EX-99.1 2 wfc2qer07-14x20ex991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1



erwellsfargoimagea06.jpg
News Release | July 14, 2020
Wells Fargo Reports Second Quarter 2020 Net Loss of $2.4 Billion, which Included an $8.4 Billion Increase in the Credit Loss Reserve Driven by Current and Forecasted Economic Conditions
Board of Directors intends to reduce third quarter 2020 common stock dividend to $0.10 per share
Financial results:
Net loss of $2.4 billion and diluted loss per share of $0.66
Revenue of $17.8 billion, down from $21.6 billion in second quarter 2019
Net interest income of $9.9 billion, down $2.2 billion
Noninterest income of $8.0 billion, down $1.5 billion
Noninterest expense of $14.6 billion, up $1.1 billion from second quarter 2019
Second quarter 2020 included:
Operating losses of $1.2 billion, primarily due to customer remediation accruals
Personnel, occupancy, and technology expense of $382 million related to the COVID-19 pandemic
Average loans of $971.3 billion, up $23.8 billion, or 3%, from second quarter 2019; period-end loans of $935.2 billion, down $74.7 billion, or 7%, from first quarter 2020
Average deposits of $1.4 trillion, up $117.7 billion, or 9%, from second quarter 2019; period-end deposits of $1.4 trillion, up $34.2 billion, or 2%, from first quarter 2020
Credit quality:
Provision expense of $9.5 billion, up $9.0 billion from second quarter 2019
Net charge-offs of $1.1 billion, up $462 million
Net loan charge-offs of 0.46% of average loans (annualized), up from 0.28%
Increase in the allowance for credit losses of $8.4 billion
Nonaccrual loans of $7.6 billion, up $1.7 billion, or 28%
Strong liquidity and capital positions:
Liquidity coverage ratio1 (LCR) of 129%, which continued to exceed the regulatory minimum of 100%
Common Equity Tier 1 (CET1) ratio of 10.9%2, up from 10.7% in first quarter 2020; the CET1 ratio continued to exceed both the regulatory minimum of 9% and our current internal target of 10%
1 Liquidity coverage ratio (LCR) is calculated as high-quality liquid assets divided by projected net cash outflows, as each is defined under the LCR rule. LCR is a preliminary estimate.
2 See table on page 38 for more information on Common Equity Tier 1. Common Equity Tier 1 is a preliminary estimate.




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On June 25, 2020, the Federal Reserve Board (FRB) released the results of the 2020 Dodd-Frank stress test and related Comprehensive Capital Analysis and Review (CCAR). The Company expects its stress capital buffer (SCB) to be 2.5%, which is the lowest possible SCB

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, 2020, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.
Selected Financial Information
 
 
 
Quarter ended
 
 
Jun 30,
2020

 
Mar 31,
2020

 
Jun 30,
2019

Earnings
 
 
 
 
 
Diluted earnings (loss) per common share
$
(0.66
)
 
0.01

 
1.30

Wells Fargo net income (loss) (in billions)
(2.38
)
 
0.65

 
6.21

Return on assets (ROA)
(0.49
)%
 
0.13

 
1.31

Return on equity (ROE)
(6.63
)
 
0.10

 
13.26

Return on average tangible common equity (ROTCE) (a)
(8.00
)
 
0.12

 
15.78

Asset Quality
 
 
 
 
 
Net loan charge-offs (annualized) as a % of average total loans
0.46
 %
 
0.38

 
0.28

Allowance for credit losses for loans as a % of total loans
2.19

 
1.19

 
1.12

Allowance for credit losses for loans as a % of annualized net loan charge-offs
457

 
329

 
405

Other
 
 
 
 
 
Revenue (in billions)
$
17.8

 
17.7

 
21.6

Efficiency ratio (b)
81.6
 %
 
73.6

 
62.3

Average loans (in billions)
$
971.3

 
965.0

 
947.5

Average deposits (in billions)
1,386.7

 
1,338.0

 
1,269.0

Net interest margin
2.25
 %
 
2.58

 
2.82

(a)
Tangible common equity and return on average tangible common equity are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 37.
(b)
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
SAN FRANCISCO July 14, 2020 – Wells Fargo & Company (NYSE:WFC) reported a net loss of $2.4 billion, or $0.66 per diluted common share, for second quarter 2020, compared with net income of $6.2 billion, or $1.30 per share, for second quarter 2019, and $653 million, or $0.01 per share, for first quarter 2020.
The Company also announced that it expects to reduce its third quarter 2020 common stock dividend to $0.10 per share from $0.51 per share, subject to approval by the Company's Board of Directors at the customary time at the end of July.
Chief Executive Officer Charlie Scharf said, “We are extremely disappointed in both our second quarter results and our intent to reduce our dividend. Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter, which drove the $8.4 billion addition to our credit loss reserve in the second quarter. While the negative impact of the pandemic is unprecedented and many of our business drivers were negatively impacted, our franchise should perform better, and we will make changes to improve our performance regardless of the operating environment.
“Though our income performance was weak, our capital and liquidity continues to be extremely strong with both our CET1 ratio and LCR increasing from the end of the prior quarter. However, it is critical in these uncertain times that our common stock dividend reflects current earnings capacity assuming a continued difficult operating environment, evolving regulatory guidance, and protects our capital position if economic conditions were to further deteriorate. Given this, we believe it is prudent to be extremely cautious until we see a clear path to broad economic



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improvement. We are confident that this eventual economic improvement combined with our actions to increase our margins will support a higher dividend in the future,” Scharf added.
“I’m proud of the hard work and dedication of our employees through these challenging times to support our customers, communities, and each other. Our regulatory commitments remain our top priority and while we have more work ahead of us, we continue to devote all necessary resources to this effort,” Scharf concluded.
Chief Financial Officer John Shrewsberry said, “Wells Fargo reported a $2.4 billion net loss in the second quarter and a diluted loss per share of $0.66. In addition to the higher reserve, net interest income declined linked quarter primarily due to the impact of significantly lower market interest rates. Our second quarter results also included $1.2 billion of operating losses, primarily due to customer remediation accruals. Additionally, we had higher personnel and occupancy expense due to COVID-19. With respect to the balance sheet, loans declined as commercial customers paid down loans that were drawn late in the first quarter during the market turbulence at the outset of the pandemic, while consumer deposit balances increased reflecting unprecedented government stimulus programs, lower spending, and customers’ preferences for liquidity.”
Net Interest Income
Net interest income in the second quarter was $9.9 billion, down $1.4 billion from first quarter 2020; and the net interest margin was 2.25%, down 33 basis points from the prior quarter. These results were due to balance sheet repricing driven by the impact of the lower interest rate environment, less favorable hedge ineffectiveness accounting results, and higher mortgage-backed securities (MBS) premium amortization, partially offset by a shift to a lower-cost mix of funding.
Noninterest Income
Noninterest income in the second quarter was $8.0 billion, up $1.6 billion from first quarter 2020. Second quarter noninterest income included higher market sensitive revenue3, partially offset by lower other income, service charges on deposit accounts, and trust and investment fees.
Service charges on deposit accounts were $930 million, down from $1.2 billion in first quarter 2020, due to the impact of the COVID-19 pandemic, which resulted in reduced debit card transaction volume and higher fee waivers, as well as customers carrying higher average balances.
Trust and investment fees were $3.4 billion, down from $3.6 billion in first quarter 2020, driven by lower asset-based fees on retail brokerage advisory assets reflecting lower market valuations at March 31, 2020, partially offset by higher investment banking revenue.
Mortgage banking income was $317 million, down from $379 million in first quarter 2020. The decline in mortgage banking income reflected a lower valuation of our mortgage servicing rights asset as a result of assumption updates, including higher prepayment assumptions and higher expected servicing costs due to higher projected defaults. Additionally, net servicing fees were lower due to payment deferrals and fee waivers instituted in response to the COVID-19 pandemic. These declines were partially offset by higher net gains on mortgage loan production activities. The production margin on residential held-for-sale mortgage loan
3 Market sensitive revenue represents net gains from trading activities, debt securities, and equity securities.



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originations4 increased to 2.04% from 1.08% in the first quarter. Residential held-for-sale mortgage loan originations increased in the second quarter to $43 billion from $33 billion in the first quarter, primarily due to lower mortgage loan interest rates in the second quarter.
Market sensitive revenue3 was $1.6 billion, up from a loss of $(1.1) billion in first quarter 2020, predominantly due to a $1.9 billion increase in net gains from equity securities, which included $967 million of higher deferred compensation plan investment results (largely offset by higher employee benefits expense) and an $844 million decrease in impairment of securities from a first quarter that included $950 million of impairments. Additionally, net gains on trading activities increased $743 million on strong fixed income trading results.
Other income was $97 million, down $370 million from the prior quarter. Second quarter 2020 included a $261 million gain from the sale of $469 million of residential mortgage loans. First quarter 2020 included a $463 million gain from the sale of $709 million of residential mortgage loans.

Noninterest Expense
Noninterest expense in the second quarter was $14.6 billion, up $1.5 billion from the prior quarter. Operating losses in the second quarter increased $755 million from the first quarter on increased customer remediation accruals for a variety of matters and higher litigation accruals. Higher personnel expense in the second quarter included $947 million of higher deferred compensation expense (largely offset in revenue by higher net gains from equity securities), as well as COVID-19 related expense including additional payments to front-line employees and back-up childcare expense. The increase in personnel expense was partially offset by seasonally lower payroll tax and 401(k) expense and lower commission expense on lower revenue. In addition, occupancy expense increased $156 million from first quarter 2020 and included higher cleaning costs due to the COVID-19 pandemic. Technology and equipment, travel and entertainment, and advertising and promotion expense all declined compared with the prior quarter.
Income Taxes
The Company’s effective income tax rate was 62.2% for second quarter 2020, reflecting the impact of annual income tax benefits, primarily tax credits, driven by the reported pre-tax loss, and included net discrete income tax benefits of $98 million predominantly related to the resolution of prior period U.S. federal income tax matters. The effective income tax rate in first quarter 2020 was 19.5% and included net discrete income tax expense of $141 million driven by the accounting for stock compensation activity, the net impact of accounting for uncertain tax positions, and the outcome of U.S. federal income tax examinations. The Company currently expects the effective income tax rate for the remainder of 2020 to be approximately 26%, excluding the impact of discrete items.
Loans
Average loans were $971.3 billion in the second quarter, up $6.2 billion from the first quarter. Period-end loan balances were $935.2 billion at June 30, 2020, down $74.7 billion from March 31, 2020. Commercial loans were down $54.5 billion compared with March 31, 2020, predominantly due to a $54.9 billion decline in commercial and industrial loans driven by repayment of revolving lines that were drawn in March at the outset of the COVID-19 pandemic. Consumer loans decreased $20.1 billion from the prior quarter driven by a $16.7 billion decrease in real
4 Production margin represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale
mortgage originations. See the “Selected Five Quarter Residential Mortgage Production Data” table on page 43 for more information.



- 5 -

estate 1-4 family first and junior lien mortgage loans, as originations and draws of existing lines were more than offset by paydowns and a reclassification of $10.4 billion to held for sale, as well as a $2.6 billion decrease in credit card loans.
Period-End Loan Balances
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Commercial
$
513,187

 
567,735

 
515,719

 
512,332

 
512,245

Consumer
421,968

 
442,108

 
446,546

 
442,583

 
437,633

Total loans
$
935,155

 
1,009,843

 
962,265

 
954,915

 
949,878

Change from prior quarter
$
(74,688
)
 
47,578

 
7,350

 
5,037

 
1,629

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 $472.6 billion at June 30, 2020, down $29.0 billion from the first quarter driven by a $23.2 billion decrease in debt securities available-for-sale and held-to-maturity, as purchases of approximately $16.8 billion, largely federal agency MBS, were more than offset by runoff and sales.
Net unrealized gains on available-for-sale debt securities were $4.4 billion at June 30, 2020, compared with $3.0 billion at March 31, 2020, predominantly due to tighter credit spreads.
Equity securities include marketable and nonmarketable equity securities, as well as equity securities held for trading. Period-end equity securities were $52.5 billion at June 30, 2020, down $1.6 billion from the first quarter.
Deposits
Period-end deposits were $1.4 trillion at June 30, 2020, up $34.2 billion from March 31, 2020. Total average deposits for second quarter 2020 were $1.4 trillion, up $48.7 billion from the prior quarter driven by growth in consumer deposits, partially offset by a decline in commercial deposits. The average deposit cost for second quarter 2020 was 17 basis points, down 35 basis points from the prior quarter and down 53 basis points from a year ago.
Capital
The Company's CET1 ratio was 10.9%2 and continued to exceed both the regulatory minimum of 9% and our current internal target of 10%. In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators in March 2020 related to the impact of the current expected credit loss (CECL) accounting standard on regulatory capital. The impact of the CECL transition provision on our regulatory capital at June 30, 2020, was an increase in capital of $1.9 billion and an increase in the CET1 ratio of 14 basis points.
The Company expects to decrease its third quarter 2020 common stock dividend to $0.10 per share from $0.51 per share, subject to approval by the Company's Board of Directors at the customary time at the end of July.
On June 25, 2020, the FRB released the results of the 2020 Dodd-Frank stress test and related CCAR. The Company expects its SCB to be 2.5%, the lowest possible SCB, which will keep the regulatory minimum for our CET1 ratio at 9%.



- 6 -

As of June 30, 2020, our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.3%5, compared with the required minimum of 22.0%.
Credit Quality

Net Loan Charge-offs
The quarterly loss rate as a percentage of average loans in the second quarter was 0.46% (annualized), up from 0.38% in the prior quarter and 0.28% a year ago. Commercial and consumer losses were 0.44% and 0.48%, respectively. Total credit losses were $1.1 billion in second quarter 2020, up $204 million from first quarter 2020. Commercial losses increased $278 million driven by continued weakness in the oil and gas portfolio and higher losses in commercial real estate, as the effect of the COVID-19 pandemic on market conditions impacted our customers.
Net Loan Charge-Offs
 
Quarter ended
 
 
June 30, 2020
 
 
March 31, 2020
 
 
June 30, 2019
 
($ 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
$
521

 
0.55
 %
 
$
333

 
0.37
 %
 
$
159

 
0.18
 %
Real estate mortgage
67

 
0.22

 
(2
)
 
(0.01
)
 
4

 
0.01

Real estate construction
(1
)
 
(0.02
)
 
(16
)
 
(0.32
)
 
(2
)
 
(0.04
)
Lease financing
15

 
0.33

 
9

 
0.19

 
4

 
0.09

Total commercial
602

 
0.44

 
324

 
0.25

 
165

 
0.13

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
2

 

 
(3
)
 

 
(30
)
 
(0.04
)
Real estate 1-4 family junior lien mortgage
(12
)
 
(0.17
)
 
(5
)
 
(0.07
)
 
(19
)
 
(0.24
)
Credit card
327

 
3.60

 
377

 
3.81

 
349

 
3.68

Automobile
106

 
0.88

 
82

 
0.68

 
52

 
0.46

Other revolving credit and installment
88

 
1.09

 
134

 
1.59

 
136

 
1.56

Total consumer
511

 
0.48

 
585

 
0.53

 
488

 
0.45

Total
$
1,113

 
0.46
 %
 
$
909

 
0.38
 %
 
$
653

 
0.28
 %
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Quarterly net charge-offs (recoveries) as a percentage of average loans are annualized.
5 The TLAC ratio is a preliminary estimate.



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Nonperforming Assets
Nonperforming assets increased $1.4 billion, or 22%, from first quarter 2020 to $7.8 billion, and nonaccrual loans increased $1.4 billion from first quarter 2020 to $7.6 billion predominantly due to a $1.4 billion increase in commercial nonaccrual loans driven by the oil and gas and commercial real estate portfolios. Consumer nonaccrual loans increased $39 million driven by the residential real estate and automobile portfolios.
Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
 
June 30, 2020
 
 
March 31, 2020
 
 
June 30, 2019
 
($ 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
$
2,896

 
0.83
%
 
$
1,779

 
0.44
%
 
$
1,634

 
0.47
%
Real estate mortgage
1,217

 
0.98

 
944

 
0.77

 
737

 
0.60

Real estate construction
34

 
0.16

 
21

 
0.10

 
36

 
0.17

Lease financing
138

 
0.79

 
131

 
0.68

 
63

 
0.33

Total commercial
4,285

 
0.83

 
2,875

 
0.51

 
2,470

 
0.48

Consumer:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
2,393

 
0.86

 
2,372

 
0.81

 
2,425

 
0.85

Real estate 1-4 family junior lien mortgage
753

 
2.81

 
769

 
2.70

 
868

 
2.71

Automobile
129

 
0.26

 
99

 
0.20

 
115

 
0.25

Other revolving credit and installment
45

 
0.14

 
41

 
0.12

 
44

 
0.13

Total consumer
3,320

 
0.79

 
3,281

 
0.74

 
3,452

 
0.79

Total nonaccrual loans
7,605

 
0.81

 
6,156

 
0.61

 
5,922

 
0.62

Foreclosed assets:
 
 
 
 
 
 
 
 
 
 
 
Government insured/guaranteed
31

 
 
 
43

 
 
 
68

 
 
Non-government insured/guaranteed
164

 
 
 
209

 
 
 
309

 
 
Total foreclosed assets
195

 
 
 
252

 
 
 
377

 
 
Total nonperforming assets
$
7,800

 
0.83
%
 
$
6,408

 
0.63
%
 
$
6,299

 
0.66
%
Change from prior quarter:
 
 
 
 
 
 
 
 
 
 
 
Total nonaccrual loans
$
1,449

 
 
 
$
810

 
 
 
$
(983
)
 
 
Total nonperforming assets
1,392

 
 
 
759

 
 
 
(1,042
)
 
 
 
Allowance for Credit Losses for Loans
At June 30, 2020, the allowance for credit losses (ACL) for loans, including the allowance for unfunded commitments, totaled $20.4 billion, up $8.4 billion from March 31, 2020. The increase in the ACL reflects forecasted credit deterioration due to the COVID-19 pandemic, including a $6.4 billion increase for commercial loans, mainly in the commercial real estate and commercial and industrial portfolios, and a $2.0 billion increase for consumer loans, mainly in the residential real estate portfolio. The allowance coverage for total loans was 2.19%, compared with 1.19% in first quarter 2020. The allowance covered 4.6 times annualized second quarter net charge-offs, compared with 3.3 times in the prior quarter. The allowance coverage for nonaccrual loans was 269% at June 30, 2020, compared with 195% at March 31, 2020.




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Business Segment Performance
Wells Fargo defines its operating segments by product type and customer segment. On February 11, 2020, we announced a new organizational structure with five principal lines of business: Consumer and Small Business Banking; Consumer Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. This new organizational structure is intended to help drive operating, control, and business performance. The Company is currently in the process of transitioning to this new organizational structure, including aligning management reporting and allocation methodologies. These changes will not impact the consolidated financial results of the Company, but are expected to result in changes to our operating segments. We plan to update our operating segment disclosures, including comparative financial results, in third quarter 2020 when the Company is managed in accordance with the new organizational structure.

Segment net income (loss) for each of the three current business segments was:
 
Quarter ended 
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Jun 30,
2019

Community Banking
$
(331
)
 
155

 
3,147

Wholesale Banking
(2,143
)
 
311

 
2,789

Wealth and Investment Management
180

 
463

 
602

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million in which the owner generally is the financial decision maker. These financial products and services include checking and savings accounts, credit and debit cards, 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 other segments and results of investments in our affiliated venture capital and private equity partnerships.
Selected Financial Information
 
Quarter ended 
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Jun 30,
2019

Total revenue
$
8,766

 
9,496

 
11,805

Provision for credit losses
3,378

 
1,718

 
479

Noninterest expense
8,346

 
7,116

 
7,212

Segment net income (loss)
(331
)
 
155

 
3,147

(in billions)
 
 
 
 
 
Average loans
449.3

 
462.6

 
457.7

Average assets
1,059.8

 
1,039.2

 
1,024.8

Average deposits
848.5

 
798.6

 
777.6

Second Quarter 2020 vs. First Quarter 2020
Net loss of $331 million, down from net income of $155 million
Revenue of $8.8 billion, down $730 million, or 8%, driven by lower net interest income, service charges on deposit accounts, mortgage banking revenue, card fees, trust and investment fees, and lower gains from the sale of residential mortgage loans, partially offset by higher market sensitive revenue3 including higher deferred compensation plan investment results (largely offset by higher employee benefits expense)
Noninterest expense of $8.3 billion increased $1.2 billion, or 17%, driven by higher operating losses reflecting increased customer remediation accruals for a variety of matters, and higher personnel expense reflecting increased benefits expense related to the COVID-19 pandemic and increased deferred compensation expense (largely offset in revenue by higher net gains from equity securities). The increase in noninterest expense was partially offset by lower travel and entertainment, advertising and promotion, and technology and equipment expense
Provision for credit losses increased $1.7 billion to $3.4 billion, predominantly due to a $2.8 billion increase in the allowance for credit losses in second quarter 2020 driven by current and forecasted economic conditions due to the COVID-19 pandemic



- 9 -

Second Quarter 2020 vs. Second Quarter 2019
Net loss of $331 million, down from net income of $3.1 billion
Revenue decreased $3.0 billion, or 26%, driven by lower net interest income, mortgage banking revenue, service charges on deposit accounts, card fees, trust and investment fees, and lower gains from the sale of residential mortgage loans, partially offset by higher market sensitive revenue3 reflecting higher deferred compensation plan investment results (largely offset by higher employee benefits expense)
Noninterest expense increased $1.1 billion, or 16%, largely due to higher operating losses reflecting increased customer remediation accruals for a variety of matters, and higher personnel expense due to increased salary and benefits expense related to the COVID-19 pandemic, as well as increased deferred compensation expense (largely offset in revenue by higher net gains from equity securities). The increase in noninterest expense was partially offset by lower advertising and promotion, and travel and entertainment expense
Provision for credit losses increased $2.9 billion, predominantly due to a $2.8 billion increase in the allowance for credit losses in second quarter 2020 driven by current and forecasted economic conditions due to the COVID-19 pandemic
Business Metrics and Highlights
Primary consumer checking customers6,7 of 24.3 million, up 0.4% from a year ago
Debit card point-of-sale purchase volume8 of $93.1 billion in the second quarter, flat compared with the prior year
General purpose credit card point-of-sale purchase volume of $15.8 billion in the second quarter, down 23% from second quarter 2019
31.1 million digital (online and mobile) active customers, including 25.2 million mobile active customers9
5,300 retail bank branches as of the end of second quarter 2020, reflecting 30 branch consolidations in the quarter
Home Lending
Originations of $59 billion in second quarter 2020, up from $48 billion in first quarter 2020, driven primarily by lower mortgage interest rates
Originations of loans held-for-sale and loans held-for-investment were $43 billion and $16 billion, respectively
Production margin on residential held-for-sale mortgage loan originations4 of 2.04% in second quarter 2020, up from 1.08% in first quarter 2020
Applications of $84 billion in second quarter 2020, down from $108 billion in first quarter 2020, as we actively managed our pipeline
Unclosed application pipeline of $50 billion at quarter end, down from $62 billion at March 31, 2020, as we actively managed our pipeline
Automobile originations of $5.6 billion in the second quarter, down 13% from first quarter 2020, reflecting the economic impact of the COVID-19 pandemic
#1 in U.S. debit card transaction and purchase volume10
6 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit. Management uses this metric to help monitor trends in checking customer engagement with the Company.
7 Data as of May 2020, comparisons with May 2019.
8 Combined consumer and business debit card purchase volume dollars.
9 Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device in the prior 90 days.
10 Source: Nilson report, Top Debit Card Issuers in the U.S. 2019 (April 2020). Reflects total 2019 debit and prepaid card transaction volume for consumers and small businesses.



- 10 -

Wholesale Banking provides financial solutions to businesses with annual sales generally in excess of $5 million and to financial institutions globally. 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,
2020

 
Mar 31,
2020

 
Jun 30,
2019

Total revenue
$
6,563

 
5,817

 
7,065

Provision for credit losses
6,028

 
2,288

 
28

Noninterest expense
3,963

 
3,763

 
3,882

Segment net income (loss)
(2,143
)
 
311

 
2,789

(in billions)
 
 
 
 
 
Average loans
504.3

 
484.5

 
474.0

Average assets
863.2

 
885.0

 
852.2

Average deposits
441.2

 
456.6

 
410.4

Second Quarter 2020 vs. First Quarter 2020
Net loss of $2.1 billion, down from net income of $311 million
Revenue of $6.6 billion, up $746 million, or 13%, driven by higher market sensitive revenue3 and investment banking fees, partially offset by lower net interest income
Noninterest expense of $4.0 billion increased $200 million, or 5%, predominantly due to higher operating losses reflecting higher litigation accruals
Provision for credit losses increased $3.7 billion, predominantly due to a $5.5 billion increase in the allowance for credit losses in second quarter 2020, driven by current and forecasted economic conditions due to the COVID-19 pandemic and higher charge-offs in the oil and gas and commercial real estate portfolios
Second Quarter 2020 vs. Second Quarter 2019
Net loss of $2.1 billion, down from net income of $2.8 billion
Revenue decreased $502 million, or 7%, driven by lower net interest income, as well as declines in a variety of other income categories including other noninterest income, lease income, and commercial real estate brokerage fees (due to the sale of Eastdil). These decreases were partially offset by higher market sensitive revenue3 and investment banking fees
Noninterest expense increased $81 million, or 2%, reflecting higher operating losses driven by higher litigation accruals, partially offset by lower personnel expense
Provision for credit losses increased $6.0 billion, predominantly due to a $5.5 billion increase in the allowance for credit losses in second quarter 2020, driven by current and forecasted economic conditions due to the COVID-19 pandemic and higher charge-offs in the oil and gas and commercial real estate portfolios
Business Metrics and Highlights
Commercial card spend volume11 of $5.8 billion in second quarter 2020, down 34% from second quarter 2019, primarily driven by reduced business travel and other purchase activity due to the COVID-19 pandemic
2.1 billion ACH payment transactions originated12 in second quarter 2020, up 11% from second quarter 2019
U.S. investment banking market share of 3.8% for year-to-date 202013, compared with 3.5% for year-to-date 201913 
11 Includes commercial card volume for the entire company.
12 Includes ACH payment transactions originated by the entire company.
13 Year-to-date through June 30. 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, and Wells Fargo Asset Management. We deliver financial planning, private banking, credit, investment management and fiduciary services to high-net worth and ultra-high-net worth individuals and families. We also serve clients’ brokerage needs and provide investment management capabilities delivered to global institutional clients through separate accounts and the Wells Fargo Funds.
Selected Financial Information
 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Jun 30,
2019

Total revenue
$
3,660

 
3,715

 
4,050

Provision (reversal of provision) for credit losses
257

 
8

 
(1
)
Noninterest expense
3,153

 
3,103

 
3,246

Segment net income
180

 
463

 
602

(in billions)
 
 
 
 
 
Average loans
78.7

 
78.5

 
75.0

Average assets
87.7

 
88.1

 
83.8

Average deposits
171.8

 
151.4

 
143.5

Second Quarter 2020 vs. First Quarter 2020
Net income of $180 million, down $283 million, or 61%
Revenue of $3.7 billion, down $55 million, or 1%, predominantly due to lower asset-based fees on retail brokerage advisory assets reflecting lower market valuations at March 31, 2020, lower net interest income, and lower brokerage transactional revenue, partially offset by higher net gains from equity securities driven by a $413 million increase in deferred compensation plan investment results (largely offset by higher employee benefits expense)
Noninterest expense of $3.2 billion increased $50 million, or 2%, predominantly due to higher employee benefits expense driven by a $401 million increase in deferred compensation expense (largely offset in revenue by higher net gains from equity securities) and higher regulatory, risk, and technology expense, partially offset by lower broker commissions, lower other personnel expenses which were seasonally higher in the first quarter, and lower equipment expense related to the continued evaluation of technology projects
Provision for credit losses of $257 million, up $249 million, predominantly due to a $255 million increase in the allowance for credit losses in second quarter 2020 driven by current and forecasted economic conditions due to the COVID-19 pandemic
Second Quarter 2020 vs. Second Quarter 2019
Net income decreased $422 million, or 70%
Revenue decreased $390 million, or 10%, predominantly due to lower net interest income, asset-based fees, and brokerage transactional revenue, partially offset by higher net gains from equity securities driven by a $118 million increase in deferred compensation plan investment results (largely offset by higher employee benefits expense)
Noninterest expense decreased $93 million, or 3%, predominantly due to lower equipment expense related to the continued evaluation of technology projects, as well as lower broker commissions and other personnel expenses, partially offset by higher regulatory, risk, and technology expense, as well as higher employee benefits expense driven by a $107 million increase in deferred compensation expense (largely offset in revenue by higher net gains from equity securities)
Provision for credit losses increased $258 million, predominantly due to a $255 million increase in the allowance for credit losses in second quarter 2020 driven by current and forecasted economic conditions due to the COVID-19 pandemic



- 12 -

Business Metrics and Highlights
Total WIM Segment 
WIM total client assets of $1.8 trillion, down 4% from a year ago, primarily driven by net outflows in the Correspondent Clearing business
Average loan balances up 5% compared with a year ago
Average deposit balances up 20% compared with a year ago, primarily due to growth in brokerage clients’ cash balances
Second quarter 2020 closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) down 43% compared with second quarter 2019, reflecting lower referral activity due to the COVID-19 pandemic
Retail Brokerage 
Client assets of $1.6 trillion, down 4% from the prior year, primarily driven by net outflows in the Correspondent Clearing business
Advisory assets of $569 billion, up 1% from a year ago, primarily driven by higher market valuations, partially offset by net outflows in the Correspondent Clearing business
IRA assets of $415 billion, flat compared with the prior year
Wealth Management
Client assets of $224 billion, down 3% from the prior year
Asset Management
Total assets under management of $578 billion, up 17% from the prior year, primarily driven by money market net inflows and higher market valuations, partially offset by equity net outflows


Conference Call
The Company will host a live conference call on Tuesday, July 14, at 8:00 a.m. PT (11:00 a.m. ET). You may listen to the call by dialing 866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and
https://engage.vevent.com/rt/wells_fargo_ao/index.jsp?seid=518.

A replay of the conference call will be available beginning at approximately 12:00 p.m. PT (3:00 p.m. ET) on Tuesday, July 14 through Tuesday, July 28. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #8246467. 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/index.jsp?seid=518.



- 13 -

Forward-Looking Statements
This document contains forward-looking statements. 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 our allowance for credit losses; (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, ratios or targets; (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) expectations regarding our effective income tax rate; (xiii) the outcome of contingencies, such as legal proceedings; and (xiv) 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;
the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;
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 or in the level or composition of our assets or liabilities 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 impairments of securities held in our debt securities and equity securities portfolios;



- 14 -

the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;
negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;
resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;
the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
fiscal and monetary policies of the Federal Reserve Board;
changes to U.S. tax guidance and regulations, as well as the effect of discrete items on our effective income tax rate;
our ability to develop and execute effective business plans and strategies; 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, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
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, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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 $1.97 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 7,300 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 31 countries and territories to support customers who conduct business in the global economy. With approximately 266,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations.


Contact Information
Media
Peter Gilchrist, 704-715-3213
peter.gilchrist@wellsfargo.com

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
Allocation of the 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, 2020 from
 
 
Six months ended
 
 
 
($ in millions, except per share amounts)
Jun 30,
2020

 
Mar 31,
2020

 
Jun 30,
2019

 
Mar 31,
2020

 
Jun 30,
2019

 
Jun 30,
2020

 
Jun 30,
2019

 
%
Change

For the Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wells Fargo net income (loss)
$
(2,379
)
 
653

 
6,206

 
NM

 
NM

 
$
(1,726
)
 
12,066

 
NM

Wells Fargo net income (loss) applicable to common stock
(2,694
)
 
42

 
5,848

 
NM

 
NM

 
(2,652
)
 
11,355

 
NM

Diluted earnings (loss) per common share
(0.66
)
 
0.01

 
1.30

 
NM

 
NM

 
(0.65
)
 
2.50

 
NM

Profitability ratios (annualized):
 
 
 
 
 
 


 


 
 
 
 
 
 
Wells Fargo net income (loss) to average assets (ROA)
(0.49
)%
 
0.13

 
1.31

 
NM

 
NM

 
(0.18
)%
 
1.29

 
NM

Wells Fargo net income (loss) applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)
(6.63
)
 
0.10

 
13.26

 
NM

 
NM

 
(3.23
)
 
12.99

 
NM

Return on average tangible common equity (ROTCE)(1)
(8.00
)
 
0.12

 
15.78

 
NM

 
NM

 
(3.89
)
 
15.47

 
NM

Efficiency ratio (2)
81.6

 
73.6

 
62.3

 
11

 
31

 
77.6

 
63.4

 
22

Total revenue
$
17,836

 
17,717

 
21,584

 
1

 
(17
)
 
$
35,553

 
43,193

 
(18
)
Pre-tax pre-provision profit (PTPP)(3)
3,285

 
4,669

 
8,135

 
(30
)
 
(60
)
 
7,954

 
15,828

 
(50
)
Dividends declared per common share
0.51

 
0.51

 
0.45

 

 
13

 
1.02

 
0.90

 
13

Average common shares outstanding
4,105.5

 
4,104.8

 
4,469.4

 

 
(8
)
 
4,105.2

 
4,510.2

 
(9
)
Diluted average common shares outstanding (4)
4,105.5

 
4,135.3

 
4,495.0

 
(1
)
 
(9
)
 
4,105.2

 
4,540.1

 
(10
)
Average loans
$
971,266

 
965,046

 
947,460

 
1

 
3

 
$
968,156

 
948,728

 
2

Average assets
1,948,939

 
1,950,659

 
1,900,627

 

 
3

 
1,949,799

 
1,891,907

 
3

Average total deposits
1,386,656

 
1,337,963

 
1,268,979

 
4

 
9

 
1,362,309

 
1,265,539

 
8

Average consumer and small business banking deposits (5)
857,943

 
779,521

 
742,671

 
10

 
16

 
819,791

 
741,171

 
11

Net interest margin
2.25
 %
 
2.58

 
2.82

 
(13
)
 
(20
)
 
2.42
 %
 
2.86

 
(15
)
At Period End
 
 
 
 
 
 


 


 
 
 
 
 
 
Debt securities
$
472,580

 
501,563

 
482,067

 
(6
)
 
(2
)
 
$
472,580

 
482,067

 
(2
)
Loans
935,155

 
1,009,843

 
949,878

 
(7
)
 
(2
)
 
935,155

 
949,878

 
(2
)
Allowance for loan losses
18,926

 
11,263

 
9,692

 
68

 
95

 
18,926

 
9,692

 
95

Goodwill
26,385

 
26,381

 
26,415

 

 

 
26,385

 
26,415

 

Equity securities
52,494

 
54,047

 
61,537

 
(3
)
 
(15
)
 
52,494

 
61,537

 
(15
)
Assets
1,968,766

 
1,981,349

 
1,923,388

 
(1
)
 
2

 
1,968,766

 
1,923,388

 
2

Deposits
1,410,711

 
1,376,532

 
1,288,426

 
2

 
9

 
1,410,711

 
1,288,426

 
9

Common stockholders' equity
159,322

 
162,654

 
177,235

 
(2
)
 
(10
)
 
159,322

 
177,235

 
(10
)
Wells Fargo stockholders’ equity
179,386

 
182,718

 
199,042

 
(2
)
 
(10
)
 
179,386

 
199,042

 
(10
)
Total equity
180,122

 
183,330

 
200,037

 
(2
)
 
(10
)
 
180,122

 
200,037

 
(10
)
Tangible common equity (1)
131,329

 
134,787

 
148,864

 
(3
)
 
(12
)
 
131,329

 
148,864

 
(12
)
Common shares outstanding
4,119.6

 
4,096.4

 
4,419.6

 
1

 
(7
)
 
4,119.6

 
4,419.6

 
(7
)
Book value per common share (6)
$
38.67

 
39.71

 
40.10

 
(3
)
 
(4
)
 
$
38.67

 
40.10

 
(4
)
Tangible book value per common share (1)(6)
31.88

 
32.90

 
33.68

 
(3
)
 
(5
)
 
31.88

 
33.68

 
(5
)
Team members (active, full-time equivalent)
266,300

 
262,800

 
262,800

 
1

 
1

 
266,300

 
262,800

 
1

(1)
Tangible common equity, return on average tangible common equity, and tangible book value per common share are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 37.
(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)
In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
(5)
Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
(6)
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,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

For the Quarter
 
 
 
 
 
 
 
 
 
Wells Fargo net income (loss)
$
(2,379
)
 
653

 
2,873

 
4,610

 
6,206

Wells Fargo net income (loss) applicable to common stock
(2,694
)
 
42

 
2,546

 
4,037

 
5,848

Diluted earnings (loss) per common share
(0.66
)
 
0.01

 
0.60

 
0.92

 
1.30

Profitability ratios (annualized):
 
 
 
 
 
 
 
 
 
Wells Fargo net income (loss) to average assets (ROA)
(0.49
)%
 
0.13

 
0.59

 
0.95

 
1.31

Wells Fargo net income (loss) applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)
(6.63
)
 
0.10

 
5.91

 
9.00

 
13.26

Return on average tangible common equity (ROTCE)(1)
(8.00
)
 
0.12

 
7.08

 
10.70

 
15.78

Efficiency ratio (2)
81.6

 
73.6

 
78.6

 
69.1

 
62.3

Total revenue
$
17,836

 
17,717

 
19,860

 
22,010

 
21,584

Pre-tax pre-provision profit (PTPP)(3)
3,285

 
4,669

 
4,246

 
6,811

 
8,135

Dividends declared per common share
0.51

 
0.51

 
0.51

 
0.51

 
0.45

Average common shares outstanding
4,105.5

 
4,104.8

 
4,197.1

 
4,358.5

 
4,469.4

Diluted average common shares outstanding (4)
4,105.5

 
4,135.3

 
4,234.6

 
4,389.6

 
4,495.0

Average loans
$
971,266

 
965,046

 
956,536

 
949,760

 
947,460

Average assets
1,948,939

 
1,950,659

 
1,941,843

 
1,927,415

 
1,900,627

Average total deposits
1,386,656

 
1,337,963

 
1,321,913

 
1,291,375

 
1,268,979

Average consumer and small business banking deposits (5)
857,943

 
779,521

 
763,169

 
749,529

 
742,671

Net interest margin
2.25
 %
 
2.58

 
2.53

 
2.66

 
2.82

At Quarter End
 
 
 
 
 
 
 
 
 
Debt securities
$
472,580

 
501,563

 
497,125

 
503,528

 
482,067

Loans
935,155

 
1,009,843

 
962,265

 
954,915

 
949,878

Allowance for loan losses
18,926

 
11,263

 
9,551

 
9,715

 
9,692

Goodwill
26,385

 
26,381

 
26,390

 
26,388

 
26,415

Equity securities
52,494

 
54,047

 
68,241

 
63,884

 
61,537

Assets
1,968,766

 
1,981,349

 
1,927,555

 
1,943,950

 
1,923,388

Deposits
1,410,711

 
1,376,532

 
1,322,626

 
1,308,495

 
1,288,426

Common stockholders' equity
159,322

 
162,654

 
166,669

 
172,827

 
177,235

Wells Fargo stockholders’ equity
179,386

 
182,718

 
187,146

 
193,304

 
199,042

Total equity
180,122

 
183,330

 
187,984

 
194,416

 
200,037

Tangible common equity (1)
131,329

 
134,787

 
138,506

 
144,481

 
148,864

Common shares outstanding
4,119.6

 
4,096.4

 
4,134.4

 
4,269.1

 
4,419.6

Book value per common share (6)
$
38.67

 
39.71

 
40.31

 
40.48

 
40.10

Tangible book value per common share (1)(6)
31.88

 
32.90

 
33.50

 
33.84

 
33.68

Team members (active, full-time equivalent)
266,300

 
262,800

 
259,800

 
261,400

 
262,800

(1)
Tangible common equity, return on average tangible common equity, and tangible book value per common share are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 37.
(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)
In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
(5)
Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
(6)
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)
2020

 
2019

 
Change

 
2020

 
2019

 
Change

Interest income
 
 
 
 
 
 
 
 
 
 
 
Debt securities
$
2,946

 
3,781

 
(22
)%
 
$
6,418

 
7,722

 
(17
)%
Mortgage loans held for sale
230

 
195

 
18

 
427

 
347

 
23

Loans held for sale
7

 
20

 
(65
)
 
19

 
44

 
(57
)
Loans
8,448

 
11,316

 
(25
)
 
18,513

 
22,670

 
(18
)
Equity securities
116

 
236

 
(51
)
 
322

 
446

 
(28
)
Other interest income
54

 
1,438

 
(96
)
 
829

 
2,760

 
(70
)
Total interest income
11,801

 
16,986

 
(31
)
 
26,528

 
33,989

 
(22
)
Interest expense
 
 
 
 
 
 
 
 
 
 
 
Deposits
585

 
2,213

 
(74
)
 
2,327

 
4,239

 
(45
)
Short-term borrowings
(17
)
 
646

 
NM

 
274

 
1,242

 
(78
)
Long-term debt
1,237

 
1,900

 
(35
)
 
2,477

 
3,827

 
(35
)
Other interest expense
116

 
132

 
(12
)
 
258

 
275

 
(6
)
Total interest expense
1,921

 
4,891

 
(61
)
 
5,336

 
9,583

 
(44
)
Net interest income
9,880

 
12,095

 
(18
)
 
21,192

 
24,406

 
(13
)
Provision (reversal of provision) for credit losses:
 
 
 
 


 
 
 
 
 


Debt securities
(31
)
 

 
NM

 
141

 

 
NM

Loans
9,565

 
503

 
NM

 
13,398

 
1,348

 
894

Net interest income after provision for credit losses
346

 
11,592

 
(97
)
 
7,653

 
23,058

 
(67
)
Noninterest income
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
930

 
1,206

 
(23
)
 
2,139

 
2,300

 
(7
)
Trust and investment fees
3,351

 
3,568

 
(6
)
 
6,925

 
6,941

 

Card fees
797

 
1,025

 
(22
)
 
1,689

 
1,969

 
(14
)
Other fees
578

 
800

 
(28
)
 
1,210

 
1,570

 
(23
)
Mortgage banking
317

 
758

 
(58
)
 
696

 
1,466

 
(53
)
Net gains from trading activities
807

 
229

 
252

 
871

 
586

 
49

Net gains on debt securities
212

 
20

 
960

 
449

 
145

 
210

Net gains (losses) from equity securities
533

 
622

 
(14
)
 
(868
)
 
1,436

 
NM

Lease income
334

 
424

 
(21
)
 
686

 
867

 
(21
)
Other (1)
97

 
837

 
(88
)
 
564

 
1,507

 
(63
)
Total noninterest income
7,956

 
9,489

 
(16
)
 
14,361

 
18,787

 
(24
)
Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
Personnel (1)
8,911

 
8,474

 
5

 
17,225

 
17,682

 
(3
)
Technology and equipment (1)
562

 
641

 
(12
)
 
1,268

 
1,335

 
(5
)
Occupancy
871

 
719

 
21

 
1,586

 
1,436

 
10

Core deposit and other intangibles
22

 
27

 
(19
)
 
45

 
55

 
(18
)
FDIC and other deposit assessments
165

 
144

 
15

 
283

 
303

 
(7
)
Other (1)
4,020

 
3,444

 
17

 
7,192

 
6,554

 
10

Total noninterest expense
14,551

 
13,449

 
8

 
27,599

 
27,365

 
1

Income (loss) before income tax expense (benefit)
(6,249
)
 
7,632

 
NM

 
(5,585
)
 
14,480

 
NM

Income tax expense (benefit)
(3,917
)
 
1,294

 
NM

 
(3,758
)
 
2,175

 
NM

Net income (loss) before noncontrolling interests
(2,332
)
 
6,338

 
NM

 
(1,827
)
 
12,305

 
NM

Less: Net income (loss) from noncontrolling interests
47

 
132

 
(64
)
 
(101
)
 
239

 
NM

Wells Fargo net income (loss)
$
(2,379
)
 
6,206

 
NM

 
$
(1,726
)
 
12,066

 
NM

Less: Preferred stock dividends and other
315

 
358

 
(12
)
 
926

 
711

 
30

Wells Fargo net income (loss) applicable to common stock
$
(2,694
)
 
5,848

 
NM

 
$
(2,652
)
 
11,355

 
NM

Per share information
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
$
(0.66
)
 
1.31

 
NM

 
$
(0.65
)
 
2.52

 
NM

Diluted earnings (loss) per common share (2)
(0.66
)
 
1.30

 
NM

 
(0.65
)
 
2.50

 
NM

Average common shares outstanding
4,105.5

 
4,469.4

 
(8
)
 
4,105.2

 
4,510.2

 
(9
)
Diluted average common shares outstanding (2)
4,105.5

 
4,495.0

 
(9
)
 
4,105.2

 
4,540.1

 
(10
)
NM - Not meaningful
(1)
In second quarter 2020, insurance income was moved to other noninterest income, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were moved from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)
In second quarter 2020, diluted earnings per common share equaled earnings per common share because our securities convertible into common shares had an anti-dilutive effect.




- 20 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
 
Quarter ended
 
(in millions, except per share amounts)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Interest income
 
 
 
 
 
 
 
 
 
Debt securities
$
2,946

 
3,472

 
3,567

 
3,666

 
3,781

Mortgage loans held for sale
230

 
197

 
234

 
232

 
195

Loans held for sale
7

 
12

 
15

 
20

 
20

Loans
8,448

 
10,065

 
10,494

 
10,982

 
11,316

Equity securities
116

 
206

 
269

 
247

 
236

Other interest income
54

 
775

 
1,016

 
1,352

 
1,438

Total interest income
11,801

 
14,727

 
15,595

 
16,499

 
16,986

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
585

 
1,742

 
2,072

 
2,324

 
2,213

Short-term borrowings
(17
)
 
291

 
439

 
635

 
646

Long-term debt
1,237

 
1,240

 
1,743

 
1,780

 
1,900

Other interest expense
116

 
142

 
141

 
135

 
132

Total interest expense
1,921

 
3,415

 
4,395

 
4,874

 
4,891

Net interest income
9,880

 
11,312

 
11,200

 
11,625

 
12,095

Provision (reversal of provision) for credit losses:
 
 
 
 
 
 
 
 
 
Debt securities
(31
)
 
172

 

 

 

Loans
9,565

 
3,833

 
644

 
695

 
503

Net interest income after provision for credit losses
346

 
7,307

 
10,556

 
10,930

 
11,592

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
930

 
1,209

 
1,279

 
1,219

 
1,206

Trust and investment fees
3,351

 
3,574

 
3,572

 
3,559

 
3,568

Card fees
797

 
892

 
1,020

 
1,027

 
1,025

Other fees
578

 
632

 
656

 
858

 
800

Mortgage banking
317

 
379

 
783

 
466

 
758

Net gains from trading activities
807

 
64

 
131

 
276

 
229

Net gains (losses) on debt securities
212

 
237

 
(8
)
 
3

 
20

Net gains (losses) from equity securities
533

 
(1,401
)
 
451

 
956

 
622

Lease income
334

 
352

 
343

 
402

 
424

Other (1)
97

 
467

 
433

 
1,619

 
837

Total noninterest income
7,956

 
6,405

 
8,660

 
10,385

 
9,489

Noninterest expense
 
 
 
 
 
 
 
 
 
Personnel (1)
8,911

 
8,314

 
8,808

 
8,594

 
8,474

Technology and equipment (1)
562

 
706

 
843

 
730

 
641

Occupancy
871

 
715

 
749

 
760

 
719

Core deposit and other intangibles
22

 
23

 
26

 
27

 
27

FDIC and other deposit assessments
165

 
118

 
130

 
93

 
144

Other (1)
4,020

 
3,172

 
5,058

 
4,995

 
3,444

Total noninterest expense
14,551

 
13,048

 
15,614

 
15,199

 
13,449

Income (loss) before income tax expense (benefit)
(6,249
)
 
664

 
3,602

 
6,116

 
7,632

Income tax expense (benefit)
(3,917
)
 
159

 
678

 
1,304

 
1,294

Net income (loss) before noncontrolling interests
(2,332
)
 
505

 
2,924

 
4,812

 
6,338

Less: Net income (loss) from noncontrolling interests
47

 
(148
)
 
51

 
202

 
132

Wells Fargo net income (loss)
$
(2,379
)
 
653

 
2,873

 
4,610

 
6,206

Less: Preferred stock dividends and other
315

 
611

 
327

 
573

 
358

Wells Fargo net income (loss) applicable to common stock
$
(2,694
)
 
42

 
2,546

 
4,037

 
5,848

Per share information
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
$
(0.66
)
 
0.01

 
0.61

 
0.93

 
1.31

Diluted earnings (loss) per common share (2)
(0.66
)
 
0.01

 
0.60

 
0.92

 
1.30

Average common shares outstanding
4,105.5

 
4,104.8

 
4,197.1

 
4,358.5

 
4,469.4

Diluted average common shares outstanding (2)
4,105.5

 
4,135.3

 
4,234.6

 
4,389.6

 
4,495.0

(1)
In second quarter 2020, insurance income was moved to other noninterest income, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were moved from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)
In second quarter 2020, diluted earnings per common share equaled earnings per common share because our securities convertible into common shares had an anti-dilutive effect.





- 21 -

Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 
Quarter ended June 30,
 
 
%
 
Six months ended June 30,
 
 
%
(in millions)
2020

 
2019

 
Change
 
2020

 
2019

 
Change
Wells Fargo net income (loss)
$
(2,379
)
 
6,206

 
NM
 
$
(1,726
)
 
12,066

 
NM
Other comprehensive income (loss), before tax:
 
 
 
 

 
 
 
 
 

Debt securities:
 
 
 
 

 
 
 
 
 

Net unrealized gains arising during the period
1,596

 
1,709

 
(7)
 
1,486

 
4,540

 
(67)
Reclassification of net (gains) losses to net income
(90
)
 
39

 
NM
 
(262
)
 
(42
)
 
524
Derivative and hedging activities:
 
 
 
 

 
 
 
 
 

Net unrealized gains (losses) arising during the period
(52
)
 
57

 
NM
 
72

 
22

 
227
Reclassification of net losses to net income
55

 
79

 
(30)
 
113

 
158

 
(28)
Defined benefit plans adjustments:
 
 
 
 

 
 
 
 
 

Net actuarial and prior service losses arising during the period
(674
)
 

 
 
(671
)
 
(4
)
 
NM
Amortization of net actuarial loss, settlements and other to net income
101

 
33

 
206
 
137

 
68

 
101
Foreign currency translation adjustments:
 
 
 
 

 
 
 
 
 

       Net unrealized gains (losses) arising during the period
51

 
14

 
264
 
(144
)
 
56

 
NM
Other comprehensive income, before tax
987


1,931

 
(49)
 
731


4,798

 
(85)
Income tax expense related to other comprehensive income
(221
)
 
(473
)
 
(53)
 
(219
)
 
(1,167
)
 
(81)
Other comprehensive income, net of tax
766


1,458

 
(47)
 
512


3,631

 
(86)
Less: Other comprehensive loss from noncontrolling interests

 

 
 
(1
)
 

 
Wells Fargo other comprehensive income, net of tax
766


1,458

 
(47)
 
513


3,631

 
(86)
Wells Fargo comprehensive income (loss)
(1,613
)

7,664

 
NM
 
(1,213
)

15,697

 
NM
Comprehensive income (loss) from noncontrolling interests
47

 
132

 
(64)
 
(102
)
 
239

 
NM
Total comprehensive income (loss)
$
(1,566
)

7,796

 
NM
 
$
(1,315
)

15,936

 
NM
NM – Not meaningful


FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Balance, beginning of period
$
183,330

 
187,984

 
194,416

 
200,037

 
198,733

Cumulative effect from change in accounting policies (1)

 
991

 

 

 

Wells Fargo net income (loss)
(2,379
)
 
653

 
2,873

 
4,610

 
6,206

Wells Fargo other comprehensive income, net of tax
766

 
(253
)
 
328

 
585

 
1,458

Noncontrolling interests
124

 
(226
)
 
(274
)
 
117

 
94

Common stock issued
367

 
1,677

 
341

 
278

 
399

Common stock repurchased
(2
)
 
(3,407
)
 
(7,367
)
 
(7,448
)
 
(4,898
)
Preferred stock redeemed (2)

 
(2,470
)
 

 
(1,550
)
 

Preferred stock released by ESOP
249

 

 

 
142

 
193

Preferred stock issued (3)

 
1,968

 

 

 

Common stock dividends
(2,093
)
 
(2,096
)
 
(2,145
)
 
(2,230
)
 
(2,015
)
Preferred stock dividends
(315
)
 
(339
)
 
(327
)
 
(353
)
 
(358
)
Stock incentive compensation expense
120

 
181

 
181

 
262

 
247

Net change in deferred compensation and related plans
(45
)
 
(1,333
)
 
(42
)
 
(34
)
 
(22
)
Balance, end of period
$
180,122

 
183,330

 
187,984

 
194,416

 
200,037

(1)
Effective January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses.
(2)
Represents the impact of the redemption of the remaining shares of Preferred Stock, Series K, in first quarter 2020, the partial redemption of Preferred Stock, Series T, in first quarter 2020, and the partial redemption of Preferred Stock, Series K, in third quarter 2019.
(3)
Represents the issuance of Preferred Stock, Series Z, in first quarter 2020.



- 22 -

Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
 
Quarter ended June 30,
 
 
2020
 
 
2019
 
(in millions)
Average
balance

 
Yields/
rates

 
Interest
income/
expense

 
Average
balance

 
Yields/
rates

 
Interest
income/
expense

Earning assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits with banks
$
176,327

 
0.12
 %
 
$
51

 
141,045

 
2.33
%
 
$
819

Federal funds sold and securities purchased under resale agreements
76,384

 
0.01

 
2

 
98,130

 
2.44

 
598

Debt securities (2):
 
 
 
 
 
 
 
 
 
 
 
Trading debt securities
96,049

 
2.76

 
663

 
86,514

 
3.45

 
746

Available-for-sale debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
9,452

 
0.83

 
19

 
15,402

 
2.21

 
85

Securities of U.S. states and political subdivisions
35,728

 
2.98

 
267

 
45,769

 
4.02

 
460

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Federal agencies
143,600

 
2.33

 
837

 
149,761

 
2.99

 
1,120

Residential and commercial
4,433

 
2.27

 
25

 
5,562

 
4.02

 
56

Total mortgage-backed securities
148,033

 
2.33

 
862

 
155,323

 
3.03

 
1,176

Other debt securities
39,231

 
2.75

 
268

 
45,063

 
4.40

 
494

Total available-for-sale debt securities
232,444

 
2.44

 
1,416

 
261,557

 
3.39

 
2,215

Held-to-maturity debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
48,574

 
2.14

 
258

 
44,762

 
2.19

 
244

Securities of U.S. states and political subdivisions
14,168

 
3.81

 
135

 
6,958

 
4.06

 
71

Federal agency and other mortgage-backed securities
104,047

 
2.21

 
575

 
95,506

 
2.64

 
632

Other debt securities
15

 
2.58

 

 
58

 
3.86

 

Total held-to-maturity debt securities
166,804

 
2.33

 
968

 
147,284

 
2.57

 
947

Total debt securities
495,297

 
2.46

 
3,047

 
495,355

 
3.16

 
3,908

Mortgage loans held for sale (3)
25,960

 
3.55

 
230

 
18,464

 
4.22

 
195

Loans held for sale (3)
1,650

 
1.87

 
7

 
1,642

 
4.80

 
20

Loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial - U.S.
310,104

 
2.58

 
1,990

 
285,084

 
4.47

 
3,176

Commercial and industrial - Non-U.S.
72,241

 
2.48

 
445

 
62,905

 
3.90

 
611

Real estate mortgage
123,525

 
3.03

 
930

 
121,869

 
4.58

 
1,390

Real estate construction
21,361

 
3.37

 
179

 
21,568

 
5.36

 
288

Lease financing
18,087

 
4.34

 
196

 
19,133

 
4.71

 
226

Total commercial loans
545,318

 
2.76

 
3,740

 
510,559

 
4.47

 
5,691

Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
280,878

 
3.44

 
2,414

 
286,169

 
3.88

 
2,776

Real estate 1-4 family junior lien mortgage
27,700

 
4.24

 
292

 
32,609

 
5.75

 
468

Credit card
36,539

 
10.78

 
979

 
38,154

 
12.65

 
1,204

Automobile
48,441

 
4.99

 
601

 
45,179

 
5.23

 
589

Other revolving credit and installment
32,390

 
5.45

 
440

 
34,790

 
7.12

 
617

Total consumer loans
425,948

 
4.45

 
4,726

 
436,901

 
5.18

 
5,654

Total loans (3)
971,266

 
3.50

 
8,466

 
947,460

 
4.80

 
11,345

Equity securities
27,417

 
1.70

 
117

 
35,215

 
2.70

 
237

Other
7,715

 
(0.02
)
 

 
4,693

 
1.76

 
20

Total earning assets
$
1,782,016

 
2.68
 %
 
$
11,920

 
1,742,004

 
3.94
%
 
$
17,142

Funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking
$
53,592

 
0.07
 %
 
$
9

 
57,549

 
1.46
%
 
$
210

Market rate and other savings
799,949

 
0.16

 
311

 
690,677

 
0.59

 
1,009

Savings certificates
27,051

 
1.11

 
75

 
30,620

 
1.62

 
124

Other time deposits
59,920

 
1.01

 
149

 
96,887

 
2.61

 
630

Deposits in non-U.S. offices
37,682

 
0.44

 
41

 
51,875

 
1.86

 
240

Total interest-bearing deposits
978,194

 
0.24

 
585

 
927,608

 
0.96

 
2,213

Short-term borrowings
63,535

 
(0.10
)
 
(17
)
 
114,754

 
2.26

 
646

Long-term debt
232,395

 
2.13

 
1,237

 
236,734

 
3.21

 
1,900

Other liabilities
29,947

 
1.53

 
116

 
24,314

 
2.18

 
132

Total interest-bearing liabilities
1,304,071

 
0.59

 
1,921

 
1,303,410

 
1.50

 
4,891

Portion of noninterest-bearing funding sources
477,945

 

 

 
438,594

 

 

Total funding sources
$
1,782,016

 
0.43

 
1,921

 
1,742,004

 
1.12

 
4,891

Net interest margin and net interest income on a taxable-equivalent basis (4)
 
 
2.25
 %
 
$
9,999

 
 
 
2.82
%
 
$
12,251

Noninterest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
21,227

 
 
 
 
 
19,475

 
 
 
 
Goodwill
26,384

 
 
 
 
 
26,415

 
 
 
 
Other
119,312

 
 
 
 
 
112,733

 
 
 
 
Total noninterest-earning assets
$
166,923

 
 
 
 
 
158,623

 
 
 
 
Noninterest-bearing funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
408,462

 
 
 
 
 
341,371

 
 
 
 
Other liabilities
52,298

 
 
 
 
 
56,161

 
 
 
 
Total equity
184,108

 
 
 
 
 
199,685

 
 
 
 
Noninterest-bearing funding sources used to fund earning assets
(477,945
)
 
 
 
 
 
(438,594
)
 
 
 
 
Net noninterest-bearing funding sources
$
166,923

 
 
 
 
 
158,623

 
 
 
 
Total assets
$
1,948,939

 
 
 
 
 
1,900,627

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average prime rate
 
 
3.25
 %
 
 
 
 
 
5.50
%
 
 
Average three-month London Interbank Offered Rate (LIBOR)
 
 
0.60

 
 
 
 
 
2.51

 
 
 
(1)
Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(2)
Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.
(3)
Nonaccrual loans and related income are included in their respective loan categories.
(4)
Includes taxable-equivalent adjustments of $119 million and $156 million for the quarters ended June 30, 2020 and 2019, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% for the periods presented.



- 23 -

Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
 
Six months ended June 30,
 
 
2020
 
 
2019
 
(in millions)
Average
balance

 
Yields/
rates

 
Interest
income/
expense

 
Average
balance

 
Yields/
rates

 
Interest
income/
expense

Earning assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits with banks
$
152,924

 
0.57
%
 
$
432

 
140,915

 
2.33
%
 
$
1,629

Federal funds sold and securities purchased under resale agreements
91,969

 
0.84

 
382

 
90,875

 
2.42

 
1,093

Debt securities (2):
 
 
 
 
 
 
 
 
 
 
 
Trading debt securities
98,556

 
2.91

 
1,433

 
87,938

 
3.52

 
1,544

Available-for-sale debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
10,116

 
1.14

 
57

 
14,740

 
2.18

 
159

Securities of U.S. states and political subdivisions
37,340

 
3.22

 
601

 
47,049

 
4.02

 
946

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Federal agencies
151,119

 
2.51

 
1,899

 
150,623

 
3.04

 
2,293

Residential and commercial
4,540

 
2.55

 
58

 
5,772

 
4.17

 
120

Total mortgage-backed securities
155,659

 
2.51

 
1,957

 
156,395

 
3.09

 
2,413

Other debt securities
39,386

 
3.11

 
611

 
45,920

 
4.43

 
1,011

Total available-for-sale debt securities
242,501

 
2.66

 
3,226

 
264,104

 
3.44

 
4,529

Held-to-maturity debt securities:
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
47,255

 
2.17

 
509

 
44,758

 
2.20

 
487

Securities of U.S. states and political subdivisions
13,852

 
3.82

 
265

 
6,560

 
4.05

 
133

Federal agency and other mortgage-backed securities
101,221

 
2.38

 
1,203

 
95,753

 
2.69

 
1,288

Other debt securities
20

 
2.90

 

 
60

 
3.91

 
1

Total held-to-maturity debt securities
162,348

 
2.44

 
1,977

 
147,131

 
2.60

 
1,909

Total debt securities
503,405

 
2.64

 
6,636

 
499,173

 
3.20

 
7,982

Mortgage loans held for sale (3)
23,161

 
3.69

 
427

 
16,193

 
4.28

 
347

Loans held for sale (3)
1,567

 
2.49

 
19

 
1,752

 
5.04

 
44

Loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial - U.S.
299,303

 
3.05

 
4,536

 
285,827

 
4.47

 
6,345

Commercial and industrial - Non-U.S.
71,451

 
2.82

 
1,001

 
62,863

 
3.90

 
1,215

Real estate mortgage
122,656

 
3.47

 
2,117

 
121,644

 
4.58

 
2,763

Real estate construction
20,819

 
3.94

 
408

 
21,999

 
5.40

 
589

Lease financing
18,687

 
4.37

 
408

 
19,261

 
4.66

 
450

Total commercial loans
532,916

 
3.19

 
8,470

 
511,594

 
4.48

 
11,362

Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
287,217

 
3.53

 
5,064

 
285,694

 
3.92

 
5,597

Real estate 1-4 family junior lien mortgage
28,303

 
4.70

 
662

 
33,197

 
5.75

 
949

Credit card
38,147

 
11.53

 
2,186

 
38,168

 
12.76

 
2,416

Automobile
48,350

 
4.98

 
1,197

 
45,007

 
5.21

 
1,163

Other revolving credit and installment
33,223

 
5.89

 
974

 
35,068

 
7.13

 
1,240

Total consumer loans
435,240

 
4.65

 
10,083

 
437,134

 
5.22

 
11,365

Total loans (3)
968,156

 
3.85

 
18,553

 
948,728

 
4.82

 
22,727

Equity securities
32,475

 
2.00

 
325

 
34,154

 
2.63

 
448

Other
7,573

 
0.37

 
14

 
4,555

 
1.69

 
38

Total earning assets
$
1,781,230

 
3.02
%
 
$
26,788

 
1,736,345

 
3.97
%
 
$
34,308

Funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking
$
58,339

 
0.50
%
 
$
144

 
56,905

 
1.44
%
 
$
407

Market rate and other savings
781,044

 
0.33

 
1,289

 
689,628

 
0.54

 
1,856

Savings certificates
28,575

 
1.30

 
185

 
27,940

 
1.46

 
202

Other time deposits
70,949

 
1.43

 
505

 
97,356

 
2.64

 
1,275

Deposits in non-U.S. offices
45,508

 
0.90

 
204

 
53,649

 
1.88

 
499

Total interest-bearing deposits
984,415

 
0.48

 
2,327

 
925,478

 
0.92

 
4,239

Short-term borrowings
83,256

 
0.66

 
275

 
111,719

 
2.24

 
1,243

Long-term debt
230,699

 
2.15

 
2,477

 
234,963

 
3.27

 
3,827

Other liabilities
30,073

 
1.71

 
258

 
24,801

 
2.23

 
275

Total interest-bearing liabilities
1,328,443

 
0.81

 
5,337

 
1,296,961

 
1.49

 
9,584

Portion of noninterest-bearing funding sources
452,787

 

 

 
439,384

 

 

Total funding sources
$
1,781,230

 
0.60

 
5,337

 
1,736,345

 
1.11

 
9,584

Net interest margin and net interest income on a taxable-equivalent basis (4)
 
 
2.42
%
 
$
21,451

 
 
 
2.86
%
 
$
24,724

Noninterest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
20,899

 
 
 
 
 
19,544

 
 
 
 
Goodwill
26,386

 
 
 
 
 
26,417

 
 
 
 
Other
121,284

 
 
 
 
 
109,601

 
 
 
 
Total noninterest-earning assets
$
168,569

 
 
 
 
 
155,562

 
 
 
 
Noninterest-bearing funding sources
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
377,894

 
 
 
 
 
340,061

 
 
 
 
Other liabilities
57,323

 
 
 
 
 
55,864

 
 
 
 
Total equity
186,139

 
 
 
 
 
199,021

 
 
 
 
Noninterest-bearing funding sources used to fund earning assets
(452,787
)
 
 
 
 
 
(439,384
)
 
 
 
 
Net noninterest-bearing funding sources
$
168,569

 
 
 
 
 
155,562

 
 
 
 
Total assets
$
1,949,799

 
 
 
 
 
1,891,907

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average prime rate
 
 
3.82
%
 
 
 
 
 
5.50
%
 
 
Average three-month London Interbank Offered Rate (LIBOR)
 
 
1.07

 
 
 
 
 
2.60

 
 
(1)
Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(2)
Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.
(3)
Nonaccrual loans and related income are included in their respective loan categories.
(4)
Includes taxable-equivalent adjustments of $259 million and $318 million for the first half of 2020 and 2019, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% for the periods presented.



- 24 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
 
Quarter ended
 
 
Jun 30, 2020
 
 
Mar 31, 2020
 
 
Dec 31, 2019
 
 
Sep 30, 2019
 
 
Jun 30, 2019
 
($ in billions)
Average
balance

 
Yields/
rates

 
Average
balance

 
Yields/
rates

 
Average
balance

 
Yields/
rates

 
Average
balance

 
Yields/
rates

 
Average
balance

 
Yields/
rates

Earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits with banks
$
176.3

 
0.12
 %
 
$
129.5

 
1.18
%
 
$
127.3

 
1.63
%
 
$
134.0

 
2.14
%
 
$
141.0

 
2.33
%
Federal funds sold and securities purchased under resale agreements
76.4

 
0.01

 
107.6

 
1.42

 
109.2

 
1.72

 
105.9

 
2.24

 
98.1

 
2.44

Debt securities (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trading debt securities
96.0

 
2.76

 
101.1

 
3.05

 
103.8

 
3.12

 
94.7

 
3.35

 
86.5

 
3.45

Available-for-sale debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
9.5

 
0.83

 
10.8

 
1.40

 
15.6

 
1.79

 
16.0

 
2.14

 
15.4

 
2.21

Securities of U.S. states and political subdivisions
35.7

 
2.98

 
39.0

 
3.43

 
39.5

 
3.58

 
43.3

 
3.78

 
45.8

 
4.02

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal agencies
143.6

 
2.33

 
158.6

 
2.68

 
161.1

 
2.58

 
154.1

 
2.77

 
149.8

 
2.99

Residential and commercial
4.4

 
2.27

 
4.6

 
2.82

 
4.8

 
4.40

 
5.2

 
4.02

 
5.6

 
4.02

Total mortgage-backed securities
148.0

 
2.33

 
163.2

 
2.68

 
165.9

 
2.63

 
159.3

 
2.81

 
155.4

 
3.03

Other debt securities
39.2

 
2.75

 
39.6

 
3.48

 
40.5

 
3.88

 
42.5

 
4.12

 
45.0

 
4.40

Total available-for-sale debt securities
232.4

 
2.44

 
252.6

 
2.87

 
261.5

 
2.92

 
261.1

 
3.14

 
261.6

 
3.39

Held-to-maturity debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
48.7

 
2.14

 
45.9

 
2.19

 
45.1

 
2.19

 
44.8

 
2.18

 
44.8

 
2.19

Securities of U.S. states and political subdivisions
14.2

 
3.81

 
13.5

 
3.84

 
12.8

 
3.88

 
8.7

 
4.01

 
7.0

 
4.06

Federal agency and other mortgage-backed securities
104.0

 
2.21

 
98.4

 
2.55

 
95.3

 
2.49

 
95.4

 
2.54

 
95.4

 
2.64

Other debt securities

 
2.58

 

 
3.10

 

 
3.28

 
0.1

 
3.58

 
0.1

 
3.86

Total held-to-maturity debt securities
166.9

 
2.33

 
157.8

 
2.56

 
153.2

 
2.51

 
149.0

 
2.52

 
147.3

 
2.57

     Total debt securities
495.3

 
2.46

 
511.5

 
2.81

 
518.5

 
2.84

 
504.8

 
3.00

 
495.4

 
3.16

Mortgage loans held for sale (3)
26.0

 
3.55

 
20.4

 
3.87

 
24.0

 
3.90

 
22.7

 
4.08

 
18.5

 
4.22

Loans held for sale (3)
1.7

 
1.87

 
1.5

 
3.17

 
1.4

 
4.13

 
2.0

 
4.17

 
1.6

 
4.80

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial - U.S.
310.1

 
2.58

 
288.4

 
3.55

 
283.7

 
3.84

 
284.3

 
4.21

 
285.1

 
4.47

Commercial and industrial - Non-U.S.
72.2

 
2.48

 
70.7

 
3.16

 
67.3

 
3.40

 
64.0

 
3.67

 
62.9

 
3.90

Real estate mortgage
123.5

 
3.03

 
121.8

 
3.92

 
122.1

 
4.07

 
121.8

 
4.36

 
121.9

 
4.58

Real estate construction
21.4

 
3.37

 
20.3

 
4.54

 
20.1

 
4.71

 
20.7

 
5.13

 
21.6

 
5.36

Lease financing
18.1

 
4.34

 
19.3

 
4.40

 
19.4

 
4.41

 
19.3

 
4.34

 
19.1

 
4.71

Total commercial loans
545.3

 
2.76

 
520.5

 
3.65

 
512.6

 
3.90

 
510.1

 
4.22

 
510.6

 
4.47

Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
280.9

 
3.44

 
293.5

 
3.61

 
292.4

 
3.66

 
288.4

 
3.74

 
286.2

 
3.88

Real estate 1-4 family junior lien mortgage
27.7

 
4.24

 
28.9

 
5.14

 
30.1

 
5.32

 
31.5

 
5.66

 
32.6

 
5.75

Credit card
36.5

 
10.78

 
39.8

 
12.21

 
39.9

 
12.26

 
39.2

 
12.55

 
38.2

 
12.65

Automobile
48.5

 
4.99

 
48.3

 
4.96

 
47.3

 
5.04

 
46.3

 
5.13

 
45.2

 
5.23

Other revolving credit and installment
32.4

 
5.45

 
34.0

 
6.32

 
34.2

 
6.60

 
34.3

 
6.95

 
34.7

 
7.12

Total consumer loans
426.0

 
4.45

 
444.5

 
4.83

 
443.9

 
4.92

 
439.7

 
5.06

 
436.9

 
5.18

Total loans (3)
971.3

 
3.50

 
965.0

 
4.20

 
956.5

 
4.37

 
949.8

 
4.61

 
947.5

 
4.80

Equity securities
27.4

 
1.70

 
37.5

 
2.22

 
38.3

 
2.81

 
37.1

 
2.68

 
35.2

 
2.70

Other
7.6

 
(0.02
)
 
7.4

 
0.77

 
6.4

 
1.36

 
6.6

 
1.77

 
4.7

 
1.76

     Total earning assets
$
1,782.0

 
2.68
 %
 
$
1,780.4

 
3.35
%
 
$
1,781.6

 
3.51
%
 
$
1,762.9

 
3.76
%
 
$
1,742.0

 
3.94
%
Funding sources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking
$
53.6

 
0.07
 %
 
$
63.1

 
0.86
%
 
$
63.3

 
1.09
%
 
$
59.3

 
1.39
%
 
$
57.5

 
1.46
%
Market rate and other savings
799.9

 
0.16

 
762.1

 
0.52

 
732.7

 
0.59

 
711.3

 
0.66

 
690.7

 
0.59

Savings certificates
27.1

 
1.11

 
30.1

 
1.47

 
32.3

 
1.68

 
32.8

 
1.72

 
30.6

 
1.62

Other time deposits
59.9

 
1.01

 
82.0

 
1.74

 
87.1

 
2.10

 
91.8

 
2.42

 
96.9

 
2.61

Deposits in non-U.S. offices
37.7

 
0.44

 
53.3

 
1.23

 
54.8

 
1.50

 
51.7

 
1.77

 
51.9

 
1.86

Total interest-bearing deposits
978.2

 
0.24

 
990.6

 
0.71

 
970.2

 
0.85

 
946.9

 
0.97

 
927.6

 
0.96

Short-term borrowings
63.5

 
(0.10
)
 
103.0

 
1.14

 
115.9

 
1.50

 
121.8

 
2.07

 
114.8

 
2.26

Long-term debt
232.4

 
2.13

 
229.0

 
2.17

 
230.4

 
3.02

 
229.7

 
3.09

 
236.7

 
3.21

Other liabilities
30.0

 
1.53

 
30.2

 
1.90

 
27.3

 
2.04

 
26.2

 
2.06

 
24.3

 
2.18

Total interest-bearing liabilities
1,304.1

 
0.59

 
1,352.8

 
1.01

 
1,343.8

 
1.30

 
1,324.6

 
1.46

 
1,303.4

 
1.50

Portion of noninterest-bearing funding sources
477.9

 

 
427.6

 

 
437.8

 

 
438.3

 

 
438.6

 

     Total funding sources
$
1,782.0

 
0.43

 
$
1,780.4

 
0.77

 
$
1,781.6

 
0.98

 
$
1,762.9

 
1.10

 
$
1,742.0

 
1.12

Net interest margin on a taxable-equivalent basis
 
 
2.25
 %
 
 
 
2.58
%
 
 
 
2.53
%
 
 
 
2.66
%
 
 
 
2.82
%
Noninterest-earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
21.2

 
 
 
20.6

 
 
 
19.9

 
 
 
19.2

 
 
 
19.5

 
 
Goodwill
26.4

 
 
 
26.4

 
 
 
26.4

 
 
 
26.4

 
 
 
26.4

 
 
Other
119.3

 
 
 
123.3

 
 
 
113.9

 
 
 
118.9

 
 
 
112.7

 
 
     Total noninterest-earnings assets
$
166.9

 
 
 
170.3

 
 
 
160.2

 
 
 
164.5

 
 
 
158.6

 
 
Noninterest-bearing funding sources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
408.5

 
 
 
347.4

 
 
 
351.7

 
 
 
344.5

 
 
 
341.4

 
 
Other liabilities
52.2

 
 
 
62.3

 
 
 
53.9

 
 
 
58.2

 
 
 
56.1

 
 
Total equity
184.1

 
 
 
188.2

 
 
 
192.4

 
 
 
200.1

 
 
 
199.7

 
 
Noninterest-bearing funding sources used to fund earning assets
(477.9
)
 
 
 
(427.6
)
 
 
 
(437.8
)
 
 
 
(438.3
)
 
 
 
(438.6
)
 
 
        Net noninterest-bearing funding sources
$
166.9

 
 
 
170.3

 
 
 
160.2

 
 
 
164.5

 
 
 
158.6

 
 
          Total assets
$
1,948.9

 
 
 
1,950.7

 
 
 
1,941.8

 
 
 
1,927.4

 
 
 
1,900.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average prime rate
 
 
3.25
 %
 
 
 
4.41

 
 
 
4.83

 
 
 
5.31

 
 
 
5.50

Average three-month London Interbank Offered Rate (LIBOR)
 
 
0.60

 
 
 
1.53

 
 
 
1.93

 
 
 
2.20

 
 
 
2.51

(1)
Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(2)
Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.
(3)
Nonaccrual loans and related income are included in their respective loan categories.




- 25 -

Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
 
Quarter ended June 30,
 
 
%

 
Six months ended June 30,
 
 
%

(in millions)
2020

 
2019

 
Change

 
2020

 
2019

 
Change

Service charges on deposit accounts
$
930

 
1,206

 
(23
)%
 
$
2,139

 
2,300

 
(7
)%
Trust and investment fees:
 
 
 
 


 
 
 
 
 

Brokerage advisory, commissions and other fees
2,117

 
2,318

 
(9
)
 
4,599

 
4,511

 
2

Trust and investment management
687

 
795

 
(14
)
 
1,388

 
1,581

 
(12
)
Investment banking
547

 
455

 
20

 
938

 
849

 
10

Total trust and investment fees
3,351

 
3,568

 
(6
)
 
6,925


6,941

 

Card fees
797

 
1,025

 
(22
)
 
1,689

 
1,969

 
(14
)
Other fees:
 
 
 
 


 
 
 
 
 

Lending related charges and fees
303

 
349

 
(13
)
 
631

 
696

 
(9
)
Cash network fees
88

 
117

 
(25
)
 
194

 
226

 
(14
)
Commercial real estate brokerage commissions

 
105

 
(100
)
 
1

 
186

 
(99
)
Wire transfer and other remittance fees
99

 
121

 
(18
)
 
209

 
234

 
(11
)
All other fees
88

 
108

 
(19
)
 
175

 
228

 
(23
)
Total other fees
578

 
800

 
(28
)
 
1,210

 
1,570

 
(23
)
Mortgage banking:
 
 
 
 


 
 
 
 
 

Servicing income, net
(689
)
 
277

 
NM

 
(418
)
 
641

 
NM

Net gains on mortgage loan origination/sales activities
1,006

 
481

 
109

 
1,114

 
825

 
35

Total mortgage banking
317

 
758

 
(58
)
 
696

 
1,466

 
(53
)
Net gains from trading activities
807

 
229

 
252

 
871

 
586

 
49

Net gains on debt securities
212

 
20

 
960

 
449

 
145

 
210

Net gains (losses) from equity securities
533

 
622

 
(14
)
 
(868
)
 
1,436

 
NM

Lease income
334

 
424

 
(21
)
 
686

 
867

 
(21
)
Life insurance investment income
163

 
167

 
(2
)
 
324

 
326

 
(1
)
All other (1)
(66
)
 
670

 
NM

 
240

 
1,181

 
(80
)
Total
$
7,956


9,489

 
(16
)
 
$
14,361

 
18,787

 
(24
)
NM - Not meaningful
(1)
In second quarter 2020, insurance income was moved to all other noninterest income. Prior period balances have been revised to conform with the current period presentation.

NONINTEREST EXPENSE
 
Quarter ended June 30,
 
 
%

 
Six months ended June 30,
 
 
%

(in millions)
2020

 
2019

 
Change

 
2020

 
2019

 
Change

Personnel (1)
$
8,911

 
8,474

 
5
 %
 
$
17,225

 
17,682

 
(3
)%
Technology and equipment (1)
562

 
641

 
(12
)
 
1,268

 
1,335

 
(5
)
Occupancy (2)
871

 
719

 
21

 
1,586

 
1,436

 
10

Core deposit and other intangibles
22

 
27

 
(19
)
 
45

 
55

 
(18
)
FDIC and other deposit assessments
165

 
144

 
15

 
283

 
303

 
(7
)
Operating losses
1,219

 
247

 
394

 
1,683

 
485

 
247

Outside professional services
758

 
821

 
(8
)
 
1,485

 
1,499

 
(1
)
Contract services (1)
634

 
590

 
7

 
1,219

 
1,120

 
9

Leases (3)
244

 
311

 
(22
)
 
504

 
597

 
(16
)
Advertising and promotion
137

 
329

 
(58
)
 
318

 
566

 
(44
)
Outside data processing
142

 
175

 
(19
)
 
307

 
342

 
(10
)
Travel and entertainment
15

 
163

 
(91
)
 
108

 
310

 
(65
)
Postage, stationery and supplies
108

 
119

 
(9
)
 
237

 
241

 
(2
)
Telecommunications
110

 
93

 
18

 
202

 
184

 
10

Foreclosed assets
23

 
35

 
(34
)
 
52

 
72

 
(28
)
Insurance
25

 
25

 

 
50

 
50

 

All other
605

 
536

 
13

 
1,027

 
1,088

 
(6
)
Total
$
14,551

 
13,449

 
8

 
$
27,599

 
27,365

 
1

(1)
In second quarter 2020, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were moved from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)
Represents expenses for both leased and owned properties.
(3)
Represents expenses for assets we lease to customers.




- 26 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Service charges on deposit accounts
$
930

 
1,209

 
1,279

 
1,219

 
1,206

Trust and investment fees:
 
 
 
 
 
 
 
 
 
Brokerage advisory, commissions and other fees
2,117

 
2,482

 
2,380

 
2,346

 
2,318

Trust and investment management
687

 
701

 
728

 
729

 
795

Investment banking
547

 
391

 
464

 
484

 
455

Total trust and investment fees
3,351

 
3,574

 
3,572

 
3,559

 
3,568

Card fees
797

 
892

 
1,020

 
1,027

 
1,025

Other fees:
 
 
 
 
 
 
 
 
 
Lending related charges and fees
303

 
328

 
334

 
349

 
349

Cash network fees
88

 
106

 
108

 
118

 
117

Commercial real estate brokerage commissions

 
1

 
2

 
170

 
105

Wire transfer and other remittance fees
99

 
110

 
119

 
121

 
121

All other fees
88

 
87

 
93

 
100

 
108

Total other fees
578

 
632

 
656

 
858

 
800

Mortgage banking:
 
 
 
 
 
 
 
 
 
Servicing income, net
(689
)
 
271

 
23

 
(142
)
 
277

Net gains on mortgage loan origination/sales activities
1,006

 
108

 
760

 
608

 
481

Total mortgage banking
317

 
379

 
783

 
466

 
758

Net gains from trading activities
807

 
64

 
131

 
276

 
229

Net gains (losses) on debt securities
212

 
237

 
(8
)
 
3

 
20

Net gains (losses) from equity securities
533

 
(1,401
)
 
451

 
956

 
622

Lease income
334

 
352

 
343

 
402

 
424

Life insurance investment income
163

 
161

 
159

 
173

 
167

All other (1)
(66
)
 
306

 
274

 
1,446

 
670

Total
$
7,956

 
6,405

 
8,660

 
10,385

 
9,489

(1)
In second quarter 2020, insurance income was moved to all other noninterest income. Prior period balances have been revised to conform with the current period presentation.


FIVE QUARTER NONINTEREST EXPENSE
 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Personnel (1)
$
8,911

 
8,314

 
8,808

 
8,594

 
8,474

Technology and equipment (1)
562

 
706

 
843

 
730

 
641

Occupancy (2)
871

 
715

 
749

 
760

 
719

Core deposit and other intangibles
22

 
23

 
26

 
27

 
27

FDIC and other deposit assessments
165

 
118

 
130

 
93

 
144

Operating losses
1,219

 
464

 
1,916

 
1,920

 
247

Outside professional services
758

 
727

 
876

 
823

 
821

Contract services (1)
634

 
585

 
612

 
612

 
590

Leases (3)
244

 
260

 
286

 
272

 
311

Advertising and promotion
137

 
181

 
244

 
266

 
329

Outside data processing
142

 
165

 
164

 
167

 
175

Travel and entertainment
15

 
93

 
131

 
139

 
163

Postage, stationery and supplies
108

 
129

 
160

 
117

 
119

Telecommunications
110

 
92

 
92

 
91

 
93

Foreclosed assets
23

 
29

 
39

 
52

 
35

Insurance
25

 
25

 
25

 
25

 
25

All other
605

 
422

 
513

 
511

 
536

Total
$
14,551

 
13,048

 
15,614

 
15,199

 
13,449

(1)
In second quarter 2020, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were moved from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)
Represents expenses for both leased and owned properties.
(3)
Represents expenses for assets we lease to customers.




- 27 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER DEFERRED COMPENSATION AND RELATED HEDGES
 
 Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Net interest income
$
3

 
12

 
26

 
13

 
18

Net gains (losses) from equity securities
346

 
(621
)
 
236

 
(4
)
 
87

Total revenue (losses) from deferred compensation plan investments
349

 
(609
)
 
262

 
9

 
105

Change in deferred compensation plan liabilities
490

 
(598
)
 
263

 
5

 
114

Net derivative (gains) losses from economic hedges of deferred compensation (1)
(141
)
 

 

 

 

Personnel expense
349

 
(598
)
 
263

 
5

 
114

Income (loss) before income tax expense
$

 
(11
)
 
(1
)
 
4

 
(9
)
(1)
In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments. Changes in the fair value of derivatives used as economic hedges are presented within the same financial statement line as the related business activity being hedged.






- 28 -

Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Jun 30,
2020

 
Dec 31,
2019

 
%
Change

Assets
 
 
 
 
 
Cash and due from banks
$
24,704

 
21,757

 
14
 %
Interest-earning deposits with banks
237,799

 
119,493

 
99

Total cash, cash equivalents, and restricted cash
262,503

 
141,250

 
86

Federal funds sold and securities purchased under resale agreements
79,289

 
102,140

 
(22
)
Debt securities:
 
 
 
 


Trading, at fair value
74,679

 
79,733

 
(6
)
Available-for-sale, at fair value (includes allowance for credit losses)
228,899

 
263,459

 
(13
)
Held-to-maturity, at amortized cost, net of allowance for credit losses
169,002

 
153,933

 
10

Mortgage loans held for sale
32,355

 
23,342

 
39

Loans held for sale
1,339

 
977

 
37

Loans
935,155

 
962,265

 
(3
)
Allowance for loan losses
(18,926
)
 
(9,551
)
 
98

Net loans
916,229

 
952,714

 
(4
)
Mortgage servicing rights:
 
 
 
 


Measured at fair value
6,819

 
11,517

 
(41
)
Amortized
1,361

 
1,430

 
(5
)
Premises and equipment, net
9,025

 
9,309

 
(3
)
Goodwill
26,385

 
26,390

 

Derivative assets
22,776

 
14,203

 
60

Equity securities
52,494

 
68,241

 
(23
)
Other assets
85,611

 
78,917

 
8

Total assets
$
1,968,766


1,927,555

 
2

Liabilities
 
 
 
 


Noninterest-bearing deposits
$
432,857

 
344,496

 
26

Interest-bearing deposits
977,854

 
978,130

 

Total deposits
1,410,711

 
1,322,626

 
7

Short-term borrowings
60,485

 
104,512

 
(42
)
Derivative liabilities
11,368

 
9,079

 
25

Accrued expenses and other liabilities
75,159

 
75,163

 

Long-term debt
230,921

 
228,191

 
1

Total liabilities
1,788,644


1,739,571

 
3

Equity
 
 
 
 


Wells Fargo stockholders’ equity:
 
 
 
 


Preferred stock
21,098

 
21,549

 
(2
)
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 
9,136

 
9,136

 

Additional paid-in capital
59,923

 
61,049

 
(2
)
Retained earnings
159,952

 
166,697

 
(4
)
Cumulative other comprehensive income (loss)
(798
)
 
(1,311
)
 
(39
)
Treasury stock – 1,362,252,882 shares and 1,347,385,537 shares 
(69,050
)
 
(68,831
)
 

Unearned ESOP shares
(875
)
 
(1,143
)
 
(23
)
Total Wells Fargo stockholders’ equity
179,386


187,146

 
(4
)
Noncontrolling interests
736

 
838

 
(12
)
Total equity
180,122


187,984

 
(4
)
Total liabilities and equity
$
1,968,766

 
1,927,555

 
2

















- 29 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
24,704

 
22,738

 
21,757

 
22,401

 
20,880

Interest-earning deposits with banks
237,799

 
128,071

 
119,493

 
126,330

 
143,547

Total cash, cash equivalents, and restricted cash
262,503

 
150,809

 
141,250

 
148,731

 
164,427

Federal funds sold and securities purchased under resale agreements
79,289

 
86,465

 
102,140

 
103,051

 
112,119

Debt securities:
 
 
 
 
 
 
 
 

Trading, at fair value
74,679

 
80,425

 
79,733

 
79,113

 
70,208

Available-for-sale, at fair value (includes allowance for credit losses)
228,899

 
251,229

 
263,459

 
271,236

 
265,983

Held-to-maturity, at amortized cost, net of allowance for credit losses
169,002

 
169,909

 
153,933

 
153,179

 
145,876

Mortgage loans held for sale
32,355

 
21,795

 
23,342

 
25,448

 
22,998

Loans held for sale
1,339

 
1,883

 
977

 
1,532

 
1,181

Loans
935,155

 
1,009,843

 
962,265

 
954,915

 
949,878

Allowance for loan losses
(18,926
)
 
(11,263
)
 
(9,551
)
 
(9,715
)
 
(9,692
)
Net loans
916,229

 
998,580

 
952,714

 
945,200

 
940,186

Mortgage servicing rights:
 
 
 
 
 
 
 
 
 
Measured at fair value
6,819

 
8,126

 
11,517

 
11,072

 
12,096

Amortized
1,361

 
1,406

 
1,430

 
1,397

 
1,407

Premises and equipment, net
9,025

 
9,108

 
9,309

 
9,315

 
9,435

Goodwill
26,385

 
26,381

 
26,390

 
26,388

 
26,415

Derivative assets
22,776

 
25,023

 
14,203

 
14,680

 
13,162

Equity securities
52,494

 
54,047

 
68,241

 
63,884

 
61,537

Other assets
85,611

 
96,163

 
78,917

 
89,724

 
76,358

Total assets
$
1,968,766


1,981,349


1,927,555


1,943,950


1,923,388

Liabilities
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
432,857

 
379,678

 
344,496

 
355,259

 
340,813

Interest-bearing deposits
977,854

 
996,854

 
978,130

 
953,236

 
947,613

Total deposits
1,410,711


1,376,532


1,322,626


1,308,495


1,288,426

Short-term borrowings
60,485

 
92,289

 
104,512

 
123,908

 
115,344

Derivative liabilities
11,368

 
15,618

 
9,079

 
9,948

 
8,399

Accrued expenses and other liabilities
75,159

 
76,238

 
75,163

 
76,532

 
69,706

Long-term debt
230,921

 
237,342

 
228,191

 
230,651

 
241,476

Total liabilities
1,788,644


1,798,019


1,739,571


1,749,534


1,723,351

Equity
 
 
 
 
 
 
 
 
 
Wells Fargo stockholders’ equity:
 
 
 
 
 
 
 
 
 
Preferred stock
21,098

 
21,347

 
21,549

 
21,549

 
23,021

Common stock
9,136

 
9,136

 
9,136

 
9,136

 
9,136

Additional paid-in capital
59,923

 
59,849

 
61,049

 
60,866

 
60,625

Retained earnings
159,952

 
165,308

 
166,697

 
166,320

 
164,551

Cumulative other comprehensive income (loss)
(798
)
 
(1,564
)
 
(1,311
)
 
(1,639
)
 
(2,224
)
Treasury stock
(69,050
)
 
(70,215
)
 
(68,831
)
 
(61,785
)
 
(54,775
)
Unearned ESOP shares
(875
)
 
(1,143
)
 
(1,143
)
 
(1,143
)
 
(1,292
)
Total Wells Fargo stockholders’ equity
179,386


182,718


187,146


193,304


199,042

Noncontrolling interests
736

 
612

 
838

 
1,112

 
995

Total equity
180,122


183,330


187,984


194,416


200,037

Total liabilities and equity
$
1,968,766


1,981,349


1,927,555


1,943,950


1,923,388




- 30 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER TRADING ASSETS AND LIABILITIES
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Trading assets
 
 
 
 
 
 
 
 
 
Debt securities
$
74,679

 
80,425

 
79,733

 
79,113

 
70,208

Equity securities
12,591

 
13,573

 
27,440

 
24,436

 
23,327

Loans held for sale
1,201

 
1,673

 
972

 
1,501

 
1,118

Gross trading derivative assets
60,644

 
72,527

 
34,825

 
39,926

 
34,683

Netting (1)
(39,885
)
 
(49,821
)
 
(21,463
)
 
(26,414
)
 
(22,827
)
Total trading derivative assets
20,759

 
22,706

 
13,362

 
13,512

 
11,856

Total trading assets
109,230

 
118,377

 
121,507

 
118,562

 
106,509

Trading liabilities
 
 
 
 
 
 
 
 
 
Short sales
20,213

 
17,603

 
17,430

 
18,290

 
15,955

Gross trading derivative liabilities
54,985

 
67,891

 
33,861

 
38,308

 
33,458

Netting (1)
(44,901
)
 
(53,598
)
 
(26,074
)
 
(29,708
)
 
(26,417
)
Total trading derivative liabilities
10,084

 
14,293

 
7,787

 
8,600

 
7,041

Total trading liabilities
$
30,297

 
31,896

 
25,217

 
26,890

 
22,996

(1)
Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.
FIVE QUARTER DEBT SECURITIES
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Trading debt securities
$
74,679

 
80,425

 
79,733

 
79,113

 
70,208

Available-for-sale debt securities:
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
7,983

 
11,036

 
14,960

 
16,549

 
15,319

Securities of U.S. states and political subdivisions
33,011

 
38,144

 
40,337

 
40,503

 
45,095

Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
Federal agencies
144,835

 
160,214

 
162,453

 
167,535

 
155,858

Residential and commercial
4,100

 
4,430

 
4,761

 
5,079

 
5,443

Total mortgage-backed securities
148,935

 
164,644

 
167,214

 
172,614

 
161,301

Other debt securities
38,970

 
37,405

 
40,948

 
41,570

 
44,268

Total available-for-sale debt securities
228,899

 
251,229

 
263,459

 
271,236

 
265,983

Held-to-maturity debt securities:
 
 
 
 
 
 
 
 
 
Securities of U.S. Treasury and federal agencies
48,578

 
48,569

 
45,541

 
44,774

 
44,766

Securities of U.S. states and political subdivisions
14,277

 
14,304

 
13,486

 
12,719

 
7,948

Federal agency and other mortgage-backed securities (1)
106,133

 
107,013

 
94,869

 
95,637

 
93,105

Other debt securities
14

 
23

 
37

 
49

 
57

Total held-to-maturity debt securities
169,002

 
169,909

 
153,933

 
153,179

 
145,876

Total debt securities
$
472,580


501,563


497,125


503,528


482,067

Allowance for credit losses for debt securities (2):
 
 
 
 
 
 
 
 
 
Available-for-sale debt securities (included in fair value)
$
114

 
161

 

 

 

Held-to-maturity debt securities (netted against amortized cost)
20

 
11

 

 

 

Total allowance for credit losses for debt securities
$
134

 
172

 

 

 

(1)
Predominantly consists of federal agency mortgage-backed securities.
(2)
Represents the allowance for credit losses for debt securities as a result of our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020.



- 31 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER EQUITY SECURITIES
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Held for trading at fair value:
 
 
 
 
 
 
 
 
 
Marketable equity securities
$
12,591

 
13,573

 
27,440

 
24,436

 
23,327

Not held for trading:
 
 
 
 
 
 
 
 
 
Fair value:
 
 
 
 
 
 
 
 
 
Marketable equity securities (1)
6,426

 
7,708

 
6,481

 
6,639

 
5,379

Nonmarketable equity securities
8,322

 
6,895

 
8,015

 
7,293

 
7,244

Total equity securities at fair value
14,748

 
14,603

 
14,496

 
13,932

 
12,623

Equity method:
 
 
 
 
 
 
 
 
 
Low-income housing tax credit investments
11,294

 
11,290

 
11,343

 
11,068

 
11,162

Private equity
3,351

 
3,351

 
3,459

 
3,425

 
3,352

Tax-advantaged renewable energy
3,940

 
3,991

 
3,811

 
3,143

 
3,051

New market tax credit and other
377

 
387

 
387

 
390

 
294

Total equity method
18,962

 
19,019

 
19,000

 
18,026

 
17,859

Other:
 
 
 
 
 
 
 
 
 
Federal Reserve Bank stock and other at cost (2)
3,794

 
4,512

 
4,790

 
5,021

 
5,622

Private equity (3)
2,399

 
2,340

 
2,515

 
2,469

 
2,106

Total equity securities not held for trading
39,903

 
40,474

 
40,801

 
39,448

 
38,210

Total equity securities
$
52,494


54,047

 
68,241

 
63,884

 
61,537

(1)
Includes $191 million, $3.1 billion, $3.8 billion, $3.5 billion and $3.5 billion at June 30 and March 31, 2020, and December 31, September 30 and June 30, 2019, respectively, related to securities held as economic hedges of our deferred compensation plan liabilities. In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments.
(2)
Includes $3.8 billion, $4.5 billion, $4.8 billion, $5.0 billion and $5.6 billion at June 30 and March 31, 2020, and December 31, September 30 and June 30, 2019, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.
(3)
Represents nonmarketable equity securities accounted for under the measurement alternative.




- 32 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER LOANS
(in millions)
Jun 30,
2020


Mar 31,
2020


Dec 31,
2019


Sep 30,
2019


Jun 30,
2019

Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
350,116

 
405,020

 
354,125

 
350,875

 
348,846

Real estate mortgage
123,967

 
122,767

 
121,824

 
121,936

 
123,008

Real estate construction
21,694

 
20,812

 
19,939

 
19,921

 
21,067

Lease financing
17,410

 
19,136

 
19,831

 
19,600

 
19,324

Total commercial
513,187

 
567,735

 
515,719

 
512,332

 
512,245

Consumer:
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
277,945

 
292,920

 
293,847

 
290,604

 
286,427

Real estate 1-4 family junior lien mortgage
26,839

 
28,527

 
29,509

 
30,838

 
32,068

Credit card
36,018

 
38,582

 
41,013

 
39,629

 
38,820

Automobile
48,808

 
48,568

 
47,873

 
46,738

 
45,664

Other revolving credit and installment
32,358

 
33,511

 
34,304

 
34,774

 
34,654

Total consumer
421,968

 
442,108

 
446,546

 
442,583

 
437,633

Total loans
$
935,155

 
1,009,843

 
962,265

 
954,915

 
949,878


Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. The following table presents total non-U.S. commercial loans outstanding by class of financing receivable.
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Non-U.S. commercial loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
67,015

 
78,753

 
70,494

 
64,418

 
63,296

Real estate mortgage
6,460

 
6,309

 
7,004

 
7,056

 
6,801

Real estate construction
1,697

 
1,478

 
1,434

 
1,262

 
1,287

Lease financing
1,146

 
1,120

 
1,220

 
1,197

 
1,215

Total non-U.S. commercial loans
$
76,318

 
87,660

 
80,152

 
73,933

 
72,599






- 33 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Nonaccrual loans:
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
2,896

 
1,779

 
1,545

 
1,539

 
1,634

Real estate mortgage
1,217

 
944

 
573

 
669

 
737

Real estate construction
34

 
21

 
41

 
32

 
36

Lease financing
138

 
131

 
95

 
72

 
63

Total commercial
4,285

 
2,875

 
2,254

 
2,312

 
2,470

Consumer:
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage (1) (2)
2,393

 
2,372

 
2,150

 
2,261

 
2,425

Real estate 1-4 family junior lien mortgage (2)
753

 
769

 
796

 
819

 
868

Automobile
129

 
99

 
106

 
110

 
115

Other revolving credit and installment
45

 
41

 
40

 
43

 
44

Total consumer
3,320

 
3,281

 
3,092

 
3,233

 
3,452

Total nonaccrual loans
$
7,605

 
6,156

 
5,346

 
5,545

 
5,922

As a percentage of total loans
0.81
%
 
0.61

 
0.56

 
0.58

 
0.62

Foreclosed assets:
 
 
 
 
 
 
 
 
 
Government insured/guaranteed
$
31

 
43

 
50

 
59

 
68

Non-government insured/guaranteed
164

 
209

 
253

 
378

 
309

Total foreclosed assets
195

 
252

 
303

 
437

 
377

Total nonperforming assets
$
7,800

 
6,408

 
5,649

 
5,982

 
6,299

As a percentage of total loans
0.83
%
 
0.63

 
0.59

 
0.63

 
0.66

(1)
Amounts are not comparative due to our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020. Prior to January 1, 2020, pools of individual purchased credit-impaired (PCI) loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of ASU 2016-13, the pools were discontinued and performance is based on contractual terms for individual loans.
(2)
Real estate 1-4 family mortgage loans predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) are not placed on nonaccrual status because they are insured or guaranteed.


LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Total:
$
9,739

 
7,023

 
7,285

 
7,130

 
7,258

Less: FHA insured/VA guaranteed (1)
8,922

 
6,142

 
6,352

 
6,308

 
6,478

Total, not government insured/guaranteed
$
817

 
881

 
933

 
822

 
780

By segment and class, not government insured/guaranteed:
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
101

 
24

 
47

 
6

 
17

Real estate mortgage
44

 
28

 
31

 
28

 
24

Real estate construction

 
1

 

 

 

Total commercial
145


53


78


34


41

Consumer:
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage (2)
93

 
128

 
112

 
100

 
108

Real estate 1-4 family junior lien mortgage (2)
19

 
25

 
32

 
35

 
27

Credit card
418

 
528

 
546

 
491

 
449

Automobile
54

 
69

 
78

 
75

 
63

Other revolving credit and installment
88

 
78

 
87

 
87

 
92

Total consumer
672


828


855


788


739

Total, not government insured/guaranteed
$
817


881


933


822


780

(1)
Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.
(2)
Amounts are not comparative due to our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020. Total loans 90 days or more past due and still accruing exclude PCI loans of $102 million, $119 million, and $156 million at December 31, September 30 and June 30, 2019, respectively.






- 34 -

Wells Fargo & Company and Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT LOSSES FOR LOANS
 
Quarter ended June 30,
 
 
Six months ended June 30,
 
(in millions)
2020

 
2019

 
2020

 
2019

Balance, beginning of period
$
12,022

 
10,821

 
10,456

 
10,707

Cumulative effect from change in accounting policies (1)

 

 
(1,337
)
 

Allowance for purchased credit deteriorated (PCD) loans (2)

 

 
8

 

Balance, beginning of period, adjusted
12,022

 
10,821

 
9,127

 
10,707

Provision for credit losses
9,565

 
503

 
13,398

 
1,348

Interest income on certain impaired loans (3)
(38
)
 
(39
)
 
(76
)
 
(78
)
Loan charge-offs:
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
Commercial and industrial
(556
)
 
(205
)
 
(933
)
 
(381
)
Real estate mortgage
(72
)
 
(14
)
 
(75
)
 
(26
)
Real estate construction

 

 

 
(1
)
Lease financing
(19
)
 
(12
)
 
(32
)
 
(23
)
Total commercial
(647
)
 
(231
)
 
(1,040
)
 
(431
)
Consumer:
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
(20
)
 
(27
)
 
(43
)
 
(70
)
Real estate 1-4 family junior lien mortgage
(18
)
 
(29
)
 
(48
)
 
(63
)
Credit card
(415
)
 
(437
)
 
(886
)
 
(874
)
Automobile
(158
)
 
(142
)
 
(314
)
 
(329
)
Other revolving credit and installment
(113
)
 
(167
)
 
(278
)
 
(329
)
Total consumer
(724
)
 
(802
)
 
(1,569
)
 
(1,665
)
Total loan charge-offs
(1,371
)
 
(1,033
)
 
(2,609
)
 
(2,096
)
Loan recoveries:
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
Commercial and industrial
35

 
46

 
79

 
89

Real estate mortgage
5

 
10

 
10

 
16

Real estate construction
1

 
2

 
17

 
5

Lease financing
4

 
8

 
8

 
11

Total commercial
45

 
66

 
114

 
121

Consumer:
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
18

 
57

 
44

 
112

Real estate 1-4 family junior lien mortgage
30

 
48

 
65

 
91

Credit card
88

 
88

 
182

 
173

Automobile
52

 
90

 
126

 
186

Other revolving credit and installment
25

 
31

 
56

 
65

Total consumer
213

 
314

 
473

 
627

Total loan recoveries
258

 
380

 
587

 
748

Net loan charge-offs
(1,113
)
 
(653
)
 
(2,022
)
 
(1,348
)
Other

 
(29
)
 
9

 
(26
)
Balance, end of period
$
20,436

 
10,603

 
20,436

 
10,603

Components:
 
 
 
 
 
 
 
Allowance for loan losses
$
18,926

 
9,692

 
18,926

 
9,692

Allowance for unfunded credit commitments
1,510

 
911

 
1,510

 
911

Allowance for credit losses for loans
$
20,436

 
10,603

 
20,436

 
10,603

Net loan charge-offs (annualized) as a percentage of average total loans
0.46
%
 
0.28

 
0.42

 
0.29

Allowance for loan losses as a percentage of total loans
2.02

 
1.02

 
2.02

 
1.02

Allowance for credit losses for loans as a percentage of total loans
2.19

 
1.12

 
2.19

 
1.12

(1)
Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020.
(2)
Represents the allowance for credit losses for PCI loans that automatically became purchased credit-deteriorated (PCD) loans with the adoption of ASU 2016-13.
(3)
Certain impaired loans with an allowance for credit losses calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in the allowance for credit losses attributable to the passage of time as interest income.



- 35 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES FOR LOANS
 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Balance, beginning of quarter
$
12,022

 
10,456

 
10,613

 
10,603

 
10,821

Cumulative effect from change in accounting policies (1)

 
(1,337
)
 

 

 

Allowance for purchased credit-deteriorated (PCD) loans (2)

 
8

 

 

 

Balance, beginning of quarter, adjusted
12,022

 
9,127

 
10,613

 
10,603

 
10,821

Provision for credit losses
9,565

 
3,833

 
644

 
695

 
503

Interest income on certain loans (3)
(38
)
 
(38
)
 
(35
)
 
(34
)
 
(39
)
Loan charge-offs:
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
(556
)
 
(377
)
 
(212
)
 
(209
)
 
(205
)
Real estate mortgage
(72
)
 
(3
)
 
(10
)
 
(2
)
 
(14
)
Real estate construction

 

 

 

 

Lease financing
(19
)
 
(13
)
 
(35
)
 
(12
)
 
(12
)
Total commercial
(647
)
 
(393
)
 
(257
)
 
(223
)
 
(231
)
Consumer:
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
(20
)
 
(23
)
 
(28
)
 
(31
)
 
(27
)
Real estate 1-4 family junior lien mortgage
(18
)
 
(30
)
 
(28
)
 
(27
)
 
(29
)
Credit card
(415
)
 
(471
)
 
(436
)
 
(404
)
 
(437
)
Automobile
(158
)
 
(156
)
 
(162
)
 
(156
)
 
(142
)
Other revolving credit and installment
(113
)
 
(165
)
 
(177
)
 
(168
)
 
(167
)
Total consumer
(724
)
 
(845
)
 
(831
)
 
(786
)
 
(802
)
Total loan charge-offs
(1,371
)
 
(1,238
)
 
(1,088
)
 
(1,009
)
 
(1,033
)
Loan recoveries:
 
 
 
 
 
 
 
 
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial and industrial
35

 
44

 
44

 
62

 
46

Real estate mortgage
5

 
5

 
6

 
10

 
10

Real estate construction
1

 
16

 

 
8

 
2

Lease financing
4

 
4

 
4

 
4

 
8

Total commercial
45

 
69

 
54

 
84

 
66

Consumer:
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
18

 
26

 
31

 
36

 
57

Real estate 1-4 family junior lien mortgage
30

 
35

 
44

 
49

 
48

Credit card
88

 
94

 
86

 
85

 
88

Automobile
52

 
74

 
75

 
80

 
90

Other revolving credit and installment
25

 
31

 
29

 
30

 
31

Total consumer
213

 
260

 
265

 
280

 
314

Total loan recoveries
258

 
329

 
319

 
364

 
380

Net loan charge-offs
(1,113
)
 
(909
)
 
(769
)
 
(645
)
 
(653
)
Other

 
9

 
3

 
(6
)
 
(29
)
Balance, end of quarter
$
20,436

 
12,022

 
10,456

 
10,613

 
10,603

Components:
 
 
 
 
 
 
 
 
 
Allowance for loan losses
$
18,926

 
11,263

 
9,551

 
9,715

 
9,692

Allowance for unfunded credit commitments
1,510

 
759

 
905

 
898

 
911

Allowance for credit losses for loans
$
20,436

 
12,022

 
10,456

 
10,613

 
10,603

Net loan charge-offs (annualized) as a percentage of average total loans
0.46
%
 
0.38

 
0.32

 
0.27

 
0.28

Allowance for loan losses as a percentage of:
 
 
 
 
 
 
 
 
 
Total loans
2.02

 
1.12

 
0.99

 
1.02

 
1.02

Nonaccrual loans
249

 
183

 
179

 
175

 
164

Nonaccrual loans and other nonperforming assets
243

 
176

 
169

 
162

 
154

Total net loan charge-offs (annualized)
422

 
308

 
346

 
379

 
370

Allowance for credit losses for loans as a percentage of:
 
 
 
 
 
 
 
 
 
Total loans
2.19

 
1.19

 
1.09

 
1.11

 
1.12

Nonaccrual loans
269

 
195

 
196

 
191

 
179

Nonaccrual loans and other nonperforming assets
262

 
188

 
185

 
177

 
168

(1)
Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020.
(2)
Represents the allowance for credit losses for PCI loans that automatically became PCD loans with the adoption of ASU 2016-13.
(3)
Loans with an allowance for credit losses measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in the allowance for credit losses attributable to the passage of time as interest income.



- 36 -

Wells Fargo & Company and Subsidiaries
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES FOR LOANS (1)
 
Jun 30, 2020
 
 
Mar 31, 2020
 
 
Jan 1, 2020
 
 
Dec 31, 2019
 
($ in millions)
ACL

 
ACL
as %
of loan
class

 
ACL

 
ACL
as %
of loan
class

 
ACL

 
ACL
as %
of loan
class

 
ACL

 
ACL
as %
of loan
class

Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
8,109

 
2.32
%
 
$
4,231

 
1.04
%
 
$
2,490

 
0.70
%
 
$
3,600

 
1.02
%
Real estate mortgage
2,395

 
1.93

 
848

 
0.69

 
702

 
0.58

 
1,236

 
1.01

Real estate construction
484

 
2.23

 
36

 
0.17

 
42

 
0.21

 
1,079

 
5.41

Lease financing
681

 
3.91

 
164

 
0.86

 
149

 
0.75

 
330

 
1.66

Total commercial
11,669

 
2.27

 
5,279

 
0.93

 
3,383

 
0.66

 
6,245

 
1.21

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate 1-4 family first mortgage
1,541

 
0.55

 
836

 
0.29

 
845

 
0.29

 
692

 
0.24

Real estate 1-4 family junior lien mortgage
725

 
2.70

 
125

 
0.44

 
78

 
0.26

 
247

 
0.84

Credit card
3,777

 
10.49

 
3,481

 
9.02

 
2,913

 
7.10

 
2,252

 
5.49

Automobile
1,174

 
2.41

 
1,016

 
2.09

 
719

 
1.50

 
459

 
0.96

Other revolving credit and installment
1,550

 
4.79

 
1,285

 
3.83

 
1,188

 
3.46

 
561

 
1.64

Total consumer
8,767

 
2.08

 
6,743

 
1.53

 
5,743

 
1.29

 
4,211

 
0.94

Total
$
20,436

 
2.19
%
 
$
12,022

 
1.19
%
 
$
9,126

 
0.95
%
 
$
10,456

 
1.09
%
(1)
Amounts are not comparative due to our adoption of ASU 2016-13, Financial Instruments – Credit Losses, on January 1, 2020.




- 37 -

Wells Fargo & Company and Subsidiaries
TANGIBLE COMMON EQUITY

We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights (MSRs)) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. These tangible common equity ratios are as follows:
Tangible book value per common share, which represents tangible common equity divided by common shares outstanding; and
Return on average tangible common equity (ROTCE), which represents our annualized earnings contribution as a percentage of tangible common equity.

The methodology of determining tangible common equity may differ among companies. Management believes that tangible book value per common share and return on average tangible common equity, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company’s use of equity.
The tables below provide a reconciliation of these non-GAAP financial measures to GAAP financial measures.
(in millions, except ratios)
 

Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Tangible book value per common share:
 

 




Total equity
 

$
180,122

183,330

187,984

194,416

200,037

Adjustments:
 
 
 
 
 
 
 
Preferred stock
 

(21,098
)
(21,347
)
(21,549
)
(21,549
)
(23,021
)
Additional paid-in capital on preferred stock
 

159

140

(71
)
(71
)
(78
)
Unearned ESOP shares
 

875

1,143

1,143

1,143

1,292

Noncontrolling interests
 

(736
)
(612
)
(838
)
(1,112
)
(995
)
Total common stockholders' equity
(A)

159,322

162,654

166,669

172,827

177,235

Adjustments:
 
 
 
 
 
 
 
Goodwill
 

(26,385
)
(26,381
)
(26,390
)
(26,388
)
(26,415
)
Certain identifiable intangible assets (other than MSRs)
 

(389
)
(413
)
(437
)
(465
)
(493
)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)
 

(2,050
)
(1,894
)
(2,146
)
(2,295
)
(2,251
)
Applicable deferred taxes related to goodwill and other intangible assets (1)
 

831

821

810

802

788

Tangible common equity
(B)

$
131,329

134,787

138,506

144,481

148,864

Common shares outstanding
(C)

4,119.6

4,096.4

4,134.4

4,269.1

4,419.6

Book value per common share
(A)/(C)

$
38.67

39.71

40.31

40.48

40.10

Tangible book value per common share
(B)/(C)

31.88

32.90

33.50

33.84

33.68

 
 
 
Quarter ended
 
 
Six months ended
 
(in millions, except ratios)
 
 
Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

 
Jun 30,
2020

Jun 30,
2019

Return on average tangible common equity:
 
 
 
 
 
 
 
 
 
 
Net income applicable to common stock
(A)
 
$
(2,694
)
42

2,546

4,037

5,848

 
(2,652
)
11,355

Average total equity
 
 
184,108

188,170

192,393

200,095

199,685

 
186,139

199,021

Adjustments:
 
 

 
 
 
 
 
 
 
Preferred stock
 
 
(21,344
)
(21,794
)
(21,549
)
(22,325
)
(23,023
)
 
(21,569
)
(23,118
)
Additional paid-in capital on preferred stock
 
 
140

135

(71
)
(78
)
(78
)
 
138

(87
)
Unearned ESOP shares
 
 
1,140

1,143

1,143

1,290

1,294

 
1,141

1,397

Noncontrolling interests
 
 
(643
)
(785
)
(945
)
(1,065
)
(939
)
 
(714
)
(919
)
Average common stockholders’ equity
(B)
 
163,401

166,869

170,971

177,917

176,939

 
165,135

176,294

Adjustments:
 
 

 
 
 
 
 
 
 
Goodwill
 
 
(26,384
)
(26,387
)
(26,389
)
(26,413
)
(26,415
)
 
(26,386
)
(26,417
)
Certain identifiable intangible assets (other than MSRs)
 
 
(402
)
(426
)
(449
)
(477
)
(505
)
 
(414
)
(524
)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)
 
 
(1,922
)
(2,152
)
(2,223
)
(2,159
)
(2,155
)
 
(2,037
)
(2,157
)
Applicable deferred taxes related to goodwill and other intangible assets (1)
 
 
828

818

807

797

780

 
823

782

Average tangible common equity
(C)
 
$
135,521

138,722

142,717

149,665

148,644

 
137,121

147,978

Return on average common stockholders' equity (ROE) (annualized)
(A)/(B)
 
(6.63
)%
0.10

5.91

9.00

13.26

 
(3.23
)
12.99

Return on average tangible common equity (ROTCE) (annualized)
(A)/(C)
 
(8.00
)
0.12

7.08

10.70

15.78

 
(3.89
)
15.47

(1)
Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.



- 38 -

Wells Fargo & Company and Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III (1)
 
 
Estimated

 
 
 
 
(in billions, except ratio)
 
Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Total equity
 
$
180.1

183.3

188.0

194.4

200.0

Adjustments:
 
 
 
 
 
 
Preferred stock
 
(21.1
)
(21.3
)
(21.5
)
(21.5
)
(23.0
)
Additional paid-in capital on preferred stock
 
0.1

0.1

(0.1
)
(0.1
)
(0.1
)
Unearned ESOP shares
 
0.9

1.1

1.1

1.1

1.3

Noncontrolling interests
 
(0.7
)
(0.6
)
(0.8
)
(1.1
)
(1.0
)
Total common stockholders' equity
 
159.3

162.6

166.7

172.8

177.2

Adjustments:
 
 
 
 
 
 
Goodwill
 
(26.4
)
(26.4
)
(26.4
)
(26.4
)
(26.4
)
Certain identifiable intangible assets (other than MSRs)
 
(0.4
)
(0.4
)
(0.4
)
(0.5
)
(0.5
)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)
 
(2.1
)
(1.9
)
(2.1
)
(2.3
)
(2.3
)
Applicable deferred taxes related to goodwill and other intangible assets (2)
 
0.8

0.8

0.8

0.8

0.8

CECL transition provision (3)
 
1.9





Other
 
(0.1
)

0.2

0.3

0.4

Common Equity Tier 1 under Basel III
(A)
133.0

134.7

138.8

144.7

149.2

Total risk-weighted assets (RWAs) anticipated under Basel III (4)(5)
(B)
$
1,215.0

1,262.8

1,245.8

1,246.2

1,246.7

Common Equity Tier 1 to total RWAs anticipated under Basel III (5)
(A)/(B)
10.9
%
10.7

11.1

11.6

12.0

(1)
Basel III capital rules, adopted by the Federal Reserve Board on July 2, 2013, revised the definition of capital, increased minimum capital ratios, and introduced a minimum Common Equity Tier 1 (CET1) ratio. The rules are being phased in through the end of 2021. The Basel III capital requirements for calculating CET1 and tier 1 capital, along with RWAs, are fully phased-in.
(2)
Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.
(3)
In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators in March 2020 related to the impact of the current expected credit loss (CECL) accounting standard on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the CECL transition provision on our regulatory capital at June 30, 2020, was an increase in capital of $1.9 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $11.4 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2020.
(4)
The final Basel III capital rules provide for two capital frameworks: the Standardized Approach and the Advanced Approach applicable to certain institutions. Accordingly, in the assessment of our capital adequacy, we must report the lower of our CET1, tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach. Because the final determination of our CET1 ratio and which approach will produce the lower CET1 ratio as of June 30, 2020, is subject to detailed analysis of considerable data, our CET1 ratio at that date has been estimated using the Basel III definition of capital under the Basel III Standardized Approach RWAs. The capital ratio for March 31, 2020, and December 31, September 30 and June 30, 2019, was calculated under the Basel III Standardized Approach RWAs.
(5)
The Company’s June 30, 2020, RWAs and capital ratio are preliminary estimates.




- 39 -

Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,
average balances in billions)
Community
Banking
 
 
Wholesale
Banking
 
 
Wealth and Investment Management
 
 
Other (2)
 
 
Consolidated
Company
 
 
2020

 
2019

 
2020

 
2019

 
2020

 
2019

 
2020

 
2019

 
2020

 
2019

Quarter ended Jun 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (3)
$
5,699

 
7,066

 
3,891

 
4,535

 
736

 
1,037

 
(446
)
 
(543
)
 
9,880

 
12,095

Provision (reversal of provision) for credit losses
3,378

 
479

 
6,028

 
28

 
257

 
(1
)
 
(129
)
 
(3
)
 
9,534

 
503

Noninterest income
3,067

 
4,739

 
2,672

 
2,530

 
2,924

 
3,013

 
(707
)
 
(793
)
 
7,956

 
9,489

Noninterest expense
8,346

 
7,212

 
3,963

 
3,882

 
3,153

 
3,246

 
(911
)
 
(891
)
 
14,551

 
13,449

Income (loss) before income tax expense (benefit)
(2,958
)
 
4,114

 
(3,428
)
 
3,155

 
250

 
805

 
(113
)
 
(442
)
 
(6,249
)
 
7,632

Income tax expense (benefit) (4)
(2,666
)
 
838

 
(1,286
)
 
365

 
63

 
201

 
(28
)
 
(110
)
 
(3,917
)
 
1,294

Net income (loss) before noncontrolling interests
(292
)
 
3,276

 
(2,142
)
 
2,790

 
187

 
604

 
(85
)
 
(332
)
 
(2,332
)
 
6,338

Less: Net income (loss) from noncontrolling interests
39

 
129

 
1

 
1

 
7

 
2

 

 

 
47

 
132

Net income (loss)
$
(331
)
 
3,147

 
(2,143
)
 
2,789

 
180

 
602

 
(85
)
 
(332
)
 
(2,379
)
 
6,206

 
Average loans
$
449.3

 
457.7

 
504.3

 
474.0

 
78.7

 
75.0

 
(61.0
)
 
(59.2
)
 
971.3

 
947.5

Average assets
1,059.8

 
1,024.8

 
863.2

 
852.2

 
87.7

 
83.8

 
(61.8
)
 
(60.2
)
 
1,948.9

 
1,900.6

Average deposits
848.5

 
777.6

 
441.2

 
410.4

 
171.8

 
143.5

 
(74.8
)
 
(62.5
)
 
1,386.7

 
1,269.0

 
Six months ended Jun 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (3)
$
12,486

 
14,314

 
8,027

 
9,069

 
1,603

 
2,138

 
(924
)
 
(1,115
)
 
21,192

 
24,406

Provision (reversal of provision) for credit losses
5,096

 
1,189

 
8,316

 
162

 
265

 
3

 
(138
)
 
(6
)
 
13,539

 
1,348

Noninterest income
5,776

 
9,241

 
4,353

 
5,107

 
5,772

 
5,991

 
(1,540
)
 
(1,552
)
 
14,361

 
18,787

Noninterest expense
15,462

 
14,901

 
7,726

 
7,720

 
6,256

 
6,549

 
(1,845
)
 
(1,805
)
 
27,599

 
27,365

Income (loss) before income tax expense (benefit)
(2,296
)
 
7,465

 
(3,662
)
 
6,294

 
854

 
1,577

 
(481
)
 
(856
)
 
(5,585
)
 
14,480

Income tax expense (benefit) (4)
(2,022
)
 
1,262

 
(1,832
)
 
734

 
216

 
393

 
(120
)
 
(214
)
 
(3,758
)
 
2,175

Net income (loss) before noncontrolling interests
(274
)
 
6,203

 
(1,830
)
 
5,560

 
638

 
1,184

 
(361
)
 
(642
)
 
(1,827
)
 
12,305

Less: Net income (loss) from noncontrolling interests
(98
)
 
233

 
2

 
1

 
(5
)
 
5

 

 

 
(101
)
 
239

Net income (loss)
$
(176
)
 
5,970

 
(1,832
)
 
5,559

 
643

 
1,179

 
(361
)
 
(642
)
 
(1,726
)
 
12,066

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans
$
456.0

 
457.9

 
494.4

 
475.2

 
78.6

 
74.7

 
(60.8
)
 
(59.1
)
 
968.2

 
948.7

Average assets
1,049.5

 
1,020.1

 
874.1

 
848.4

 
87.9

 
83.5

 
(61.7
)
 
(60.1
)
 
1,949.8

 
1,891.9

Average deposits
823.5

 
771.6

 
448.9

 
410.1

 
161.6

 
148.3

 
(71.7
)
 
(64.5
)
 
1,362.3

 
1,265.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
(2)
Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels.
(3)
Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets as well as interest credits for any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities as well as funding charges for any funding provided from other segments.
(4)
Income tax expense (benefit) for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of $465 million and $956 million for the second quarter and first half of 2020, respectively, and $423 million and $850 million for the second quarter and first half of 2019, respectively.





- 40 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
 
 
 
 
 
 
 
Quarter ended
 
(income/expense in millions, average balances in billions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

COMMUNITY BANKING
 
 
 
 
 
 
 
 
 
Net interest income (2)
$
5,699

 
6,787

 
6,527

 
6,769

 
7,066

Provision for credit losses
3,378

 
1,718

 
522

 
608

 
479

Noninterest income
3,067

 
2,709

 
3,995

 
4,470

 
4,739

Noninterest expense
8,346

 
7,116

 
9,029

 
8,766

 
7,212

Income (loss) before income tax expense (benefit)
(2,958
)
 
662

 
971

 
1,865

 
4,114

Income tax expense (benefit)
(2,666
)
 
644

 
497

 
667

 
838

Net income (loss) before noncontrolling interests
(292
)
 
18

 
474

 
1,198

 
3,276

Less: Net income (loss) from noncontrolling interests
39

 
(137
)
 
45

 
199

 
129

Segment net income (loss)
$
(331
)
 
155

 
429

 
999

 
3,147

Average loans
$
449.3

 
462.6

 
462.5

 
459.0

 
457.7

Average assets
1,059.8

 
1,039.2

 
1,039.3

 
1,033.9

 
1,024.8

Average deposits
848.5

 
798.6

 
794.6

 
789.7

 
777.6

WHOLESALE BANKING
 
 
 
 
 
 
 
 
 
Net interest income (2)
$
3,891

 
4,136

 
4,248

 
4,382

 
4,535

Provision for credit losses
6,028

 
2,288

 
124

 
92

 
28

Noninterest income
2,672

 
1,681

 
2,311

 
2,560

 
2,530

Noninterest expense
3,963

 
3,763

 
3,743

 
3,889

 
3,882

Income (loss) before income tax expense (benefit)
(3,428
)
 
(234
)
 
2,692

 
2,961

 
3,155

Income tax expense (benefit) (3)
(1,286
)
 
(546
)
 
197

 
315

 
365

Net income (loss) before noncontrolling interests
(2,142
)
 
312

 
2,495

 
2,646

 
2,790

Less: Net income from noncontrolling interests
1

 
1

 
2

 
2

 
1

Segment net income (loss)
$
(2,143
)
 
311

 
2,493

 
2,644

 
2,789

Average loans
$
504.3

 
484.5

 
476.5

 
474.3

 
474.0

Average assets
863.2

 
885.0

 
877.6

 
869.2

 
852.2

Average deposits
441.2

 
456.6

 
447.4

 
422.0

 
410.4

WEALTH AND INVESTMENT MANAGEMENT
 
 
 
 
 
 
 
 
 
Net interest income (2)
$
736

 
867

 
910

 
989

 
1,037

Provision (reversal of provision) for credit losses
257

 
8

 
(1
)
 
3

 
(1
)
Noninterest income
2,924

 
2,848

 
3,161

 
4,152

 
3,013

Noninterest expense
3,153

 
3,103

 
3,729

 
3,431

 
3,246

Income before income tax expense
250

 
604

 
343

 
1,707

 
805

Income tax expense
63

 
153

 
85

 
426

 
201

Net income before noncontrolling interests
187

 
451

 
258

 
1,281

 
604

Less: Net income (loss) from noncontrolling interests
7

 
(12
)
 
4

 
1

 
2

Segment net income
$
180

 
463

 
254

 
1,280

 
602

Average loans
$
78.7

 
78.5

 
77.1

 
75.9

 
75.0

Average assets
87.7

 
88.1

 
85.5

 
84.7

 
83.8

Average deposits
171.8

 
151.4

 
145.0

 
142.4

 
143.5

OTHER (4)
 
 
 
 
 
 
 
 
 
Net interest income (2)
$
(446
)
 
(478
)
 
(485
)
 
(515
)
 
(543
)
Provision (reversal of provision) for credit losses
(129
)
 
(9
)
 
(1
)
 
(8
)
 
(3
)
Noninterest income
(707
)
 
(833
)
 
(807
)
 
(797
)
 
(793
)
Noninterest expense
(911
)
 
(934
)
 
(887
)
 
(887
)
 
(891
)
Loss before income tax benefit
(113
)
 
(368
)
 
(404
)
 
(417
)
 
(442
)
Income tax benefit
(28
)
 
(92
)
 
(101
)
 
(104
)
 
(110
)
Net loss before noncontrolling interests
(85
)
 
(276
)
 
(303
)
 
(313
)
 
(332
)
Less: Net income from noncontrolling interests

 

 

 

 

Other net loss
$
(85
)
 
(276
)
 
(303
)
 
(313
)
 
(332
)
Average loans
$
(61.0
)
 
(60.6
)
 
(59.6
)
 
(59.4
)
 
(59.2
)
Average assets
(61.8
)
 
(61.6
)
 
(60.6
)
 
(60.4
)
 
(60.2
)
Average deposits
(74.8
)
 
(68.6
)
 
(65.1
)
 
(62.7
)
 
(62.5
)
CONSOLIDATED COMPANY
 
 
 
 
 
 
 
 
 
Net interest income (2)
$
9,880

 
11,312

 
11,200

 
11,625

 
12,095

Provision for credit losses
9,534

 
4,005

 
644

 
695

 
503

Noninterest income
7,956

 
6,405

 
8,660

 
10,385

 
9,489

Noninterest expense
14,551

 
13,048

 
15,614

 
15,199

 
13,449

Income before income tax expense (benefit)
(6,249
)
 
664

 
3,602

 
6,116

 
7,632

Income tax expense (benefit)
(3,917
)
 
159

 
678

 
1,304

 
1,294

Net income (loss) before noncontrolling interests
(2,332
)
 
505

 
2,924

 
4,812

 
6,338

Less: Net income (loss) from noncontrolling interests
47

 
(148
)
 
51

 
202

 
132

Wells Fargo net income (loss)
$
(2,379
)
 
653

 
2,873

 
4,610

 
6,206

Average loans
$
971.3

 
965.0

 
956.5

 
949.8

 
947.5

Average assets
1,948.9

 
1,950.7

 
1,941.8

 
1,927.4

 
1,900.6

Average deposits
1,386.7

 
1,338.0

 
1,321.9

 
1,291.4

 
1,269.0

(1)
The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
(2)
Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets as well as interest credits for any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities as well as funding charges for any funding provided from other segments.
(3)
Income tax expense (benefit) for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of $465 million, $491 million, $478 million, $422 million, and $423 million for the quarters ended June 30 and March 31, 2020, and December 31, September 30 and June 30, 2019, respectively.
(4)
Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels.




- 41 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING

 Quarter ended
 
(in millions)
Jun 30,
2020


Mar 31,
2020


Dec 31,
2019


Sep 30,
2019


Jun 30,
2019

MSRs measured using the fair value method:









Fair value, beginning of quarter
$
8,126


11,517


11,072


12,096


13,336

Servicing from securitizations or asset transfers (1)
462


461


654


538


400

Sales and other (2)
(1
)

(31
)



(4
)

(1
)
Net additions
461


430


654


534


399

Changes in fair value:









Due to changes in valuation inputs or assumptions:









Mortgage interest rates (3)
(600
)

(3,022
)

405


(718
)

(1,153
)
Servicing and foreclosure costs (4)
(349
)

(73
)

45


13


(22
)
Discount rates


27


(34
)

188


(109
)
Prepayment estimates and other (5)
(182
)

(189
)

(54
)

(445
)

206

Net changes in valuation inputs or assumptions
(1,131
)

(3,257
)

362


(962
)

(1,078
)
Changes due to collection/realization of expected cash flows (6)
(637
)

(564
)

(571
)

(596
)

(561
)
Total changes in fair value
(1,768
)

(3,821
)

(209
)

(1,558
)

(1,639
)
Fair value, end of quarter
$
6,819


8,126


11,517


11,072


12,096

(1)
Includes impacts associated with exercising cleanup calls on securitizations and our right to repurchase delinquent loans from Government National Mortgage Association (GNMA) loan securitization pools. MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.
(2)
Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.
(3)
Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.
(4)
Includes costs to service and unreimbursed foreclosure costs.
(5)
Represents other changes in inputs or assumptions, including prepayment speed estimation changes that are independent of mortgage interest rate changes.
(6)
Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

 
Quarter ended
 
(in millions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Amortized MSRs:
 
 
 
 
 
 
 
 
 
Balance, beginning of quarter
$
1,406

 
1,430

 
1,397

 
1,407

 
1,427

Purchases
7

 
8

 
35

 
25

 
16

Servicing from securitizations or asset transfers
48

 
34

 
69

 
33

 
33

Amortization (1)
(100
)
 
(66
)
 
(71
)
 
(68
)
 
(69
)
Balance, end of quarter
$
1,361

 
1,406

 
1,430

 
1,397

 
1,407

Fair value of amortized MSRs:
 
 
 
 
 
 
 
 
 
Beginning of quarter
$
1,490

 
1,872

 
1,813

 
1,897

 
2,149

End of quarter
1,401

 
1,490

 
1,872

 
1,813

 
1,897

(1)
In second quarter 2020, we recorded impairment and associated valuation allowance of $30 million.



- 42 -

Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
 
 
Quarter ended
 
(in millions)
 
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Servicing income, net:
 
 
 
 
 
 
 
 
 
 
Servicing fees (1)
 
$
644

 
758

 
780

 
806

 
830

Amortization (2)
 
(100
)
 
(66
)
 
(71
)
 
(68
)
 
(69
)
Changes due to collection/realization of expected cash flows (3)
(A)
(637
)
 
(564
)
 
(571
)
 
(596
)
 
(561
)
Net servicing fees
 
(93
)
 
128

 
138

 
142

 
200

Changes in fair value of MSRs due to valuation inputs or assumptions (4)
(B)
(1,131
)
 
(3,257
)
 
362

 
(962
)
 
(1,078
)
Net derivative gains (losses) from economic hedges of MSRs
 
535

 
3,400

 
(477
)
 
678

 
1,155

Market-related valuation changes to MSRs, net of hedge results
 
(596
)
 
143

 
(115
)
 
(284
)
 
77

Total servicing income (loss), net
 
$
(689
)
 
271

 
23

 
(142
)
 
277

Total changes in fair value of MSRs carried at fair value
(A)+(B)
$
(1,768
)
 
(3,821
)
 
(209
)
 
(1,558
)
 
(1,639
)
(1)
Includes contractually specified servicing fees, late charges and other ancillary revenues, net of unreimbursed direct servicing costs.
(2)
In second quarter 2020, we recorded impairment and associated valuation allowance of $30 million.
(3)
Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.
(4)
Refer to the changes in fair value MSRs table on the previous page for more detail.

(in billions)
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019

 
Jun 30,
2019

Managed servicing portfolio (1):
 
 
 
 
 
 
 
 
 
Residential mortgage servicing:
 
 
 
 
 
 
 
 
 
Serviced and subserviced for others
$
992

 
1,041

 
1,065

 
1,086

 
1,112

Owned loans serviced
335

 
341

 
343

 
346

 
340

Total residential servicing
1,327

 
1,382

 
1,408

 
1,432

 
1,452

Commercial mortgage servicing:
 
 
 
 
 
 
 
 
 
Serviced and subserviced for others
578

 
573

 
575

 
560

 
557

Owned loans serviced
125

 
124

 
124

 
122

 
123

Total commercial servicing
703

 
697

 
699

 
682

 
680

Total managed servicing portfolio
$
2,030

 
2,079

 
2,107

 
2,114

 
2,132

Total serviced for others, excluding subserviced for others
$
1,558

 
1,602

 
1,629

 
1,634

 
1,655

Ratio of MSRs to related loans serviced for others
0.52
%
 
0.60

 
0.79

 
0.76

 
0.82

Weighted-average note rate (mortgage loans serviced for others)
4.13

 
4.20

 
4.25

 
4.29

 
4.33

(1)
The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.



- 43 -

Wells Fargo & Company and Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
 
 
Quarter ended
 
 
 
Jun 30,
2020

 
Mar 31,
2020

 
Dec 31,
2019

 
Sep 30,
2019


Jun 30,
2019

Net gains on mortgage loan origination/sales activities (in millions):
 
 
 
 
 
 
 
 
 
 
Residential
(A)
$
866

 
360

 
503

 
461

 
322

Commercial
 
83

 
23

 
101

 
106

 
83

Residential pipeline and unsold/repurchased loan management (1)
 
57

 
(275
)
 
156

 
41

 
76

Total
 
$
1,006

 
108

 
760

 
608

 
481

Application data (in billions):
 
 
 
 
 
 
 
 
 
 
Wells Fargo first mortgage quarterly applications
 
$
84

 
108

 
72

 
85

 
90

Refinances as a percentage of applications
 
60
%
 
65

 
51

 
50

 
44

Wells Fargo first mortgage unclosed pipeline, at quarter end
 
$
50

 
62

 
33

 
44

 
44

Residential real estate originations:
 
 
 
 
 
 
 
 
 
 
Purchases as a percentage of originations
 
38
%
 
48

 
50

 
60

 
68

Refinances as a percentage of originations
 
62

 
52

 
50

 
40

 
32

Total
 
100
%
 
100

 
100

 
100

 
100

Wells Fargo first mortgage loans (in billions):
 
 
 
 
 
 
 
 
 
 
Retail
 
$
30

 
23

 
27

 
27

 
26

Correspondent
 
28

 
25

 
33

 
30

 
27

Other (2)
 
1

 

 

 
1

 

Total quarter-to-date
 
$
59

 
48

 
60

 
58

 
53

Held-for-sale
(B)
$
43

 
33

 
42

 
38

 
33

Held-for-investment
 
16

 
15

 
18

 
20

 
20

Total quarter-to-date
 
$
59

 
48

 
60

 
58

 
53

Total year-to-date
 
$
107

 
48

 
204

 
144

 
86

Production margin on residential held-for-sale mortgage originations
(A)/(B)
2.04
%
 
1.08

 
1.21

 
1.21

 
0.98

(1)
Predominantly includes the results of sales of modified GNMA loans, interest rate management activities and changes in the estimate of our liability for mortgage loan repurchase losses.
(2)
Consists of home equity loans and lines.