848

 
5,507

 
4,792

 
6

 
22

 
11,355

 
9,525

 
19

Diluted earnings per common share
1.30

 
1.20

 
0.98

 
8

 
33

 
2.50

 
1.94

 
29

Profitability ratios (annualized):
 
 
 
 
 
 


 


 
 
 
 
 
 
Wells Fargo net income to average assets (ROA)
1.31
%
 
1.26

 
1.10

 
4

 
19

 
1.29
%
 
1.10

 
17

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)
13.26

 
12.71

 
10.60

 
4

 
25

 
12.99

 
10.59

 
23

Return on average tangible common equity (ROTCE)(1)
15.78

 
15.16

 
12.62

 
4

 
25

 
15.47

 
12.62

 
23

Efficiency ratio (2)
62.3

 
64.4

 
64.9

 
(3
)
 
(4
)
 
63.4

 
66.7

 
(5
)
Total revenue
$
21,584

 
21,609

 
21,553

 

 

 
$
43,193

 
43,487

 
(1
)
Pre-tax pre-provision profit (PTPP) (3)
8,135

 
7,693

 
7,571

 
6

 
7

 
15,828

 
14,463

 
9

Dividends declared per common share
0.45

 
0.45

 
0.39

 

 
15

 
0.90

 
0.78

 
15

Average common shares outstanding
4,469.4

 
4,551.5

 
4,865.8

 
(2
)
 
(8
)
 
4,510.2

 
4,875.7

 
(7
)
Diluted average common shares outstanding
4,495.0

 
4,584.0

 
4,899.8

 
(2
)
 
(8
)
 
4,540.1

 
4,916.1

 
(8
)
Average loans
$
947,460

 
950,010

 
944,079

 

 

 
$
948,728

 
947,532

 

Average assets
1,900,627

 
1,883,091

 
1,884,884

 
1

 
1

 
1,891,907

 
1,900,304

 

Average total deposits
1,268,979

 
1,262,062

 
1,271,339

 
1

 

 
1,265,539

 
1,284,187

 
(1
)
Average consumer and small business banking deposits (4)
742,671

 
739,654

 
754,047

 

 
(2
)
 
741,171

 
754,898

 
(2
)
Net interest margin
2.82
%
 
2.91

 
2.93

 
(3
)
 
(4
)
 
2.86
%
 
2.89

 
(1
)
At Period End
 
 
 
 
 
 


 


 
 
 
 
 
 
Debt securities
$
482,067

 
483,467

 
475,495

 

 
1

 
$
482,067

 
475,495

 
1

Loans
949,878

 
948,249

 
944,265

 

 
1

 
949,878

 
944,265

 
1

Allowance for loan losses
9,692

 
9,900

 
10,193

 
(2
)
 
(5
)
 
9,692

 
10,193

 
(5
)
Goodwill
26,415

 
26,420

 
26,429

 

 

 
26,415

 
26,429

 

Equity securities
61,537

 
58,440

 
57,505

 
5

 
7

 
61,537

 
57,505

 
7

Assets
1,923,388

 
1,887,792

 
1,879,700

 
2

 
2

 
1,923,388

 
1,879,700

 
2

Deposits
1,288,426

 
1,264,013

 
1,268,864

 
2

 
2

 
1,288,426

 
1,268,864

 
2

Common stockholders' equity
177,235

 
176,025

 
181,386

 
1

 
(2
)
 
177,235

 
181,386

 
(2
)
Wells Fargo stockholders’ equity
199,042

 
197,832

 
205,188

 
1

 
(3
)
 
199,042

 
205,188

 
(3
)
Total equity
200,037

 
198,733

 
206,069

 
1

 
(3
)
 
200,037

 
206,069

 
(3
)
Tangible common equity (1)
148,864

 
147,723

 
152,580

 
1

 
(2
)
 
148,864

 
152,580

 
(2
)
Common shares outstanding
4,419.6

 
4,511.9

 
4,849.1

 
(2
)
 
(9
)
 
4,419.6

 
4,849.1

 
(9
)
Book value per common share (5)
$
40.10

 
39.01

 
37.41

 
3

 
7

 
$
40.10

 
37.41

 
7

Tangible book value per common share (1)(5)
33.68

 
32.74

 
31.47

 
3

 
7

 
33.68

 
31.47

 
7

Team members (active, full-time equivalent)
262,800

 
262,100

 
264,500

 

 
(1
)
 
262,800

 
264,500

 
(1
)
(1)
Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 36.
(2)
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(3)
Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
(4)
Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
(5)
Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.




- 18 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
 
Quarter ended
 
($ in millions, except per share amounts)
Jun 30,
2019

 
Mar 31,
2019

 
Dec 31,
2018

 
Sep 30,
2018

 
Jun 30,
2018

For the Quarter
 
 
 
 
 
 
 
 
 
Wells Fargo net income
$
6,206

 
5,860

 
6,064

 
6,007

 
5,186

Wells Fargo net income applicable to common stock
5,848

 
5,507

 
5,711

 
5,453

 
4,792

Diluted earnings per common share
1.30

 
1.20

 
1.21

 
1.13

 
0.98

Profitability ratios (annualized):
 
 
 
 
 
 
 
 
 
Wells Fargo net income to average assets (ROA)
1.31
%
 
1.26

 
1.28

 
1.27

 
1.10

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)
13.26

 
12.71

 
12.89

 
12.04

 
10.60

Return on average tangible common equity (ROTCE)(1)
15.78

 
15.16

 
15.39

 
14.33

 
12.62

Efficiency ratio (2)
62.3

 
64.4

 
63.6

 
62.7

 
64.9

Total revenue
$
21,584

 
21,609

 
20,980

 
21,941

 
21,553

Pre-tax pre-provision profit (PTPP) (3)
8,135

 
7,693

 
7,641

 
8,178

 
7,571

Dividends declared per common share
0.45

 
0.45

 
0.43

 
0.43

 
0.39

Average common shares outstanding
4,469.4

 
4,551.5

 
4,665.8

 
4,784.0

 
4,865.8

Diluted average common shares outstanding
4,495.0

 
4,584.0

 
4,700.8

 
4,823.2

 
4,899.8

Average loans
$
947,460

 
950,010

 
946,336

 
939,462

 
944,079

Average assets
1,900,627

 
1,883,091

 
1,879,047

 
1,876,283

 
1,884,884

Average total deposits
1,268,979

 
1,262,062

 
1,268,948

 
1,266,378

 
1,271,339

Average consumer and small business banking deposits (4)
742,671

 
739,654

 
736,295

 
743,503

 
754,047

Net interest margin
2.82
%
 
2.91

 
2.94

 
2.94

 
2.93

At Quarter End
 
 
 
 
 
 
 
 
 
Debt securities
$
482,067

 
483,467

 
484,689

 
472,283

 
475,495

Loans
949,878

 
948,249

 
953,110

 
942,300

 
944,265

Allowance for loan losses
9,692

 
9,900

 
9,775

 
10,021

 
10,193

Goodwill
26,415

 
26,420

 
26,418

 
26,425

 
26,429

Equity securities
61,537

 
58,440

 
55,148

 
61,755

 
57,505

Assets
1,923,388

 
1,887,792

 
1,895,883

 
1,872,981

 
1,879,700

Deposits
1,288,426

 
1,264,013

 
1,286,170

 
1,266,594

 
1,268,864

Common stockholders' equity
177,235

 
176,025

 
174,359

 
176,934

 
181,386

Wells Fargo stockholders’ equity
199,042

 
197,832

 
196,166

 
198,741

 
205,188

Total equity
200,037

 
198,733

 
197,066

 
199,679

 
206,069

Tangible common equity (1)
148,864

 
147,723

 
145,980

 
148,391

 
152,580

Common shares outstanding
4,419.6

 
4,511.9

 
4,581.3

 
4,711.6

 
4,849.1

Book value per common share (5)
$
40.10

 
39.01

 
38.06

 
37.55

 
37.41

Tangible book value per common share (1)(5)
33.68

 
32.74

 
31.86

 
31.49

 
31.47

Team members (active, full-time equivalent)
262,800

 
262,100

 
258,700

 
261,700

 
264,500

(1)
Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 36.
(2)
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(3)
Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
(4)
Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
(5)
Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.



- 19 -

Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
 
Quarter ended June 30,
 
 
%

 
Six months ended June 30,
 
 
%

(in millions, except per share amounts)
2019

 
2018

 
Change

 
2019

 
2018

 
Change

Interest income
 
 
 
 
 
 
 
 
 
 
 
Debt securities
$
3,781

 
3,594

 
5
 %
 
$
7,722

 
7,008

 
10
 %
Mortgage loans held for sale
195

 
198

 
(2
)
 
347

 
377

 
(8
)
Loans held for sale
20

 
48

 
(58
)
 
44

 
72

 
(39
)
Loans
11,316

 
10,912

 
4

 
22,670

 
21,491

 
5

Equity securities
236

 
221

 
7

 
446

 
452

 
(1
)
Other interest income
1,438

 
1,042

 
38

 
2,760

 
1,962

 
41

Total interest income
16,986

 
16,015

 
6

 
33,989

 
31,362

 
8

Interest expense
 
 
 
 
 
 
 
 
 
 
 
Deposits
2,213

 
1,268

 
75

 
4,239

 
2,358

 
80

Short-term borrowings
646

 
398

 
62

 
1,242

 
709

 
75

Long-term debt
1,900

 
1,658

 
15

 
3,827

 
3,234

 
18

Other interest expense
132

 
150

 
(12
)
 
275

 
282

 
(2
)
Total interest expense
4,891

 
3,474

 
41

 
9,583

 
6,583

 
46

Net interest income
12,095

 
12,541

 
(4
)
 
24,406

 
24,779

 
(2
)
Provision for credit losses
503

 
452

 
11

 
1,348

 
643

 
110

Net interest income after provision for credit losses
11,592

 
12,089

 
(4
)
 
23,058

 
24,136

 
(4
)
Noninterest income
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
1,206

 
1,163

 
4

 
2,300

 
2,336

 
(2
)
Trust and investment fees
3,568

 
3,675

 
(3
)
 
6,941

 
7,358

 
(6
)
Card fees
1,025

 
1,001

 
2

 
1,969

 
1,909

 
3

Other fees
800

 
846

 
(5
)
 
1,570

 
1,646

 
(5
)
Mortgage banking
758

 
770

 
(2
)
 
1,466

 
1,704

 
(14
)
Insurance
93

 
102

 
(9
)
 
189

 
216

 
(13
)
Net gains from trading activities
229

 
191

 
20

 
586

 
434

 
35

Net gains on debt securities
20

 
41

 
(51
)
 
145

 
42

 
245

Net gains from equity securities
622

 
295

 
111

 
1,436

 
1,078

 
33

Lease income
424

 
443

 
(4
)
 
867

 
898

 
(3
)
Other
744

 
485

 
53

 
1,318

 
1,087

 
21

Total noninterest income
9,489

 
9,012

 
5

 
18,787

 
18,708

 

Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
Salaries
4,541

 
4,465

 
2

 
8,966

 
8,828

 
2

Commission and incentive compensation
2,597

 
2,642

 
(2
)
 
5,442

 
5,410

 
1

Employee benefits
1,336

 
1,245

 
7

 
3,274

 
2,843

 
15

Equipment
607

 
550

 
10

 
1,268

 
1,167

 
9

Net occupancy
719

 
722

 

 
1,436

 
1,435

 

Core deposit and other intangibles
27

 
265

 
(90
)
 
55

 
530

 
(90
)
FDIC and other deposit assessments
144

 
297

 
(52
)
 
303

 
621

 
(51
)
Other
3,478

 
3,796

 
(8
)
 
6,621

 
8,190

 
(19
)
Total noninterest expense
13,449

 
13,982

 
(4
)
 
27,365

 
29,024

 
(6
)
Income before income tax expense
7,632

 
7,119

 
7

 
14,480

 
13,820

 
5

Income tax expense
1,294

 
1,810

 
(29
)
 
2,175

 
3,184

 
(32
)
Net income before noncontrolling interests
6,338

 
5,309

 
19

 
12,305

 
10,636

 
16

Less: Net income from noncontrolling interests
132

 
123

 
7

 
239

 
314

 
(24
)
Wells Fargo net income
$
6,206

 
5,186

 
20

 
$
12,066

 
10,322

 
17

Less: Preferred stock dividends and other
358

 
394

 
(9
)
 
711

 
797

 
(11
)
Wells Fargo net income applicable to common stock
$
5,848

 
4,792

 
22

 
$
11,355

 
9,525

 
19

Per share information
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share
$
1.31

 
0.98

 
34

 
$
2.52

 
1.95

 
29

Diluted earnings per common share
1.30

 
0.98

 
33

 
2.50

 
1.94

 
29

Average common shares outstanding
4,469.4

 
4,865.8

 
(8
)
 
4,510.2

 
4,875.7

 
(7
)
Diluted average common shares outstanding
4,495.0

 
4,899.8

 
(8
)
 
4,540.1

 
4,916.1

 
(8
)





- 20 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
 
Quarter ended
 
(in millions, except per share amounts)
Jun 30,
2019

 
Mar 31,
2019

 
Dec 31,
2018

 
Sep 30,
2018

 
Jun 30,
2018

Interest income
 
 
 
 
 
 
 
 
 
Debt securities
$
3,781

 
3,941

 
3,803

 
3,595

 
3,594

Mortgage loans held for sale
195

 
152

 
190

 
210

 
198

Loans held for sale
20

 
24

 
33

 
35

 
48

Loans
11,316

 
11,354

 
11,367

 
11,116

 
10,912

Equity securities
236

 
210

 
260

 
280

 
221

Other interest income
1,438

 
1,322

 
1,268

 
1,128

 
1,042

Total interest income
16,986

 
17,003

 
16,921

 
16,364

 
16,015

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
2,213

 
2,026

 
1,765

 
1,499

 
1,268

Short-term borrowings
646

 
596

 
546

 
462

 
398

Long-term debt
1,900

 
1,927

 
1,802

 
1,667

 
1,658

Other interest expense
132

 
143

 
164

 
164

 
150

Total interest expense
4,891

 
4,692

 
4,277

 
3,792

 
3,474

Net interest income
12,095

 
12,311

 
12,644

 
12,572

 
12,541

Provision for credit losses
503

 
845

 
521

 
580

 
452

Net interest income after provision for credit losses
11,592

 
11,466

 
12,123

 
11,992

 
12,089

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
1,206