WFC
$51.68
Wells Fargo &
($.12)
(.23%)
Earnings Details
2nd Quarter June 2017
Friday, July 14, 2017 8:00:17 AM
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Summary

Wells Fargo & Beats

Wells Fargo & (WFC) reported 2nd Quarter June 2017 earnings of $1.07 per share on revenue of $24.4 billion. The consensus earnings estimate was $1.02 per share on revenue of $22.4 billion. The Earnings Whisper number was $1.05 per share. Revenue grew 3.5% 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
$1.07
Earnings Whisper
$1.05
Consensus Estimate
$1.02
Reported Revenue
$24.40 Bil
Revenue Estimate
$22.35 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wells Fargo Reports $5.8 Billion in Quarterly Net Income

Wells Fargo & Company (WFC):

Strong financial results: -- Net income of $5.8 billion, up 5 percent from second quarter 2016

-- Diluted earnings per share (EPS) of $1.07, up 6 percent

Revenue of $22.2 billion -- Net interest income of $12.5 billion, up $750 million, or 6 percent

Total average deposits of $1.3 trillion, up $64.5 billion, or 5 percent

Total average loans of $956.9 billion, up $6.1 billion, or 1 percent

Return on assets (ROA) of 1.21 percent and return on equity (ROE) of 11.95 percent

Continued improvement in credit quality: -- Provision expense of $555 million, down $519 million, or 48 percent, from second quarter 2016 -- Net charge-offs of $655 million, down $269 million -- Net charge-offs were 0.27 percent of average loans (annualized), down from 0.39 percent

-- Reserve release(1) of $100 million

-- Nonaccrual loans of $9.1 billion, down $2.9 billion, or 24 percent

Strong capital position while returning more capital to shareholders: -- Common Equity Tier 1 ratio (fully phased-in) of 11.6 percent(2)

Period-end common shares outstanding down 81.7 million from second quarter 2016

Returned $3.4 billion to shareholders in the second quarter through common stock dividends and net share repurchases

Received a non-objection to the Company’s 2017 Capital Plan submission from the Federal Reserve -- As part of this plan, the Company expects to increase its third quarter 2017 common stock dividend to $0.39 per share from $0.38 per share, subject to approval by the Company’s Board of Directors. The plan also includes up to $11.5 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from third quarter 2017 through second quarter 2018.

Final financial results and other disclosures will be reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

Selected Financial Information
Quarter ended
Jun 30,
Mar 31,
Jun 30,
2017
2017
2016
Earnings
Diluted earnings per common share
$
1.07
1.00
1.01
Wells Fargo net income (in billions)
5.81
5.46
5.56
Return on assets (ROA)
1.21 %
1.15
1.20
Return on equity (ROE)
11.95
11.54
11.70
Return on average tangible common equity (ROTCE)(a)
14.26
13.85
14.15
Asset Quality
Net charge-offs (annualized) as a % of average total loans
0.27 %
0.34
0.39
Allowance for credit losses as a % of total loans
1.27
1.28
1.33
Allowance for credit losses as a % of annualized net charge-offs
462
376
343
Other
Revenue (in billions)
$
22.2
22.0
22.2
Efficiency ratio (b)
61.1 %
62.7
58.1
Average loans (in billions)
$
956.9
963.6
950.8
Average deposits (in billions)
1,301.2
1,299.2
1,236.7
Net interest margin
2.90 %
2.87
2.86
(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 investments 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 35.
(b) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).

Wells Fargo & Company (WFC) reported net income of $5.8 billion, or $1.07 per diluted common share, for second quarter 2017, compared with $5.6 billion, or $1.01 per share, for second quarter 2016, and $5.5 billion, or $1.00 per share, for first quarter 2017.

Chief Executive Officer Tim Sloan said, "Second quarter 2017 results demonstrated the benefit of our diversified business model as we continued to generate strong financial results, invest for the future, and adhere to our prudent risk discipline. We remain committed to reducing expenses and improving the efficiency of our company, and we are very focused on our recently announced goals. As we work to improve our efficiency, we will also continue to innovate for the future. We recently advanced a number of important customer-focused initiatives, such as the launch of the Zelle(SM) person-to-person payment platform to our 28 million digital customers. As always, our success starts with our customers, and I appreciate the effort of our 271,000 team members in helping our customers succeed financially. We continued to make progress this quarter in our efforts to rebuild trust and build a better Wells Fargo and, while there is still more work ahead of us, we are on the right track and I am confident about our future."

Chief Financial Officer John Shrewsberry said, "Wells Fargo reported $5.8 billion of net income in the second quarter, up on a linked-quarter and year-over-year basis. Overall results were solid in a period with continued modest economic growth and included growth in net interest income and continued improvement in credit results. Second quarter 2017 also included discrete tax benefits totaling $186 million, or approximately $0.04 per share, primarily as a result of our agreement to sell Wells Fargo Insurance Services.

Our liquidity and capital positions remained strong, and we returned $3.4 billion to shareholders through common stock dividends and net share repurchases for a net payout ratio(3) of 63 percent in the quarter. In addition, during the quarter we received a non-objection from the Federal Reserve to our 2017 Capital Plan, which included an increase, subject to board approval, in our quarterly common stock dividend rate in third quarter 2017, to $0.39 per share from $0.38 per share, as well as increased share repurchases."

Net Interest Income

Net interest income in second quarter 2017 increased $183 million from first quarter 2017 to $12.5 billion, as the benefit of repricing earning assets in response to higher short-term interest rates exceeded the cost of repricing liabilities, due in part to continued deposit pricing discipline. Second quarter results also benefited from one additional business day. These benefits more than offset the impact of lower average loan and investment securities balances.

Net interest margin was 2.90 percent, up 3 basis points from first quarter 2017. The benefit of higher short-term interest rates, disciplined deposit pricing, and a reduction in long-term debt was partially offset by the impacts from lower loan and investment securities balances.

Noninterest Income

Noninterest income in the second quarter was $9.7 billion, in line with first quarter 2017. Second quarter noninterest income included higher other income on a $309 million gain on the sale of a Pick-a-Pay purchased credit-impaired (PCI) loan portfolio, higher card fees on stronger credit card and debit card purchase volumes, and higher trust and investment fees reflecting stronger investment banking fees from both higher equity and debt originations. These increases were offset by lower market sensitive revenue(4) and lower mortgage banking income.

Mortgage banking noninterest income was $1.1 billion, compared with $1.2 billion in first quarter 2017. As expected, residential mortgage loan originations increased in the second quarter, up to $56 billion, from $44 billion in the first quarter. The production margin on residential held-for-sale mortgage loan originations(5) was 1.24 percent, down from 1.68 percent in the first quarter due to increased price competition and a higher percentage of correspondent volume, which has lower production margins than retail originations. Mortgage servicing income was $400 million in the second quarter, down from $456 million in the first quarter, primarily due to lower net hedge results and higher prepayments.

Market sensitive revenue was $545 million, compared with $878 million in first quarter 2017, as lower net gains from equity investments and trading activities were partially offset by higher gains on debt securities. Net gains from equity investments were down $215 million from the first quarter on lower venture capital gains. Net gains from trading activities were down $202 million linked quarter and included lower deferred compensation plan investment results (largely offset in employee benefits expense), as well as lower secondary trading results on reduced client activity and lower valuation adjustments.

Noninterest Expense

Noninterest expense in the second quarter declined $251 million from the prior quarter to $13.5 billion, primarily due to lower employee benefits and commission and incentive compensation, which were seasonally elevated in the first quarter. These declines were partially offset by increases in outside professional services and salaries, as well as higher operating losses, reflecting higher litigation accruals. In addition, the second quarter included a $94 million donation to the Wells Fargo Foundation. The efficiency ratio improved to 61.1 percent in second quarter 2017, compared with 62.7 percent in the prior quarter.

Income Taxes

The Company’s effective income tax rate was 27.7 percent for second quarter 2017, and included discrete tax benefits totaling $186 million, primarily related to the deferred income tax effect of investment basis differences recognized as a result of our agreement to sell Wells Fargo Insurance Services USA and related businesses. This compares with an effective income tax rate of 27.4 percent in first quarter 2017, which included discrete tax benefits totaling $197 million, of which $183 million reflected tax benefits associated with stock compensation activity during the quarter which was subject to ASU 2016-09 accounting guidance adopted in the first quarter. The Company currently expects the full-year 2017 tax rate to be approximately 29 percent.

Loans

Total average loans were $956.9 billion in the second quarter, down $6.8 billion from the first quarter. Period-end loan balances were $957.4 billion at June 30, 2017, down $982 million from March 31, 2017, reflecting an expected decline in auto loans as our tighter underwriting standards resulted in lower origination volume. Additionally, legacy junior lien mortgage loans continued to decline as expected. These declines were partially offset by growth in commercial and industrial loans, real estate first mortgage loans, and credit card loans.

Period-End Loan Balances
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Commercial
$ 505,901
505,004
506,536
496,454
494,538
Consumer
451,522
453,401
461,068
464,872
462,619
Total loans
$ 957,423
958,405
967,604
961,326
957,157
Change from prior quarter
$
(982 )
(9,199 )
6,278
4,169
9,899

Investment Securities

Investment securities were $409.6 billion at June 30, 2017, up $2.0 billion from the first quarter, as approximately $37.1 billion of purchases, primarily federal agency mortgage-backed securities in the available-for-sale portfolio, were partially offset by sales and run-off.

Net unrealized gains on available-for-sale securities were $1.1 billion at June 30, 2017, compared with net unrealized losses on available-for-sale securities of $1.2 billion at March 31, 2017, primarily due to tighter credit spreads during the quarter and a modest benefit from lower long-term interest rates.

Deposits

Total average deposits for second quarter 2017 were $1.3 trillion, stable from the prior quarter, as growth in consumer and small business deposits was offset by lower commercial deposits. The average deposit cost for second quarter 2017 was 21 basis points, up 4 basis points from the prior quarter and 10 basis points from a year ago, primarily driven by an increase in commercial deposit rates.

Capital

Capital levels remained strong in the second quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 11.6 percent(2), compared with 11.2 percent in the prior quarter. In second quarter 2017, the Company repurchased 43.0 million shares of its common stock, which reduced period-end common shares outstanding by 30.0 million. The Company paid a quarterly common stock dividend of $0.38 per share. In addition, the Company received a non-objection to its 2017 Capital Plan from the Federal Reserve. As part of this plan, the Company expects to increase its third quarter 2017 common stock dividend to $0.39 per share, subject to approval by the Company’s Board of Directors. The plan also includes up to $11.5 billion of gross common stock repurchases, subject to management discretion, for the four-quarter period from third quarter 2017 through second quarter 2018.

Credit Quality

Net Loan Charge-offs

The quarterly loss rate improved to 0.27 percent (annualized) from 0.34 percent in the prior quarter. Commercial and consumer losses improved to 0.06 percent and 0.51 percent, respectively. Credit losses were $655 million in second quarter 2017, down $150 million from first quarter 2017. Consumer losses decreased $82 million, driven by lower losses across all asset classes with the exception of credit card. Commercial losses were down $68 million, predominantly driven by lower losses in our oil and gas portfolio.

Net Loan Charge-Offs
Quarter ended
June 30, 2017
March 31, 2017
December 31, 2016
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
$
78
0.10 %
$
171
0.21 %
$
256
0.31 %
Real estate mortgage
(6 )
(0.02 )
(25 )
(0.08 )
(12 )
(0.04 )
Real estate construction
(4 )
(0.05 )
(8 )
(0.15 )
(8 )
(0.13 )
Lease financing
7
0.15
5
0.11
15
0.32
Total commercial
75
0.06
143
0.11
251
0.20
Consumer:
Real estate 1-4 family first mortgage
(16 )
(0.02 )
7
0.01
(3 )
--
Real estate 1-4 family junior lien mortgage
(4 )
(0.03 )
23
0.21
44
0.38
Credit card
320
3.67
309
3.54
275
3.09
Automobile
126
0.86
167
1.10
166
1.05
Other revolving credit and installment
154
1.58
156
1.60
172
1.70
Total consumer
580
0.51
662
0.59
654
0.56
Total
$
655
0.27 %
$
805
0.34 %
$
905
0.37 %
(a) Quarterly net charge-offs as a percentage of average loans are
annualized. See explanation on page 31 of the accounting for
purchased credit-impaired (PCI) loans and the impact on selected
financial ratios.

Nonperforming Assets

Nonperforming assets decreased $827 million from first quarter 2017 to $9.8 billion. Nonaccrual loans decreased $703 million from first quarter 2017 to $9.1 billion reflecting declines across all commercial asset classes, as well as continued lower consumer real estate nonaccruals.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
June 30, 2017
March 31, 2017
December 31, 2016
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
$ 2,632
0.79 %
$
2,898
0.88 %
$
3,216
0.97 %
Real estate mortgage
630
0.48
672
0.51
685
0.52
Real estate construction
34
0.13
40
0.16
43
0.18
Lease financing
89
0.46
96
0.50
115
0.60
Total commercial
3,385
0.67
3,706
0.73
4,059
0.80
Consumer:
Real estate 1-4 family first mortgage
4,413
1.60
4,743
1.73
4,962
1.80
Real estate 1-4 family junior lien mortgage
1,095
2.56
1,153
2.60
1,206
2.61
Automobile
104
0.18
101
0.17
106
0.17
Other revolving credit and installment
59
0.15
56
0.14
51
0.13
Total consumer
5,671
1.26
6,053
1.34
6,325
1.37
Total nonaccrual loans
9,056
0.95
9,759
1.02
10,384
1.07
Foreclosed assets:
Government insured/guaranteed
149
179
197
Non-government insured/guaranteed
632
726
781
Total foreclosed assets
781
905
978
Total nonperforming assets
$ 9,837
1.03 %
$ 10,664
1.11 %
$ 11,362
1.17 %
Change from prior quarter:
Total nonaccrual loans
$
(703 )
$
(625 )
$
(602 )
Total nonperforming assets
(827 )
(698 )
(644 )

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.1 billion at June 30, 2017, which was down $141 million from March 31, 2017. Second quarter 2017 included a $100 million reserve release(1), reflecting continued strong credit performance. The allowance coverage for total loans was 1.27 percent, compared with 1.28 percent in first quarter 2017. The allowance covered 4.6 times annualized second quarter net charge-offs, compared with 3.8 times in the prior quarter. The allowance coverage for nonaccrual loans was 134 percent at June 30, 2017, compared with 126 percent at March 31, 2017. The Company believes the allowance was appropriate for losses inherent in the loan portfolio at June 30, 2017.

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
Jun 30,
Mar 31,
Jun 30,
(in millions)
2017
2017
2016
Community Banking
$ 2,993
3,009
3,179
Wholesale Banking
2,388
2,115
2,073
Wealth and Investment Management
682
623
584

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 auto, student, and small business lending. Community Banking also offers investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Lending business units.

Selected Financial Information
Quarter ended
Jun 30,
Mar 31,
Jun 30,
(in millions)
2017
2017
2016
Total revenue
$ 12,289
12,093
12,204
Provision for credit losses
623
646
689
Noninterest expense
7,223
7,221
6,648
Segment net income
2,993
3,009
3,179
(in billions)
Average loans
477.2
482.7
485.7
Average assets
983.5
990.7
967.6
Average deposits
727.2
717.2
703.7

Community Banking reported net income of $3.0 billion, down $16 million, or 1 percent, from first quarter 2017. Revenue of $12.3 billion increased $196 million, or 2 percent, from first quarter 2017, driven by the gain on the sale of a Pick-a-Pay PCI loan portfolio, higher other income (reflecting the accounting impact of net hedge ineffectiveness), higher gains on sales of debt securities and higher card fees, partially offset by lower gains on equity investments, lower net interest income and lower mortgage banking revenue. Noninterest expense was flat, compared with first quarter 2017, as lower personnel expense offset higher professional services. The provision for credit losses decreased $23 million linked quarter.

Net income decreased $186 million, or 6 percent, from second quarter 2016. Revenue increased $85 million, or 1 percent, compared with a year ago due to the gain on the sale of a Pick-a-Pay PCI loan portfolio, higher net interest income, higher gains from deferred compensation plan investments (offset in benefits expense) and higher card fees, partially offset by lower mortgage banking revenue and gains on sales of debt securities. Noninterest expense increased $575 million, or 9 percent, from a year ago driven by higher personnel and professional services expense. The provision for credit losses decreased $66 million from a year ago primarily due to improvement in the consumer real estate portfolios.

Retail Banking and Consumer Payments, Virtual Solutions and Innovation

With over 400,000 branch customer experience surveys completed during the second quarter, ’Overall Satisfaction with Most Recent Visit’ and ’Loyalty’ scores in June reached their highest levels since August 2016

5,977 retail bank branches as of the end of second quarter 2017, reflecting 54 branch consolidations in the quarter

Primary consumer checking customers(6,7) up 0.7 percent year-over-year

Debit card point-of-sale purchase volume(8) of $80.6 billion in second quarter, up 6 percent year-over-year

Credit card point-of-sale purchase volume of $20.0 billion in second quarter, up 3 percent year-over-year

-- Credit card penetration in retail banking households of 45.5 percent(9)

27.9 million digital (online and mobile) active customers in June, including 20.4 million mobile active users(10)

Keynote’s Banker Scorecard named Wells Fargo as tied for #1 in online performance (May 2017)

Launched Zelle(SM) peer-to-peer payments experience to allow digital customers to send, receive, and request money with mobile banking customers across the U.S.

Consumer Lending

Auto originations of $4.5 billion in second quarter, down 17 percent from prior quarter and down 45 percent from prior year, as proactive steps to tighten underwriting standards resulted in lower origination volume

Home Lending -- Originations of $56 billion, up from $44 billion in prior quarter

-- Applications of $83 billion, up from $59 billion in prior quarter

Application pipeline of $34 billion at quarter end, up from $28 billion at March 31, 2017

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 Business Banking, Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments and Asset Backed Finance.

Selected Financial Information
Quarter ended
Jun 30,
Mar 31,
Jun 30,
(in millions)
2017
2017
2016
Total revenue
$ 6,951
7,038
7,284
Provision (reversal of provision) for credit losses
(65 )
(43 )
385
Noninterest expense
4,078
4,225
4,036
Segment net income
2,388
2,115
2,073
(in billions)
Average loans
464.9
466.3
451.4
Average assets
817.3
807.8
772.6
Average deposits
463.0
466.0
425.8

Wholesale Banking reported net income of $2.4 billion, up $273 million, or 13 percent, from first quarter 2017, primarily due to the tax benefit resulting from our agreement to sell Wells Fargo Insurance Services USA and related businesses and lower noninterest expense. Revenue of $7.0 billion decreased $87 million, or 1 percent, from the prior quarter. Net interest income increased $130 million, or 3 percent, on higher trading related income, increased loan yields and one additional business day in the quarter. Noninterest income decreased $217 million, or 8 percent, as lower customer accommodation trading and lower principal investing results were partially offset by higher investment banking and commercial real estate brokerage fees. Noninterest expense decreased $147 million, or 3 percent, from the prior quarter due to seasonally higher personnel expenses in the first quarter. The provision for credit losses decreased $22 million from the prior quarter, primarily due to improvements in the oil and gas portfolio.

Net income increased $315 million, or 15 percent, from second quarter 2016, primarily due to the tax benefit in second quarter 2017 and lower loan loss provision. Revenue decreased $333 million, or 5 percent, from second quarter 2016, which included the gain on sale of our health benefit services business. Net interest income increased $359 million, or 9 percent, from second quarter 2016 on deposit and loan growth, including the GE Capital portfolio acquisitions in the second half of 2016, as well as the impact of rising interest rates. Noninterest income decreased $692 million, or 21 percent, from a year ago primarily due to the second quarter 2016 gain on the sale of our health benefit services business, lower customer accommodation trading results, and lower principal investing gains. Noninterest expense increased $42 million, or 1 percent, from a year ago primarily due to higher expenses related to growth initiatives, compliance, and regulatory requirements. The provision for credit losses decreased $450 million from a year ago primarily due to improvements in the oil and gas portfolio.

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 customers’ 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
Jun 30,
Mar 31,
Jun 30,
(in millions)
2017
2017
2016
Total revenue
$ 4,182
4,193
3,919
Provision (reversal of provision) for credit losses
7
(4 )
2
Noninterest expense
3,075
3,206
2,976
Segment net income
682
623
584
(in billions)
Average loans
71.7
70.7
66.7
Average assets
213.1
221.9
205.3
Average deposits
188.2
195.6
182.5

Wealth and Investment Management reported net income of $682 million, up $59 million, or 9 percent, from first quarter 2017. Revenue of $4.2 billion decreased $11 million from the prior quarter, primarily due to lower gains on deferred compensation plan investments (offset in employee benefits expense) and lower other fee income, partially offset by higher net interest income and higher asset-based fees. Noninterest expense decreased $131 million, or 4 percent, from the prior quarter, primarily driven by lower personnel expenses from seasonally-higher first quarter expense, lower other non-personnel expenses, and lower deferred compensation plan expense (offset in trading revenue), partially offset by higher operating losses.

Net income was up $98 million, or 17 percent, from second quarter 2016. Revenue increased $263 million, or 7 percent, from a year ago primarily driven by higher net interest income and asset-based fees, partially offset by lower transaction revenue. Noninterest expense increased $99 million, or 3 percent, from a year ago, primarily due to higher operating losses, broker commissions, and other personnel expenses.

WIM total client assets reached a record-high of $1.8 trillion, up 8 percent from a year ago, driven by higher market valuations and continued positive net flows

Second quarter 2017 average closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) were up 12 percent from first quarter 2017

Retail Brokerage

-- Client assets of $1.6 trillion, up 8 percent from prior year

Advisory assets of $503 billion, up 13 percent from prior year, primarily driven by higher market valuations and positive net flows

Strong loan growth, with average balances up 11 percent from prior year largely due to continued growth in non-conforming mortgage loans

Wealth Management

-- Client assets of $236 billion, up 5 percent from prior year

Average loan balances up 5 percent from prior year primarily driven by continued growth in non-conforming mortgage loans

Asset Management

Total assets under management of $487 billion, up 1 percent from prior year, primarily due to higher market valuations, positive fixed income net flows and assets acquired during the prior year, partially offset by equity and money market net outflows

Strong performance in active equity with 70 percent of active equity mutual funds outperforming their respective benchmarks year-to-date through the end of June

Retirement

-- IRA assets of $390 billion, up 6 percent from prior year

Institutional Retirement plan assets of $375 billion, up 11 percent from prior year

Conference Call

The Company will host a live conference call on Friday, July 14, at 7:00 a.m. PT (10:00 a.m. ET). You may participate 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~34999396.

A replay of the conference call will be available beginning at 10:00 a.m. PT (1:00 p.m. ET) on Friday, July 14 through Friday, July 28. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #34999396. 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~34999396.

Endnotes
(1)
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.
(2)
See table on page 36 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.
(3)
Net payout ratio means the ratio of (i) common stock dividends and
share repurchases less issuances and stock compensation-related
items, divided by (ii) net income applicable to common stock.
(4)
Market sensitive revenue represents net gains from trading
activities, debt securities and equity investments.
(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 41 for more
information.
(6)
Customers who actively use their checking account with transactions
such as debit card purchases, online bill payments, and direct
deposit.
(7)
Data as of May 2017, comparisons with May 2016.
(8)
Combined consumer and business debit card purchase volume dollars.
(9)
Credit card penetration defined as the percentage of Retail Banking
households that have a credit card with Wells Fargo. Retail Banking
households reflect only those households that maintain a retail
checking account, which we believe provides the foundation for
long-term retail banking relationships. Credit card household
penetration rates have not been adjusted to reflect the impact of
the potentially unauthorized accounts identified by an independent
consulting firm late in 2016 because the maximum impact in any one
quarter was not greater than 86 basis points, or approximately 2
percent. Data as of May 2017.
(10)
Primarily includes retail banking, consumer lending, small business
and business banking customers.

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 and return on 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 the overall 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;

the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications;

the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;

negative effects relating to our mortgage servicing and foreclosure practices, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;

our ability to realize our efficiency ratio 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 low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages 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 investment securities portfolio;

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, 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;

reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions;

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, 2016.

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, 2016, 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.

About Wells Fargo

Wells Fargo & Company (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, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 271,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations.

Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
Pages
Summary Information
Summary Financial Data
16
Income
Consolidated Statement of Income
18
Consolidated Statement of Comprehensive Income
20
Condensed Consolidated Statement of Changes in Total Equity
20
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis)
21
Five Quarter Average Balances, Yields and Rates Paid
23
(Taxable-Equivalent Basis)
Noninterest Income and Noninterest Expense
24
Balance Sheet
Consolidated Balance Sheet
26
Investment Securities
28
Loans
Loans
28
Nonperforming Assets
29
Loans 90 Days or More Past Due and Still Accruing
30
Purchased Credit-Impaired Loans
31
Pick-A-Pay Portfolio
32
Changes in Allowance for Credit Losses
34
Equity
Tangible Common Equity
35
Common Equity Tier 1 Under Basel III
36
Operating Segments
Operating Segment Results
37
Other
Mortgage Servicing and other related data
39
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
% Change
Quarter ended
Jun 30, 2017 from
Six months ended
($ in millions, except per
Jun 30,
Mar 31,
Jun 30,
Mar 31,
Jun 30,
Jun 30,
Jun 30,
%
share amounts)
2017
2017
2016
2017
2016
2017
2016
Change
For the Period
Wells Fargo net income
$
5,810
5,457
5,558
6 %
5
$
11,267
11,020
2 %
Wells Fargo net income applicable to common stock
5,404
5,056
5,173
7
4
10,460
10,258
2
Diluted earnings per common share
1.07
1.00
1.01
7
6
2.07
2.00
4
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.21 %
1.15
1.20
5
1
1.18 %
1.20
(2 )
Wells Fargo net income applicable to common stock to average Wells
11.95
11.54
11.70
4
2
11.75
11.72
--
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
14.26
13.85
14.15
3
1
14.06
14.15
(1 )
Efficiency ratio (2)
61.1
62.7
58.1
(3 )
5
61.9
58.4
6
Total revenue
$
22,169
22,002
22,162
1
--
$
44,171
44,357
--
Pre-tax pre-provision profit (PTPP) (3)
8,628
8,210
9,296
5
(7 )
16,838
18,463
(9 )
Dividends declared per common share
0.380
0.380
0.380
--
--
0.760
0.755
1
Average common shares outstanding
4,989.9
5,008.6
5,066.9
--
(2 )
4,999.2
5,071.3
(1 )
Diluted average common shares outstanding
5,037.7
5,070.4
5,118.1
(1 )
(2 )
5,054.8
5,129.8
(1 )
Average loans
$
956,879
963,645
950,751
(1 )
1
$
960,243
938,986
2
Average assets
1,927,079
1,931,041
1,862,084
--
3
1,929,049
1,840,980
5
Average total deposits
1,301,195
1,299,191
1,236,658
--
5
1,300,198
1,228,044
6
Average consumer and small business banking deposits (4)
760,149
758,754
726,359
--
5
759,455
720,598
5
Net interest margin
2.90 %
2.87
2.86
1
1
2.89 %
2.88
--
At Period End
Investment securities
$
409,594
407,560
353,426
--
16
$
409,594
353,426
16
Loans
957,423
958,405
957,157
--
--
957,423
957,157
--
Allowance for loan losses
11,073
11,168
11,664
(1 )
(5 )
11,073
11,664
(5 )
Goodwill
26,573
26,666
26,963
--
(1 )
26,573
26,963
(1 )
Assets
1,930,871
1,951,564
1,889,235
(1 )
2
1,930,871
1,889,235
2
Deposits
1,305,830
1,325,444
1,245,473
(1 )
5
1,305,830
1,245,473
5
Common stockholders’ equity
181,428
178,388
178,633
2
2
181,428
178,633
2
Wells Fargo stockholders’ equity
205,230
201,500
201,745
2
2
205,230
201,745
2
Total equity
206,145
202,489
202,661
2
2
206,145
202,661
2
Tangible common equity (1)
152,173
148,850
148,110
2
3
152,173
148,110
3
Common shares outstanding
4,966.8
4,996.7
5,048.5
(1 )
(2 )
4,966.8
5,048.5
(2 )
Book value per common share (5)
$
36.53
35.70
35.38
2
3
$
36.53
35.38
3
Tangible book value per common share (1)(5)
30.64
29.79
29.34
3
4
30.64
29.34
4
Common stock price:
High
56.60
59.99
51.41
(6 )
10
59.99
53.27
13
Low
50.84
53.35
44.50
(5 )
14
50.84
44.50
14
Period end
55.41
55.66
47.33
--
17
55.41
47.33
17
Team members (active, full-time equivalent)
270,600
272,800
267,900
(1 )
1
270,600
267,900
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 investments 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 35.
(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
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
($ in millions, except per share amounts)
2017
2017
2016
2016
2016
For the Quarter
Wells Fargo net income
$
5,810
5,457
5,274
5,644
5,558
Wells Fargo net income applicable to common stock
5,404
5,056
4,872
5,243
5,173
Diluted earnings per common share
1.07
1.00
0.96
1.03
1.01
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.21 %
1.15
1.08
1.17
1.20
Wells Fargo net income applicable to common stock to average Wells
11.95
11.54
10.94
11.60
11.70
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
14.26
13.85
13.16
13.96
14.15
Efficiency ratio (2)
61.1
62.7
61.2
59.4
58.1
Total revenue
$
22,169
22,002
21,582
22,328
22,162
Pre-tax pre-provision profit (PTPP) (3)
8,628
8,210
8,367
9,060
9,296
Dividends declared per common share
0.380
0.380
0.380
0.380
0.380
Average common shares outstanding
4,989.9
5,008.6
5,025.6
5,043.4
5,066.9
Diluted average common shares outstanding
5,037.7
5,070.4
5,078.2
5,094.6
5,118.1
Average loans
$
956,879
963,645
964,147
957,484
950,751
Average assets
1,927,079
1,931,041
1,944,250
1,914,586
1,862,084
Average total deposits
1,301,195
1,299,191
1,284,158
1,261,527
1,236,658
Average consumer and small business banking deposits (4)
760,149
758,754
749,946
739,066
726,359
Net interest margin
2.90 %
2.87
2.87
2.82
2.86
At Quarter End
Investment securities
$
409,594
407,560
407,947
390,832
353,426
Loans
957,423
958,405
967,604
961,326
957,157
Allowance for loan losses
11,073
11,168
11,419
11,583
11,664
Goodwill
26,573
26,666
26,693
26,688
26,963
Assets
1,930,871
1,951,564
1,930,115
1,942,124
1,889,235
Deposits
1,305,830
1,325,444
1,306,079
1,275,894
1,245,473
Common stockholders’ equity
181,428
178,388
176,469
179,916
178,633
Wells Fargo stockholders’ equity
205,230
201,500
199,581
203,028
201,745
Total equity
206,145
202,489
200,497
203,958
202,661
Tangible common equity (1)
152,173
148,850
146,737
149,829
148,110
Common shares outstanding
4,966.8
4,996.7
5,016.1
5,023.9
5,048.5
Book value per common share (5)
$
36.53
35.70
35.18
35.81
35.38
Tangible book value per common share (1)(5)
30.64
29.79
29.25
29.82
29.34
Common stock price:
High
56.60
59.99
58.02
51.00
51.41
Low
50.84
53.35
43.55
44.10
44.50
Period end
55.41
55.66
55.11
44.28
47.33
Team members (active, full-time equivalent)
270,600
272,800
269,100
268,800
267,900
(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 investments 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 35.
(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 June 30,
%
Six months ended June 30,
%
(in millions, except per share amounts)
2017
2016
Change
2017
2016
Change
Interest income
Trading assets
$
710
572
24 %
$
1,353
1,168
16 %
Investment securities
2,698
2,176
24
5,373
4,438
21
Mortgages held for sale
195
181
8
379
342
11
Loans held for sale
4
3
33
5
5
--
Loans
10,358
9,822
5
20,499
19,399
6
Other interest income
750
392
91
1,332
766
74
Total interest income
14,715
13,146
12
28,941
26,118
11
Interest expense
Deposits
683
332
106
1,220
639
91
Short-term borrowings
163
77
112
277
144
92
Long-term debt
1,278
921
39
2,461
1,763
40
Other interest expense
108
83
30
200
172
16
Total interest expense
2,232
1,413
58
4,158
2,718
53
Net interest income
12,483
11,733
6
24,783
23,400
6
Provision for credit losses
555
1,074
(48 )
1,160
2,160
(46 )
Net interest income after provision for credit losses
11,928
10,659
12
23,623
21,240
11
Noninterest income
Service charges on deposit accounts
1,276
1,336
(4 )
2,589
2,645
(2 )
Trust and investment fees
3,629
3,547
2
7,199
6,932
4
Card fees
1,019
997
2
1,964
1,938
1
Other fees
902
906
--
1,767
1,839
(4 )
Mortgage banking
1,148
1,414
(19 )
2,376
3,012
(21 )
Insurance
280
286
(2 )
557
713
(22 )
Net gains from trading activities
237
328
(28 )
676
528
28
Net gains on debt securities
120
447
(73 )
156
691
(77 )
Net gains from equity investments
188
189
(1 )
591
433
36
Lease income
493
497
(1 )
974
870
12
Other
394
482
(18 )
539
1,356
(60 )
Total noninterest income
9,686
10,429
(7 )
19,388
20,957
(7 )
Noninterest expense
Salaries
4,343
4,099
6
8,604
8,135
6
Commission and incentive compensation
2,499
2,604
(4 )
5,224
5,249
--
Employee benefits
1,308
1,244
5
2,994
2,770
8
Equipment
529
493
7
1,106
1,021
8
Net occupancy
706
716
(1 )
1,418
1,427
(1 )
Core deposit and other intangibles
287
299
(4 )
576
592
(3 )
FDIC and other deposit assessments
328
255
29
661
505
31
Other
3,541
3,156
12
6,750
6,195
9
Total noninterest expense
13,541
12,866
5
27,333
25,894
6
Income before income tax expense
8,073
8,222
(2 )
15,678
16,303
(4 )
Income tax expense
2,225
2,649
(16 )
4,282
5,216
(18 )
Net income before noncontrolling interests
5,848
5,573
5
11,396
11,087
3
Less: Net income from noncontrolling interests
38
15
153
129
67
93
Wells Fargo net income
$
5,810
5,558
5
$
11,267
11,020
2
Less: Preferred stock dividends and other
406
385
5
807
762
6
Wells Fargo net income applicable to common stock
$
5,404
5,173
4
$
10,460
10,258
2
Per share information
Earnings per common share
$
1.08
1.02
6
$
2.09
2.02
3
Diluted earnings per common share
1.07
1.01
6
2.07
2.00
4
Dividends declared per common share
0.380
0.380
--
0.760
0.755
1
Average common shares outstanding
4,989.9
5,066.9
(2 )
4,999.2
5,071.3
(1 )
Diluted average common shares outstanding
5,037.7
5,118.1
(2 )
5,054.8
5,129.8
(1 )
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions, except per share amounts)
2017
2017
2016
2016
2016
Interest income
Trading assets
$
710
643
745
593
572
Investment securities
2,698
2,675
2,512
2,298
2,176
Mortgages held for sale
195
184
235
207
181
Loans held for sale
4
1
2
2
3
Loans
10,358
10,141
10,128
9,978
9,822
Other interest income
750
582
436
409
392
Total interest income
14,715
14,226
14,058
13,487
13,146
Interest expense
Deposits
683
537
400
356
332
Short-term borrowings
163
114
101
85
77
Long-term debt
1,278
1,183
1,061
1,006
921
Other interest expense
108
92
94
88
83
Total interest expense
2,232
1,926
1,656
1,535
1,413
Net interest income
12,483
12,300
12,402
11,952
11,733
Provision for credit losses
555
605
805
805
1,074
Net interest income after provision for credit losses
11,928
11,695
11,597
11,147
10,659
Noninterest income
Service charges on deposit accounts
1,276
1,313
1,357
1,370
1,336
Trust and investment fees
3,629
3,570
3,698
3,613
3,547
Card fees
1,019
945
1,001
997
997
Other fees
902
865
962
926
906
Mortgage banking
1,148
1,228
1,417
1,667
1,414
Insurance
280
277
262
293
286
Net gains (losses) from trading activities
237
439
(109 )
415
328
Net gains on debt securities
120
36
145
106
447
Net gains from equity investments
188
403
306
140
189
Lease income
493
481
523
534
497
Other
394
145
(382 )
315
482
Total noninterest income
9,686
9,702
9,180
10,376
10,429
Noninterest expense
Salaries
4,343
4,261
4,193
4,224
4,099
Commission and incentive compensation
2,499
2,725
2,478
2,520
2,604
Employee benefits
1,308
1,686
1,101
1,223
1,244
Equipment
529
577
642
491
493
Net occupancy
706
712
710
718
716
Core deposit and other intangibles
287
289
301
299
299
FDIC and other deposit assessments
328
333
353
310
255
Other
3,541
3,209
3,437
3,483
3,156
Total noninterest expense
13,541
13,792
13,215
13,268
12,866
Income before income tax expense
8,073
7,605
7,562
8,255
8,222
Income tax expense
2,225
2,057
2,258
2,601
2,649
Net income before noncontrolling interests
5,848
5,548
5,304
5,654
5,573
Less: Net income from noncontrolling interests
38
91
30
10
15
Wells Fargo net income
$
5,810
5,457
5,274
5,644
5,558
Less: Preferred stock dividends and other
406
401
402
401
385
Wells Fargo net income applicable to common stock
$
5,404
5,056
4,872
5,243
5,173
Per share information
Earnings per common share
$
1.08
1.01
0.97
1.04
1.02
Diluted earnings per common share
1.07
1.00
0.96
1.03
1.01
Dividends declared per common share
0.380
0.380
0.380
0.380
0.380
Average common shares outstanding
4,989.9
5,008.6
5,025.6
5,043.4
5,066.9
Diluted average common shares outstanding
5,037.7
5,070.4
5,078.2
5,094.6
5,118.1
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended June 30,
%
Six months ended June 30,
%
(in millions)
2017
2016
Change
2017
2016
Change
Wells Fargo net income
$
5,810
5,558
5 %
$ 11,267
11,020
2 %
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized gains arising during the period
1,565
1,571
--
1,934
2,366
(18 )
Reclassification of net gains to net income
(177 )
(504 )
(65 )
(322 )
(808 )
(60 )
Derivatives and hedging activities:
Net unrealized gains arising during the period
376
1,057
(64 )
243
3,056
(92 )
Reclassification of net gains on cash flow hedges to net income
(153 )
(265 )
(42 )
(355 )
(521 )
(32 )
Defined benefit plans adjustments:
Net actuarial and prior service losses arising during the period
--
(19 )
(100 )
(7 )
(27 )
(74 )
Amortization of net actuarial loss, settlements and other to net
41
39
5
79
76
4
income
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period
31
(6 )
NM
47
37
27
Other comprehensive income, before tax
1,683
1,873
(10 )
1,619
4,179
(61 )
Income tax expense related to other comprehensive income
(624 )
(714 )
(13 )
(587 )
(1,571 )
(63 )
Other comprehensive income, net of tax
1,059
1,159
(9 )
1,032
2,608
(60 )
Less: Other comprehensive income (loss) from noncontrolling interests
(9 )
(15 )
(40 )
5
(43 )
NM
Wells Fargo other comprehensive income, net of tax
1,068
1,174
(9 )
1,027
2,651
(61 )
Wells Fargo comprehensive income
6,878
6,732
2
12,294
13,671
(10 )
Comprehensive income from noncontrolling interests
29
--
--
134
24
458
Total comprehensive income
$
6,907
6,732
3
$ 12,428
13,695
(9 )
NM - Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
TOTAL EQUITY
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Balance, beginning of period
$
202,489
200,497
203,958
202,661
198,504
Wells Fargo net income
5,810
5,457
5,274
5,644
5,558
Wells Fargo other comprehensive income (loss), net of tax
1,068
(41 )
(5,321 )
(764 )
1,174
Noncontrolling interests
(75 )
75
(13 )
14
(92 )
Common stock issued
252
1,406
610
300
397
Common stock repurchased (1)
(2,287 )
(2,175 )
(2,034 )
(1,839 )
(2,214 )
Preferred stock released by ESOP
406
--
43
236
371
Common stock warrants repurchased/exercised
(24 )
(44 )
--
(17 )
--
Preferred stock issued
677
--
--
--
1,126
Common stock dividends
(1,899 )
(1,903 )
(1,909 )
(1,918 )
(1,930 )
Preferred stock dividends
(406 )
(401 )
(401 )
(401 )
(386 )
Tax benefit from stock incentive compensation (2)
--
--
74
31
23
Stock incentive compensation expense
145
389
232
39
139
Net change in deferred compensation and related plans
(11 )
(771 )
(16 )
(28 )
(9 )
Balance, end of period
$
206,145
202,489
200,497
203,958
202,661
(1) For the quarter ended December 31, 2016, includes $750 million
related to a private forward repurchase transaction that settled
in first quarter 2017 for 14.7 million shares of common stock.
(2) Effective January 1, 2017, we adopted Accounting Standards
Update 2016-09 (Improvements to Employee Share-Based Payment
Accounting). Accordingly, tax benefit from stock incentive
compensation is reported in income tax expense in the consolidated
statement of income.
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
Quarter ended June 30,
2017
2016
Interest
Interest
Average
Yields/
income/
Average
Yields/
income/
(in millions)
balance
rates
expense
balance
rates
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
281,619
0.99 %
$
698
293,783
0.49 %
$
359
other short-term investments
Trading assets
98,086
2.95
722
81,380
2.86
582
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
18,099
1.53
69
31,525
1.56
123
Securities of U.S. states and political subdivisions
53,492
4.03
540
52,201
4.24
553
Mortgage-backed securities:
Federal agencies
132,032
2.63
868
92,010
2.53
583
Residential and commercial
12,586
5.55
175
19,571
5.44
266
Total mortgage-backed securities
144,618
2.89
1,043
111,581
3.04
849
Other debt and equity securities
48,962
3.87
472
53,301
3.48
461
Total available-for-sale securities
265,171
3.21
2,124
248,608
3.20
1,986
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,701
2.19
244
44,671
2.19
243
Securities of U.S. states and political subdivisions
6,270
5.29
83
2,155
5.41
29
Federal agency and other mortgage-backed securities
83,116
2.44
507
35,057
1.90
166
Other debt securities
2,798
2.34
16
4,077
1.92
20
Total held-to-maturity securities
136,885
2.49
850
85,960
2.14
458
Total investment securities
402,056
2.96
2,974
334,568
2.93
2,444
Mortgages held for sale (4)
19,758
3.94
195
20,140
3.60
181
Loans held for sale (4)
210
6.95
4
239
4.83
3
Loans:
Commercial:
Commercial and industrial - U.S.
273,073
3.70
2,521
270,862
3.45
2,328
Commercial and industrial - Non U.S.
56,426
2.86
402
51,201
2.35
300
Real estate mortgage
131,293
3.68
1,206
126,126
3.41
1,069
Real estate construction
25,271
4.10
259
23,115
3.49
200
Lease financing
19,058
4.82
230
18,930
5.12
242
Total commercial
505,121
3.67
4,618
490,234
3.39
4,139
Consumer:
Real estate 1-4 family first mortgage
275,108
4.08
2,805
275,854
4.01
2,765
Real estate 1-4 family junior lien mortgage
43,602
4.78
521
50,609
4.37
551
Credit card
34,868
12.18
1,059
33,368
11.52
956
Automobile
59,112
5.43
800
61,149
5.66
860
Other revolving credit and installment
39,068
6.13
596
39,537
5.91
581
Total consumer
451,758
5.13
5,781
460,517
4.98
5,713
Total loans (4)
956,879
4.36
10,399
950,751
4.16
9,852
Other
10,713
2.00
54
6,014
2.30
35
Total earning assets
$
1,769,321
3.41 %
$
15,046
1,686,875
3.20 %
$
13,456
Funding sources
Deposits:
Interest-bearing checking
$
48,465
0.41 %
$
50
39,772
0.13 %
$
13
Market rate and other savings
683,014
0.13
214
658,944
0.07
110
Savings certificates
22,599
0.30
17
26,246
0.35
23
Other time deposits
57,158
1.43
203
61,170
0.85
129
Deposits in foreign offices
123,684
0.65
199
97,525
0.23
57
Total interest-bearing deposits
934,920
0.29
683
883,657
0.15
332
Short-term borrowings
95,763
0.69
164
111,848
0.28
78
Long-term debt
249,518
2.05
1,278
236,156
1.56
921
Other liabilities
20,981
2.05
108
16,336
2.06
83
Total interest-bearing liabilities
1,301,182
0.69
2,233
1,247,997
0.45
1,414
Portion of noninterest-bearing funding sources
468,139
--
--
438,878
Total funding sources
$
1,769,321
0.51
2,233
1,686,875
0.34
1,414
Net interest margin and net interest income on a
2.90 %
$
12,813
2.86 %
$
12,042
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,171
18,818
Goodwill
26,664
27,037
Other
112,923
129,354
Total noninterest-earning assets
$
157,758
175,209
Noninterest-bearing funding sources
Deposits
$
366,275
353,001
Other liabilities
53,654
60,083
Total equity
205,968
201,003
Noninterest-bearing funding sources used to fund earning assets
(468,139 )
(438,878 )
Net noninterest-bearing funding sources
$
157,758
175,209
Total assets
$
1,927,079
1,862,084
(1) Our average prime rate was 4.05% and 3.50% for the quarters
ended June 30, 2017 and 2016, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 1.21% and
0.64% 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 $330 million and
$309 million for the quarters ended June 30, 2017 and 2016,
respectively, predominantly related to tax-exempt income on
certain loans and securities. The federal statutory tax rate was
35% for the periods presented.
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
Six months ended June 30,
2017
2016
Interest
Interest
Average
Yields/
income/
Average
Yields/
income/
(in millions)
balance
rates
expense
balance
rates
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
282,687
0.88 %
$
1,230
289,240
0.49 %
$
703
other short-term investments
Trading assets
95,937
2.87
1,377
80,922
2.94
1,187
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
21,547
1.53
164
33,000
1.58
259
Securities of U.S. states and political subdivisions
52,873
4.03
1,066
51,357
4.24
1,088
Mortgage-backed securities:
Federal agencies
144,257
2.61
1,879
94,216
2.67
1,258
Residential and commercial
13,514
5.43
367
20,199
5.32
537
Total mortgage-backed securities
157,771
2.85
2,246
114,415
3.14
1,795
Other debt and equity securities
49,787
3.73
924
53,430
3.34
890
Total available-for-sale securities
281,978
3.13
4,400
252,202
3.20
4,032
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,697
2.20
487
44,667
2.19
487
Securities of U.S. states and political subdivisions
6,271
5.30
166
2,155
5.41
58
Federal agency and other mortgage-backed securities
67,538
2.46
831
31,586
2.16
341
Other debt securities
3,062
2.34
35
4,338
1.92
42
Total held-to-maturity securities
121,568
2.51
1,519
82,746
2.25
928
Total investment securities
403,546
2.94
5,919
334,948
2.97
4,960
Mortgages held for sale (4)
19,825
3.82
379
19,005
3.60
342
Loans held for sale (4)
161
6.08
5
260
3.97
5
Loans:
Commercial:
Commercial and industrial - U.S.
273,905
3.65
4,957
264,295
3.42
4,505
Commercial and industrial - Non U.S.
55,890
2.80
775
50,354
2.23
558
Real estate mortgage
131,868
3.62
2,370
124,432
3.41
2,109
Real estate construction
24,933
3.91
484
22,859
3.55
403
Lease financing
19,064
4.88
465
16,989
4.95
420
Total commercial
505,660
3.61
9,051
478,929
3.35
7,995
Consumer:
Real estate 1-4 family first mortgage
275,293
4.05
5,571
275,288
4.03
5,547
Real estate 1-4 family junior lien mortgage
44,439
4.69
1,036
51,423
4.38
1,122
Credit card
35,151
12.07
2,105
33,367
11.56
1,919
Automobile
60,304
5.45
1,628
60,631
5.66
1,708
Other revolving credit and installment
39,396
6.07
1,186
39,348
5.95
1,165
Total consumer
454,583
5.09
11,526
460,057
5.00
11,461
Total loans (4)
960,243
4.31
20,577
938,986
4.16
19,456
Other
8,801
2.37
104
5,910
2.18
65
Total earning assets
$
1,771,200
3.36 %
$
29,591
1,669,271
3.21 %
$
26,718
Funding sources
Deposits:
Interest-bearing checking
$
49,569
0.35 %
$
87
39,242
0.12 %
$
24
Market rate and other savings
683,591
0.11
371
655,247
0.07
217
Savings certificates
23,030
0.29
34
27,063
0.40
54
Other time deposits
56,043
1.37
381
59,688
0.80
236
Deposits in foreign offices
122,946
0.57
347
97,604
0.22
108
Total interest-bearing deposits
935,179
0.26
1,220
878,844
0.15
639
Short-term borrowings
97,149
0.58
279
109,853
0.27
145
Long-term debt
254,627
1.94
2,461
226,519
1.56
1,763
Other liabilities
18,905
2.12
200
16,414
2.10
172
Total interest-bearing liabilities
1,305,860
0.64
4,160
1,231,630
0.44
2,719
Portion of noninterest-bearing funding sources
465,340
--
--
437,641
--
--
Total funding sources
$
1,771,200
0.47
4,160
1,669,271
0.33
2,719
Net interest margin and net interest income on a
2.89 %
$
25,431
2.88 %
$
23,999
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,437
18,407
Goodwill
26,668
26,553
Other
112,744
126,749
Total noninterest-earning assets
$
157,849
171,709
Noninterest-bearing funding sources
Deposits
$
365,019
349,200
Other liabilities
54,291
61,355
Total equity
203,879
198,795
Noninterest-bearing funding sources used to fund earning assets
(465,340 )
(437,641 )
Net noninterest-bearing funding sources
$
157,849
171,709
Total assets
$
1,929,049
1,840,980
(1) Our average prime rate was 3.92% and 3.50% for the first half
of 2017 and 2016, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 1.14% and 0.63% for the same
periods, 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 $648 million and
$599 million for the first half of 2017 and 2016, respectively,
predominantly related to tax-exempt income on certain loans and
securities. The federal statutory tax rate was 35% for the periods
presented.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Jun 30, 2017
Mar 31, 2017
Dec 31, 2016
Sep 30, 2016
Jun 30, 2016
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
($ in billions)
balance
rates
balance
rates
balance
rates
balance
rates
balance
rates
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
281.6
0.99 %
$
283.8
0.76 %
$
273.1
0.56 %
$
299.4
0.50 %
$
293.8
0.49 %
other short-term investments
Trading assets
98.1
2.95
93.8
2.80
102.8
2.96
88.8
2.72
81.4
2.86
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
18.1
1.53
25.0
1.54
25.9
1.53
25.8
1.52
31.5
1.56
Securities of U.S. states and political subdivisions
53.5
4.03
52.2
4.03
53.9
4.06
55.2
4.28
52.2
4.24
Mortgage-backed securities:
Federal agencies
132.0
2.63
156.6
2.58
148.0
2.37
105.8
2.39
92.0
2.53
Residential and commercial
12.6
5.55
14.5
5.32
16.5
5.87
18.1
5.54
19.6
5.44
Total mortgage-backed securities
144.6
2.89
171.1
2.81
164.5
2.72
123.9
2.85
111.6
3.04
Other debt and equity securities
49.0
3.87
50.7
3.60
52.7
3.71
54.2
3.37
53.3
3.48
Total available-for-sale securities
265.2
3.21
299.0
3.05
297.0
3.03
259.1
3.13
248.6
3.20
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44.7
2.19
44.7
2.20
44.7
2.20
44.6
2.19
44.6
2.19
Securities of U.S. states and political subdivisions
6.3
5.29
6.3
5.30
4.7
5.31
2.5
5.24
2.2
5.41
Federal agency and other mortgage-backed securities
83.1
2.44
51.8
2.51
46.0
1.81
48.0
1.97
35.1
1.90
Other debt securities
2.8
2.34
3.3
2.34
3.6
2.26
3.9
1.98
4.1
1.92
Total held-to-maturity securities
136.9
2.49
106.1
2.54
99.0
2.17
99.0
2.15
86.0
2.14
Total investment securities
402.1
2.96
405.1
2.92
396.0
2.82
358.1
2.86
334.6
2.93
Mortgages held for sale
19.8
3.94
19.9
3.70
27.5
3.43
24.1
3.44
20.1
3.60
Loans held for sale
0.2
6.95
0.1
4.44
0.2
5.42
0.2
3.04
0.2
4.83
Loans:
Commercial:
Commercial and industrial - U.S.
273.1
3.70
274.8
3.59
272.8
3.46
271.2
3.48
270.9
3.45
Commercial and industrial - Non U.S.
56.4
2.86
55.3
2.73
54.4
2.58
51.3
2.40
51.2
2.35
Real estate mortgage
131.3
3.68
132.4
3.56
131.2
3.44
128.8
3.48
126.1
3.41
Real estate construction
25.3
4.10
24.6
3.72
23.9
3.61
23.2
3.50
23.1
3.49
Lease financing
19.0
4.82
19.1
4.94
18.9
5.78
18.9
4.70
19.0
5.12
Total commercial
505.1
3.67
506.2
3.54
501.2
3.45
493.4
3.42
490.3
3.39
Consumer:
Real estate 1-4 family first mortgage
275.1
4.08
275.5
4.02
277.7
4.01
278.5
3.97
275.9
4.01
Real estate 1-4 family junior lien mortgage
43.6
4.78
45.3
4.60
47.2
4.42
48.9
4.37
50.6
4.37
Credit card
34.9
12.18
35.4
11.97
35.4
11.73
34.6
11.60
33.4
11.52
Automobile
59.1
5.43
61.5
5.46
62.5
5.54
62.5
5.60
61.1
5.66
Other revolving credit and installment
39.1
6.13
39.7
6.02
40.1
5.91
39.6
5.92
39.5
5.91
Total consumer
451.8
5.13
457.4
5.06
462.9
5.01
464.1
4.97
460.5
4.98
Total loans
956.9
4.36
963.6
4.26
964.1
4.20
957.5
4.17
950.8
4.16
Other
10.6
2.00
6.8
2.96
6.7
3.27
6.4
2.30
6.0
2.30
Total earning assets
$
1,769.3
3.41 %
$
1,773.1
3.31 %
$
1,770.4
3.24 %
$
1,734.5
3.17 %
$
1,686.9
3.20 %
Funding sources
Deposits:
Interest-bearing checking
$
48.5
0.41 %
$
50.7
0.29 %
$
46.9
0.17 %
$
44.0
0.15 %
$
39.8
0.13 %
Market rate and other savings
683.0
0.13
684.2
0.09
676.4
0.07
667.2
0.07
659.0
0.07
Savings certificates
22.6
0.30
23.5
0.29
24.4
0.30
25.2
0.30
26.2
0.35
Other time deposits
57.1
1.43
54.9
1.31
49.2
1.16
54.9
0.93
61.2
0.85
Deposits in foreign offices
123.7
0.65
122.2
0.49
110.4
0.35
107.1
0.30
97.5
0.23
Total interest-bearing deposits
934.9
0.29
935.5
0.23
907.3
0.18
898.4
0.16
883.7
0.15
Short-term borrowings
95.8
0.69
98.5
0.47
124.7
0.33
116.2
0.29
111.8
0.28
Long-term debt
249.5
2.05
259.8
1.83
252.2
1.68
252.4
1.59
236.2
1.56
Other liabilities
21.0
2.05
16.8
2.22
17.1
2.15
16.8
2.11
16.3
2.06
Total interest-bearing liabilities
1,301.2
0.69
1,310.6
0.59
1,301.3
0.51
1,283.8
0.48
1,248.0
0.45
Portion of noninterest-bearing funding sources
468.1
--
462.5
--
469.1
--
450.7
--
438.9
--
Total funding sources
$
1,769.3
0.51
$
1,773.1
0.44
$
1,770.4
0.37
$
1,734.5
0.35
$
1,686.9
0.34
Net interest margin on a taxable-equivalent basis
2.90 %
2.87 %
2.87 %
2.82 %
2.86 %
Noninterest-earning assets
Cash and due from banks
$
18.2
18.7
19.0
18.7
18.8
Goodwill
26.7
26.7
26.7
27.0
27.0
Other
112.9
112.5
128.2
134.4
129.4
Total noninterest-earnings assets
$
157.8
157.9
173.9
180.1
175.2
Noninterest-bearing funding sources
Deposits
$
366.3
363.7
376.9
363.1
353.0
Other liabilities
53.6
54.9
64.9
63.8
60.1
Total equity
206.0
201.8
201.2
203.9
201.0
Noninterest-bearing funding sources used to fund earning assets
(468.1 )
(462.5 )
(469.1 )
(450.7 )
(438.9 )
Net noninterest-bearing funding sources
$
157.8
157.9
173.9
180.1
175.2
Total assets
$
1,927.1
1,931.0
1,944.3
1,914.6
1,862.1
(1) Our average prime rate was 4.05% for the quarter ended June
30, 2017, 3.80% for the quarter ended March 31, 2017, 3.54% for
the quarter ended December 31, 2016 and 3.50% for the quarters
ended September 30 and June 30, 2016. The average three-month
London Interbank Offered Rate (LIBOR) was 1.21%, 1.07%, 0.92%,
0.79% and 0.64% 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 June 30,
%
Six months ended June 30,
%
(in millions)
2017
2016
Change
2017
2016
Change
Service charges on deposit accounts
$
1,276
1,336
(4 )%
$
2,589
2,645
(2 )%
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,329
2,291
2
4,653
4,530
3
Trust and investment management
837
835
--
1,666
1,650
1
Investment banking
463
421
10
880
752
17
Total trust and investment fees
3,629
3,547
2
7,199
6,932
4
Card fees
1,019
997
2
1,964
1,938
1
Other fees:
Charges and fees on loans
325
317
3
632
630
--
Cash network fees
134
138
(3 )
260
269
(3 )
Commercial real estate brokerage commissions
102
86
19
183
203
(10 )
Letters of credit fees
76
83
(8 )
150
161
(7 )
Wire transfer and other remittance fees
112
101
11
219
193
13
All other fees
153
181
(15 )
323
383
(16 )
Total other fees
902
906
--
1,767
1,839
(4 )
Mortgage banking:
Servicing income, net
400
360
11
856
1,210
(29 )
Net gains on mortgage loan origination/sales activities
748
1,054
(29 )
1,520
1,802
(16 )
Total mortgage banking
1,148
1,414
(19 )
2,376
3,012
(21 )
Insurance
280
286
(2 )
557
713
(22 )
Net gains from trading activities
237
328
(28 )
676
528
28
Net gains on debt securities
120
447
(73 )
156
691
(77 )
Net gains from equity investments
188
189
(1 )
591
433
36
Lease income
493
497
(1 )
974
870
12
Life insurance investment income
145
149
(3 )
289
303
(5 )
All other
249
333
(25 )
250
1,053
(76 )
Total
$
9,686
10,429
(7 )
$ 19,388
20,957
(7 )
NONINTEREST EXPENSE
Quarter ended June 30,
%
Six months ended June 30,
%
(in millions)
2017
2016
Change
2017
2016
Change
Salaries
$
4,343
4,099
6 %
$
8,604
8,135
6 %
Commission and incentive compensation
2,499
2,604
(4 )
5,224
5,249
--
Employee benefits
1,308
1,244
5
2,994
2,770
8
Equipment
529
493
7
1,106
1,021
8
Net occupancy
706
716
(1 )
1,418
1,427
(1 )
Core deposit and other intangibles
287
299
(4 )
576
592
(3 )
FDIC and other deposit assessments
328
255
29
661
505
31
Outside professional services
1,029
769
34
1,833
1,352
36
Operating losses
350
334
5
632
788
(20 )
Operating leases
334
352
(5 )
679
587
16
Contract services
349
283
23
674
565
19
Outside data processing
236
225
5
456
433
5
Travel and entertainment
171
193
(11 )
350
365
(4 )
Postage, stationery and supplies
134
153
(12 )
279
316
(12 )
Advertising and promotion
150
166
(10 )
277
300
(8 )
Telecommunications
91
94
(3 )
182
186
(2 )
Foreclosed assets
52
66
(21 )
138
144
(4 )
Insurance
24
22
9
48
133
(64 )
All other
621
499
24
1,202
1,026
17
Total
$ 13,541
12,866
5
$ 27,333
25,894
6
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Service charges on deposit accounts
$
1,276
1,313
1,357
1,370
1,336
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,329
2,324
2,342
2,344
2,291
Trust and investment management
837
829
837
849
835
Investment banking
463
417
519
420
421
Total trust and investment fees
3,629
3,570
3,698
3,613
3,547
Card fees
1,019
945
1,001
997
997
Other fees:
Charges and fees on loans
325
307
305
306
317
Cash network fees
134
126
130
138
138
Commercial real estate brokerage commissions
102
81
172
119
86
Letters of credit fees
76
74
79
81
83
Wire transfer and other remittance fees
112
107
105
103
101
All other fees
153
170
171
179
181
Total other fees
902
865
962
926
906
Mortgage banking:
Servicing income, net
400
456
196
359
360
Net gains on mortgage loan origination/sales activities
748
772
1,221
1,308
1,054
Total mortgage banking
1,148
1,228
1,417
1,667
1,414
Insurance
280
277
262
293
286
Net gains (losses) from trading activities
237
439
(109 )
415
328
Net gains on debt securities
120
36
145
106
447
Net gains from equity investments
188
403
306
140
189
Lease income
493
481
523
534
497
Life insurance investment income
145
144
132
152
149
All other
249
1
(514 )
163
333
Total
$
9,686
9,702
9,180
10,376
10,429
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Salaries
$
4,343
4,261
4,193
4,224
4,099
Commission and incentive compensation
2,499
2,725
2,478
2,520
2,604
Employee benefits
1,308
1,686
1,101
1,223
1,244
Equipment
529
577
642
491
493
Net occupancy
706
712
710
718
716
Core deposit and other intangibles
287
289
301
299
299
FDIC and other deposit assessments
328
333
353
310
255
Outside professional services
1,029
804
984
802
769
Operating losses
350
282
243
577
334
Operating leases
334
345
379
363
352
Contract services
349
325
325
313
283
Outside data processing
236
220
222
233
225
Travel and entertainment
171
179
195
144
193
Postage, stationery and supplies
134
145
156
150
153
Advertising and promotion
150
127
178
117
166
Telecommunications
91
91
96
101
94
Foreclosed assets
52
86
75
(17 )
66
Insurance
24
24
23
23
22
All other
621
581
561
677
499
Total
$ 13,541
13,792
13,215
13,268
12,866
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
Jun 30,
Dec 31,
%
(in millions, except shares)
2017
2016
Change
Assets
Cash and due from banks
$
20,248
20,729
(2 )%
Federal funds sold, securities purchased under resale agreements and
264,706
266,038
(1 )
other short-term investments
Trading assets
83,607
74,397
12
Investment securities:
Available-for-sale, at fair value
269,202
308,364
(13 )
Held-to-maturity, at cost
140,392
99,583
41
Mortgages held for sale
24,807
26,309
(6 )
Loans held for sale
156
80
95
Loans
957,423
967,604
(1 )
Allowance for loan losses
(11,073 )
(11,419 )
(3 )
Net loans
946,350
956,185
(1 )
Mortgage servicing rights:
Measured at fair value
12,789
12,959
(1 )
Amortized
1,399
1,406
--
Premises and equipment, net
8,403
8,333
1
Goodwill
26,573
26,693
--
Derivative assets
13,273
14,498
(8 )
Other assets
118,966
114,541
4
Total assets
$ 1,930,871
1,930,115
--
Liabilities
Noninterest-bearing deposits
$
372,766
375,967
(1 )
Interest-bearing deposits
933,064
930,112
--
Total deposits
1,305,830
1,306,079
--
Short-term borrowings
95,356
96,781
(1 )
Derivative liabilities
11,636
14,492
(20 )
Accrued expenses and other liabilities
73,035
57,189
28
Long-term debt
238,869
255,077
(6 )
Total liabilities
1,724,726
1,729,618
--
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,785
24,551
5
Common stock - $1-2/3 par value, authorized 9,000,000,000 shares;
9,136
9,136
--
issued 5,481,811,474 shares
Additional paid-in capital
60,689
60,234
1
Retained earnings
139,524
133,075
5
Cumulative other comprehensive income (loss)
(2,110 )
(3,137 )
(33 )
Treasury stock - 515,041,424 shares and 465,702,148 shares
(25,675 )
(22,713 )
13
Unearned ESOP shares
(2,119 )
(1,565 )
35
Total Wells Fargo stockholders’ equity
205,230
199,581
3
Noncontrolling interests
915
916
--
Total equity
206,145
200,497
3
$ 1,930,871
1,930,115
--
Total liabilities and equity
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Assets
Cash and due from banks
$
20,248
19,698
20,729
19,287
20,407
Federal funds sold, securities purchased under resale agreements and
264,706
308,747
266,038
298,325
295,521
other short-term investments
Trading assets
83,607
80,326
74,397
81,094
71,556
Investment securities:
Available-for-sale, at fair value
269,202
299,530
308,364
291,591
253,006
Held-to-maturity, at cost
140,392
108,030
99,583
99,241
100,420
Mortgages held for sale
24,807
17,822
26,309
27,423
23,930
Loans held for sale
156
253
80
183
220
Loans
957,423
958,405
967,604
961,326
957,157
Allowance for loan losses
(11,073 )
(11,168 )
(11,419 )
(11,583 )
(11,664 )
Net loans
946,350
947,237
956,185
949,743
945,493
Mortgage servicing rights:
Measured at fair value
12,789
13,208
12,959
10,415
10,396
Amortized
1,399
1,402
1,406
1,373
1,353
Premises and equipment, net
8,403
8,320
8,333
8,322
8,289
Goodwill
26,573
26,666
26,693
26,688
26,963
Derivative assets
13,273
12,564
14,498
18,736
20,999
Other assets
118,966
107,761
114,541
109,703
110,682
Total assets
$ 1,930,871
1,951,564
1,930,115
1,942,124
1,889,235
Liabilities
Noninterest-bearing deposits
$
372,766
365,780
375,967
376,136
361,934
Interest-bearing deposits
933,064
959,664
930,112
899,758
883,539
Total deposits
1,305,830
1,325,444
1,306,079
1,275,894
1,245,473
Short-term borrowings
95,356
94,871
96,781
124,668
120,258
Derivative liabilities
11,636
12,461
14,492
13,603
15,483
Accrued expenses and other liabilities
73,035
59,831
57,189
69,166
61,433
Long-term debt
238,869
256,468
255,077
254,835
243,927
Total liabilities
1,724,726
1,749,075
1,729,618
1,738,166
1,686,574
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,785
25,501
24,551
24,594
24,830
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,689
60,585
60,234
60,685
60,691
Retained earnings
139,524
136,032
133,075
130,288
127,076
Cumulative other comprehensive income (loss)
(2,110 )
(3,178 )
(3,137 )
2,184
2,948
Treasury stock
(25,675 )
(24,030 )
(22,713 )
(22,247 )
(21,068 )
Unearned ESOP shares
(2,119 )
(2,546 )
(1,565 )
(1,612 )
(1,868 )
Total Wells Fargo stockholders’ equity
205,230
201,500
199,581
203,028
201,745
Noncontrolling interests
915
989
916
930
916
Total equity
206,145
202,489
200,497
203,958
202,661
Total liabilities and equity
$ 1,930,871
1,951,564
1,930,115
1,942,124
1,889,235
Wells Fargo & Company and Subsidiaries
FIVE QUARTER INVESTMENT SECURITIES
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
$
17,896
24,625
25,819
26,376
27,939
Securities of U.S. states and political subdivisions
52,013
52,061
51,101
55,366
54,024
Mortgage-backed securities:
Federal agencies
135,938
156,966
161,230
135,692
95,868
Residential and commercial
12,772
14,233
16,318
18,387
19,938
Total mortgage-backed securities
148,710
171,199
177,548
154,079
115,806
Other debt securities
49,555
50,520
52,685
54,537
53,935
Total available-for-sale debt securities
268,174
298,405
307,153
290,358
251,704
Marketable equity securities
1,028
1,125
1,211
1,233
1,302
Total available-for-sale securities
269,202
299,530
308,364
291,591
253,006
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,704
44,697
44,690
44,682
44,675
Securities of U.S. states and political subdivisions
6,325
6,331
6,336
2,994
2,181
Federal agency and other mortgage-backed securities (1)
87,525
53,778
45,161
47,721
49,594
Other debt securities
1,838
3,224
3,396
3,844
3,970
Total held-to-maturity debt securities
140,392
108,030
99,583
99,241
100,420
Total investment securities
$
409,594
407,560
407,947
390,832
353,426
(1) Predominantly consists of federal agency mortgage-backed
securities.
FIVE QUARTER LOANS
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Commercial:
Commercial and industrial
$
331,113
329,252
330,840
324,020
323,858
Real estate mortgage
130,277
131,532
132,491
130,223
128,320
Real estate construction
25,337
25,064
23,916
23,340
23,387
Lease financing
19,174
19,156
19,289
18,871
18,973
Total commercial
505,901
505,004
506,536
496,454
494,538
Consumer:
Real estate 1-4 family first mortgage
276,566
274,633
275,579
278,689
277,162
Real estate 1-4 family junior lien mortgage
42,747
44,333
46,237
48,105
49,772
Credit card
35,305
34,742
36,700
34,992
34,137
Automobile
57,958
60,408
62,286
62,873
61,939
Other revolving credit and installment
38,946
39,285
40,266
40,213
39,609
Total consumer
451,522
453,401
461,068
464,872
462,619
Total loans (1)
$
957,423
958,405
967,604
961,326
957,157
(1) Includes $14.3 billion, $15.7 billion, $16.7 billion, $17.7
billion, and $19.3 billion of purchased credit-impaired (PCI)
loans at June 30, and March 31, 2017, and December 31, September
30, and June 30, 2016, 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.
Jun 30,
Mar 31
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Commercial foreign loans:
$
57,825
56,987
55,396
51,515
50,515
Commercial and industrial
8,359
8,206
8,541
8,466
8,467
Real estate mortgage
585
471
375
310
246
Real estate construction
1,092
986
972
958
987
Lease financing
$
67,861
66,650
65,284
61,249
60,215
Total commercial foreign loans
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND
FORECLOSED ASSETS)
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Nonaccrual loans:
Commercial:
Commercial and industrial
$ 2,632
2,898
3,216
3,331
3,464
Real estate mortgage
630
672
685
780
872
Real estate construction
34
40
43
59
59
Lease financing
89
96
115
92
112
Total commercial
3,385
3,706
4,059
4,262
4,507
Consumer:
Real estate 1-4 family first mortgage
4,413
4,743
4,962
5,310
5,970
Real estate 1-4 family junior lien mortgage
1,095
1,153
1,206
1,259
1,330
Automobile
104
101
106
108
111
Other revolving credit and installment
59
56
51
47
45
Total consumer
5,671
6,053
6,325
6,724
7,456
Total nonaccrual loans (1)(2)(3)
$ 9,056
9,759
10,384
10,986
11,963
As a percentage of total loans
0.95 %
1.02
1.07
1.14
1.25
Foreclosed assets:
Government insured/guaranteed
$
149
179
197
282
321
Non-government insured/guaranteed
632
726
781
738
796
Total foreclosed assets
781
905
978
1,020
1,117
Total nonperforming assets
$ 9,837
10,664
11,362
12,006
13,080
As a percentage of total loans
1.03 %
1.11
1.17
1.25
1.37
(1) Includes nonaccrual mortgages held for sale and loans held for
sale in their respective loan categories.
(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) and student loans largely
guaranteed by agencies on behalf of the U.S. Department of
Education under the Federal Family Education Loan Program are not
placed on nonaccrual status because they are insured or
guaranteed. All remaining student loans guaranteed under the FFELP
were sold as of March 31, 2017.
Wells Fargo & Company and Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Total (excluding PCI)(1):
$
9,716
10,525
11,858
12,068
12,385
Less: FHA insured/guaranteed by the VA (2)(3)
8,873
9,585
10,883
11,198
11,577
Less: Student loans guaranteed under the FFELP (4)
--
--
3
17
20
Total, not government insured/guaranteed
$
843
940
972
853
788
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial
$
42
88
28
47
36
Real estate mortgage
2
11
36
4
22
Real estate construction
10
3
--
--
--
Total commercial
54
102
64
51
58
Consumer:
Real estate 1-4 family first mortgage (3)
145
149
175
171
169
Real estate 1-4 family junior lien mortgage (3)
44
42
56
54
52
Credit card
411
453
452
392
348
Automobile
91
79
112
81
64
Other revolving credit and installment
98
115
113
104
97
Total consumer
789
838
908
802
730
Total, not government insured/guaranteed
$
843
940
972
853
788
(1) PCI loans totaled $1.5 billion, $1.8 billion, $2.0 billion,
$2.2 billion and $2.4 billion, at June 30 and March 31, 2017 and
December 31, September 30, and June 30, 2016, respectively.
(2) Represents loans whose repayments are predominantly insured by
the FHA or guaranteed by the VA.
(3) Includes mortgages held for sale 90 days or more past due and
still accruing.
(4) Represents loans whose repayments are largely guaranteed by
agencies on behalf of the U.S. Department of Education under the
FFELP. All remaining student loans guaranteed under the FFELP were
sold as of March 31, 2017.

Wells Fargo & Company and Subsidiaries CHANGES IN ACCRETABLE YIELD RELATED TO PURCHASED CREDIT-IMPAIRED (PCI) LOANS

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. PCI loans predominantly represent loans acquired from Wachovia that were deemed to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status, recent borrower credit scores and recent LTV percentages. PCI loans are initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, the associated allowance for credit losses related to these loans is not carried over at the acquisition date.

As a result of PCI loan accounting, certain credit-related ratios cannot be used to compare a portfolio that includes PCI loans against one that does not, or to compare ratios across quarters or years. The ratios particularly affected include the allowance for loan losses and allowance for credit losses as percentages of loans, of nonaccrual loans and of nonperforming assets; nonaccrual loans and nonperforming assets as a percentage of total loans; and net charge-offs as a percentage of loans.

The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated lives of the PCI loans using the effective yield method. The accretable yield is affected by:

Changes in interest rate indices for variable rate PCI loans - Expected future cash flows are based on the variable rates in effect at the time of the quarterly assessment of expected cash flows;

Changes in prepayment assumptions - Prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and

Changes in the expected principal and interest payments over the estimated life - Updates to changes in expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The change in the accretable yield related to PCI loans since the merger with Wachovia is presented in the following table.

Quarter
Six months
ended
ended
June 30,
June 30,
(in millions)
2017
2017
2009-2016
Balance, beginning of period
$
10,315
11,216
10,447
Change in accretable yield due to acquisitions
--
2
159
Accretion into interest income (1)
(374 )
(731 )
(15,577 )
Accretion into noninterest income due to sales (2)
(309 )
(334 )
(467 )
Reclassification from nonaccretable difference for loans with
--
406
10,955
improving credit-related cash flows (3)
Changes in expected cash flows that do not affect nonaccretable
(263 )
(1,190 )
5,699
difference (4)
Balance, end of period
$
9,369
9,369
11,216
(1) Includes accretable yield released as a result of settlements
with borrowers, which is included in interest income.
(2) Includes accretable yield released as a result of sales to
third parties, which is included in noninterest income.
(3) At June 30, 2017, our carrying value for PCI loans totaled
$14.3 billion and the remainder of nonaccretable difference
established in purchase accounting totaled $649 million. The
nonaccretable difference absorbs losses of contractual amounts
that exceed our carrying value for PCI loans.
(4) Represents changes in cash flows expected to be collected due
to the impact of modifications, changes in prepayment assumptions,
changes in interest rates on variable rate PCI loans and sales to
third parties.
Wells Fargo & Company and Subsidiaries
PICK-A-PAY PORTFOLIO (1)
June 30, 2017
PCI loans
All other loans
Ratio of
Ratio of
Adjusted
carrying
carrying
unpaid
Current
value to
value to
principal
LTV
Carrying
current
Carrying
current
(in millions)
balance (2)
ratio (3)
value (4)
value (5)
value (4)
value (5)
California
$
12,263
63 %
$
9,511
48 %
$
7,077
45 %
Florida
1,540
70
1,146
51
1,502
56
New Jersey
609
77
447
56
995
63
New York
458
70
360
51
497
60
Texas
141
49
108
37
598
38
Other states
3,057
70
2,308
52
4,147
57
Total Pick-a-Pay loans
$
18,068
65
$
13,880
49
$
14,816
51
(1) The individual states shown in this table represent the top
five states based on the total net carrying value of the
Pick-a-Pay loans at the beginning of 2017.
(2) Adjusted unpaid principal balance includes write-downs taken
on loans where severe delinquency (normally 180 days) or other
indications of severe borrower financial stress exist that
indicate there will be a loss of contractually due amounts upon
final resolution of the loan.
(3) The current LTV ratio is calculated as the adjusted unpaid
principal balance divided by the collateral value. Collateral
values are generally determined using automated valuation models
(AVM) and are updated quarterly. AVMs are computer-based tools
used to estimate market values of homes based on processing large
volumes of market data including market comparables and price
trends for local market areas.
(4) Carrying value, which does not reflect the allowance for loan
losses, includes remaining purchase accounting adjustments, which,
for PCI loans may include the nonaccretable difference and the
accretable yield and, for all other loans, an adjustment to mark
the loans to a market yield at date of merger less any subsequent
charge-offs.
(5) The ratio of carrying value to current value is calculated as
the carrying value divided by the collateral value.
Wells Fargo & Company and Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT LOSSES
Quarter ended June 30,
Six months ended June 30,
(in millions)
2017
2016
2017
2016
Balance, beginning of period
$
12,287
12,668
12,540
12,512
Provision for credit losses
555
1,074
1,160
2,160
Interest income on certain impaired loans (1)
(46 )
(51 )
(94 )
(99 )
Loan charge-offs:
Commercial:
Commercial and industrial
(161 )
(437 )
(414 )
(786 )
Real estate mortgage
(8 )
(3 )
(13 )
(6 )
Real estate construction
--
(1 )
--
(1 )
Lease financing
(13 )
(17 )
(20 )
(21 )
Total commercial
(182 )
(458 )
(447 )
(814 )
Consumer:
Real estate 1-4 family first mortgage
(55 )
(123 )
(124 )
(260 )
Real estate 1-4 family junior lien mortgage
(62 )
(133 )
(155 )
(266 )
Credit card
(379 )
(320 )
(746 )
(634 )
Automobile
(212 )
(176 )
(467 )
(387 )
Other revolving credit and installment
(185 )
(163 )
(374 )
(338 )
Total consumer
(893 )
(915 )
(1,866 )
(1,885 )
Total loan charge-offs
(1,075 )
(1,373 )
(2,313 )
(2,699 )
Loan recoveries:
Commercial:
Commercial and industrial
83
69
165
145
Real estate mortgage
14
23
44
55
Real estate construction
4
4
12
12
Lease financing
6
5
8
8
Total commercial
107
101
229
220
Consumer:
Real estate 1-4 family first mortgage
71
109
133
198
Real estate 1-4 family junior lien mortgage
66
71
136
130
Credit card
59
50
117
102
Automobile
86
86
174
170
Other revolving credit and installment
31
32
64
69
Total consumer
313
348
624
669
Total loan recoveries
420
449
853
889
Net loan charge-offs
(655 )
(924 )
(1,460 )
(1,810 )
Other
5
(18 )
--
(14 )
Balance, end of period
$
12,146
12,749
12,146
12,749
Components:
Allowance for loan losses
$
11,073
11,664
11,073
11,664
Allowance for unfunded credit commitments
1,073
1,085
1,073
1,085
Allowance for credit losses
$
12,146
12,749
12,146
12,749
Net loan charge-offs (annualized) as a percentage of average total
0.27 %
0.39
0.31
0.39
loans
Allowance for loan losses as a percentage of total loans
1.16
1.22
1.16
1.22
Allowance for credit losses as a percentage of total loans
1.27
1.33
1.27
1.33
(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
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Balance, beginning of quarter
$
12,287
12,540
12,694
12,749
12,668
Provision for credit losses
555
605
805
805
1,074
Interest income on certain impaired loans (1)
(46 )
(48 )
(52 )
(54 )
(51 )
Loan charge-offs:
Commercial:
Commercial and industrial
(161 )
(253 )
(309 )
(324 )
(437 )
Real estate mortgage
(8 )
(5 )
(14 )
(7 )
(3 )
Real estate construction
--
--
--
--
(1 )
Lease financing
(13 )
(7 )
(16 )
(4 )
(17 )
Total commercial
(182 )
(265 )
(339 )
(335 )
(458 )
Consumer:
Real estate 1-4 family first mortgage
(55 )
(69 )
(86 )
(106 )
(123 )
Real estate 1-4 family junior lien mortgage
(62 )
(93 )
(110 )
(119 )
(133 )
Credit card
(379 )
(367 )
(329 )
(296 )
(320 )
Automobile
(212 )
(255 )
(243 )
(215 )
(176 )
Other revolving credit and installment
(185 )
(189 )
(200 )
(170 )
(163 )
Total consumer
(893 )
(973 )
(968 )
(906 )
(915 )
Total loan charge-offs
(1,075 )
(1,238 )
(1,307 )
(1,241 )
(1,373 )
Loan recoveries:
Commercial:
Commercial and industrial
83
82
53
65
69
Real estate mortgage
14
30
26
35
23
Real estate construction
4
8
8
18
4
Lease financing
6
2
1
2
5
Total commercial
107
122
88
120
101
Consumer:
Real estate 1-4 family first mortgage
71
62
89
86
109
Real estate 1-4 family junior lien mortgage
66
70
66
70
71
Credit card
59
58
54
51
50
Automobile
86
88
77
78
86
Other revolving credit and installment
31
33
28
31
32
Total consumer
313
311
314
316
348
Total loan recoveries
420
433
402
436
449
Net loan charge-offs
(655 )
(805 )
(905 )
(805 )
(924 )
Other
5
(5 )
(2 )
(1 )
(18 )
Balance, end of quarter
$
12,146
12,287
12,540
12,694
12,749
Components:
Allowance for loan losses
$
11,073
11,168
11,419
11,583
11,664
Allowance for unfunded credit commitments
1,073
1,119
1,121
1,111
1,085
Allowance for credit losses
$
12,146
12,287
12,540
12,694
12,749
Net loan charge-offs (annualized) as a percentage of average total
0.27 %
0.34
0.37
0.33
0.39
loans
Allowance for loan losses as a percentage of:
Total loans
1.16
1.17
1.18
1.20
1.22
Nonaccrual loans
122
114
110
105
98
Nonaccrual loans and other nonperforming assets
113
105
101
96
89
Allowance for credit losses as a percentage of:
Total loans
1.27
1.28
1.30
1.32
1.33
Nonaccrual loans
134
126
121
116
107
Nonaccrual loans and other nonperforming assets
123
115
110
106
97
(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)
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions, except ratios)
2017
2017
2016
2016
2016
Tangible book value per common share (1):
Total equity
$ 206,145
202,489
200,497
203,958
202,661
Adjustments:
Preferred stock
(25,785 )
(25,501 )
(24,551 )
(24,594 )
(24,830 )
Additional paid-in capital on ESOP
(136 )
(157 )
(126 )
(130 )
(150 )
preferred stock
Unearned ESOP shares
2,119
2,546
1,565
1,612
1,868
Noncontrolling interests
(915 )
(989 )
(916 )
(930 )
(916 )
Total common stockholders’ equity
(A)
181,428
178,388
176,469
179,916
178,633
Adjustments:
Goodwill
(26,573 )
(26,666 )
(26,693 )
(26,688 )
(26,963 )
(2,147 )
(2,449 )
(2,723 )
(3,001 )
(3,356 )
Certain identifiable intangible assets
(other than MSRs)
Other assets (2)
(2,159 )
(2,121 )
(2,088 )
(2,230 )
(2,110 )
Applicable deferred taxes (3)
1,624
1,698
1,772
1,832
1,906
Tangible common equity
(B)
$ 152,173
148,850
146,737
149,829
148,110
Common shares outstanding
(C)
4,966.8
4,996.7
5,016.1
5,023.9
5,048.5
Book value per common share
(A)/(C)
$
36.53
35.70
35.18
35.81
35.38
Tangible book value per common share
(B)/(C)
30.64
29.79
29.25
29.82
29.34
Quarter ended
Six months ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Jun 30,
Jun 30,
(in millions, except ratios)
2017
2017
2016
2016
2016
2017
2016
Return on average tangible common equity (1):
Net income applicable to common stock
(A)
$
5,404
5,056
4,872
5,243
5,173
10,460
10,258
Average total equity
205,968
201,767
201,247
203,883
201,003
203,879
198,795
Adjustments:
Preferred stock
(25,849 )
(25,163 )
(24,579 )
(24,813 )
(24,091 )
(25,508 )
(24,027 )
Additional paid-in capital on ESOP preferred stock
(144 )
(146 )
(128 )
(148 )
(168 )
(145 )
(184 )
Unearned ESOP shares
2,366
2,198
1,596
1,850
2,094
2,282
2,302
Noncontrolling interests
(910 )
(957 )
(928 )
(927 )
(984 )
(934 )
(944 )
Average common stockholders’ equity
(B)
181,431
177,699
177,208
179,845
177,854
179,574
175,942
Adjustments:
Goodwill
(26,664 )
(26,673 )
(26,713 )
(26,979 )
(27,037 )
(26,668 )
(26,553 )
Certain identifiable intangible assets (other than MSRs)
(2,303 )
(2,588 )
(2,871 )
(3,145 )
(3,600 )
(2,445 )
(3,503 )
Other assets (2)
(2,160 )
(2,095 )
(2,175 )
(2,131 )
(2,096 )
(2,128 )
(2,081 )
Applicable deferred taxes (3)
1,648
1,722
1,785
1,855
1,934
1,685
1,974
Average tangible common equity
(C)
$
151,952
148,065
147,234
149,445
147,055
150,018
145,779
Return on average common stockholders’ equity (ROE)
(A)/(B)
11.95 %
11.54
10.94
11.60
11.70
11.75
11.72
Return on average tangible common equity (ROTCE)
(A)/(C)
14.26
13.85
13.16
13.96
14.15
14.06
14.15
(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 investments 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 investments, 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
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in billions, except ratio)
2017
2017
2016
2016
2016
Total equity
$
206.1
202.5
200.5
204.0
202.7
Adjustments:
Preferred stock
(25.8 )
(25.5 )
(24.6 )
(24.6 )
(24.8 )
Additional paid-in capital on ESOP
(0.1 )
(0.2 )
(0.1 )
(0.1 )
(0.2 )
preferred stock
Unearned ESOP shares
2.1
2.5
1.6
1.6
1.9
Noncontrolling interests
(0.9 )
(1.0 )
(0.9 )
(1.0 )
(1.0 )
Total common stockholders’ equity
181.4
178.3
176.5
179.9
178.6
Adjustments:
Goodwill
(26.6 )
(26.7 )
(26.7 )
(26.7 )
(27.0 )
Certain identifiable intangible assets (other than MSRs)
(2.1 )
(2.4 )
(2.7 )
(3.0 )
(3.4 )
Other assets (2)
(2.2 )
(2.1 )
(2.1 )
(2.2 )
(2.0 )
Applicable deferred taxes (3)
1.6
1.7
1.8
1.8
1.9
Investment in certain subsidiaries and other
(0.2 )
(0.1 )
(0.4 )
(2.0 )
(2.5 )
Common Equity Tier 1 (Fully Phased-In) under Basel III
(A)
151.9
148.7
146.4
147.8
145.6
Total risk-weighted assets (RWAs) anticipated under Basel III (4)(5)
(B)
$ 1,312.6
1,324.5
1,358.9
1,380.0
1,372.9
Common Equity Tier 1 to total RWAs anticipated under Basel III
(A)/(B)
11.6 %
11.2
10.8
10.7
10.6
(Fully Phased-In) (5)
(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. These rules established a new comprehensive
capital framework for U.S. banking organizations that implements
the Basel III capital framework and certain provisions of the
Dodd-Frank Act. 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. Fully phased-in regulatory capital amounts, ratios and RWAs
are considered non-GAAP financial measures that are used by
management, bank regulatory agencies, investors and analysts to
assess and monitor the Company’s capital position.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, 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 June 30, 2017, is subject to
detailed analysis of considerable data, our CET1 ratio at that
date has been estimated using the Basel III definition of capital
under the Basel III Standardized Approach RWAs. The capital ratio
for March 31, 2017, and December 31, September 30 and June 30,
2016, was calculated under the Basel III Standardized Approach
RWAs.
(5) The Company’s June 30, 2017, RWAs and capital ratio are
preliminary estimates.
Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,
Community
Wholesale
Wealth and
Other (2)
Consolidated
average balances in billions)
Banking
Banking
Investment
Company
Management
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Quarter ended Jun 30,
Net interest income (3)
$
7,548
7,379
4,278
3,919
1,127
932
(470 )
(497 )
12,483
11,733
Provision (reversal of provision) for credit losses
623
689
(65 )
385
7
2
(10 )
(2 )
555
1,074
Noninterest income
4,741
4,825
2,673
3,365
3,055
2,987
(783 )
(748 )
9,686
10,429
Noninterest expense
7,223
6,648
4,078
4,036
3,075
2,976
(835 )
(794 )
13,541
12,866
Income (loss) before income tax expense (benefit)
4,443
4,867
2,938
2,863
1,100
941
(408 )
(449 )
8,073
8,222
Income tax expense (benefit)
1,404
1,667
559
795
417
358
(155 )
(171 )
2,225
2,649
Net income (loss) before noncontrolling interests
3,039
3,200
2,379
2,068
683
583
(253 )
(278 )
5,848
5,573
Less: Net income (loss) from noncontrolling interests
46
21
(9 )
(5 )
1
(1 )
--
--
38
15
Net income (loss)
$
2,993
3,179
2,388
2,073
682
584
(253 )
(278 )
5,810
5,558
Average loans
$
477.2
485.7
464.9
451.4
71.7
66.7
(56.9 )
(53.0 )
956.9
950.8
Average assets
983.5
967.6
817.3
772.6
213.1
205.3
(86.8 )
(83.4 )
1,927.1
1,862.1
Average deposits
727.2
703.7
463.0
425.8
188.2
182.5
(77.2 )
(75.3 )
1,301.2
1,236.7
Six months ended June 30,
Net interest income (3)
$
15,175
14,847
8,426
7,667
2,201
1,875
(1,019 )
(989 )
24,783
23,400
Provision (reversal of provision) for credit losses
1,269
1,409
(108 )
748
3
(12 )
(4 )
15
1,160
2,160
Noninterest income
9,207
9,971
5,563
6,575
6,174
5,898
(1,556 )
(1,487 )
19,388
20,957
Noninterest expense
14,444
13,484
8,303
8,004
6,281
6,018
(1,695 )
(1,612 )
27,333
25,894
Income (loss) before income tax expense (benefit)
8,669
9,925
5,794
5,490
2,091
1,767
(876 )
(879 )
15,678
16,303
Income tax expense (benefit)
2,531
3,364
1,305
1,514
779
672
(333 )
(334 )
4,282
5,216
Net income (loss) before noncontrolling interests
6,138
6,561
4,489
3,976
1,312
1,095
(543 )
(545 )
11,396
11,087
Less: Net income (loss) from noncontrolling interests
136
86
(14 )
(18 )
7
(1 )
--
--
129
67
Net income (loss)
$
6,002
6,475
4,503
3,994
1,305
1,096
(543 )
(545 )
11,267
11,020
Average loans
$
479.9
485.0
465.6
440.6
71.2
65.4
(56.5 )
(52.0 )
960.2
939.0
Average assets
987.0
957.5
812.6
760.6
217.5
206.7
(88.1 )
(83.8 )
1,929.0
1,841.0
Average deposits
722.2
693.3
464.5
426.9
191.9
183.5
(78.4 )
(75.7 )
1,300.2
1,228.0
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is
not necessarily comparable with other similar information for
other financial services companies. We define our operating
segments by product type and customer segment.
(2) Includes the elimination of certain items that are included in
more than one business segment, substantially all 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
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(income/expense in millions, average balances in billions)
2017
2017
2016
2016
2016
COMMUNITY BANKING
Net interest income (2)
$
7,548
7,627
7,556
7,430
7,379
Provision for credit losses
623
646
631
651
689
Noninterest income
4,741
4,466
4,105
4,957
4,825
Noninterest expense
7,223
7,221
6,985
6,953
6,648
Income before income tax expense
4,443
4,226
4,045
4,783
4,867
Income tax expense
1,404
1,127
1,272
1,546
1,667
Net income before noncontrolling interests
3,039
3,099
2,773
3,237
3,200
Less: Net income from noncontrolling interests
46
90
40
10
21
Segment net income
$
2,993
3,009
2,733
3,227
3,179
Average loans
$
477.2
482.7
488.1
489.2
485.7
Average assets
983.5
990.7
1,000.7
993.6
967.6
Average deposits
727.2
717.2
709.8
708.0
703.7
WHOLESALE BANKING
Net interest income (2)
$
4,278
4,148
4,323
4,062
3,919
Provision (reversal of provision) for credit losses
(65 )
(43 )
168
157
385
Noninterest income
2,673
2,890
2,830
3,085
3,365
Noninterest expense
4,078
4,225
4,002
4,120
4,036
Income before income tax expense
2,938
2,856
2,983
2,870
2,863
Income tax expense
559
746
795
827
795
Net income before noncontrolling interests
2,379
2,110
2,188
2,043
2,068
Less: Net loss from noncontrolling interests
(9 )
(5 )
(6 )
(4 )
(5 )
Segment net income
$
2,388
2,115
2,194
2,047
2,073
Average loans
$
464.9
466.3
461.5
454.3
451.4
Average assets
817.3
807.8
811.9
794.2
772.6
Average deposits
463.0
466.0
459.2
441.2
425.8
WEALTH AND INVESTMENT MANAGEMENT
Net interest income (2)
$
1,127
1,074
1,061
977
932
Provision (reversal of provision) for credit losses
7
(4 )
3
4
2
Noninterest income
3,055
3,119
3,013
3,122
2,987
Noninterest expense
3,075
3,206
3,042
2,999
2,976
Income before income tax expense
1,100
991
1,029
1,096
941
Income tax expense
417
362
380
415
358
Net income before noncontrolling interests
683
629
649
681
583
Less: Net income (loss) from noncontrolling interests
1
6
(4 )
4
(1 )
Segment net income
$
682
623
653
677
584
Average loans
$
71.7
70.7
70.0
68.4
66.7
Average assets
213.1
221.9
220.4
212.1
205.3
Average deposits
188.2
195.6
194.9
189.2
182.5
OTHER (3)
Net interest income (2)
$
(470 )
(549 )
(538 )
(517 )
(497 )
Provision (reversal of provision) for credit losses
(10 )
6
3
(7 )
(2 )
Noninterest income
(783 )
(773 )
(768 )
(788 )
(748 )
Noninterest expense
(835 )
(860 )
(814 )
(804 )
(794 )
Loss before income tax benefit
(408 )
(468 )
(495 )
(494 )
(449 )
Income tax benefit
(155 )
(178 )
(189 )
(187 )
(171 )
Net loss before noncontrolling interests
(253 )
(290 )
(306 )
(307 )
(278 )
Less: Net income from noncontrolling interests
--
--
--
--
--
Other net loss
$
(253 )
(290 )
(306 )
(307 )
(278 )
Average loans
$
(56.9 )
(56.1 )
(55.5 )
(54.4 )
(53.0 )
Average assets
(86.8 )
(89.4 )
(88.7 )
(85.3 )
(83.4 )
Average deposits
(77.2 )
(79.6 )
(79.7 )
(76.9 )
(75.3 )
CONSOLIDATED COMPANY
Net interest income (2)
$
12,483
12,300
12,402
11,952
11,733
Provision for credit losses
555
605
805
805
1,074
Noninterest income
9,686
9,702
9,180
10,376
10,429
Noninterest expense
13,541
13,792
13,215
13,268
12,866
Income before income tax expense
8,073
7,605
7,562
8,255
8,222
Income tax expense
2,225
2,057
2,258
2,601
2,649
Net income before noncontrolling interests
5,848
5,548
5,304
5,654
5,573
Less: Net income from noncontrolling interests
38
91
30
10
15
Wells Fargo net income
$
5,810
5,457
5,274
5,644
5,558
Average loans
$
956.9
963.6
964.1
957.5
950.8
Average assets
1,927.1
1,931.0
1,944.3
1,914.6
1,862.1
Average deposits
1,301.2
1,299.2
1,284.2
1,261.5
1,236.7
(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
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
(3) Includes the elimination of certain items that are included in
more than one business segment, substantially all 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
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
MSRs measured using the fair value method:
Fair value, beginning of quarter
$
13,208
12,959
10,415
10,396
11,333
Servicing from securitizations or asset transfers (1)
436
583
752
609
477
Sales and other (2)
(8 )
(47 )
(47 )
4
(22 )
Net additions
428
536
705
613
455
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)
(305 )
152
2,367
39
(779 )
Servicing and foreclosure costs (4)
(14 )
27
93
(10 )
(4 )
Prepayment estimates and other (5)
(41 )
(5 )
(106 )
(37 )
(41 )
Net changes in valuation model inputs or assumptions
(360 )
174
2,354
(8 )
(824 )
Changes due to collection/realization of expected cash flows over
(487 )
(461 )
(515 )
(586 )
(568 )
time
Total changes in fair value
(847 )
(287 )
1,839
(594 )
(1,392 )
Fair value, end of quarter
$
12,789
13,208
12,959
10,415
10,396
(1) Includes impacts associated with exercising our right to
repurchase delinquent loans from 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.
(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) 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
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Amortized MSRs:
Balance, beginning of quarter
$
1,402
1,406
1,373
1,353
1,359
Purchases
26
18
34
18
24
Servicing from securitizations or asset transfers
37
45
66
69
38
Amortization
(66 )
(67 )
(67 )
(67 )
(68 )
Balance, end of quarter
$
1,399
1,402
1,406
1,373
1,353
Fair value of amortized MSRs:
Beginning of quarter
$
2,051
1,956
1,627
1,620
1,725
End of quarter
1,989
2,051
1,956
1,627
1,620
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Servicing income, net:
Servicing fees (1)
$
882
882
738
878
842
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)
(A)
(360 )
174
2,354
(8 )
(824 )
Changes due to collection/realization of expected cash flows over
(487 )
(461 )
(515 )
(586 )
(568 )
time
Total changes in fair value of MSRs carried at fair value
(847 )
(287 )
1,839
(594 )
(1,392 )
Amortization
(66 )
(67 )
(67 )
(67 )
(68 )
Net derivative gains (losses) from economic hedges (3)
(B)
431
(72 )
(2,314 )
142
978
Total servicing income, net
$
400
456
196
359
360
Market-related valuation changes to MSRs, net of hedge results (2)(3)
(A)+(B)
$
71
102
40
134
154
(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.
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in billions)
2017
2017
2016
2016
2016
Managed servicing portfolio (1):
Residential mortgage servicing:
Serviced for others
$
1,189
1,204
1,205
1,226
1,250
Owned loans serviced
343
335
347
352
349
Subserviced for others
4
4
8
4
4
Total residential servicing
1,536
1,543
1,560
1,582
1,603
Commercial mortgage servicing:
Serviced for others
475
474
479
477
478
Owned loans serviced
130
132
132
130
128
Subserviced for others
8
7
8
8
8
Total commercial servicing
613
613
619
615
614
Total managed servicing portfolio
$
2,149
2,156
2,179
2,197
2,217
Total serviced for others
$
1,664
1,678
1,684
1,703
1,728
Ratio of MSRs to related loans serviced for others
0.85 %
0.87
0.85
0.69
0.68
Weighted-average note rate (mortgage loans serviced for others)
4.23
4.23
4.26
4.28
4.32
(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
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
2017
2017
2016
2016
2016
Net gains on mortgage loan origination/sales activities (in
millions):
Residential
(A)
$
521
569
939
953
744
Commercial
81
101
90
167
72
Residential pipeline and unsold/repurchased loan management (1)
146
102
192
188
238
Total
$
748
772
1,221
1,308
1,054
Application data (in billions):
Wells Fargo first mortgage quarterly applications
$
83
59
75
100
95
Refinances as a percentage of applications
32 %
36
48
55
46
Wells Fargo first mortgage unclosed pipeline, at quarter end
$
34
28
30
50
47
Residential real estate originations:
Purchases as a percentage of originations
75 %
61
50
58
60
Refinances as a percentage of originations
25
39
50
42
40
Total
100 %
100
100
100
100
Wells Fargo first mortgage loans (in billions):
Retail
$
25
21
35
37
34
Correspondent
31
22
36
32
28
Other (2)
--
1
1
1
1
Total quarter-to-date
$
56
44
72
70
63
Held-for-sale
(B)
$
42
34
56
53
46
Held-for-investment
14
10
16
17
17
Total quarter-to-date
$
56
44
72
70
63
Total year-to-date
$
100
44
249
177
107
Production margin on residential held-for-sale mortgage
(A)/(B)
1.24 %
1.68
1.68
1.81
1.66
originations
(1) Largely includes the results of GNMA loss mitigation
activities, interest rate management activities and changes in
estimate to the liability for mortgage loan repurchase losses.
(2) Consists of home equity loans and lines.
CHANGES IN MORTGAGE REPURCHASE LIABILITY
Quarter ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(in millions)
2017
2017
2016
2016
2016
Balance, beginning of period
$
222
229
239
255
355
Provision for repurchase losses:
Loan sales
6
8
10
11
8
Change in estimate (1)
(45 )
(8 )
(7 )
(24 )
(89 )
Net additions (reductions)
(39 )
--
3
(13 )
(81 )
Losses
(5 )
(7 )
(13 )
(3 )
(19 )
Balance, end of period
$
178
222
229
239
255
(1)
Results from changes in investor demand and mortgage insurer
practices, credit deterioration and changes in the financial
stability of correspondent lenders.

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SOURCE: Wells Fargo & Company

Media
Ancel Martinez, 415-222-3858
or
Investors
Jim Rowe, 415-396-8216