WFC
$45.68
Wells Fargo &
$.12
.26%
Earnings Details
1st Quarter March 2019
Friday, April 12, 2019 8:00:00 AM
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Summary

Wells Fargo & Beats

Wells Fargo & (WFC) reported 1st Quarter March 2019 earnings of $1.20 per share on revenue of $26.3 billion. The consensus earnings estimate was $1.08 per share on revenue of $20.9 billion. The Earnings Whisper number was $1.12 per share. Revenue grew 5.0% on a year-over-year basis.

Wells Fargo & Co is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions.

Results
Reported Earnings
$1.20
Earnings Whisper
$1.12
Consensus Estimate
$1.08
Reported Revenue
$26.30 Bil
Revenue Estimate
$20.87 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wells Fargo Reports $5.9 Billion in Quarterly Net Income; Diluted EPS of $1.20

SAN FRANCISCO--(BUSINESS WIRE)-- Wells Fargo & Company (NYSE:WFC):

  • Financial results:
    • Net income of $5.9 billion, compared with $5.1 billion in first quarter 2018
    • Diluted earnings per share (EPS) of $1.20, compared with $0.96
    • Revenue of $21.6 billion, down from $21.9 billion
      • Net interest income of $12.3 billion, up $73 million
      • Noninterest income of $9.3 billion, down $398 million
    • Noninterest expense of $13.9 billion, down $1.1 billion
    • Average deposits of $1.3 trillion, down $35.1 billion, or 3%
    • Average loans of $950.1 billion, down $876 million
    • Return on assets (ROA) of 1.26%, return on equity (ROE) of 12.71%, and return on average tangible common equity (ROTCE) of 15.16%1
  • Credit quality:
    • Provision expense of $845 million, up $654 million from first quarter 2018
      • Net charge-offs of $695 million, down $46 million
        • Net charge-offs of 0.30% of average loans (annualized), down from 0.32%
      • Reserve build2 of $150 million, compared with $550 million reserve release2
    • Nonaccrual loans of $6.9 billion, down $434 million, or 6%
  • Strong capital position while returning more capital to shareholders:
    • Common Equity Tier 1 ratio (fully phased-in) of 11.9%3
    • Returned $6.0 billion to shareholders through common stock dividends and net share repurchases, up 49% from $4.0 billion in first quarter 2018

a) Net share repurchases of $3.9 billion, up 86% from $2.1 billion in first quarter 2018

b) Period-end common shares outstanding down 362 million shares, or 7%

c) Quarterly common stock dividend increased to $0.45 per share, compared with $0.43 per share in fourth quarter 2018 and $0.39 per share in first quarter 2018

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 March 31, 2019, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

 

Selected Financial Information

      Quarter ended
Mar 31,   Dec 31,   Mar 31,
    2019   2018   2018
Earnings
Diluted earnings per common share $ 1.20 1.21 0.96
Wells Fargo net income (in billions) 5.86 6.06 5.14
Return on assets (ROA) 1.26 % 1.28 1.09
Return on equity (ROE) 12.71 12.89 10.58
Return on average tangible common equity (ROTCE) (a) 15.16 15.39 12.62
Asset Quality
Net charge-offs (annualized) as a % of average total loans 0.30 % 0.30 0.32
Allowance for credit losses as a % of total loans 1.14 1.12 1.19
Allowance for credit losses as a % of annualized net charge-offs 384 374 376
Other
Revenue (in billions) $ 21.6 21.0 21.9
Efficiency ratio (b) 64.4 % 63.6 68.6
Average loans (in billions) $ 950.1 946.3 951.0
Average deposits (in billions) 1,262.1 1,268.9 1,297.2
Net interest margin   2.91 %   2.94     2.84

(a) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it enables investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 34.

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

 

Wells Fargo & Company (NYSE:WFC) reported net income of $5.9 billion, or $1.20 per diluted common share, for first quarter 2019, compared with $5.1 billion, or $0.96 per share, for first quarter 2018, and $6.1 billion, or $1.21 per share, for fourth quarter 2018.

Interim Chief Executive Officer Allen Parker said, “Since assuming this role, I have been focused on leading our Company forward by emphasizing my top priorities: serving our customers and supporting our Wells Fargo team members; meeting and exceeding the expectations of our regulators; and continuing the important transformation of the Company. We have more work ahead of us, and our strong leadership team is dedicated to making our Company the most customer-focused, efficient, and innovative Wells Fargo ever. All these efforts are focused on creating a first-rate organization that is characterized by a strong financial foundation, a leading presence in our chosen markets, focused growth within a responsible risk management framework, operational excellence, and highly engaged team members. I want to thank our team members for their continued commitment and tireless efforts, and I’m confident and enthusiastic about the extraordinary opportunities we have in front of us to build an even stronger Wells Fargo for all our stakeholders.”

Chief Financial Officer John Shrewsberry said, “Wells Fargo reported $5.9 billion of net income in the first quarter. Our financial results included continued strong credit performance and high levels of liquidity. In addition, our continued de-risking of the balance sheet and consistent level of profitability have resulted in capital levels well above our regulatory minimum. As a result, we returned $6.0 billion to shareholders through common stock dividends and net share repurchases in the first quarter, up 49% from a year ago. Returning excess capital to shareholders remains a priority. While our expenses in the first quarter included typically higher personnel expense, we remain committed to, and are on track to achieving, our 2019 expense target.”

Net Interest Income

Net interest income in the first quarter was $12.3 billion, down $333 million from fourth quarter 2018, driven primarily by two fewer days in the quarter and balance sheet mix and repricing, including the impact of a flattening yield curve. The net interest margin was 2.91%, down 3 basis points from the prior quarter due to balance sheet mix and repricing.

Noninterest Income

Noninterest income in the first quarter was $9.3 billion, up $962 million from fourth quarter 2018. First quarter noninterest income included higher market sensitive revenue4 and mortgage banking income, partially offset by lower other income, trust and investment fees, and other fees.

  • Trust and investment fees were $3.4 billion, down from $3.5 billion in fourth quarter 2018, driven by lower asset-based fees on retail brokerage advisory assets, reflecting lower market valuations at December 31, 2018.
  • Mortgage banking income was $708 million, up from $467 million in fourth quarter 2018. Net mortgage servicing income was $364 million, up from $109 million in the fourth quarter, which included negative mortgage servicing rights valuation adjustments. The production margin on residential held-for-sale mortgage loan originations5 increased to 1.05%, from 0.89% in the fourth quarter, primarily due to an improvement in secondary market conditions. Residential mortgage loan originations in the first quarter were $33 billion, down from $38 billion in the fourth quarter primarily due to seasonality. The unclosed application pipeline at March 31, 2019, was $32 billion, up from $18 billion at December 31, 2018.
  • Market sensitive revenue4 was $1.3 billion, up from $40 million in fourth quarter 2018, and included higher net gains from equity securities driven by a $797 million increase in deferred compensation plan investment results (P&L neutral, largely offset by higher employee benefits expense). Net gains from trading activities increased $347 million compared with the prior quarter, driven predominantly by strength in credit and asset-backed products. Net gains from debt securities increased $116 million compared with the prior quarter, predominantly due to the sale of non-agency residential mortgage-backed securities.

Noninterest Expense

Noninterest expense in the first quarter increased $577 million from the prior quarter to $13.9 billion, predominantly due to $778 million of seasonally higher employee benefits and incentive compensation expense, as well as a $785 million increase in deferred compensation expense (P&L neutral, largely offset by net gains from equity securities). These increases were partially offset by lower core deposit and other intangibles amortization, operating losses, other expense, outside professional services, salaries, and operating lease expense. The efficiency ratio was 64.4% in first quarter 2019, compared with 63.6% in the fourth quarter.

Income Taxes

The Company’s effective income tax rate was 13.1% for first quarter 2019 and included net discrete income tax benefits of $297 million related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity. The effective income tax rate in fourth quarter 2018 was 13.7% and included net discrete income tax benefits related to the results of state income tax audits and incremental state tax credits, as well as benefits related to revisions to our full year 2018 effective income tax rate made during the fourth quarter. The Company currently expects the effective income tax rate for the remainder of 2019 to be approximately 18%, excluding the impact of any unanticipated discrete items.

Loans

Average loans were $950.1 billion in the first quarter, up $3.8 billion from the fourth quarter. Period-end loan balances were $948.2 billion at March 31, 2019, down $4.9 billion from December 31, 2018. Commercial loans were down $1.2 billion compared with December 31, 2018, predominantly due to a $1.1 billion decline in commercial and industrial loans, partially offset by $460 million of growth in commercial real estate loans. Consumer loans decreased $3.7 billion from the prior quarter, reflecting the following:

  • Real estate 1-4 family first mortgage loans decreased $520 million, as $10.5 billion of held-for-investment nonconforming mortgage loan originations were more than offset by paydowns and $1.6 billion of sales of purchased credit-impaired (PCI) Pick-a-Pay mortgage loans. Additionally, $776 million of nonconforming mortgage loan originations that would have otherwise been included in 1-4 family first mortgage loan outstandings were designated as held-for-sale in first quarter 2019 in anticipation of future securitizations.
  • Real estate 1-4 family junior lien mortgage loans decreased $1.3 billion, as paydowns continued to exceed originations
  • Credit card loans decreased $746 million primarily due to seasonality
  • Automobile loans declined $156 million, as paydowns outpaced originations of $5.4 billion
 

Period-End Loan Balances

  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
(in millions)   2019   2018   2018   2018   2018
Commercial $ 512,226 513,405 501,886 503,105 503,396
Consumer   436,023     439,705     440,414     441,160     443,912  
Total loans   $ 948,249     953,110     942,300     944,265     947,308  
Change from prior quarter   $ (4,861 )   10,810     (1,965 )   (3,043 )   (9,462 )

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 $483.5 billion at March 31, 2019, down $1.2 billion from the fourth quarter, predominantly due to a net decrease in available-for-sale and held for trading debt securities. Debt securities purchases of approximately $4.8 billion, primarily U.S. Treasury and federal agency mortgage-backed securities (MBS) in the available-for-sale portfolio, declined from the prior quarter primarily reflecting less reinvestment due to lower long-term interest rates and tighter credit spreads. These purchases were more than offset by runoff and sales.

Net unrealized gains on available-for-sale debt securities were $853 million at March 31, 2019, compared with net unrealized losses of $2.6 billion at December 31, 2018, due to lower long-term interest rates and tighter credit spreads.

Period-end equity securities, which include marketable and non-marketable equity securities, as well as equity securities held for trading, were $58.4 billion at March 31, 2019, up $3.3 billion from the fourth quarter.

Deposits

Total average deposits for first quarter 2019 were $1.3 trillion, down $6.9 billion from the prior quarter primarily due to lower Wholesale Banking and Wealth and Investment Management deposits, partially offset by higher retail banking deposits. The average deposit cost for first quarter 2019 was 65 basis points, up 10 basis points from the prior quarter and 31 basis points from a year ago.

Capital

Our Common Equity Tier 1 ratio (fully phased-in) was 11.9%3 and continued to exceed both the regulatory minimum of 9% and our current internal target of 10%. In first quarter 2019, the Company repurchased 97.4 million shares of its common stock, which net of issuances reduced period-end common shares outstanding by 69.3 million. The Company increased its quarterly common stock dividend paid in the quarter to $0.45 per share from $0.43 per share in the prior quarter.

As of March 31, 2019, our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 23.9%6, compared with the required minimum of 22.0%.

Credit Quality

Net Loan Charge-offs

The quarterly loss rate in the first quarter was 0.30% (annualized), unchanged from the prior quarter, and down from 0.32% a year ago. Commercial and consumer losses were 0.11% and 0.51%, respectively. Total credit losses were $695 million in first quarter 2019, down $26 million from fourth quarter 2018. Commercial losses increased $13 million driven by lower recoveries, while consumer losses decreased $39 million.

 

Net Loan Charge-Offs

  Quarter ended
    March 31, 2019   December 31, 2018   March 31, 2018
Net loan   As a % of   Net loan   As a % of   Net loan   As a % of
charge- average charge- average charge- average
($ in millions)   offs   loans (a)   offs   loans (a)   offs   loans (a)
Commercial:
Commercial and industrial $ 133 0.15 % $ 132 0.15 % $ 85 0.10 %
Real estate mortgage 6 0.02 (12 ) (0.04 ) (15 ) (0.05 )
Real estate construction (2 ) (0.04 ) (1 ) (0.01 ) (4 ) (0.07 )
Lease financing   8   0.17 13   0.26 12   0.25
Total commercial   145   0.11 132   0.10 78   0.06
Consumer:
Real estate 1-4 family first mortgage (12 ) (0.02 ) (22 ) (0.03 ) (18 ) (0.03 )
Real estate 1-4 family junior lien mortgage (9 ) (0.10 ) (10 ) (0.11 ) (8 ) (0.09 )
Credit card 352 3.73 338 3.54 332 3.69
Automobile 91 0.82 133 1.16 208 1.64
Other revolving credit and installment   128   1.47 150   1.64 149   1.60
Total consumer   550   0.51 589   0.53 663   0.60
Total   $ 695   0.30 % $ 721   0.30 % $ 741   0.32 %
 

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

 

Nonperforming Assets

Nonperforming assets increased $394 million, or 6%, from fourth quarter 2018 to $7.3 billion. Nonaccrual loans increased $409 million from fourth quarter 2018 to $6.9 billion. Commercial nonaccrual loans increased $609 million driven in part by a borrower in the utility sector.

 

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

    March 31, 2019   December 31, 2018   March 31, 2018
        As a     As a
As a % of % of % of
Total total Total total Total total
($ in millions)   balances   loans   balances   loans   balances   loans
Commercial:
Commercial and industrial $ 1,986 0.57 % $ 1,486 0.42 % $ 1,516 0.45 %
Real estate mortgage 699 0.57 580 0.48 755 0.60
Real estate construction 36 0.16 32 0.14 45 0.19
Lease financing   76   0.40 90   0.46 93   0.48
Total commercial   2,797   0.55 2,188   0.43 2,409   0.48
Consumer:
Real estate 1-4 family first mortgage 3,026 1.06 3,183 1.12 3,673 1.30
Real estate 1-4 family junior lien mortgage 916 2.77 945 2.75 1,087 2.87
Automobile 116 0.26 130 0.29 117 0.24
Other revolving credit and installment   50   0.14 50   0.14 53   0.14
Total consumer   4,108   0.94 4,308   0.98 4,930   1.11
Total nonaccrual loans (a)   6,905   0.73 6,496   0.68 7,339   0.77
Foreclosed assets:
Government insured/guaranteed 75 88 103
Non-government insured/guaranteed   361   363   468  
Total foreclosed assets   436   451   571  
Total nonperforming assets   $ 7,341   0.77 % $ 6,947   0.73 % $ 7,910   0.83 %
Change from prior quarter:
Total nonaccrual loans (a) $ 409 $ (218 ) $ (307 )
Total nonperforming assets   394         (289 )       (378 )    

(a) Financial information for periods prior to December 31, 2018, has been revised to exclude mortgage loans held for sale (MLHFS), loans held for sale (LHFS) and loans held at fair value. For additional information, see the "Five Quarter Nonperforming Assets" table on page 32.

 

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $10.8 billion at March 31, 2019, up $114 million from December 31, 2018. First quarter 2019 included a $150 million reserve build2, primarily due to a higher probability of slightly less favorable economic conditions. The allowance coverage for total loans was 1.14%, compared with 1.12% in fourth quarter 2018. The allowance covered 3.8 times annualized first quarter net charge-offs, compared with 3.7 times in the prior quarter. The allowance coverage for nonaccrual loans was 157% at March 31, 2019, compared with 165% at December 31, 2018.

Business Segment Performance

Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:

     
  Quarter ended
Mar 31,   Dec 31,   Mar 31,
(in millions)   2019   2018   2018
Community Banking $ 2,823 3,169 1,913
Wholesale Banking 2,770 2,671 2,875
Wealth and Investment Management   577     689     714
 

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

 

Selected Financial Information

  Quarter ended
Mar 31,   Dec 31,   Mar 31,
(in millions)   2019   2018   2018
Total revenue $ 11,750 11,461 11,830
Provision for credit losses 710 534 218
Noninterest expense 7,689 7,032 8,702
Segment net income 2,823 3,169 1,913
(in billions)
Average loans 458.2 459.7 470.5
Average assets 1,015.4 1,015.9 1,061.9
Average deposits   765.6     759.4     747.5
 

First Quarter 2019 vs. Fourth Quarter 2018

  • Net income of $2.8 billion, down $346 million, or 11%
  • Revenue was $11.8 billion, up $289 million, or 3%, driven by higher market sensitive revenue4 reflecting higher deferred compensation plan investment results (P&L neutral, largely offset by higher employee benefits expense) and higher mortgage banking income, partially offset by lower other income and net interest income
  • Noninterest expense of $7.7 billion increased $657 million, or 9%, predominantly driven by seasonally higher personnel expense and higher deferred compensation expense (P&L neutral, largely offset by net gains from equity securities), partially offset by lower other expense, operating losses, and core deposit and other intangibles amortization expense
  • Provision for credit losses increased $176 million, primarily due to a reserve build2 in first quarter 2019, reflecting a higher probability of slightly less favorable economic conditions, compared with a reserve release2 in fourth quarter 2018, partially offset by lower net charge-offs in the first quarter

First Quarter 2019 vs. First Quarter 2018

  • Net income was up $910 million, or 48%, driven in part by a lower effective income tax rate in first quarter 2019
  • Revenue declined $80 million, or 1%, predominantly due to lower mortgage banking income and trust and investment fees, partially offset by higher other income and net interest income
  • Noninterest expense decreased $1.0 billion, or 12%, driven by lower operating losses and core deposit and other intangibles amortization expense, partially offset by higher personnel expense
  • Provision for credit losses increased $492 million, due to a reserve build2 in first quarter 2019, reflecting a higher probability of slightly less favorable economic conditions, compared with a reserve release2 in first quarter 2018

Business Metrics and Highlights

  • Primary consumer checking customers7,8 of 23.9 million, up 1.1% from a year ago. The sale of 52 branches and $1.8 billion of deposits which closed in fourth quarter 2018 reduced the growth rate by 0.5%
  • Branch customer experience surveys completed during first quarter 2019 reflected higher scores from the previous quarter, with both ‘Customer Loyalty’ and ‘Overall Satisfaction with Most Recent Visit’ reaching their highest level in more than three years
  • Debit card point-of-sale purchase volume9 of $86.6 billion in the first quarter, up 6% year-over-year
  • General purpose credit card point-of-sale purchase volume of $18.3 billion in the first quarter, up 5% year-over-year
  • 29.8 million digital (online and mobile) active customers, including 23.3 million mobile active customers8,10
  • 5,479 retail bank branches as of the end of first quarter 2019, reflecting 40 branch consolidations in the quarter
  • Home Lending
  • Originations of $33 billion, down from $38 billion in the prior quarter, primarily due to seasonality
    • Originations of loans held-for-sale and loans held-for-investment were $22 billion and $11 billion, respectively
  • Applications of $64 billion, up from $48 billion in the prior quarter, driven primarily by lower mortgage interest rates
  • Unclosed application pipeline of $32 billion at quarter end, up from $18 billion at December 31, 2018, driven primarily by lower mortgage interest rates
  • Production margin on residential held-for-sale mortgage loan originations5 of 1.05%, up from 0.89% in the prior quarter, primarily due to an improvement in secondary market conditions
  • Automobile originations of $5.4 billion in the first quarter, up 24% from the prior year
  • Small Business Lending11originations of $621 million, up 6% from the prior year
  • Wells Fargo's mobile banking ranked #2 in Overall Performance and #1 in Mobile Web, and tied for #1 in Functionality on the Dynatrace Mobile Banking Scorecard (March 2019)
  • Wells Fargo's Go FarTM Rewards mobile app tied for highest ranking (A-) on the Credit Card Monitor report (February 2019)

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $5 million. Products and businesses include Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, Credit Investment Portfolio, Treasury Management, and Commercial Capital.

 

Selected Financial Information

  Quarter ended
Mar 31,   Dec 31,   Mar 31,
(in millions)   2019   2018   2018
Total revenue $ 7,111 6,926 7,279
Provision (reversal of provision) for credit losses 134 (28 ) (20 )
Noninterest expense 3,838 4,025 3,978
Segment net income 2,770 2,671 2,875
(in billions)
Average loans 476.5 470.2 465.1
Average assets 844.6 839.1 829.2
Average deposits   409.8     421.6     446.0  

First Quarter 2019 vs. Fourth Quarter 2018

  • Net income of $2.8 billion, up $99 million, or 4%
  • Revenue of $7.1 billion increased $185 million, or 3%, driven by higher market sensitive revenue4, partially offset by lower net interest income, commercial real estate brokerage fees, and other fees
  • Noninterest expense of $3.8 billion decreased $187 million, or 5%, reflecting lower operating lease, core deposit and other intangibles amortization, and project related expenses, partially offset by seasonally higher personnel expense
  • Provision for credit losses increased $162 million, driven by a reserve build2 in first quarter 2019, reflecting higher nonaccrual loans, as well as lower recoveries in the first quarter

First Quarter 2019 vs. First Quarter 2018

  • Net income decreased $105 million, or 4%
  • Revenue decreased $168 million, or 2%, largely due to the impact of the sale of Wells Fargo Shareowner Services in first quarter 2018, as well as lower treasury management fees and mortgage banking income, partially offset by higher market sensitive revenue4
  • Noninterest expense decreased $140 million, or 4%, on lower FDIC, core deposit and other intangibles amortization, operating lease, and personnel expenses, partially offset by higher regulatory, risk, and technology expense
  • Provision for credit losses increased $154 million, primarily due to a reserve build2 in first quarter 2019, reflecting higher nonaccrual loans, compared with a reserve release2 in first quarter 2018, as well as lower recoveries in first quarter 2019

Business Metrics and Highlights

  • Commercial card spend volume12 of $8.5 billion, up 5% from the prior year on increased transaction volumes primarily reflecting customer growth, and down 2% compared with fourth quarter 2018
  • U.S. investment banking market share of 3.5% in first quarter 201913, compared with 3.1% in first quarter 201813

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

 

Selected Financial Information

  Quarter ended
Mar 31,   Dec 31,   Mar 31,
(in millions)   2019   2018   2018
Total revenue $ 4,079 3,957 4,242
Provision (reversal of provision) for credit losses 4 (3 ) (6 )
Noninterest expense 3,303 3,044 3,290
Segment net income 577 689 714
(in billions)
Average loans 74.4 75.2 73.9
Average assets 83.2 83.6 84.2
Average deposits   153.2     155.5     177.9  
 

First Quarter 2019 vs. Fourth Quarter 2018

  • Net income of $577 million, down $112 million, or 16%
  • Revenue of $4.1 billion increased $122 million, or 3%, mostly due to higher net gains from equity securities on higher deferred compensation plan investment results of $307 million (P&L neutral, offset by higher employee benefits expense), partially offset by lower asset-based fees
  • Noninterest expense of $3.3 billion increased $259 million, or 9%, primarily driven by higher employee benefits expense from deferred compensation plan expense of $307 million (P&L neutral, offset by net gains from equity securities) and seasonally higher personnel expense, partially offset by lower broker commissions and lower core deposit and other intangibles amortization expense

First Quarter 2019 vs. First Quarter 2018

  • Net income down $137 million, or 19%
  • Revenue decreased $163 million, or 4%, primarily driven by lower asset-based fees and brokerage transaction revenue, partially offset by higher net gains from equity securities on higher deferred compensation plan investment results of $133 million (P&L neutral, offset by higher employee benefits expense)
  • Noninterest expense increased $13 million, primarily due to higher employee benefits expense from deferred compensation plan expense of $133 million (P&L neutral, offset by net gains from equity securities) and higher regulatory, risk, and technology expense, partially offset by lower broker commissions and core deposit and other intangibles amortization expense

Business Metrics and Highlights

Total WIM Segment

  • WIM total client assets of $1.8 trillion, down 2% from a year ago, driven primarily by net outflows, partially offset by higher market valuations
  • Average loan balances up 1% from a year ago largely due to growth in nonconforming mortgage loans
  • First quarter 2019 closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) down 8% compared with first quarter 2018

Retail Brokerage

  • Client assets of $1.6 trillion, down 1% from prior year, driven primarily by net outflows, partially offset by higher market valuations
  • Advisory assets of $547 billion, up 1% from prior year, driven primarily by higher market valuations, partially offset by net outflows

Wealth Management

  • Client assets of $232 billion, down 4% from prior year, driven primarily by net outflows, partially offset by higher market valuations

Asset Management

  • Total assets under management (AUM) of $476 billion, down 4% from prior year, primarily due to equity and fixed income net outflows and the sale of Wells Fargo Asset Management's ownership stake in The Rock Creek Group, LP and removal of the associated AUM, partially offset by higher market valuations and higher money market fund net inflows

Retirement

  • IRA assets of $404 billion, flat compared with the prior year
  • Institutional Retirement plan assets of $379 billion, down 2% from prior year
  • On April 9, 2019, we announced an agreement to sell our Institutional Retirement and Trust business. This transaction is expected to close in third quarter 2019.

Conference Call

The Company will host a live conference call on Friday, April 12, at 7:00 a.m. PT (10:00 a.m. ET). You may listen to the call by dialing 866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and https://engage.vevent.com/rt/wells_fargo_ao~5287428.

A replay of the conference call will be available beginning at 11:00 a.m. PT (2:00 p.m. ET) on Friday, April 12 through Friday, April 26. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #5287428. 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~5287428.

End Notes

1 Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it enables investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Tangible Common Equity” tables on page 34.

2 Reserve build represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses.

3 See table on page 35 for more information on Common Equity Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary estimate and is calculated assuming the full phase-in of the Basel III capital rules.

4 Market sensitive revenue represents net gains from trading activities, debt securities, and equity securities.

5 Production margin represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage originations. See the "Selected Five Quarter Residential Mortgage Production Data" table on page 40 for more information.

6 The TLAC ratio is a preliminary estimate.

7 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.

8 Data as of February 2019, comparisons with February 2018.

9 Combined consumer and business debit card purchase volume dollars.

10 Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device in the prior 90 days.

11 Small Business Lending includes credit card, lines of credit and loan products (primarily under $100,000 sold through our retail banking branches).

12 Includes commercial card volume for the entire company.

13 Source: Dealogic U.S. investment banking fee market share.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance levels; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital or liquidity levels or targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets, return on equity, and return on tangible common equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

  • current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;
  • our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
  • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
  • developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;
  • our ability to realize any efficiency ratio or expense target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;
  • the effect of the current interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;
  • significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our debt securities and equity securities portfolios;
  • the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;
  • negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;
  • resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
  • a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;
  • the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
  • fiscal and monetary policies of the Federal Reserve Board; and
  • the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,700 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 262,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018 rankings of America’s largest corporations.

 
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
 
  Pages
 

Summary Information

Summary Financial Data

17

 

Income

Consolidated Statement of Income 19
Consolidated Statement of Comprehensive Income 21
Condensed Consolidated Statement of Changes in Total Equity 21
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 22
Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 23
Noninterest Income and Noninterest Expense 24
Five Quarter Deferred Compensation Plan Investment Results 26
 

Balance Sheet

Consolidated Balance Sheet 27
Trading Activities 29
Debt Securities 29
Equity Securities 30
 

Loans

Loans 31
Nonperforming Assets 32
Loans 90 Days or More Past Due and Still Accruing 32
Changes in Allowance for Credit Losses 33
 

Equity

Tangible Common Equity 34
Common Equity Tier 1 Under Basel III 35
 

Operating Segments

Operating Segment Results 36
 

Other

Mortgage Servicing and other related data 38
 

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA
    % Change
Quarter ended Mar 31, 2019 from
Mar 31,   Dec 31,   Mar 31, Dec 31,   Mar 31,
($ in millions, except per share amounts)   2019   2018   2018   2018   2018
For the Period
Wells Fargo net income $ 5,860 6,064 5,136 (3 )% 14
Wells Fargo net income applicable to common stock 5,507 5,711 4,733 (4 ) 16
Diluted earnings per common share 1.20 1.21 0.96 (1 ) 25
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.26 % 1.28 1.09 (2 ) 16
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 12.71 12.89 10.58 (1 ) 20
Return on average tangible common equity (ROTCE)(1) 15.16 15.39 12.62 (1 ) 20
Efficiency ratio (2) 64.4 63.6 68.6 1 (6 )
Total revenue $ 21,609 20,980 21,934 3 (1 )
Pre-tax pre-provision profit (PTPP) (3) 7,693 7,641 6,892 1 12
Dividends declared per common share 0.45 0.43 0.39 5 15
Average common shares outstanding 4,551.5 4,665.8 4,885.7 (2 ) (7 )
Diluted average common shares outstanding 4,584.0 4,700.8 4,930.7 (2 ) (7 )
Average loans $ 950,148 946,336 951,024
Average assets 1,883,229 1,879,047 1,915,896 (2 )
Average total deposits 1,262,062 1,268,948 1,297,178 (1 ) (3 )
Average consumer and small business banking deposits (4) 739,654 736,295 755,483 (2 )
Net interest margin 2.91 % 2.94 2.84 (1 ) 2
At Period End
Debt securities $ 483,467 484,689 472,968 2
Loans 948,249 953,110 947,308 (1 )
Allowance for loan losses 9,900 9,775 10,373 1 (5 )
Goodwill 26,420 26,418 26,445
Equity securities 58,440 55,148 58,935 6 (1 )
Assets 1,887,792 1,895,883 1,915,388 (1 )
Deposits 1,264,013 1,286,170 1,303,689 (2 ) (3 )
Common stockholders' equity 176,025 174,359 181,150 1 (3 )
Wells Fargo stockholders’ equity 197,832 196,166 204,952 1 (3 )
Total equity 198,733 197,066 205,910 1 (3 )
Tangible common equity (1) 147,723 145,980 151,878 1 (3 )
Common shares outstanding 4,511.9 4,581.3 4,873.9 (2 ) (7 )
Book value per common share (5) $ 39.01 38.06 37.17 2 5
Tangible book value per common share (1)(5) 32.74 31.86 31.16 3 5
Team members (active, full-time equivalent)   262,100     258,700     265,700     1     (1 )

(1) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on page 34.

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

(3) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(4) Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.

(5) Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA
  Quarter ended
Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
($ in millions, except per share amounts)   2019   2018   2018   2018   2018
For the Quarter
Wells Fargo net income $ 5,860 6,064 6,007 5,186 5,136
Wells Fargo net income applicable to common stock 5,507 5,711 5,453 4,792 4,733
Diluted earnings per common share 1.20 1.21 1.13 0.98 0.96
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.26 % 1.28 1.27 1.10 1.09
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 12.71 12.89 12.04 10.60 10.58
Return on average tangible common equity (ROTCE)(1) 15.16 15.39 14.33 12.62 12.62
Efficiency ratio (2) 64.4 63.6 62.7 64.9 68.6
Total revenue $ 21,609 20,980 21,941 21,553 21,934
Pre-tax pre-provision profit (PTPP) (3) 7,693 7,641 8,178 7,571 6,892
Dividends declared per common share 0.45 0.43 0.43 0.39 0.39
Average common shares outstanding 4,551.5 4,665.8 4,784.0 4,865.8 4,885.7
Diluted average common shares outstanding 4,584.0 4,700.8 4,823.2 4,899.8 4,930.7
Average loans $ 950,148 946,336 939,462 944,079 951,024
Average assets 1,883,229 1,879,047 1,876,283 1,884,884 1,915,896
Average total deposits 1,262,062 1,268,948 1,266,378 1,271,339 1,297,178
Average consumer and small business banking deposits (4) 739,654 736,295 743,503 754,047 755,483
Net interest margin 2.91 % 2.94 2.94 2.93 2.84
At Quarter End
Debt securities $ 483,467 484,689 472,283 475,495 472,968
Loans 948,249 953,110 942,300 944,265 947,308
Allowance for loan losses 9,900 9,775 10,021 10,193 10,373
Goodwill 26,420 26,418 26,425 26,429 26,445
Equity securities 58,440 55,148 61,755 57,505 58,935
Assets 1,887,792 1,895,883 1,872,981 1,879,700 1,915,388
Deposits 1,264,013 1,286,170 1,266,594 1,268,864 1,303,689
Common stockholders' equity 176,025 174,359 176,934 181,386 181,150
Wells Fargo stockholders’ equity 197,832 196,166 198,741 205,188 204,952
Total equity 198,733 197,066 199,679 206,069 205,910
Tangible common equity (1) 147,723 145,980 148,391 152,580 151,878
Common shares outstanding 4,511.9 4,581.3 4,711.6 4,849.1 4,873.9
Book value per common share (5) $ 39.01 38.06 37.55 37.41 37.17
Tangible book value per common share (1)(5) 32.74 31.86 31.49 31.47 31.16
Team members (active, full-time equivalent)   262,100     258,700     261,700     264,500     265,700

(1) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on page 34.

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

(3) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(4) Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.

(5) Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

 
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME
  Quarter ended March 31,   %
(in millions, except per share amounts)   2019   2018   Change
Interest income  
Debt securities $ 3,941 3,414 15 %
Mortgage loans held for sale 152 179 (15 )
Loans held for sale 24 24
Loans 11,354 10,579 7
Equity securities 210 231 (9 )
Other interest income   1,322     920   44
Total interest income   17,003     15,347   11
Interest expense
Deposits 2,026 1,090 86
Short-term borrowings 596 311 92
Long-term debt 1,927 1,576 22
Other interest expense   143     132   8
Total interest expense   4,692     3,109   51
Net interest income 12,311 12,238 1
Provision for credit losses   845     191   342
Net interest income after provision for credit losses   11,466     12,047   (5 )
Noninterest income
Service charges on deposit accounts 1,094 1,173 (7 )
Trust and investment fees 3,373 3,683 (8 )
Card fees 944 908 4
Other fees 770 800 (4 )
Mortgage banking 708 934 (24 )
Insurance 96 114 (16 )
Net gains from trading activities 357 243 47
Net gains on debt securities 125 1 NM
Net gains from equity securities 814 783 4
Lease income 443 455 (3 )
Other   574     602   (5 )
Total noninterest income   9,298     9,696   (4 )
Noninterest expense
Salaries 4,425 4,363 1
Commission and incentive compensation 2,845 2,768 3
Employee benefits 1,938 1,598 21
Equipment 661 617 7
Net occupancy 717 713 1
Core deposit and other intangibles 28 265 (89 )
FDIC and other deposit assessments 159 324 (51 )
Other   3,143     4,394   (28 )
Total noninterest expense   13,916     15,042   (7 )
Income before income tax expense 6,848 6,701 2
Income tax expense   881     1,374   (36 )
Net income before noncontrolling interests 5,967 5,327 12
Less: Net income from noncontrolling interests   107     191   (44 )
Wells Fargo net income   $ 5,860     5,136   14
Less: Preferred stock dividends and other   353     403   (12 )
Wells Fargo net income applicable to common stock   $ 5,507     4,733   16
Per share information
Earnings per common share $ 1.21 0.97 25
Diluted earnings per common share 1.20 0.96 25
Average common shares outstanding 4,551.5 4,885.7 (7 )
Diluted average common shares outstanding   4,584.0     4,930.7     (7 )

NM - Not meaningful

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
  Quarter ended
Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
(in millions, except per share amounts)   2019   2018   2018   2018   2018
Interest income
Debt securities $ 3,941 3,803 3,595 3,594 3,414
Mortgage loans held for sale 152 190 210 198 179
Loans held for sale 24 33 35 48 24
Loans 11,354 11,367 11,116 10,912 10,579
Equity securities 210 260 280 221 231
Other interest income   1,322     1,268     1,128     1,042     920
Total interest income   17,003     16,921     16,364     16,015     15,347
Interest expense
Deposits 2,026 1,765 1,499 1,268 1,090
Short-term borrowings 596 546 462 398 311
Long-term debt 1,927 1,802 1,667 1,658 1,576
Other interest expense   143     164     164     150     132
Total interest expense   4,692     4,277     3,792     3,474     3,109
Net interest income 12,311 12,644 12,572 12,541 12,238
Provision for credit losses   845     521     580     452     191
Net interest income after provision for credit losses   11,466     12,123     11,992     12,089     12,047
Noninterest income
Service charges on deposit accounts 1,094 1,176 1,204 1,163 1,173
Trust and investment fees 3,373 3,520 3,631 3,675 3,683
Card fees 944 981 1,017 1,001 908
Other fees 770 888 850 846 800
Mortgage banking 708 467 846 770 934
Insurance 96 109 104 102 114
Net gains from trading activities 357 10 158 191 243
Net gains on debt securities 125 9 57 41 1
Net gains from equity securities 814 21 416 295 783
Lease income 443 402 453 443 455
Other   574     753     633     485     602
Total noninterest income   9,298     8,336     9,369     9,012     9,696
Noninterest expense
Salaries 4,425 4,545 4,461 4,465 4,363
Commission and incentive compensation 2,845 2,427 2,427 2,642 2,768
Employee benefits 1,938 706 1,377 1,245 1,598
Equipment 661 643 634 550 617
Net occupancy 717 735 718 722 713
Core deposit and other intangibles 28 264 264 265 265
FDIC and other deposit assessments 159 153 336 297 324
Other   3,143     3,866     3,546     3,796     4,394
Total noninterest expense   13,916     13,339     13,763     13,982     15,042
Income before income tax expense 6,848 7,120 7,598 7,119 6,701
Income tax expense   881     966     1,512     1,810     1,374
Net income before noncontrolling interests 5,967 6,154 6,086 5,309 5,327
Less: Net income from noncontrolling interests   107     90     79     123     191
Wells Fargo net income   $ 5,860     6,064     6,007     5,186     5,136
Less: Preferred stock dividends and other   353     353     554     394     403
Wells Fargo net income applicable to common stock   $ 5,507     5,711     5,453     4,792     4,733
Per share information
Earnings per common share $ 1.21 1.22 1.14 0.98 0.97
Diluted earnings per common share 1.20 1.21 1.13 0.98 0.96
Average common shares outstanding 4,551.5 4,665.8 4,784.0 4,865.8 4,885.7
Diluted average common shares outstanding   4,584.0     4,700.8     4,823.2     4,899.8     4,930.7
 

 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  Quarter ended March 31,   %
(in millions)   2019   2018   Change
Wells Fargo net income   $ 5,860     5,136   14%
Other comprehensive income (loss), before tax:  
Debt securities:
Net unrealized gains (losses) arising during the period 2,831 (3,443 ) NM
Reclassification of net (gains) losses to net income (81 ) 68 NM
Derivatives and hedging activities:
Net unrealized losses arising during the period (35 ) (242 ) (86)
Reclassification of net losses to net income 79 60 32
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period (4 ) 6 NM
Amortization of net actuarial loss, settlements and other to net income 35 32 9
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period   42     (2 ) NM
Other comprehensive income (loss), before tax 2,867 (3,521 ) NM
Income tax benefit (expense) related to other comprehensive income   (694 )   862   NM
Other comprehensive income (loss), net of tax 2,173 (2,659 ) NM
Less: Other comprehensive income from noncontrolling interests        
Wells Fargo other comprehensive income (loss), net of tax   2,173     (2,659 ) NM
Wells Fargo comprehensive income 8,033 2,477 224
Comprehensive income from noncontrolling interests   107     191   (44)
Total comprehensive income   $ 8,140     2,668     205

NM – Not meaningful

 
 

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

  Quarter ended
Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
(in millions)   2019   2018   2018   2018   2018
Balance, beginning of period $ 197,066 199,679 206,069 205,910 208,079
Cumulative effect from change in accounting policies (1) (11 ) (24 )
Wells Fargo net income 5,860 6,064 6,007 5,186 5,136
Wells Fargo other comprehensive income (loss), net of tax 2,173 537 (1,012 ) (540 ) (2,659 )
Noncontrolling interests 1 (38 ) 57 (77 ) (178 )
Common stock issued 1,139 239 156 73 1,208
Common stock repurchased (2) (4,820 ) (7,299 ) (7,382 ) (2,923 ) (3,029 )
Preferred stock redeemed (3) (2,150 )
Preferred stock released by ESOP 268 260 490 231
Common stock warrants repurchased/exercised (131 ) (36 ) (1 ) (157 )
Common stock dividends (2,054 ) (2,016 ) (2,062 ) (1,900 ) (1,911 )
Preferred stock dividends (353 ) (353 ) (399 ) (394 ) (410 )
Stock incentive compensation expense 544 144 202 258 437
Net change in deferred compensation and related plans   (812 )   (28 )   (31 )   (13 )   (813 )
Balance, end of period   $ 198,733     197,066     199,679     206,069     205,910  

(1) Effective January 1, 2019, we adopted ASU 2016-02 – Leases (Topic 842) and subsequent related Updates and ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. Effective January 1, 2018, we adopted ASU 2016-04 – Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, and ASU 2014-09 – Revenue from Contracts With Customers (Topic 606) and subsequent related Updates.

(2) For the quarter ended June 30, 2018, includes $1.0 billion related to a private forward repurchase transaction that settled in third quarter 2018 for 18.8 million shares of common stock.

(3) Represents the impact of the redemption of preferred stock, Series J, in third quarter 2018.

 
 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
  Quarter ended March 31,
2019   2018
    Interest     Interest
Average Yields/ income/ Average Yields/ income/
(in millions)   balance   rates   expense   balance   rates   expense
Earning assets
Interest-earning deposits with banks $ 140,784 2.33 % $ 810 172,291 1.49 % $ 632
Federal funds sold and securities purchased under resale agreements 83,539 2.40 495 78,135 1.40 271
Debt securities (3):
Trading debt securities 89,378 3.58 798 78,715 3.24 637
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 14,070 2.14 74 6,426 1.66 26
Securities of U.S. states and political subdivisions 48,342 4.02 486 49,956 3.37 421
Mortgage-backed securities:
Federal agencies 151,494 3.10 1,173 158,472 2.72 1,076
Residential and commercial   5,984   4.31 64   8,871   4.12 91
Total mortgage-backed securities 157,478 3.14 1,237 167,343 2.79 1,167
Other debt securities   46,788   4.46 517   48,094   3.73 444
Total available-for-sale debt securities   266,678   3.48 2,314   271,819   3.04 2,058
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44,754 2.20 243 44,723 2.20 243
Securities of U.S. states and political subdivisions 6,158 4.03 62 6,259 4.34 68
Federal agency and other mortgage-backed securities 96,004 2.74 656 90,789 2.38 541
Other debt securities   61   3.96 1   695   3.23 5
Total held-to-maturity debt securities   146,977   2.63 962   142,466   2.42 857
Total debt securities 503,033 3.25 4,074 493,000 2.89 3,552
Mortgage loans held for sale (4) 13,898 4.37 152 18,406 3.89 179
Loans held for sale (4) 1,862 5.25 24 2,011 4.92 24
Commercial loans:
Commercial and industrial - U.S. 286,579 4.48 3,169 272,040 3.85 2,584
Commercial and industrial - Non U.S. 62,957 3.89 604 60,216 3.23 479
Real estate mortgage 121,417 4.58 1,373 126,200 4.05 1,262
Real estate construction 22,435 5.43 301 24,449 4.54 274
Lease financing   19,391   4.61 224   19,265   5.30 255
Total commercial loans   512,779   4.48 5,671   502,170   3.91 4,854
Consumer loans:
Real estate 1-4 family first mortgage 285,214 3.96 2,821 284,207 4.02 2,852
Real estate 1-4 family junior lien mortgage 33,791 5.75 481 38,844 5.13 493
Credit card 38,182 12.88 1,212 36,468 12.75 1,147
Automobile 44,833 5.19 574 51,469 5.16 655
Other revolving credit and installment   35,349   7.14 623   37,866   6.46 604
Total consumer loans   437,369   5.26 5,711   448,854   5.16 5,751
Total loans (4) 950,148 4.84 11,382 951,024 4.50 10,605
Equity securities 33,080 2.56 211 39,754 2.35 233
Other   4,416   1.63 18   6,015   1.21 19
Total earning assets   $ 1,730,760   4.00 % $ 17,166   1,760,636   3.55 % $ 15,515
Funding sources
Deposits:
Interest-bearing checking $ 56,253 1.42 % $ 197 67,774 0.77 % $ 129
Market rate and other savings 688,568 0.50 847 679,068 0.22 368
Savings certificates 25,231 1.26 78 20,018 0.34 17
Other time deposits 97,830 2.67 645 76,589 1.84 347
Deposits in foreign offices   55,443   1.89 259   94,810   0.98 229
Total interest-bearing deposits 923,325 0.89 2,026 938,259 0.47 1,090
Short-term borrowings 108,789 2.22 597 101,779 1.24 312
Long-term debt 233,172 3.32 1,927 226,062 2.80 1,576
Other liabilities   25,292   2.28 143   27,927   1.92 132
Total interest-bearing liabilities 1,290,578 1.47 4,693 1,294,027 0.97 3,110
Portion of noninterest-bearing funding sources   440,182     466,609  
Total funding sources   $ 1,730,760   1.09   4,693   1,760,636   0.71   3,110
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.91 %   $ 12,473   2.84 %   $ 12,405
Noninterest-earning assets
Cash and due from banks $ 19,614 18,853
Goodwill 26,420 26,516
Other   106,435   109,891  
Total noninterest-earning assets   $ 152,469   155,260  
Noninterest-bearing funding sources
Deposits $ 338,737 358,919
Other liabilities 55,565 56,770
Total equity 198,349 206,180
Noninterest-bearing funding sources used to fund earning assets   (440,182 ) (466,609 )
Net noninterest-bearing funding sources   $ 152,469   155,260  
Total assets   $ 1,883,229   1,915,896  
 

(1) Our average prime rate was 5.50% and 4.52% for the quarters ended March 31, 2019 and 2018, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 2.69% and 1.93% for the same quarters, respectively.

(2) Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(3) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.

(4) Nonaccrual loans and related income are included in their respective loan categories.

(5) Includes taxable-equivalent adjustments of $162 million and $167 million for the quarters ended March 31, 2019 and 2018, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% for the periods presented.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
  Quarter ended
    Mar 31, 2019   Dec 31, 2018   Sep 30, 2018   Jun 30, 2018   Mar 31, 2018
Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/
($ in billions)   balance   rates   balance   rates   balance   rates   balance   rates balance rates
Earning assets
Interest-earning deposits with banks $ 140.8 2.33 % $ 150.1 2.18 % $ 148.6 1.93 % $ 154.8 1.75 % $ 172.3 1.49 %
Federal funds sold and securities purchased under resale agreements 83.5 2.40 76.1 2.22 79.9 1.93 80.0 1.73 78.1 1.40
Debt securities (3):
Trading debt securities 89.4 3.58 90.1 3.52 84.5 3.45 80.7 3.45 78.7 3.24
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 14.1 2.14 7.2 1.80 6.4 1.65 6.4 1.66 6.4 1.66
Securities of U.S. states and political subdivisions 48.3 4.02 47.6 4.05 46.6 3.76 47.4 3.91 50.0 3.37
Mortgage-backed securities:
Federal agencies 151.5 3.10 155.3 2.91 155.5 2.77 154.9 2.75 158.4 2.72
Residential and commercial   6.0   4.31 6.7   4.87 7.3   4.68 8.2   4.86 8.9   4.12
Total mortgage-backed securities 157.5 3.14 162.0 2.99 162.8 2.86 163.1 2.86 167.3 2.79
Other debt securities   46.8   4.46 46.1   4.46 46.4   4.39 47.1   4.33 48.1   3.73
Total available-for-sale debt securities   266.7   3.48 262.9   3.41 262.2   3.26 264.0   3.28 271.8   3.04
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44.7 2.20 44.7 2.19 44.7 2.18 44.7 2.19 44.7 2.20
Securities of U.S. states and political subdivisions 6.2 4.03 6.2 4.34 6.3 4.33 6.3 4.34 6.3 4.34
Federal agency and other mortgage-backed securities 95.9 2.74 95.8 2.46 95.3 2.27 94.9 2.33 90.8 2.38
Other debt securities   0.1   3.96 0.1   3.65 0.1   5.61 0.6   4.66 0.7   3.23
Total held-to-maturity debt securities   146.9   2.63 146.8   2.46 146.4   2.33 146.5   2.38 142.5   2.42
Total debt securities 503.0 3.25 499.8 3.15 493.1 3.02 491.2 3.04 493.0 2.89
Mortgage loans held for sale 13.9 4.37 17.0 4.46 19.3 4.33 18.8 4.22 18.4 3.89
Loans held for sale 1.9 5.25 2.0 6.69 2.6 5.28 3.5 5.48 2.0 4.92
Commercial loans:
Commercial and industrial - U.S. 286.6 4.48 281.4 4.40 273.8 4.22 275.3 4.16 272.0 3.85
Commercial and industrial - Non U.S. 63.0 3.89 62.0 3.73 60.9 3.63 59.7 3.51 60.2 3.23
Real estate mortgage 121.4 4.58 120.4 4.51 121.3 4.35 124.0 4.27 126.2 4.05
Real estate construction 22.4 5.43 23.1 5.32 23.3 5.05 23.6 4.88 24.4 4.54
Lease financing   19.4   4.61 19.5   4.48 19.5   4.69 19.3   4.48 19.4   5.30
Total commercial loans   512.8   4.48 506.4   4.39 498.8   4.24 501.9   4.15 502.2   3.91
Consumer loans:
Real estate 1-4 family first mortgage 285.2 3.96 285.3 4.02 284.1 4.07 283.1 4.06 284.2 4.02
Real estate 1-4 family junior lien mortgage 33.8 5.75 34.8 5.60 35.9 5.50 37.2 5.32 38.8 5.13
Credit card 38.2 12.88 37.9 12.69 36.9 12.77 35.9 12.66 36.4 12.75
Automobile 44.8 5.19 45.5 5.16 47.0 5.20 48.6 5.18 51.5 5.16
Other revolving credit and installment   35.3   7.14 36.4   6.95 36.8   6.78 37.4   6.62 37.9   6.46
Total consumer loans   437.3   5.26 439.9   5.25 440.7   5.26 442.2   5.20 448.8   5.16
Total loans 950.1 4.84 946.3 4.79 939.5 4.72 944.1 4.64 951.0 4.50
Equity securities 33.1 2.56 37.4 2.79 37.9 2.98 37.3 2.38 39.8 2.35
Other   4.5   1.63 4.2   1.78 4.7   1.47 5.6   1.48 6.0   1.21
Total earning assets   $ 1,730.8   4.00 % $ 1,732.9   3.93 % $ 1,725.6   3.81 % $ 1,735.3   3.73 % $ 1,760.6   3.55 %
Funding sources
Deposits:
Interest-bearing checking $ 56.3 1.42 % $ 54.0 1.21 % $ 51.2 1.01 % $ 80.3 0.90 % $ 67.8 0.77 %
Market rate and other savings 688.6 0.50 689.6 0.43 693.9 0.35 676.7 0.26 679.1 0.22
Savings certificates 25.2 1.26 22.0 0.87 20.6 0.62 20.0 0.43 20.0 0.34
Other time deposits 97.8 2.67 92.6 2.46 87.8 2.35 82.1 2.26 76.6 1.84
Deposits in foreign offices   55.4   1.89 56.1   1.66 53.9   1.50 51.5   1.30 94.8   0.98
Total interest-bearing deposits 923.3 0.89 914.3 0.77 907.4 0.66 910.6 0.56 938.3 0.47
Short-term borrowings 108.8 2.22 106.0 2.04 105.5 1.74 103.8 1.54 101.8 1.24
Long-term debt 233.2 3.32 226.6 3.17 220.7 3.02 223.8 2.97 226.0 2.80
Other liabilities   25.3   2.28 27.4   2.41 27.0   2.40 28.2   2.12 27.9   1.92
Total interest-bearing liabilities 1,290.6 1.47 1,274.3 1.34 1,260.6 1.20 1,266.4 1.10 1,294.0 0.97
Portion of noninterest-bearing funding sources   440.2   458.6   465.0   468.9   466.6  
Total funding sources   $ 1,730.8   1.09   $ 1,732.9   0.99   $ 1,725.6   0.87   $ 1,735.3   0.80   $ 1,760.6   0.71  
Net interest margin on a taxable-equivalent basis 2.91 % 2.94 % 2.94 % 2.93 % 2.84 %
Noninterest-earning assets
Cash and due from banks $ 19.6 19.3 18.4 18.6 18.9
Goodwill 26.4 26.4 26.4 26.4 26.5
Other   106.4   100.4   105.9   104.6   109.9  
Total noninterest-earnings assets   $ 152.4   146.1   150.7   149.6   155.3  
Noninterest-bearing funding sources
Deposits $ 338.8 354.6 359.0 360.7 358.9
Other liabilities 55.5 51.7 53.9 51.7 56.8
Total equity 198.3 198.4 202.8 206.1 206.2
Noninterest-bearing funding sources used to fund earning assets   (440.2 ) (458.6 ) (465.0 ) (468.9 ) (466.6 )
Net noninterest-bearing funding sources   $ 152.4   146.1   150.7   149.6   155.3  
Total assets   $ 1,883.2   1,879.0   1,876.3   1,884.9   1,915.9  
 

(1) Our average prime rate was 5.50% for the quarter ended March 31, 2019, 5.28% for the quarter ended December 31, 2018, 5.01% for the quarter ended September 30, 2018, 4.80% for the quarter ended June 30, 2018 and 4.52% for the quarter ended March 31, 2018. The average three-month London Interbank Offered Rate (LIBOR) was 2.69%, 2.62%, 2.34%, 2.34% and 1.93% for the same quarters, respectively.

(2) Yields/rates include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(3) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.

 

Wells Fargo & Company and Subsidiaries

NONINTEREST INCOME
  Quarter ended March 31,   %
(in millions)   2019   2018   Change
Service charges on deposit accounts $ 1,094   1,173 (7 )%
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,193 2,403 (9 )
Trust and investment management 786 850 (8 )
Investment banking   394     430   (8 )
Total trust and investment fees   3,373     3,683   (8 )
Card fees 944 908 4
Other fees:
Lending related charges and fees (1) 347 380 (9 )
Cash network fees 109 126 (13 )
Commercial real estate brokerage commissions 81 85 (5 )
Wire transfer and other remittance fees 113 116 (3 )
All other fees   120     93   29
Total other fees   770     800   (4 )
Mortgage banking:
Servicing income, net 364 468 (22 )
Net gains on mortgage loan origination/sales activities   344     466   (26 )
Total mortgage banking   708     934   (24 )
Insurance 96 114 (16 )
Net gains from trading activities 357 243 47
Net gains on debt securities 125 1 NM
Net gains from equity securities 814 783 4
Lease income 443 455 (3 )
Life insurance investment income 159 164 (3 )
All other   415     438   (5 )
Total   $ 9,298     9,696     (4 )

NM - Not meaningful

(1) Represents combined amount of previously reported "Charges and fees on loans" and "Letters of credit fees".

 

NONINTEREST EXPENSE

  Quarter ended March 31,   %
(in millions)   2019   2018   Change
Salaries $ 4,425   4,363 1 %
Commission and incentive compensation 2,845 2,768 3
Employee benefits 1,938 1,598 21
Equipment 661 617 7
Net occupancy (1) 717 713 1
Core deposit and other intangibles 28 265 (89 )
FDIC and other deposit assessments 159 324 (51 )
Outside professional services 678 821 (17 )
Operating losses 238 1,468 (84 )
Contract services 563 447 26
Operating leases (2) 286 320 (11 )
Advertising and promotion 237 153 55
Outside data processing 167 162 3
Travel and entertainment 147 152 (3 )
Postage, stationery and supplies 122 142 (14 )
Telecommunications 91 92 (1 )
Foreclosed assets 37 38 (3 )
Insurance 25 26 (4 )
All other   552     573   (4 )
Total   $ 13,916     15,042     (7 )

(1) Represents expenses for both leased and owned properties.

(2) Represents expenses for assets we lease to customers.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME
  Quarter ended
Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
(in millions)   2019   2018   2018   2018   2018
Service charges on deposit accounts $ 1,094 1,176 1,204 1,163 1,173
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,193 2,345 2,334 2,354 2,403
Trust and investment management 786 796 835 835 850
Investment banking   394     379     462     486     430
Total trust and investment fees   3,373     3,520     3,631     3,675     3,683
Card fees 944 981 1,017 1,001 908
Other fees:
Lending related charges and fees (1) 347 400 370 376 380
Cash network fees 109 114 121 120 126
Commercial real estate brokerage commissions 81 145 129 109 85
Wire transfer and other remittance fees 113 120 120 121 116
All other fees   120     109     110     120     93
Total other fees   770     888     850     846     800
Mortgage banking:
Servicing income, net 364 109 390 406 468
Net gains on mortgage loan origination/sales activities   344     358     456     364     466
Total mortgage banking   708     467     846     770     934
Insurance 96 109 104 102 114
Net gains from trading activities 357 10 158 191 243
Net gains on debt securities 125 9 57 41 1
Net gains from equity securities 814 21 416 295 783
Lease income 443 402 453 443 455
Life insurance investment income 159 158 167 162 164
All other   415     595     466     323     438
Total   $ 9,298     8,336     9,369     9,012     9,696

(1)  Represents combined amount of previously reported "Charges and fees on loans" and "Letters of credit fees".

 
 

FIVE QUARTER NONINTEREST EXPENSE

  Quarter ended
Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
(in millions)   2019   2018   2018   2018   2018
Salaries $ 4,425 4,545 4,461 4,465 4,363
Commission and incentive compensation 2,845 2,427 2,427 2,642 2,768
Employee benefits 1,938 706 1,377 1,245 1,598
Equipment 661 643 634 550 617
Net occupancy (1) 717 735 718 722 713
Core deposit and other intangibles 28 264 264 265 265
FDIC and other deposit assessments 159 153 336 297 324
Outside professional services 678 843 761 881 821
Operating losses 238 432 605 619 1,468
Contract services 563 616 593 536 447
Operating leases (2) 286 392 311 311 320
Advertising and promotion 237 254 223 227 153
Outside data processing 167 168 166 164 162
Travel and entertainment 147 168 141 157 152
Postage, stationery and supplies 122 132 120 121 142
Telecommunications 91 91 90 88 92
Foreclosed assets 37 47 59 44 38
Insurance 25 25 26 24 26
All other   552     698     451     624     573
Total   $ 13,916     13,339     13,763     13,982     15,042

(1)  Represents expenses for both leased and owned properties.

(2)  Represents expenses for assets we lease to customers.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER DEFERRED COMPENSATION PLAN INVESTMENT RESULTS

  Quarter ended
(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Net interest income $ 13   23   14   13   10
Net gains (losses) from equity securities   345     (452 )   118     37     (6 )
Total revenue (losses) from deferred compensation plan investments 358 (429 ) 132 50 4
Employee benefits expense   357     (428 )   129     53     4  
Income (loss) before income tax expense   $ 1     (1 )   3     (3 )    
 
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

(in millions, except shares)   Mar 31,
2019
 

Dec 31,
2018

 

%
Change

Assets      
Cash and due from banks $ 20,650 23,551 (12

)%

Interest-earning deposits with banks   128,318     149,736   (14 )
Total cash, cash equivalents, and restricted cash   148,968     173,287   (14 )
Federal funds sold and securities purchased under resale agreements 98,621 80,207 23
Debt securities:
Trading, at fair value 70,378 69,989 1
Available-for-sale, at fair value 268,099 269,912 (1 )
Held-to-maturity, at cost 144,990 144,788
Mortgage loans held for sale 15,016 15,126 (1 )
Loans held for sale 1,018 2,041 (50 )
Loans 948,249 953,110 (1 )
Allowance for loan losses   (9,900 )   (9,775 ) 1
Net loans   938,349     943,335   (1 )
Mortgage servicing rights:
Measured at fair value 13,336 14,649 (9 )
Amortized 1,427 1,443 (1 )
Premises and equipment, net 8,825 8,920 (1 )
Goodwill 26,420 26,418
Derivative assets 11,238 10,770 4
Equity securities 58,440 55,148 6
Other assets   82,667     79,850   4
Total assets   $ 1,887,792     1,895,883  
Liabilities
Noninterest-bearing deposits $ 341,399 349,534 (2 )
Interest-bearing deposits   922,614     936,636   (1 )
Total deposits 1,264,013 1,286,170 (2 )
Short-term borrowings 106,597 105,787 1
Derivative liabilities 7,393 8,499 (13 )
Accrued expenses and other liabilities 74,717 69,317 8
Long-term debt   236,339     229,044     3
Total liabilities   1,689,059     1,698,817     (1 )
Equity
Wells Fargo stockholders’ equity:
Preferred stock 23,214 23,214
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 60,409 60,685
Retained earnings 160,776 158,163 2
Cumulative other comprehensive income (loss) (3,682 ) (6,336 ) (42 )
Treasury stock – 969,863,644 shares and 900,557,866 shares (50,519 ) (47,194 ) 7
Unearned ESOP shares   (1,502 )   (1,502 )
Total Wells Fargo stockholders’ equity 197,832 196,166 1
Noncontrolling interests   901     900  
Total equity   198,733     197,066   1
Total liabilities and equity   $ 1,887,792     1,895,883      
 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED BALANCE SHEET

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Assets          
Cash and due from banks $ 20,650 23,551 18,791 20,450 18,145
Interest-earning deposits with banks   128,318     149,736     140,732     142,999     184,250  
Total cash, cash equivalents, and restricted cash   148,968     173,287     159,523     163,449     202,395  
Federal funds sold and securities purchased under resale agreements 98,621 80,207 83,471 80,184 73,550
Debt securities:
Trading, at fair value 70,378 69,989 65,188 65,602 59,866
Available-for-sale, at fair value 268,099 269,912 262,964 265,687 271,656
Held-to-maturity, at cost 144,990 144,788 144,131 144,206 141,446
Mortgage loans held for sale 15,016 15,126 19,225 21,509 17,944
Loans held for sale 1,018 2,041 1,765 3,408 3,581
Loans 948,249 953,110 942,300 944,265 947,308
Allowance for loan losses   (9,900 )   (9,775 )   (10,021 )   (10,193 )   (10,373 )
Net loans   938,349     943,335     932,279     934,072     936,935  
Mortgage servicing rights:
Measured at fair value 13,336 14,649 15,980 15,411 15,041
Amortized 1,427 1,443 1,414 1,407 1,411
Premises and equipment, net 8,825 8,920 8,802 8,882 8,828
Goodwill 26,420 26,418 26,425 26,429 26,445
Derivative assets 11,238 10,770 11,811 11,099 11,467
Equity securities 58,440 55,148 61,755 57,505 58,935
Other assets   82,667     79,850     78,248     80,850     85,888  
Total assets   $ 1,887,792     1,895,883     1,872,981     1,879,700     1,915,388  
Liabilities
Noninterest-bearing deposits $ 341,399 349,534 352,869 365,021 370,085
Interest-bearing deposits   922,614     936,636     913,725     903,843     933,604  
Total deposits 1,264,013 1,286,170 1,266,594 1,268,864 1,303,689
Short-term borrowings 106,597 105,787 105,451 104,496 97,207
Derivative liabilities 7,393 8,499 8,586 8,507 7,883
Accrued expenses and other liabilities 74,717 69,317 71,348 72,480 73,397
Long-term debt   236,339     229,044     221,323     219,284     227,302  
Total liabilities   1,689,059     1,698,817     1,673,302     1,673,631     1,709,478  
Equity
Wells Fargo stockholders’ equity:
Preferred stock 23,214 23,214 23,482 25,737 26,227
Common stock 9,136 9,136 9,136 9,136 9,136
Additional paid-in capital 60,409 60,685 60,738 59,644 60,399
Retained earnings 160,776 158,163 154,576 150,803 147,928
Cumulative other comprehensive income (loss) (3,682 ) (6,336 ) (6,873 ) (5,461 ) (4,921 )
Treasury stock (50,519 ) (47,194 ) (40,538 ) (32,620 ) (31,246 )
Unearned ESOP shares   (1,502 )   (1,502 )   (1,780 )   (2,051 )   (2,571 )
Total Wells Fargo stockholders’ equity 197,832 196,166 198,741 205,188 204,952
Noncontrolling interests   901     900     938     881     958  
Total equity   198,733     197,066     199,679     206,069     205,910  
Total liabilities and equity   $ 1,887,792     1,895,883     1,872,981     1,879,700     1,915,388  
 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER TRADING ASSETS AND LIABILITIES

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Trading assets          
Debt securities $ 70,378 69,989 65,188 65,602 59,866
Equity securities 20,933 19,449 26,138 22,978 25,327
Loans held for sale 998 1,469 1,266 1,350 1,695
Gross trading derivative assets 30,002 29,216 30,302 30,758 30,644
Netting (1)   (20,809 )   (19,807 )   (19,188 )   (20,687 )   (20,112 )
Total trading derivative assets   9,193     9,409     11,114     10,071     10,532  
Total trading assets   101,502     100,316     103,706     100,001     97,420  
Trading liabilities
Short sales 21,586 19,720 23,992 21,765 23,303
Gross trading derivative liabilities 28,994 28,717 29,268 29,847 29,717
Netting (1)   (22,810 )   (21,178 )   (21,842 )   (22,311 )   (22,569 )
Total trading derivative liabilities   6,184     7,539     7,426     7,536     7,148  
Total trading liabilities   $ 27,770     27,259     31,418     29,301     30,451  

(1) Represents balance sheet netting for trading derivative assets and liability balances, and trading portfolio level counterparty valuation adjustments.

 
 

FIVE QUARTER DEBT SECURITIES

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Trading debt securities   $ 70,378     69,989     65,188     65,602     59,866
Available-for-sale debt securities:          
Securities of U.S. Treasury and federal agencies 15,106 13,348 6,187 6,271 6,279
Securities of U.S. states and political subdivisions 49,700 49,264 48,216 47,559 49,643
Mortgage-backed securities:
Federal agencies 150,663 153,203 153,511 154,556 156,814
Residential and commercial   5,828     7,000     6,939     8,286     9,264
Total mortgage-backed securities 156,491 160,203 160,450 162,842 166,078
Other debt securities   46,802     47,097     48,111     49,015     49,656
Total available-for-sale debt securities   268,099     269,912     262,964     265,687     271,656
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44,758 44,751 44,743 44,735 44,727
Securities of U.S. states and political subdivisions 6,163 6,286 6,293 6,300 6,307
Federal agency and other mortgage-backed securities (1) 94,009 93,685 93,020 93,016 89,748
Other debt securities   60     66     75     155     664
Total held-to-maturity debt securities   144,990     144,788     144,131     144,206     141,446
Total debt securities   $ 483,467     484,689     472,283     475,495     472,968

(1) Predominantly consists of federal agency mortgage-backed securities.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER EQUITY SECURITIES

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Held for trading at fair value:                    
Marketable equity securities   $ 20,933     19,449     26,138     22,978     25,327
Not held for trading:          
Fair value:
Marketable equity securities (1) 5,135 4,513 5,705 5,273 4,931
Nonmarketable equity securities (2)   6,518     5,594     6,479     5,876     5,303
Total equity securities at fair value   11,653     10,107     12,184     11,149     10,234
Equity method:
Low-income housing tax credit investments 10,925 10,999 10,453 10,361 10,318
Private equity 3,890 3,832 3,838 3,732 3,840
Tax-advantaged renewable energy 3,041 3,073 1,967 1,950 1,822
New market tax credit and other   305     311     259     262     268
Total equity method   18,161     18,215     16,517     16,305     16,248
Other:
Federal bank stock and other at cost (3) 5,732 5,643 5,467 5,673 5,780
Private equity (4)   1,961     1,734     1,449     1,400     1,346
Total equity securities not held for trading   37,507     35,699     35,617     34,527     33,608
Total equity securities   $ 58,440     55,148     61,755     57,505     58,935

(1) Includes $3.5 billion, $3.2 billion, $3.6 billion, $3.5 billion and $3.5 billion at March 31, 2019, and December 31, September 30, June 30, and March 31, 2018, respectively, related to securities held as economic hedges of our deferred compensation plan obligations.

(2) Includes $6.4 billion, $5.5 billion, $6.3 billion, $5.5 billion and $5.0 billion at March 31, 2019, and December 31, September 30, June 30, and March 31, 2018, respectively, related to investments for which we elected the fair value option.

(3) Includes $5.7 billion, $5.6 billion, $5.4 billion, $5.6 billion and $5.7 billion at March 31, 2019, and December 31, September 30, June 30, and March 31, 2018, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.

(4) Represents nonmarketable equity securities for which we have elected to account for the security under the measurement alternative.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER LOANS

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Commercial:          
Commercial and industrial $ 349,134 350,199 338,048 336,590 334,678
Real estate mortgage 122,113 121,014 120,403 123,964 125,543
Real estate construction 21,857 22,496 23,690 22,937 23,882
Lease financing   19,122     19,696     19,745     19,614     19,293
Total commercial   512,226     513,405     501,886     503,105     503,396
Consumer:
Real estate 1-4 family first mortgage 284,545 285,065 284,273 283,001 282,658
Real estate 1-4 family junior lien mortgage 33,099 34,398 35,330 36,542 37,920
Credit card 38,279 39,025 37,812 36,684 36,103
Automobile 44,913 45,069 46,075 47,632 49,554
Other revolving credit and installment   35,187     36,148     36,924     37,301     37,677
Total consumer   436,023     439,705     440,414     441,160     443,912
Total loans (1)   $ 948,249     953,110     942,300     944,265     947,308

(1) Includes $3.2 billion, $5.0 billion, $6.9 billion, $9.0 billion, and $10.7 billion of purchased credit-impaired (PCI) loans at March 31, 2019, and December 31, September 30, June 30, and March 31, 2018, respectively.

 

Our foreign loans are reported by respective class of financing receivable in the table above. Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower's primary address is outside of the United States. The following table presents total commercial foreign loans outstanding by class of financing receivable.

 
(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Commercial foreign loans:          
Commercial and industrial $ 63,158 62,564 61,696 61,732 59,696
Real estate mortgage 7,049 6,731 6,891 7,617 8,082
Real estate construction 1,138 1,011 726 542 668
Lease financing   1,167     1,159     1,187     1,097     1,077
Total commercial foreign loans   $ 72,512     71,465     70,500     70,988     69,523
 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Nonaccrual loans:          
Commercial:
Commercial and industrial $ 1,986 1,486 1,555 1,559 1,516
Real estate mortgage 699 580 603 765 755
Real estate construction 36 32 44 51 45
Lease financing   76     90     96     80     93
Total commercial   2,797     2,188     2,298     2,455     2,409
Consumer:
Real estate 1-4 family first mortgage 3,026 3,183 3,267 3,469 3,673
Real estate 1-4 family junior lien mortgage 916 945 983 1,029 1,087
Automobile 116 130 118 119 117
Other revolving credit and installment   50     50     48     54     53
Total consumer   4,108     4,308     4,416     4,671     4,930
Total nonaccrual loans (1)(2)(3)   $ 6,905     6,496     6,714     7,126     7,339
As a percentage of total loans 0.73 % 0.68 0.71 0.75 0.77
Foreclosed assets:
Government insured/guaranteed $ 75 88 87 90 103
Non-government insured/guaranteed   361     363     435     409     468
Total foreclosed assets   436     451     522     499     571
Total nonperforming assets   $ 7,341     6,947     7,236     7,625     7,910
As a percentage of total loans   0.77 %   0.73     0.77     0.81     0.83

(1) Financial information for periods prior to December 31, 2018, has been revised to exclude mortgage loans held for sale (MLHFS), loans held for sale (LHFS) and loans held at fair value of $339 million, $360 million, and $380 million at September 30, June 30, and March 31, 2018, respectively.

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

(3) 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 (1)

(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Total (excluding PCI)(2):   $ 7,870   8,704   8,838   9,087   10,351
Less: FHA insured/VA guaranteed (3)   6,996     7,725     7,906     8,246     9,385
Total, not government insured/guaranteed   $ 874     979     932     841     966
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial $ 42 43 42 23 40
Real estate mortgage 20 51 56 26 23
Real estate construction   5                 1
Total commercial   67     94     98     49     64
Consumer:
Real estate 1-4 family first mortgage 117 124 128 132 163
Real estate 1-4 family junior lien mortgage 28 32 32 33 48
Credit card 502 513 460 429 473
Automobile 68 114 108 105 113
Other revolving credit and installment   92     102     106     93     105
Total consumer   807     885     834     792     902
Total, not government insured/guaranteed   $ 874     979     932     841     966

(1) Financial information for periods prior to December 31, 2018 has been revised to exclude MLHFS, LHFS and loans held at fair value, which reduced “Total, not government insured/guaranteed” by $1 million at September 30, June 30, and March 31, 2018, respectively.

(2) PCI loans totaled $243 million, $370 million, $567 million, $811 million and $1.0 billion, at March 31, 2019, and December 31, September 30, June 30 and March 31, 2018, respectively.

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

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES

  Quarter ended
(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Balance, beginning of quarter $ 10,707   10,956   11,110   11,313   11,960
Provision for credit losses 845 521 580 452 191
Interest income on certain impaired loans (1) (39 ) (38 ) (42 ) (43 ) (43 )
Loan charge-offs:
Commercial:
Commercial and industrial (176 ) (220 ) (209 ) (134 ) (164 )
Real estate mortgage (12 ) (12 ) (9 ) (19 ) (2 )
Real estate construction (1 )
Lease financing   (11 )   (18 )   (15 )   (20 )   (17 )
Total commercial   (200 )   (250 )   (233 )   (173 )   (183 )
Consumer:
Real estate 1-4 family first mortgage (43 ) (38 ) (45 ) (55 ) (41 )
Real estate 1-4 family junior lien mortgage (34 ) (38 ) (47 ) (47 ) (47 )
Credit card (437 ) (414 ) (376 ) (404 ) (405 )
Automobile (187 ) (217 ) (214 ) (216 ) (300 )
Other revolving credit and installment   (162 )   (180 )   (161 )   (164 )   (180 )
Total consumer   (863 )   (887 )   (843 )   (886 )   (973 )
Total loan charge-offs   (1,063 )   (1,137 )   (1,076 )   (1,059 )   (1,156 )
Loan recoveries:
Commercial:
Commercial and industrial 43 88 61 76 79
Real estate mortgage 6 24 10 19 17
Real estate construction 3 1 2 6 4
Lease financing   3     5     8     5     5  
Total commercial   55     118     81     106     105  
Consumer:
Real estate 1-4 family first mortgage 55 60 70 78 59
Real estate 1-4 family junior lien mortgage 43 48 56 60 55
Credit card 85 76 77 81 73
Automobile 96 84 84 103 92
Other revolving credit and installment   34     30     28     29     31  
Total consumer   313     298     315     351     310  
Total loan recoveries   368     416     396     457     415  
Net loan charge-offs   (695 )   (721 )   (680 )   (602 )   (741 )
Other   3     (11 )   (12 )   (10 )   (54 )
Balance, end of quarter   $ 10,821     10,707     10,956     11,110     11,313  
Components:
Allowance for loan losses $ 9,900 9,775 10,021 10,193 10,373
Allowance for unfunded credit commitments   921     932     935     917     940  
Allowance for credit losses   $ 10,821     10,707     10,956     11,110     11,313  
Net loan charge-offs (annualized) as a percentage of average total loans 0.30 % 0.30 0.29 0.26 0.32
Allowance for loan losses as a percentage of:
Total loans 1.04 1.03 1.06 1.08 1.10
Nonaccrual loans 143 150 149 143 141
Nonaccrual loans and other nonperforming assets 135 141 138 134 131
Allowance for credit losses as a percentage of:
Total loans 1.14 1.12 1.16 1.18 1.19
Nonaccrual loans 157 165 163 156 154
Nonaccrual loans and other nonperforming assets   147     154     151     146     143  

(1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

 
 

Wells Fargo & Company and Subsidiaries

TANGIBLE COMMON EQUITY (1)

(in millions, except ratios)         Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Tangible book value per common share (1):              
Total equity $ 198,733 197,066 199,679 206,069 205,910
Adjustments:
Preferred stock (23,214 ) (23,214 ) (23,482 ) (25,737 ) (26,227 )
Additional paid-in capital on ESOP

preferred stock

(95 ) (95 ) (105 ) (116 ) (146 )
Unearned ESOP shares 1,502 1,502 1,780 2,051 2,571
Noncontrolling interests         (901 )   (900 )   (938 )   (881 )   (958 )
Total common stockholders' equity (A) 176,025 174,359 176,934 181,386 181,150
Adjustments:
Goodwill (26,420 ) (26,418 ) (26,425 ) (26,429 ) (26,445 )
Certain identifiable intangible assets

(other than MSRs)

(522 ) (559 ) (826 ) (1,091 ) (1,357 )
Other assets (2) (2,131 ) (2,187 ) (2,121 ) (2,160 ) (2,388 )
Applicable deferred taxes (3)         771     785     829     874     918  
Tangible common equity   (B)     $ 147,723     145,980     148,391     152,580     151,878  
Common shares outstanding (C) 4,511.9 4,581.3 4,711.6 4,849.1 4,873.9
Book value per common share (A)/(C) $ 39.01 38.06 37.55 37.41 37.17
Tangible book value per common share   (B)/(C)     32.74     31.86     31.49     31.47     31.16  
 
 
  Quarter ended
(in millions, except ratios)     Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Return on average tangible common equity (1):        
Net income applicable to common stock (A) $ 5,507 5,711 5,453 4,792 4,733
Average total equity 198,349 198,442 202,826 206,067 206,180
Adjustments:
Preferred stock (23,214 ) (23,463 ) (24,219 ) (26,021 ) (26,157 )
Additional paid-in capital on ESOP preferred stock (95 ) (105 ) (115 ) (129 ) (153 )
Unearned ESOP shares 1,502 1,761 2,026 2,348 2,508
Noncontrolling interests     (899 )   (910 )   (892 )   (919 )   (997 )
Average common stockholders’ equity (B) 175,643 175,725 179,626 181,346 181,381
Adjustments:
Goodwill (26,420 ) (26,423 ) (26,429 ) (26,444 ) (26,516 )
Certain identifiable intangible assets (other than MSRs) (543 ) (693 ) (958 ) (1,223 ) (1,489 )
Other assets (2) (2,159 ) (2,204 ) (2,083 ) (2,271 ) (2,233 )
Applicable deferred taxes (3)     784     800     845     889     933  
Average tangible common equity (C)   $ 147,305     147,205     151,001     152,297     152,076  
Return on average common stockholders' equity (ROE) (annualized) (A)/(B) 12.71 12.89 12.04 10.60 10.58
Return on average tangible common equity (ROTCE) (annualized) (A)/(C)   15.16     15.39     14.33     12.62     12.62  

(1) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity securities but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity.

(2) Represents goodwill and other intangibles on nonmarketable equity securities, which are included in other assets.

(3) Applicable deferred taxes relate to goodwill and other intangible assets. They were 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.

 
 

Wells Fargo & Company and Subsidiaries

COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1)

    Estimated        
(in billions, except ratio)       Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Total equity $ 198.7 197.1 199.7 206.1 205.9
Adjustments:
Preferred stock (23.2 ) (23.2 ) (23.5 ) (25.7 ) (26.2 )
Additional paid-in capital on ESOP

preferred stock

(0.1 ) (0.1 ) (0.1 ) (0.1 ) (0.1 )
Unearned ESOP shares 1.5 1.5 1.8 2.0 2.6
Noncontrolling interests       (0.9 )   (0.9 )   (0.9 )   (0.9 )   (1.0 )
Total common stockholders' equity 176.0 174.4 177.0 181.4 181.2
Adjustments:
Goodwill (26.4 ) (26.4 ) (26.4 ) (26.4 ) (26.4 )
Certain identifiable intangible assets (other than MSRs) (0.5 ) (0.6 ) (0.8 ) (1.1 ) (1.4 )
Other assets (2) (2.1 ) (2.2 ) (2.1 ) (2.2 ) (2.4 )
Applicable deferred taxes (3) 0.8 0.8 0.8 0.9 0.9
Investment in certain subsidiaries and other       0.2     0.4     0.4     0.4     0.4  
Common Equity Tier 1 (Fully Phased-In) under Basel III   (A)   148.0     146.4     148.9     153.0     152.3  
Total risk-weighted assets (RWAs) anticipated under Basel III (4)(5)   (B)   $ 1,238.9     1,247.2     1,250.2     1,276.3     1,278.1  
Common Equity Tier 1 to total RWAs anticipated under Basel III (Fully Phased-In) (5)   (A)/(B)   11.9 %   11.7     11.9     12.0     11.9  

(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. Fully phased-in capital amounts, ratios and RWAs are calculated assuming the full phase-in of the Basel III capital rules. Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, became fully phased-in.

(2) Represents goodwill and other intangibles on nonmarketable equity securities, which are included in other assets.

(3) Applicable deferred taxes relate to goodwill and other intangible assets. They were 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.

(4) The final Basel III capital rules provide for two capital frameworks: the Standardized Approach, which replaced Basel I, and the Advanced Approach applicable to certain institutions. Under the final rules, we are subject to the lower of our CET1 ratio calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. Because the final determination of our CET1 ratio and which approach will produce the lower CET1 ratio as of March 31, 2019, 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 December 31, September 30, June 30 and March 31, 2018, was calculated under the Basel III Standardized Approach RWAs.

(5) The Company’s March 31, 2019, RWAs and capital ratio are preliminary estimates.

 
 

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

  2019   2018   2019   2018   2019   2018   2019   2018   2019   2018
Quarter ended Mar 31,          
Net interest income (3) $ 7,248 7,195 4,534 4,532 1,101 1,112 (572 ) (601 ) 12,311 12,238
Provision (reversal of provision) for credit losses 710 218 134 (20 ) 4 (6 ) (3 ) (1 ) 845 191
Noninterest income 4,502 4,635 2,577 2,747 2,978 3,130 (759 ) (816 ) 9,298 9,696
Noninterest expense   7,689     8,702     3,838     3,978     3,303     3,290     (914 )   (928 )   13,916     15,042
Income (loss) before income tax expense (benefit) 3,351 2,910 3,139 3,321 772 958 (414 ) (488 ) 6,848 6,701
Income tax expense (benefit)   424     809     369     448     192     239     (104 )   (122 )   881     1,374
Net income (loss) before noncontrolling interests 2,927 2,101 2,770 2,873 580 719 (310 ) (366 ) 5,967 5,327
Less: Net income (loss) from noncontrolling interests   104     188         (2 )   3     5             107     191
Net income (loss)   $ 2,823     1,913     2,770     2,875     577     714     (310 )   (366 )   5,860     5,136
 
Average loans $ 458.2 470.5 476.5 465.1 74.4 73.9 (59.0 ) (58.5 ) 950.1 951.0
Average assets 1,015.4 1,061.9 844.6 829.2 83.2 84.2 (60.0 ) (59.4 ) 1,883.2 1,915.9
Average deposits   765.6     747.5     409.8     446.0     153.2     177.9     (66.5 )   (74.2 )   1,262.1     1,297.2

(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, predominantly 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.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER OPERATING SEGMENT RESULTS (1)

  Quarter ended
(income/expense in millions, average balances in billions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
COMMUNITY BANKING        
Net interest income (2) $ 7,248 7,340 7,338 7,346 7,195
Provision for credit losses 710 534 547 484 218
Noninterest income 4,502 4,121 4,478 4,460 4,635
Noninterest expense   7,689     7,032     7,467     7,290     8,702  
Income before income tax expense 3,351 3,895 3,802 4,032 2,910
Income tax expense   424     637     925     1,413     809  
Net income before noncontrolling interests 2,927 3,258 2,877 2,619 2,101
Less: Net income from noncontrolling interests   104     89     61     123     188  
Segment net income   $ 2,823     3,169     2,816     2,496     1,913  
Average loans $ 458.2 459.7 460.9 463.8 470.5
Average assets 1,015.4 1,015.9 1,024.9 1,034.3 1,061.9
Average deposits   765.6     759.4     760.9     760.6     747.5  
WHOLESALE BANKING
Net interest income (2) $ 4,534 4,739 4,726 4,693 4,532
Provision (reversal of provision) for credit losses 134 (28 ) 26 (36 ) (20 )
Noninterest income 2,577 2,187 2,578 2,504 2,747
Noninterest expense   3,838     4,025     3,935     4,219     3,978  
Income before income tax expense 3,139 2,929 3,343 3,014 3,321
Income tax expense   369     253     475     379     448  
Net income before noncontrolling interests 2,770 2,676 2,868 2,635 2,873
Less: Net income (loss) from noncontrolling interests       5     17         (2 )
Segment net income   $ 2,770     2,671     2,851     2,635     2,875  
Average loans $ 476.5 470.2 462.8 464.7 465.1
Average assets 844.6 839.1 827.2 826.4 829.2
Average deposits   409.8     421.6     413.6     414.0     446.0  
WEALTH AND INVESTMENT MANAGEMENT
Net interest income (2) $ 1,101 1,116 1,102 1,111 1,112
Provision (reversal of provision) for credit losses 4 (3 ) 6 (2 ) (6 )
Noninterest income 2,978 2,841 3,124 2,840 3,130
Noninterest expense   3,303     3,044     3,243     3,361     3,290  
Income before income tax expense 772 916 977 592 958
Income tax expense   192     231     244     147     239  
Net income before noncontrolling interests 580 685 733 445 719
Less: Net income (loss) from noncontrolling interests   3     (4 )   1         5  
Segment net income   $ 577     689     732     445     714  
Average loans $ 74.4 75.2 74.6 74.7 73.9
Average assets 83.2 83.6 83.8 84.0 84.2
Average deposits   153.2     155.5     159.8     167.1     177.9  
OTHER (3)
Net interest income (2) $ (572 ) (551 ) (594 ) (609 ) (601 )
Provision (reversal of provision) for credit losses (3 ) 18 1 6 (1 )
Noninterest income (759 ) (813 ) (811 ) (792 ) (816 )
Noninterest expense   (914 )   (762 )   (882 )   (888 )   (928 )
Loss before income tax benefit (414 ) (620 ) (524 ) (519 ) (488 )
Income tax benefit   (104 )   (155 )   (132 )   (129 )   (122 )
Net loss before noncontrolling interests (310 ) (465 ) (392 ) (390 ) (366 )
Less: Net income from noncontrolling interests                    
Other net loss   $ (310 )   (465 )   (392 )   (390 )   (366 )
Average loans $ (59.0 ) (58.8 ) (58.8 ) (59.1 ) (58.5 )
Average assets (60.0 ) (59.6 ) (59.6 ) (59.8 ) (59.4 )
Average deposits   (66.5 )   (67.6 )   (67.9 )   (70.4 )   (74.2 )
CONSOLIDATED COMPANY
Net interest income (2) $ 12,311 12,644 12,572 12,541 12,238
Provision for credit losses 845 521 580 452 191
Noninterest income 9,298 8,336 9,369 9,012 9,696
Noninterest expense   13,916     13,339     13,763     13,982     15,042  
Income before income tax expense 6,848 7,120 7,598 7,119 6,701
Income tax expense   881     966     1,512     1,810     1,374  
Net income before noncontrolling interests 5,967 6,154 6,086 5,309 5,327
Less: Net income from noncontrolling interests   107     90     79     123     191  
Wells Fargo net income   $ 5,860     6,064     6,007     5,186     5,136  
Average loans $ 950.1 946.3 939.5 944.1 951.0
Average assets 1,883.2 1,879.0 1,876.3 1,884.9 1,915.9
Average deposits   1,262.1     1,268.9     1,266.4     1,271.3     1,297.2  

(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) 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.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING

  Quarter ended
(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
MSRs measured using the fair value method:        
Fair value, beginning of quarter $ 14,649 15,980 15,411 15,041 13,625
Servicing from securitizations or asset transfers (1) 341 449 502 486 573
Sales and other (2)   (281 )   (64 )   (2 )   (1 )   (4 )
Net additions   60     385     500     485     569  
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3) (940 ) (874 ) 582 376 1,253
Servicing and foreclosure costs (4) 12 763 (9 ) 30 34
Discount rates (5) 100 (821 ) (9 )
Prepayment estimates and other (6)   (63 )   (314 )   (33 )   (61 )   43  
Net changes in valuation model inputs or assumptions   (891 )   (1,246 )   531     345     1,330  
Changes due to collection/realization of expected cash flows over time   (482 )   (470 )   (462 )   (460 )   (483 )
Total changes in fair value   (1,373 )   (1,716 )   69     (115 )   847  
Fair value, end of quarter   $ 13,336     14,649     15,980     15,411     15,041  

(1) Includes impacts associated with exercising our right to repurchase delinquent loans from Government National Mortgage Association (GNMA) loan securitization pools.

(2) Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.

(3) Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).

(4) Includes costs to service and unreimbursed foreclosure costs.

(5) Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.

(6) Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.

 
 
  Quarter ended
(in millions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Amortized MSRs:        
Balance, beginning of quarter $ 1,443 1,414 1,407 1,411 1,424
Purchases 24 45 42 22 18
Servicing from securitizations or asset transfers 26 52 33 39 34
Amortization   (66 )   (68 )   (68 )   (65 )   (65 )
Balance, end of quarter   $ 1,427     1,443     1,414     1,407     1,411  
Fair value of amortized MSRs:
Beginning of quarter $ 2,288 2,389 2,309 2,307 2,025
End of quarter   2,149     2,288     2,389     2,309     2,307  
 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)

    Quarter ended
(in millions)       Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Servicing income, net:        
Servicing fees (1) $ 841 925 890 905 906
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2) (A) (891 ) (1,246 ) 531 345 1,330
Changes due to collection/realization of expected cash flows over time       (482 )   (470 )   (462 )   (460 )   (483 )
Total changes in fair value of MSRs carried at fair value (1,373 ) (1,716 ) 69 (115 ) 847
Amortization (66 ) (68 ) (68 ) (65 ) (65 )
Net derivative gains (losses) from economic hedges (3)   (B)   962     968     (501 )   (319 )   (1,220 )
Total servicing income, net       $ 364     109     390     406     468  
Market-related valuation changes to MSRs, net of hedge results (2)(3)   (A)+(B)   $ 71     (278 )   30     26     110  

(1) Includes contractually specified servicing fees, late charges and other ancillary revenues, net of unreimbursed direct servicing costs.

(2) Refer to the changes in fair value MSRs table on the previous page for more detail.

(3) Represents results from economic hedges used to hedge the risk of changes in fair value of MSRs.

 
 
(in billions)   Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Managed servicing portfolio (1):          
Residential mortgage servicing:
Serviced for others $ 1,125 1,164 1,184 1,190 1,201
Owned loans serviced 331 334 337 340 337
Subserviced for others   26     4     5     4     5
Total residential servicing   1,482     1,502     1,526     1,534     1,543
Commercial mortgage servicing:
Serviced for others 552 543 529 518 510
Owned loans serviced 122 121 121 124 125
Subserviced for others   9     9     9     10     10
Total commercial servicing   683     673     659     652     645
Total managed servicing portfolio   $ 2,165     2,175     2,185     2,186     2,188
Total serviced for others $ 1,677 1,707 1,713 1,708 1,711
Ratio of MSRs to related loans serviced for others 0.88 % 0.94 1.02 0.98 0.96
Weighted-average note rate (mortgage loans serviced for others)   4.34     4.32     4.29     4.27     4.24

(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.

 
 

Wells Fargo & Company and Subsidiaries

SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA

    Quarter ended
        Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Jun 30,
2018
  Mar 31,
2018
Net gains on mortgage loan origination/sales activities (in millions):        
Residential (A) $ 232 245 324 281 324
Commercial 47 65 75 49 76
Residential pipeline and unsold/repurchased loan management (1)       65     48     57     34     66
Total       $ 344     358     456     364     466
Application data (in billions):
Wells Fargo first mortgage quarterly applications $ 64 48 57 67 58
Refinances as a percentage of applications 44 % 30 26 25 35
Wells Fargo first mortgage unclosed pipeline, at quarter end       $ 32     18     22     26     24
Residential real estate originations:
Purchases as a percentage of originations 70 % 78 81 78 65
Refinances as a percentage of originations       30     22     19     22     35
Total       100 %   100     100     100     100
Wells Fargo first mortgage loans (in billions):
Retail $ 14 16 18 21 16
Correspondent 18 21 27 28 27
Other (2)       1     1     1     1    
Total quarter-to-date       $ 33     38     46     50     43
Held-for-sale (B) $ 22 28 33 37 34
Held-for-investment       11     10     13     13     9
Total quarter-to-date       $ 33     38     46     50     43
Total year-to-date       $ 33     177     139     93     43
Production margin on residential held-for-sale mortgage originations   (A)/(B)   1.05 %   0.89     0.97     0.77     0.94

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

(2) Consists of home equity loans and lines.

 

Media
Ancel Martinez, 415-222-3858
ancel.martinez@wellsfargo.com
or
Investor Relations
John M. Campbell, 415-396-0523
john.m.campbell@wellsfargo.com

Source: Wells Fargo & Company