WFC
$64.22
Wells Fargo &
$.27
.42%
Earnings Details
Quarter December 2017
Friday, January 12, 2018 8:00:06 AM
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Summary

Wells Fargo & Misses

Wells Fargo & (WFC) reported Quarter December 2017 earnings of $0.97 per share on revenue of $24.7 billion. The consensus earnings estimate was $1.04 per share on revenue of $22.3 billion. The Earnings Whisper number was $1.07 per share. Revenue grew 6.3% 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
$0.97
Earnings Whisper
$1.07
Consensus Estimate
$1.04
Reported Revenue
$24.70 Bil
Revenue Estimate
$22.28 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wells Fargo Reports Fourth Quarter 2017 Net Income of $6.2 Billion; Diluted EPS of $1.16

Wells Fargo & Company (WFC):

Full year 2017 financial results(1): -- Net income of $22.2 billion, compared with $21.9 billion in 2016

-- Diluted earnings per share (EPS) of $4.10, compared with $3.99

Revenue of $88.4 billion, up from $88.3 billion -- Net interest income of $49.6 billion, up $1.8 billion, or 4 percent

Noninterest income of $38.8 billion, down $1.7 billion, or 4 percent

-- Average deposits of $1.3 trillion, up $54.1 billion, or 4 percent

-- Average loans of $956.1 billion, up $6.2 billion, or 1 percent

Return on assets (ROA) of 1.15 percent and return on equity (ROE) of 11.35 percent

Net charge-offs of 0.31 percent of average loans, down from 0.37 percent

-- Nonaccrual loans of $8.0 billion, down $2.3 billion, or 23 percent

Returned $14.5 billion to shareholders through common stock dividends and net share repurchases, up 16 percent from $12.5 billion -- Net share repurchases of $6.8 billion, up 42 percent

Period-end common shares outstanding of 4.9 billion, down 124.5 million shares, or 2 percent

Fourth quarter 2017 financial results included: -- $3.35 billion after-tax benefit, or $0.67 per share, from the Tax Cuts & Jobs Act (Tax Act) -- $3.89 billion estimated tax benefit from the reduction to net deferred income taxes

$370 million after-tax loss from adjustments related to leveraged leases, low income housing and tax-advantaged renewable energy investments

-- $173 million tax expense from estimated deemed repatriation

$848 million pre-tax gain, or $0.11 per share, on sale of Wells Fargo Insurance Services USA

$3.25 billion pre-tax expense, or $(0.59) per share, from litigation accruals for a variety of matters, including mortgage-related regulatory investigations, sales practices, and other consumer-related matters; a majority of this expense was not tax deductible

Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 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
Year ended Dec. 31,
Dec 31,
Sep 30,
Dec 31,
2017
2016
2017
2017
2016
Earnings (a)
Diluted earnings per common share
$
1.16
0.83
0.96
4.10
3.99
Wells Fargo net income (in billions)
6.15
4.54
5.27
22.18
21.94
Return on assets (ROA)
1.26
%
0.93
1.08
1.15
1.16
Return on equity (ROE)
12.47
8.96
10.94
11.35
11.49
Return on average tangible common equity (ROTCE) (b)
14.85
10.66
13.16
13.55
13.85
Asset Quality
Net charge-offs (annualized) as a % of average total loans
0.31
%
0.30
0.37
0.31
0.37
Allowance for credit losses as a % of total loans
1.25
1.27
1.30
1.25
1.30
Allowance for credit losses as a % of annualized net charge-offs
401
426
348
408
356
Other
Revenue (in billions) (a)
$
22.1
21.8
21.6
88.4
88.3
Efficiency ratio (a)(c)
76.2
%
65.7
61.2
66.2
59.3
Average loans (in billions)
$
951.8
952.3
964.1
956.1
950.0
Average deposits (in billions)
1,311.6
1,306.4
1,284.2
1,304.6
1,250.6
Net interest margin (a)
2.84
%
2.86
2.87
2.87
2.86
(a) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities. See footnote (1) to the Summary Financial Data
table on page 16 for more information.
(b) 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.
(c) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).(1) Financial
information for prior quarters in 2017 has been revised to reflect
the impact of the adoption in fourth quarter 2017 of Accounting
Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic
815): Targeted Improvements to Accounting for Hedging Activities.
See footnote (1) to the Summary Financial Data table on page 16
for more information.

Wells Fargo & Company (WFC) reported net income of $6.2 billion, or $1.16 per diluted common share, for fourth quarter 2017, compared with $5.3 billion, or $0.96 per share, for fourth quarter 2016, and $4.5 billion, or $0.83 per share, for third quarter 2017.

Chief Executive Officer Tim Sloan said, "In 2017 we continued executing on our plan to build a better bank for the future, and I’m proud of the hard work and dedication of our team members to put our customers first as we transform Wells Fargo. Over the past year we have invested billions of dollars into our business and capabilities including risk management, accelerated the pace of innovation, increased our commitment to communities, enhanced team member benefits, and continued to execute on our business strategies to provide long-term value to our shareholders. The progress we made over the past year was evident in the fourth quarter in higher deposits, loan growth particularly in commercial loans, increased debit and credit card transactions, and record client assets under management in Wealth and Investment Management. While we faced challenges in 2017, we are a much better company today than we were a year ago, and I am confident that this year Wells Fargo will be even better."

Chief Financial Officer John Shrewsberry said, "Wells Fargo reported $6.2 billion of net income in the fourth quarter, which included a net benefit from the Tax Cuts & Jobs Act and a gain on the sale of Wells Fargo Insurance Services, partially offset by litigation accruals. Compared with the third quarter we grew both loans and deposits, and our credit performance, liquidity and capital remained exceptionally strong. We returned a record $14.5 billion to shareholders through common stock dividends and net share repurchases in 2017, up 16 percent, and returning more capital to shareholders remains a priority. We’ve made progress on our efficiency initiatives and remain committed to our target of $2 billion of expense reductions by the end of 2018, which are being used to support our investments in the business, and an additional $2 billion by the end of 2019. In addition, by the beginning of 2019 we expect the amortization of core deposit intangible expense ($769 million in 2018) and the FDIC special assessment to be complete."

Net Interest Income

Net interest income in fourth quarter 2017 was $12.3 billion, down $136 million, compared with third quarter 2017, driven primarily by a negative $183 million one-time adjustment related to leveraged leases due to the Tax Act, which reduced loan yields in the fourth quarter, partially offset by a modest net benefit from all other growth, repricing and variable items.

Net interest margin was 2.84 percent, down 2 basis points from third quarter 2017. The negative impacts from the one-time adjustment to leveraged leases and growth in average deposits were partially offset by lower average long-term debt and a modest net benefit from all other growth, repricing and variable items.

Noninterest Income

Noninterest income in the fourth quarter was $9.7 billion, compared with $9.4 billion in third quarter 2017. Fourth quarter noninterest income reflected higher other income, trust and investment fees, and market sensitive revenue(2), partially offset by lower mortgage banking and deposit service charges.

Deposit service charges of $1.2 billion were down $30 million in the fourth quarter driven by the impact of customer-friendly changes including the launch of Overdraft Rewind(SM) in November.

Trust and investment fees were $3.7 billion, compared with $3.6 billion in third quarter 2017, as higher asset-based fees and retail brokerage transaction activity were partially offset by lower investment banking fees.

Mortgage banking noninterest income was $928 million, compared with $1.0 billion in third quarter 2017. Residential mortgage loan originations were $53 billion in the fourth quarter, down from $59 billion in the third quarter. The production margin on residential held-for-sale mortgage loan originations(3) was 1.25 percent, compared with 1.24 percent in the third quarter. Mortgage servicing income was $262 million in the fourth quarter, down from $309 million in the third quarter.

Market sensitive revenue was $728 million, compared with $649 million in third quarter 2017, driven by higher net gains from equity investments.

Other income was $405 million, compared with $47 million in the third quarter. Fourth quarter 2017 included an $848 million gain on the previously announced sale of Wells Fargo Insurance Services USA, which was partially offset by $414 million of impairments on low income housing and renewable energy investments due to the Tax Act.

Noninterest Expense

Noninterest expense in the fourth quarter was $16.8 billion, compared with $14.4 billion in the prior quarter. Fourth quarter expenses included operating losses of $3.5 billion, up from $1.3 billion in the third quarter, primarily reflecting litigation accruals for a variety of matters, including mortgage-related regulatory investigations, sales practices, and other consumer-related matters. Fourth quarter expenses also included higher charitable donations (up $103 million from the third quarter), commission and incentive compensation expense, outside professional services, and typically higher equipment and advertising expense, which were partially offset by a $117 million gain on the sale of a corporate property. The efficiency ratio was 76.2 percent in fourth quarter 2017, up from 65.7 percent in the third quarter, driven primarily by higher operating losses.

Income Taxes

The Company’s fourth quarter income tax expense was a $1.6 billion benefit and reflected the estimated impact of the Tax Act, including a benefit of $3.89 billion resulting from the re-measurement of the Company’s estimated net deferred tax liability as of December 31, 2017, partially offset by $173 million of tax expense relating to the estimated tax impact of the deemed repatriation of the Company’s previously undistributed foreign earnings. The fourth quarter income tax benefit was also adversely impacted by a $1.0 billion tax effect relating to the impact of discrete non-deductible items (primarily litigation accruals). The full year 2017 effective income tax rate was 18.1 percent. The Company currently expects its full year 2018 effective income tax rate to be approximately 19 percent.

Loans

Total average loans were $951.8 billion in the fourth quarter, down $521 million from the third quarter. Period-end loan balances were $956.8 billion at December 31, 2017, up $4.9 billion from September 30, 2017. Commercial loans were up $3.2 billion from September 30, 2017 with growth in commercial and industrial loans, partially offset by declines in commercial real estate loans. Consumer loans increased $1.7 billion from the prior quarter, as growth in real estate 1-4 family first mortgage loans and consumer credit card loans was partially offset by expected declines in automobile loans and the junior lien mortgage portfolio.

Period-End Loan Balances
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Commercial
$ 503,388
500,150
505,901
505,004
506,536
Consumer
453,382
451,723
451,522
453,401
461,068
Total loans
$ 956,770
951,873
957,423
958,405
967,604
Change from prior quarter
$
4,897
(5,550 )
(982 )
(9,199 )
6,278

Investment Securities

Investment securities were $416.4 billion at December 31, 2017, up $1.8 billion from the third quarter, as approximately $20.9 billion of purchases, mostly federal agency mortgage-backed securities (MBS) in the available-for-sale portfolio, were partially offset by run-off and sales.

Net unrealized gains on available-for-sale securities declined to $1.5 billion at December 31, 2017, compared with $1.8 billion at September 30, 2017, primarily due to gains realized in the fourth quarter. Modestly higher Treasury yields were largely offset by tighter credit and agency MBS spreads during the quarter.

Deposits

Total average deposits for fourth quarter 2017 were $1.3 trillion, up $5.2 billion from the prior quarter. The average deposit cost for fourth quarter 2017 was 28 basis points, up 2 basis points from the prior quarter and 16 basis points from a year ago, primarily driven by an increase in commercial and Wealth and Investment Management deposit rates.

Capital

Capital levels remained strong in the fourth quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 11.9 percent(4), compared with 11.8 percent in the prior quarter. In fourth quarter 2017, the Company repurchased 51.4 million shares of its common stock, which reduced period-end common shares outstanding by 36.3 million.

Credit Quality

Net Loan Charge-offs

The quarterly loss rate was 0.31 percent (annualized), compared with 0.30 percent in the prior quarter. Commercial and consumer losses were 0.09 percent and 0.56 percent, respectively. Total credit losses were $751 million in fourth quarter 2017, up $34 million from third quarter 2017. Commercial losses were up $2 million on lower recoveries in commercial real estate loans. Consumer losses increased $32 million, as higher recoveries on consumer real estate loans and lower losses on automobile loans were offset by higher credit card losses driven by seasonality and portfolio seasoning.

Net Loan Charge-Offs
Quarter ended
December 31, 2017
September 30, 2017
June 30, 2017
($ in millions)
Net loan
As a % of
Net loan
As a % of
Net loan
As a % of
charge-
average
charge-
average
charge-
average
offs
loans (a)
offs
loans (a)
offs
loans (a)
Commercial:
Commercial and industrial
$ 118
0.14
%
$ 125
0.15
%
$
78
0.10
%
Real estate mortgage
(10 )
(0.03 )
(3 )
(0.01 )
(6 )
(0.02 )
Real estate construction
(3 )
(0.05 )
(15 )
(0.24 )
(4 )
(0.05 )
Lease financing
10
0.20
6
0.12
7
0.15
Total commercial
115
0.09
113
0.09
75
0.06
Consumer:
Real estate 1-4 family first mortgage
(23 )
(0.03 )
(16 )
(0.02 )
(16 )
(0.02 )
Real estate 1-4 family junior lien mortgage
(7 )
(0.06 )
1
--
(4 )
(0.03 )
Credit card
336
3.66
277
3.08
320
3.67
Automobile
188
1.38
202
1.41
126
0.86
Other revolving credit and installment
142
1.46
140
1.44
154
1.58
Total consumer
636
0.56
604
0.53
580
0.51
Total
$ 751
0.31
%
$ 717
0.30
%
$ 655
0.27
%
(a) Quarterly net charge-offs (recoveries) 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 $647 million, or 7 percent, from third quarter 2017 to $8.7 billion. Nonaccrual loans decreased $583 million from third quarter 2017 to $8.0 billion primarily driven by lower commercial and industrial nonaccruals reflecting continued improvement in the oil and gas portfolio, as well as continued declines in consumer real estate nonaccruals.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
December 31, 2017
September 30, 2017
June 30, 2017
($ in millions)
Total
As a
Total
As a
Total
As a
balances
% of
balances
% of
balances
% of
total
total
total
loans
loans
loans
Commercial:
Commercial and industrial
$ 1,899
0.57
%
$ 2,397
0.73
%
$ 2,632
0.79
%
Real estate mortgage
628
0.50
593
0.46
630
0.48
Real estate construction
37
0.15
38
0.15
34
0.13
Lease financing
76
0.39
81
0.42
89
0.46
Total commercial
2,640
0.52
3,109
0.62
3,385
0.67
Consumer:
Real estate 1-4 family first mortgage
4,122
1.45
4,213
1.50
4,413
1.60
Real estate 1-4 family junior lien mortgage
1,086
2.73
1,101
2.68
1,095
2.56
Automobile
130
0.24
137
0.25
104
0.18
Other revolving credit and installment
58
0.15
59
0.15
59
0.15
Total consumer
5,396
1.19
5,510
1.22
5,671
1.26
Total nonaccrual loans
8,036
0.84
8,619
0.91
9,056
0.95
Foreclosed assets:
Government insured/guaranteed
120
137
149
Non-government insured/guaranteed
522
569
632
Total foreclosed assets
642
706
781
Total nonperforming assets
$ 8,678
0.91
%
$ 9,325
0.98
%
$ 9,837
1.03
%
Change from prior quarter:
Total nonaccrual loans
$
(583 )
$
(437 )
$
(703 )
Total nonperforming assets
(647 )
(512 )
(827 )

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.0 billion at December 31, 2017, down $149 million from September 30, 2017. Fourth quarter 2017 included a $100 million reserve release(5), reflecting continued strong credit performance. The allowance coverage for total loans was 1.25 percent compared with 1.27 percent in third quarter 2017. The allowance covered 4.0 times annualized fourth quarter net charge-offs, compared with 4.3 times in the prior quarter. The allowance coverage for nonaccrual loans was 149 percent at December 31, 2017, compared with 141 percent at September 30, 2017. The Company believes the allowance was appropriate for losses inherent in the loan portfolio at December 31, 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
(in millions)
Dec 31,
Sep 30,
Dec 31,
2017
2017
2016
Community Banking (a)
$
3,673
2,176
2,733
Wholesale Banking (a)
2,148
2,045
2,194
Wealth and Investment Management
659
710
653
(a) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.

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

Selected Financial Information
Quarter ended
(in millions)
Dec 31,
Sep 30,
Dec 31,
2017
2017
2016
Total revenue (a)
$
12,028
11,984
11,661
Provision for credit losses
636
650
631
Noninterest expense
10,200
7,834
6,985
Segment net income (a)
3,673
2,176
2,733
(in billions)
Average loans
473.5
473.5
488.1
Average assets
974.0
988.9
1,000.7
Average deposits
738.1
734.5
709.8
(a) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.

Community Banking reported net income of $3.7 billion, up $1.5 billion, or 69 percent, from third quarter 2017. Fourth quarter income tax expense reflected the estimated impact of the Tax Act to the Company and the impact of discrete non-deductible items, primarily litigation accruals. Revenue in the fourth quarter was $12.0 billion, flat compared with third quarter 2017, and included lower net interest income, mortgage banking revenue, and service charges on deposit accounts, offset by higher market sensitive revenue and trust and investment fees. Noninterest expense increased $2.4 billion, or 30 percent, compared with third quarter 2017, driven primarily by litigation accruals. The provision for credit losses decreased $14 million from the prior quarter.

Net income was up $940 million, or 34 percent, from fourth quarter 2016, and included the income tax benefit from the Tax Act. Revenue increased $367 million, or 3 percent, compared with a year ago due to higher market sensitive revenue and other income, partially offset by lower mortgage banking revenue, service charges on deposit accounts, and net interest income. Noninterest expense increased $3.2 billion, or 46 percent, from a year ago primarily driven by litigation accruals. The provision for credit losses increased $5 million from a year ago.

Retail Banking and Consumer Payments, Virtual Solutions and Innovation

1.6 million branch customer experience surveys completed during 2017, both ’Loyalty’ and ’Overall Satisfaction with Most Recent Visit’ scores improved in fourth quarter from third quarter

5,861 retail bank branches as of the end of fourth quarter 2017, reflecting 214 branch consolidations for full year 2017

For the 15th consecutive year, America’s #1 small business lender and #1 lender to small businesses in low-and moderate-income areas (loans under $1 million; 2016 Community Reinvestment Act data, released November 2017)

-- Primary consumer checking customers(6,7)up 0.2 percent year-over-year

Debit card point-of-sale purchase volume(8) of $83.1 billion in fourth quarter, up 6 percent year-over-year

Credit card point-of-sale purchase volume of $19.1 billion in fourth quarter, up 6 percent year-over-year

-- Credit card penetration in retail banking households of 45.3 percent(9)

28.1 million digital (online and mobile) active customers, including 21.2 million mobile active users(7,10)

Bank Monitor Awards provided Wells Fargo a Gold Medal, the highest level, in Website Design and Usability (December 2017)

Dynatrace (formerly Keynote) ranked Wells Fargo #1 in Functionality, Open Accounts, and Transact in its fourth quarter Online Banking Scorecard (November 2017)

Consumer Lending

Home Lending -- Originations of $53 billion, down from $59 billion in prior quarter

-- Applications of $63 billion, down from $73 billion in prior quarter

Application pipeline of $23 billion at quarter end, down from $29 billion at September 30, 2017

Automobile originations of $4.3 billion in fourth quarter, flat compared with prior quarter and down 33 percent from prior year, as proactive steps to tighten underwriting standards resulted in lower origination volume

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, Commercial Real Estate, Corporate Banking, Financial Institutions Group, Government and Institutional Banking, Middle Market Banking, Principal Investments, Treasury Management, Wells Fargo Commercial Capital, and Wells Fargo Securities.

Selected Financial Information
Quarter ended
(in millions)
Dec 31,
Sep 30,
Dec 31,
2017
2017
2016
Total revenue (a)
$
7,094
7,084
7,153
Provision for credit losses
20
69
168
Noninterest expense
4,204
4,248
4,002
Segment net income (a)
2,148
2,045
2,194
(in billions)
Average loans
463.5
463.8
461.5
Average assets
837.3
824.3
811.9
Average deposits
465.7
463.4
459.2
(a) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.

Wholesale Banking reported net income of $2.1 billion, up $103 million, or 5 percent, from third quarter 2017. Fourth quarter results included the loss from adjustments related to leveraged leases and other tax advantaged businesses due to the Tax Act, as well as a gain related to the completion of the previously announced sale of Wells Fargo Insurance Services USA (WFIS). Revenue of $7.1 billion was flat compared with the prior quarter, as the gain related to the sale of WFIS was offset by the impact of the Tax Act and lower market sensitive revenue. Net interest income decreased $134 million, or 3 percent, as the impact to leveraged leases due to the Tax Act was partially offset by higher trading related income and a modest benefit from higher interest rates. Noninterest income increased $144 million, or 5 percent, as the gain related to the sale of WFIS and higher commercial real estate brokerage fees were partially offset by impairments on low income housing and tax-advantaged renewable energy investments due to the Tax Act, lower market sensitive revenue and one less month of WFIS operating income. Noninterest expense decreased $44 million, or 1 percent, from the prior quarter reflecting one less month of WFIS operating expenses and lower operating lease expense. The provision for credit losses decreased $49 million from the prior quarter, primarily due to a reserve release in the fourth quarter.

Net income of $2.1 billion decreased $46 million, or 2 percent, from fourth quarter 2016. Revenue decreased $59 million, or 1 percent, from fourth quarter 2016, as lower net interest income was partially offset by higher noninterest income. Net interest income decreased $112 million, or 3 percent, from fourth quarter 2016, as the impact to leveraged leases due to the Tax Act was partially offset by the impact of rising interest rates. Noninterest income increased $53 million, or 2 percent, from a year ago as the gain related to the sale of WFIS and higher market sensitive revenue were partially offset by impairments on low income housing and tax-advantaged renewable energy investments due to the Tax Act, lower investment banking results, and one less month of WFIS operating income. Noninterest expense increased $202 million, or 5 percent, from a year ago reflecting increased personnel expense and higher regulatory, risk, cyber and technology expenses. The provision for credit losses decreased $148 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
(in millions)
Dec 31,
Sep 30,
Dec 31,
2017
2017
2016
Total revenue
$ 4,305
4,246
4,074
Provision (reversal of provision) for credit losses
(7 )
(1 )
3
Noninterest expense
3,244
3,106
3,042
Segment net income
659
710
653
(in billions)
Average loans
72.8
72.4
70.0
Average assets
209.3
213.4
220.4
Average deposits
184.2
188.1
194.9

Wealth and Investment Management reported net income of $659 million, down $51 million, or 7 percent, from third quarter 2017. Revenue of $4.3 billion increased $59 million from the prior quarter, primarily due to higher asset-based fees and transaction revenue, partially offset by lower net interest income. Noninterest expense increased $138 million, or 4 percent, from the prior quarter, primarily due to higher non-personnel expense and broker commissions.

Net income was up $6 million, or 1 percent, from fourth quarter 2016. Revenue increased $231 million, or 6 percent, from a year ago primarily driven by higher asset-based fees, higher net interest income, and higher gains on deferred compensation plan investments (offset in employee benefits expense), partially offset by lower transaction revenue. Noninterest expense increased $202 million, or 7 percent, from a year ago, primarily due to higher regulatory, risk, cyber and technology expenses, as well as higher broker commissions and deferred compensation plan expense (offset in trading revenue), partially offset by lower other non-personnel expense.

WIM total client assets reached a record-high of $1.9 trillion, up 11 percent from a year ago, driven by higher market valuations

Fourth quarter 2017 average closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) were flat compared with the prior quarter and up 12 percent from prior year

Retail Brokerage

-- Client assets of $1.7 trillion, up 11 percent from prior year

Advisory assets of $543 billion, up 17 percent from prior year, primarily driven by higher market valuations and positive net flows

Continued loan growth, with average balances up 7 percent from prior year largely due to growth in non-conforming mortgage loans

Wealth Management

-- Client assets of $248 billion, up 7 percent from prior year

Average loan balances up 3 percent from prior year primarily driven by continued growth in non-conforming mortgage loans

Asset Management

Total assets under management of $504 billion, up 5 percent from prior year as higher market valuations, positive fixed income and money market net flows were partially offset by equity net outflows

Retirement

-- IRA assets of $410 billion, up 8 percent from prior year

Institutional Retirement plan assets of $393 billion, up 12 percent from prior year

Conference Call

The Company will host a live conference call on Friday, January 12, 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~6099528.

A replay of the conference call will be available beginning at 10:00 a.m. PT (1:00 p.m. ET) on Friday, January 12 through Friday, January 26. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #6099528. 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~6099528.

Endnotes

(1) Financial information for prior quarters in 2017 has been revised to reflect the impact of the adoption in fourth quarter 2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. See footnote (1) to the Summary Financial Data table on page 16 for more information.

(2) Market sensitive revenue represents net gains from trading activities, debt securities and equity investments.

(3) 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.

(4) 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.

(5) 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.

(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 November 2017, comparisons with November 2016.

(8) Combined consumer and business debit card purchase volume dollars.

(9) 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 (determined principally based on whether the account was activated by the customer) identified by a third party consulting firm in August 2017 because the maximum impact in any one quarter was not greater than 127 bps.

(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 (including the impact of the Tax Cuts & Jobs Act), 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;

losses related to recent hurricanes, which primarily affected Texas, Florida and Puerto Rico, and related to recent California wildfires, in each case including from damage or loss to our collateral for loans in our consumer and commercial loan portfolios and from the impact on the ability of our borrowers to repay their loans;

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 and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;

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 $2.0 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, investments, mortgage, and consumer and commercial finance through more than 8,300 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 263,000 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
Quarter ended
% Change
Year ended
Dec 31, 2017 from
($ in millions, except per share amounts)
Dec 31,
Sep 30,
Dec 31,
Sep 30,
Dec 31,
Dec 31,
Dec 31,
%
2017
2017
2016
2017
2016
2017
2016
Change
For the Period
Wells Fargo net income (1)
$
6,151
4,542
5,274
35
%
17
$
22,183
21,938
1
%
Wells Fargo net income applicable to common stock (1)
5,740
4,131
4,872
39
18
20,554
20,373
1
Diluted earnings per common share (1)
1.16
0.83
0.96
40
21
4.10
3.99
3
Profitability ratios (annualized) (1):
Wells Fargo net income to average assets (ROA)
1.26
%
0.93
1.08
35
17
1.15
%
1.16
(1 )
Wells Fargo net income applicable to common stock to average Wells
12.47
8.96
10.94
39
14
11.35
11.49
(1 )
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(2)
14.85
10.66
13.16
39
13
13.55
13.85
(2 )
Efficiency ratio (1)(3)
76.2
65.7
61.2
16
25
66.2
59.3
12
Total revenue (1)
$
22,050
21,849
21,582
1
2
$
88,389
88,267
--
Pre-tax pre-provision profit (PTPP) (1)(4)
5,250
7,498
8,367
(30 )
(37 )
29,905
35,890
(17 )
Dividends declared per common share
0.390
0.390
0.380
--
3
1.540
1.515
2
Average common shares outstanding
4,912.5
4,948.6
5,025.6
(1 )
(2 )
4,964.6
5,052.8
(2 )
Diluted average common shares outstanding
4,963.1
4,996.8
5,078.2
(1 )
(2 )
5,017.3
5,108.3
(2 )
Average loans
$ 951,822
952,343
964,147
--
(1 )
$ 956,129
949,960
1
Average assets (1)
1,935,318
1,938,461
1,944,250
--
--
1,933,005
1,885,441
3
Average total deposits
1,311,592
1,306,356
1,284,158
--
2
1,304,622
1,250,566
4
Average consumer and small business banking deposits (5)
757,541
755,094
749,946
--
1
758,271
732,620
4
Net interest margin (1)
2.84
%
2.86
2.87
(1 )
(1 )
2.87
%
2.86
--
At Period End
Investment securities
$ 416,420
414,633
407,947
--
2
$ 416,420
407,947
2
Loans
956,770
951,873
967,604
1
(1 )
956,770
967,604
(1 )
Allowance for loan losses
11,004
11,078
11,419
(1 )
(4 )
11,004
11,419
(4 )
Goodwill
26,587
26,581
26,693
--
--
26,587
26,693
--
Assets (1)
1,951,757
1,934,880
1,930,115
1
1
1,951,757
1,930,115
1
Deposits
1,335,991
1,306,706
1,306,079
2
2
1,335,991
1,306,079
2
Common stockholders’ equity (1)
183,134
181,920
176,469
1
4
183,134
176,469
4
Wells Fargo stockholders’ equity (1)
206,936
205,722
199,581
1
4
206,936
199,581
4
Total equity (1)
208,079
206,617
200,497
1
4
208,079
200,497
4
Tangible common equity (1)(2)
153,730
152,694
146,737
1
5
153,730
146,737
5
Common shares outstanding
4,891.6
4,927.9
5,016.1
(1 )
(2 )
4,891.6
5,016.1
(2 )
Book value per common share (1)(6)
$
37.44
36.92
35.18
1
6
$
37.44
35.18
6
Tangible book value per common share (1)(2)(6)
31.43
30.99
29.25
1
7
31.43
29.25
7
Common stock price:
High
62.24
56.45
58.02
10
7
62.24
58.02
7
Low
52.84
49.28
43.55
7
21
49.28
43.55
13
Period end
60.67
55.15
55.11
10
10
60.67
55.11
10
Team members (active, full-time equivalent)
262,700
268,000
269,100
(2 )
(2 )
262,700
269,100
(2 )
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption of Accounting
Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic
815): Targeted Improvements to Accounting for Hedging Activities
in fourth quarter 2017. The retrospective application of the
changes to certain hedging strategies resulted in a cumulative
effect adjustment to opening retained earnings effective January
1, 2017. The adjustment reduced retained earnings by $381 million
and increased other comprehensive income by $168 million. The
effect of adoption on previously reported September 30, 2017,
year-to-date net income resulted in an increase of $169 million
($242 million pre-tax) and a decrease in other comprehensive
income of $163 million. Other affected financial information,
including financial ratios, has been revised to reflect this
adoption.
(2) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company’s
use of equity. For additional information, including a
corresponding reconciliation to GAAP financial measures, see the
"Tangible Common Equity" tables on page 35.
(3) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(4) Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to
assess the Company’s ability to generate capital to cover credit
losses through a credit cycle.
(5) Consumer and small business banking deposits are total deposits
excluding mortgage escrow and wholesale deposits.
(6) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per common
share is tangible common equity divided by common shares outstanding.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
Quarter ended
($ in millions, except per share amounts)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
For the Quarter
Wells Fargo net income (1)
$
6,151
4,542
5,856
5,634
5,274
Wells Fargo net income applicable to common stock (1)
5,740
4,131
5,450
5,233
4,872
Diluted earnings per common share (1)
1.16
0.83
1.08
1.03
0.96
Profitability ratios (annualized) (1):
Wells Fargo net income to average assets (ROA)
1.26
%
0.93
1.22
1.18
1.08
Wells Fargo net income applicable to common stock to average Wells
12.47
8.96
12.06
11.96
10.94
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(2)
14.85
10.66
14.41
14.35
13.16
Efficiency ratio (1)(3)
76.2
65.7
60.9
62.0
61.2
Total revenue (1)
$
22,050
21,849
22,235
22,255
21,582
Pre-tax pre-provision profit (PTPP) (1)(4)
5,250
7,498
8,694
8,463
8,367
Dividends declared per common share
0.39
0.39
0.38
0.38
0.38
Average common shares outstanding
4,912.5
4,948.6
4,989.9
5,008.6
5,025.6
Diluted average common shares outstanding
4,963.1
4,996.8
5,037.7
5,070.4
5,078.2
Average loans
$ 951,822
952,343
956,879
963,645
964,147
Average assets (1)
1,935,318
1,938,461
1,927,021
1,931,040
1,944,250
Average total deposits
1,311,592
1,306,356
1,301,195
1,299,191
1,284,158
Average consumer and small business banking deposits (5)
757,541
755,094
760,149
758,754
749,946
Net interest margin (1)
2.84
%
2.86
2.90
2.87
2.87
At Quarter End
Investment securities
$ 416,420
414,633
409,594
407,560
407,947
Loans
956,770
951,873
957,423
958,405
967,604
Allowance for loan losses
11,004
11,078
11,073
11,168
11,419
Goodwill
26,587
26,581
26,573
26,666
26,693
Assets (1)
1,951,757
1,934,880
1,930,792
1,951,501
1,930,115
Deposits
1,335,991
1,306,706
1,305,830
1,325,444
1,306,079
Common stockholders’ equity (1)
183,134
181,920
181,233
178,209
176,469
Wells Fargo stockholders’ equity (1)
206,936
205,722
205,034
201,321
199,581
Total equity (1)
208,079
206,617
205,949
202,310
200,497
Tangible common equity (1)(2)
153,730
152,694
151,868
148,671
146,737
Common shares outstanding
4,891.6
4,927.9
4,966.8
4,996.7
5,016.1
Book value per common share (1)(6)
$
37.44
36.92
36.49
35.67
35.18
Tangible book value per common share (1)(2)(6)
31.43
30.99
30.58
29.75
29.25
Common stock price:
High
62.24
56.45
56.60
59.99
58.02
Low
52.84
49.28
50.84
53.35
43.55
Period end
60.67
55.15
55.41
55.66
55.11
Team members (active, full-time equivalent)
262,700
268,000
270,600
272,800
269,100
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption of Accounting
Standards Update (ASU) 2017-12 - Derivatives and Hedging (Topic
815): Targeted Improvements to Accounting for Hedging Activities
in fourth quarter 2017. The retrospective application of the
changes to certain hedging strategies resulted in a cumulative
effect adjustment to opening retained earnings effective January
1, 2017. The adjustment reduced retained earnings by $381 million
and increased other comprehensive income by $168 million. The
effect of adoption on previously reported September 30, 2017,
year-to-date net income resulted in an increase of $169 million
($242 million pre-tax) and a decrease in other comprehensive
income of $163 million. Other affected financial information,
including financial ratios, has been revised to reflect this
adoption.
(2) 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.
(3) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(4) 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.
(5) Consumer and small business banking deposits are total deposits
excluding mortgage escrow and wholesale deposits.
(6) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per common
share is tangible common equity divided by common shares outstanding.
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
Quarter ended December 31,
%
Year ended December 31,
%
(in millions, except per share amounts)
2017
2016
Change
2017
2016
Change
Interest income
Trading assets
$
821
745
10
%
$
2,928
2,506
17
%
Investment securities
2,669
2,512
6
10,664
9,248
15
Mortgages held for sale
196
235
(17 )
786
784
--
Loans held for sale
2
2
--
12
9
33
Loans
10,367
10,128
2
41,388
39,505
5
Other interest income
903
436
107
3,131
1,611
94
Total interest income
14,958
14,058
6
58,909
53,663
10
Interest expense
Deposits
931
400
133
3,013
1,395
116
Short-term borrowings
255
101
152
758
330
130
Long-term debt
1,344
1,061
27
5,157
3,830
35
Other interest expense
115
94
22
424
354
20
Total interest expense
2,645
1,656
60
9,352
5,909
58
Net interest income
12,313
12,402
(1 )
49,557
47,754
4
Provision for credit losses
651
805
(19 )
2,528
3,770
(33 )
Net interest income after provision for credit losses
11,662
11,597
1
47,029
43,984
7
Noninterest income
Service charges on deposit accounts
1,246
1,357
(8 )
5,111
5,372
(5 )
Trust and investment fees
3,687
3,698
--
14,495
14,243
2
Card fees
996
1,001
--
3,960
3,936
1
Other fees
913
962
(5 )
3,557
3,727
(5 )
Mortgage banking
928
1,417
(35 )
4,350
6,096
(29 )
Insurance
223
262
(15 )
1,049
1,268
(17 )
Net gains (losses) from trading activities
132
(109 )
NM
1,053
834
26
Net gains on debt securities
157
145
8
479
942
(49 )
Net gains from equity investments
439
306
43
1,268
879
44
Lease income
458
523
(12 )
1,907
1,927
(1 )
Other
558
(382 )
NM
1,603
1,289
24
Total noninterest income
9,737
9,180
6
38,832
40,513
(4 )
Noninterest expense
Salaries
4,403
4,193
5
17,363
16,552
5
Commission and incentive compensation
2,665
2,478
8
10,442
10,247
2
Employee benefits
1,293
1,101
17
5,566
5,094
9
Equipment
608
642
(5 )
2,237
2,154
4
Net occupancy
715
710
1
2,849
2,855
--
Core deposit and other intangibles
288
301
(4 )
1,152
1,192
(3 )
FDIC and other deposit assessments
312
353
(12 )
1,287
1,168
10
Other
6,516
3,437
90
17,588
13,115
34
Total noninterest expense
16,800
13,215
27
58,484
52,377
12
Income before income tax expense
4,599
7,562
(39 )
27,377
32,120
(15 )
Income tax expense (benefit)
(1,642 )
2,258
NM
4,917
10,075
(51 )
Net income before noncontrolling interests
6,241
5,304
18
22,460
22,045
2
Less: Net income from noncontrolling interests
90
30
200
277
107
159
Wells Fargo net income
$ 6,151
5,274
17
$ 22,183
21,938
1
Less: Preferred stock dividends and other
411
402
2
1,629
1,565
4
Wells Fargo net income applicable to common stock
$ 5,740
4,872
18
$ 20,554
20,373
1
Per share information
Earnings per common share
$
1.17
0.97
21
$
4.14
4.03
3
Diluted earnings per common share
1.16
0.96
21
4.10
3.99
3
Dividends declared per common share
0.390
0.380
3
1.540
1.515
2
Average common shares outstanding
4,912.5
5,025.6
(2 )
4,964.6
5,052.8
(2 )
Diluted average common shares outstanding
4,963.1
5,078.2
(2 )
5,017.3
5,108.3
(2 )
NM - Not meaningful
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
(in millions, except per share amounts)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Interest income
Trading assets
$
821
754
710
643
745
Investment securities (1)
2,669
2,650
2,681
2,664
2,512
Mortgages held for sale (1)
196
217
191
182
235
Loans held for sale
2
5
4
1
2
Loans
10,367
10,522
10,358
10,141
10,128
Other interest income
903
896
750
582
436
Total interest income (1)
14,958
15,044
14,694
14,213
14,058
Interest expense
Deposits (1)
931
869
677
536
400
Short-term borrowings
255
226
163
114
101
Long-term debt (1)
1,344
1,391
1,275
1,147
1,061
Other interest expense
115
109
108
92
94
Total interest expense (1)
2,645
2,595
2,223
1,889
1,656
Net interest income (1)
12,313
12,449
12,471
12,324
12,402
Provision for credit losses
651
717
555
605
805
Net interest income after provision for credit losses
11,662
11,732
11,916
11,719
11,597
Noninterest income
Service charges on deposit accounts
1,246
1,276
1,276
1,313
1,357
Trust and investment fees
3,687
3,609
3,629
3,570
3,698
Card fees
996
1,000
1,019
945
1,001
Other fees
913
877
902
865
962
Mortgage banking
928
1,046
1,148
1,228
1,417
Insurance
223
269
280
277
262
Net gains (losses) from trading activities
132
245
237
439
(109 )
Net gains on debt securities
157
166
120
36
145
Net gains from equity investments
439
238
188
403
306
Lease income
458
475
493
481
523
Other (1)
558
199
472
374
(382 )
Total noninterest income (1)
9,737
9,400
9,764
9,931
9,180
Noninterest expense
Salaries
4,403
4,356
4,343
4,261
4,193
Commission and incentive compensation
2,665
2,553
2,499
2,725
2,478
Employee benefits
1,293
1,279
1,308
1,686
1,101
Equipment
608
523
529
577
642
Net occupancy
715
716
706
712
710
Core deposit and other intangibles
288
288
287
289
301
FDIC and other deposit assessments
312
314
328
333
353
Other
6,516
4,322
3,541
3,209
3,437
Total noninterest expense
16,800
14,351
13,541
13,792
13,215
Income before income tax expense (1)
4,599
6,781
8,139
7,858
7,562
Income tax expense (benefit) (1)
(1,642 )
2,181
2,245
2,133
2,258
Net income before noncontrolling interests (1)
6,241
4,600
5,894
5,725
5,304
Less: Net income from noncontrolling interests
90
58
38
91
30
Wells Fargo net income (1)
$ 6,151
4,542
5,856
5,634
5,274
Less: Preferred stock dividends and other
411
411
406
401
402
Wells Fargo net income applicable to common stock (1)
$ 5,740
4,131
5,450
5,233
4,872
Per share information
Earnings per common share (1)
$
1.17
0.83
1.09
1.05
0.97
Diluted earnings per common share (1)
1.16
0.83
1.08
1.03
0.96
Dividends declared per common share
0.390
0.390
0.380
0.380
0.380
Average common shares outstanding
4,912.5
4,948.6
4,989.9
5,008.6
5,025.6
Diluted average common shares outstanding
4,963.1
4,996.8
5,037.7
5,070.4
5,078.2
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended Dec 31,
%
Year ended Dec 31,
%
(in millions)
2017
2016
Change
2017
2016
Change
Wells Fargo net income
$ 6,151
5,274
17%
$ 22,183
21,938
1%
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized gains (losses) arising during the period
(106 )
(5,936 )
(98)
2,719
(3,458 )
NM
Reclassification of net gains to net income
(215 )
(239 )
(10)
(737 )
(1,240 )
(41)
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period
(558 )
(2,434 )
(77)
(540 )
177
NM
Reclassification of net gains on cash flow hedges to net income
(83 )
(246 )
(66)
(543 )
(1,029 )
(47)
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the
45
422
(89)
49
(52 )
NM
period
Amortization of net actuarial loss, settlements and other to net
33
43
(23)
153
158
(3)
income
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period
10
(30 )
NM
96
(3 )
NM
Other comprehensive income (loss), before tax
(874 )
(8,420 )
(90)
1,197
(5,447 )
NM
Income tax benefit (expense) related to other comprehensive income
319
3,106
(90)
(434 )
1,996
NM
Other comprehensive income (loss), net of tax
(555 )
(5,314 )
(90)
763
(3,451 )
NM
Less: Other comprehensive income (loss) from noncontrolling interests
(33 )
7
NM
(62 )
(17 )
265
Wells Fargo other comprehensive income (loss), net of tax
(522 )
(5,321 )
(90)
825
(3,434 )
NM
Wells Fargo comprehensive income (loss)
5,629
(47 )
NM
23,008
18,504
24
Comprehensive income from noncontrolling interests
57
37
54
215
90
139
Total comprehensive income (loss)
$ 5,686
(10 )
NM
$ 23,223
18,594
25
NM - Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
TOTAL EQUITY
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Balance, beginning of period (1)
$ 206,617
205,949
202,310
200,497
203,958
Cumulative effect from change in hedge accounting (1)
--
--
--
(213 )
--
Wells Fargo net income (1)
6,151
4,542
5,856
5,634
5,274
Wells Fargo other comprehensive income (loss), net of tax (1)
(522 )
526
1,005
(184 )
(5,321 )
Noncontrolling interests
247
(20 )
(75 )
75
(13 )
Common stock issued
436
254
252
1,406
610
Common stock repurchased (2)
(2,845 )
(2,601 )
(2,287 )
(2,175 )
(2,034 )
Preferred stock released by ESOP
218
209
406
--
43
Common stock warrants repurchased/exercised
(46 )
(19 )
(24 )
(44 )
--
Preferred stock issued
--
--
677
--
--
Common stock dividends
(1,920 )
(1,936 )
(1,899 )
(1,903 )
(1,909 )
Preferred stock dividends
(411 )
(411 )
(406 )
(401 )
(401 )
Tax benefit from stock incentive compensation (3)
--
--
--
--
74
Stock incentive compensation expense
206
135
145
389
232
Net change in deferred compensation and related plans
(52 )
(11 )
(11 )
(771 )
(16 )
Balance, end of period (1)
$ 208,079
206,617
205,949
202,310
200,497
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities. See footnote (1) to the Summary Financial Data
table on page 16 for more information.
(2) 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.
(3) 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 December 31,
2017
2016
(in millions)
Average
Yields/
Interest
Average
Yields/
Interest
balance
rates
income/
balance
rates
income/
expense
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
264,940
1.25
%
$
835
273,073
0.56
%
$
381
other short-term investments
Trading assets
111,213
3.01
838
102,757
2.96
761
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
6,423
1.66
27
25,935
1.53
99
Securities of U.S. states and political subdivisions
52,390
3.91
513
53,917
4.06
547
Mortgage-backed securities:
Federal agencies
152,910
2.62
1,000
147,980
2.37
875
Residential and commercial
9,371
4.85
114
16,456
5.87
242
Total mortgage-backed securities
162,281
2.75
1,114
164,436
2.72
1,117
Other debt and equity securities
49,138
3.70
456
52,692
3.71
492
Total available-for-sale securities
270,232
3.12
2,110
296,980
3.03
2,255
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,716
2.19
246
44,686
2.20
246
Securities of U.S. states and political subdivisions
6,263
5.26
83
4,738
5.31
63
Federal agency and other mortgage-backed securities
89,622
2.25
503
46,009
1.81
209
Other debt securities
1,194
2.64
8
3,597
2.26
20
Total held-to-maturity securities
141,795
2.36
840
99,030
2.17
538
Total investment securities
412,027
2.86
2,950
396,010
2.82
2,793
Mortgages held for sale (4)
20,517
3.82
196
27,503
3.43
235
Loans held for sale (4)
114
8.14
2
155
5.42
2
Loans:
Commercial:
Commercial and industrial - U.S.
270,294
3.89
2,649
272,828
3.46
2,369
Commercial and industrial - Non U.S.
59,233
2.96
442
54,410
2.58
352
Real estate mortgage
127,199
3.88
1,244
131,195
3.44
1,135
Real estate construction
24,408
4.38
270
23,850
3.61
216
Lease financing
19,226
0.62
31
18,904
5.78
273
Total commercial
500,360
3.68
4,636
501,187
3.45
4,345
Consumer:
Real estate 1-4 family first mortgage
281,966
4.01
2,826
277,732
4.01
2,785
Real estate 1-4 family junior lien mortgage
40,379
4.96
505
47,203
4.42
524
Credit card
36,428
12.37
1,136
35,383
11.73
1,043
Automobile
54,323
5.13
702
62,521
5.54
870
Other revolving credit and installment
38,366
6.28
607
40,121
5.91
595
Total consumer
451,462
5.10
5,776
462,960
5.01
5,817
Total loans (4)
951,822
4.35
10,412
964,147
4.20
10,162
Other
13,084
2.06
68
6,729
3.27
56
Total earning assets
$ 1,773,717
3.43
%
$
15,301
1,770,374
3.24
%
$
14,390
Funding sources
Deposits:
Interest-bearing checking
$
50,483
0.68
%
$
86
46,907
0.17
%
$
19
Market rate and other savings
679,893
0.19
319
676,365
0.07
122
Savings certificates
20,920
0.31
17
24,362
0.30
18
Other time deposits
68,187
1.49
255
49,170
1.16
144
Deposits in foreign offices
124,597
0.81
254
110,425
0.35
97
Total interest-bearing deposits
944,080
0.39
931
907,229
0.18
400
Short-term borrowings
102,142
0.99
256
124,698
0.33
102
Long-term debt
231,598
2.32
1,344
252,162
1.68
1,061
Other liabilities
24,728
1.86
115
17,210
2.15
94
Total interest-bearing liabilities
1,302,548
0.81
2,646
1,301,299
0.51
1,657
Portion of noninterest-bearing funding sources
471,169
--
--
469,075
--
--
Total funding sources
$ 1,773,717
0.59
2,646
1,770,374
0.37
1,657
Net interest margin and net interest income on a
2.84
%
$
12,655
2.87
%
$
12,733
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
19,152
18,967
Goodwill
26,579
26,713
Other
115,870
128,196
Total noninterest-earning assets
$
161,601
173,876
Noninterest-bearing funding sources
Deposits
$
367,512
376,929
Other liabilities
57,845
64,775
Total equity
207,413
201,247
Noninterest-bearing funding sources used to fund earning assets
(471,169 )
(469,075 )
Net noninterest-bearing funding sources
$
161,601
173,876
Total assets
$ 1,935,318
1,944,250
(1) Our average prime rate was 4.30% and 3.54% for the quarters
ended December 31, 2017 and 2016, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 1.46% and
0.92% 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 $342 million and
$331 million for the quarters ended December 31, 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)
Year ended December 31,
2017
2016
(in millions)
Average
Yields/
Interest
Average
Yields/
Interest
balance
rates
income/
balance
rates
income/
expense
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
276,561
1.05
%
$
2,897
287,718
0.51
%
$
1,457
other short-term investments
Trading assets
101,716
2.93
2,982
88,400
2.89
2,553
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
15,966
1.49
239
29,418
1.56
457
Securities of U.S. states and political subdivisions
52,658
3.95
2,082
52,959
4.20
2,225
Mortgage-backed securities:
Federal agencies
145,310
2.60
3,782
110,637
2.50
2,764
Residential and commercial
11,839
5.33
631
18,725
5.49
1,029
Total mortgage-backed securities
157,149
2.81
4,413
129,362
2.93
3,793
Other debt and equity securities
49,193
3.73
1,834
53,433
3.44
1,841
Total available-for-sale securities
274,966
3.12
8,568
265,172
3.14
8,316
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,705
2.19
979
44,675
2.19
979
Securities of U.S. states and political subdivisions
6,268
5.32
334
2,893
5.32
154
Federal agency and other mortgage-backed securities
78,330
2.34
1,832
39,330
2.00
786
Other debt securities
2,194
2.50
55
4,043
2.01
81
Total held-to-maturity securities
131,497
2.43
3,200
90,941
2.20
2,000
Total investment securities
406,463
2.90
11,768
356,113
2.90
10,316
Mortgages held for sale (4)
20,780
3.78
786
22,412
3.50
784
Loans held for sale (4)
147
8.38
12
218
4.01
9
Loans:
Commercial:
Commercial and industrial - U.S.
272,034
3.75
10,196
268,182
3.45
9,243
Commercial and industrial - Non U.S.
57,198
2.86
1,639
51,601
2.36
1,219
Real estate mortgage
129,990
3.74
4,859
127,232
3.44
4,371
Real estate construction
24,813
4.10
1,017
23,197
3.55
824
Lease financing
19,128
3.74
715
17,950
5.10
916
Total commercial
503,163
3.66
18,426
488,162
3.39
16,573
Consumer:
Real estate 1-4 family first mortgage
277,751
4.03
11,206
276,712
4.01
11,096
Real estate 1-4 family junior lien mortgage
42,780
4.82
2,062
49,735
4.39
2,183
Credit card
35,600
12.23
4,355
34,178
11.62
3,970
Automobile
57,900
5.34
3,094
61,566
5.62
3,458
Other revolving credit and installment
38,935
6.18
2,408
39,607
5.93
2,350
Total consumer
452,966
5.11
23,125
461,798
4.99
23,057
Total loans (4)
956,129
4.35
41,551
949,960
4.17
39,630
Other
11,445
2.06
237
6,262
2.51
157
Total earning assets
$
1,773,241
3.40
%
$
60,233
1,711,083
3.21
%
$
54,906
Funding sources
Deposits:
Interest-bearing checking
$
49,474
0.49
%
$
242
42,379
0.14
%
$
60
Market rate and other savings
682,053
0.14
983
663,557
0.07
449
Savings certificates
22,190
0.30
67
25,912
0.35
91
Other time deposits
61,625
1.43
880
55,846
0.91
508
Deposits in foreign offices
123,816
0.68
841
103,206
0.28
287
Total interest-bearing deposits
939,158
0.32
3,013
890,900
0.16
1,395
Short-term borrowings
98,922
0.77
761
115,187
0.29
333
Long-term debt
246,195
2.09
5,157
239,471
1.60
3,830
Other liabilities
21,872
1.94
424
16,702
2.12
354
Total interest-bearing liabilities
1,306,147
0.72
9,355
1,262,260
0.47
5,912
Portion of noninterest-bearing funding sources
467,094
--
--
448,823
--
--
Total funding sources
$
1,773,241
0.53
9,355
1,711,083
0.35
5,912
Net interest margin and net interest income on a
2.87
%
$
50,878
2.86
%
$
48,994
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,622
18,617
Goodwill
26,629
26,700
Other
114,513
129,041
Total noninterest-earning assets
$
159,764
174,358
Noninterest-bearing funding sources
Deposits
$
365,464
359,666
Other liabilities
55,740
62,825
Total equity
205,654
200,690
Noninterest-bearing funding sources used to fund earning assets
(467,094 )
(448,823 )
Net noninterest-bearing funding sources
$
159,764
174,358
Total assets
$
1,933,005
1,885,441
(1) Our average prime rate was 4.10% and 3.51% for the 2017 and
2016, respectively. The average three-month London Interbank Offered
Rate (LIBOR) was 1.26% and 0.74% 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) 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 $1.3 billion and
$1.2 billion for the 2017 and 2016, respectively, predominantly
related to tax-exempt income on certain loans and securities. The
federal statutory tax rate was 35% for the periods presented.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Dec 31, 2017
Sep 30, 2017
Jun 30, 2017
Mar 31, 2017
Dec 31, 2016
($ in billions)
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
balance
rates
balance
rates
balance
rates
balance
rates
balance
rates
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
264.9
1.25
%
$
276.1
1.20
%
$
281.6
0.99
%
$
283.8
0.76
%
$
273.1
0.56
%
other short-term investments
Trading assets
111.2
3.01
103.6
2.96
98.1
2.95
93.8
2.80
102.8
2.96
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
6.4
1.66
14.5
1.31
18.1
1.53
25.0
1.54
25.9
1.53
Securities of U.S. states and political subdivisions (4)
52.4
3.91
52.5
4.08
53.5
3.89
52.2
3.93
53.9
4.06
Mortgage-backed securities:
Federal agencies
152.9
2.62
139.8
2.58
132.0
2.63
156.6
2.58
148.0
2.37
Residential and commercial (4)
9.4
4.85
11.0
5.44
12.6
5.55
14.5
5.34
16.5
5.87
Total mortgage-backed securities
162.3
2.75
150.8
2.79
144.6
2.89
171.1
2.81
164.5
2.72
Other debt and equity securities (4)
49.1
3.70
48.1
3.74
49.0
3.87
50.7
3.61
52.7
3.71
Total available-for-sale securities (4)
270.2
3.12
265.9
3.14
265.2
3.18
299.0
3.04
297.0
3.03
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44.7
2.19
44.7
2.18
44.7
2.19
44.7
2.20
44.7
2.20
Securities of U.S. states and political subdivisions
6.3
5.26
6.3
5.44
6.3
5.29
6.3
5.30
4.7
5.31
Federal agency and other mortgage-backed securities
89.6
2.25
88.3
2.26
83.1
2.44
51.8
2.51
46.0
1.81
Other debt securities
1.2
2.64
1.4
3.05
2.8
2.34
3.3
2.34
3.6
2.26
Total held-to-maturity securities
141.8
2.36
140.7
2.38
136.9
2.49
106.1
2.54
99.0
2.17
Total investment securities (4)
412.0
2.86
406.6
2.88
402.1
2.94
405.1
2.91
396.0
2.82
Mortgages held for sale (4)
20.5
3.82
22.9
3.79
19.8
3.87
19.9
3.67
27.5
3.43
Loans held for sale
0.1
8.14
0.2
13.35
0.2
6.95
0.1
4.44
0.2
5.42
Loans:
Commercial:
Commercial and industrial - U.S.
270.3
3.89
270.1
3.81
273.1
3.70
274.8
3.59
272.8
3.46
Commercial and industrial - Non U.S. (4)
59.2
2.96
57.7
2.89
56.4
2.86
55.3
2.73
54.4
2.58
Real estate mortgage
127.2
3.88
129.1
3.83
131.3
3.68
132.4
3.56
131.2
3.44
Real estate construction
24.4
4.38
25.0
4.18
25.3
4.10
24.6
3.72
23.9
3.61
Lease financing
19.3
0.62
19.2
4.59
19.0
4.82
19.1
4.94
18.9
5.78
Total commercial
500.4
3.68
501.1
3.76
505.1
3.67
506.2
3.54
501.2
3.45
Consumer:
Real estate 1-4 family first mortgage
282.0
4.01
278.4
4.03
275.1
4.08
275.5
4.02
277.7
4.01
Real estate 1-4 family junior lien mortgage
40.4
4.96
41.9
4.95
43.6
4.78
45.3
4.60
47.2
4.42
Credit card
36.4
12.37
35.6
12.41
34.9
12.18
35.4
11.97
35.4
11.73
Automobile
54.3
5.13
56.7
5.34
59.1
5.43
61.5
5.46
62.5
5.54
Other revolving credit and installment
38.3
6.28
38.6
6.31
39.1
6.13
39.7
6.02
40.1
5.91
Total consumer
451.4
5.10
451.2
5.14
451.8
5.13
457.4
5.06
462.9
5.01
Total loans
951.8
4.35
952.3
4.41
956.9
4.36
963.6
4.26
964.1
4.20
Other
13.2
2.06
15.1
1.69
10.6
2.00
6.8
2.96
6.7
3.27
Total earning assets (4)
$ 1,773.7
3.43
%
$ 1,776.8
3.44
%
$ 1,769.3
3.40
%
$ 1,773.1
3.30
%
$ 1,770.4
3.24
%
Funding sources
Deposits:
Interest-bearing checking
$
50.5
0.68
%
$
48.3
0.57
%
$
48.5
0.41
%
$
50.7
0.29
%
$
46.9
0.17
%
Market rate and other savings
679.9
0.19
681.2
0.17
683.0
0.13
684.2
0.09
676.4
0.07
Savings certificates
20.9
0.31
21.8
0.31
22.6
0.30
23.5
0.29
24.4
0.30
Other time deposits (4)
68.2
1.49
66.1
1.51
57.1
1.39
54.9
1.30
49.2
1.16
Deposits in foreign offices
124.6
0.81
124.7
0.76
123.7
0.65
122.2
0.49
110.4
0.35
Total interest-bearing deposits
944.1
0.39
942.1
0.37
934.9
0.29
935.5
0.23
907.3
0.18
Short-term borrowings
102.1
0.99
99.2
0.91
95.8
0.69
98.5
0.47
124.7
0.33
Long-term debt (4)
231.6
2.32
243.5
2.28
249.9
2.04
260.1
1.77
252.2
1.68
Other liabilities
24.7
1.86
24.8
1.74
21.0
2.05
16.8
2.22
17.1
2.15
Total interest-bearing liabilities (4)
1,302.5
0.81
1,309.6
0.79
1,301.6
0.68
1,310.9
0.58
1,301.3
0.51
Portion of noninterest-bearing funding sources (4)
471.2
--
467.2
--
467.7
--
462.2
--
469.1
--
Total funding sources (4)
$ 1,773.7
0.59
$ 1,776.8
0.58
$ 1,769.3
0.50
$ 1,773.1
0.43
$ 1,770.4
0.37
Net interest margin on a taxable-equivalent basis (4)
2.84
%
2.86
%
2.90
%
2.87
%
2.87
%
Noninterest-earning assets
Cash and due from banks
$
19.2
18.5
18.2
18.7
19.0
Goodwill
26.6
26.6
26.7
26.7
26.7
Other (4)
115.8
116.6
112.8
112.5
128.2
Total noninterest-earnings assets (4)
$
161.6
161.7
157.7
157.9
173.9
Noninterest-bearing funding sources
Deposits
$
367.5
364.3
366.3
363.7
376.9
Other liabilities (4)
57.8
56.8
53.4
54.8
64.9
Total equity (4)
207.4
207.7
205.8
201.6
201.2
Noninterest-bearing funding sources used to fund earning assets (4)
(471.1 )
(467.1 )
(467.8 )
(462.2 )
(469.1 )
Net noninterest-bearing funding sources (4)
$
161.6
161.7
157.7
157.9
173.9
Total assets (4)
$ 1,935.3
1,938.5
1,927.0
1,931.0
1,944.3
(1) Our average prime rate was 4.30% for the quarter ended
December 31, 2017, 4.25% for the quarter ended September 30, 2017,
4.05% for the quarter ended June 30, 2017, 3.80% for the quarter
ended March 31, 2017 and 3.54% for the quarter ended December 31,
2016. The average three-month London Interbank Offered Rate
(LIBOR) was 1.46%, 1.31%, 1.21%, 1.07% and 0.92% 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.
(4) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
Quarter ended December 31,
%
Year ended December 31,
%
(in millions)
2017
2016
Change
2017
2016
Change
Service charges on deposit accounts
$ 1,246
1,357
(8 )%
$
5,111
5,372
(5 )%
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,401
2,342
3
9,358
9,216
2
Trust and investment management
866
837
3
3,372
3,336
1
Investment banking
420
519
(19 )
1,765
1,691
4
Total trust and investment fees
3,687
3,698
--
14,495
14,243
2
Card fees
996
1,001
--
3,960
3,936
1
Other fees:
Charges and fees on loans
313
305
3
1,263
1,241
2
Cash network fees
120
130
(8 )
506
537
(6 )
Commercial real estate brokerage commissions
159
172
(8 )
462
494
(6 )
Letters of credit fees
78
79
(1 )
305
321
(5 )
Wire transfer and other remittance fees
115
105
10
448
401
12
All other fees
128
171
(25 )
573
733
(22 )
Total other fees
913
962
(5 )
3,557
3,727
(5 )
Mortgage banking:
Servicing income, net
262
196
34
1,427
1,765
(19 )
Net gains on mortgage loan origination/sales activities
666
1,221
(45 )
2,923
4,331
(33 )
Total mortgage banking
928
1,417
(35 )
4,350
6,096
(29 )
Insurance
223
262
(15 )
1,049
1,268
(17 )
Net gains (losses) from trading activities
132
(109 )
NM
1,053
834
26
Net gains on debt securities
157
145
8
479
942
(49 )
Net gains from equity investments
439
306
43
1,268
879
44
Lease income
458
523
(12 )
1,907
1,927
(1 )
Life insurance investment income
153
132
16
594
587
1
All other
405
(514 )
NM
1,009
702
44
Total
$ 9,737
9,180
6
$ 38,832
40,513
(4 )
NM - Not meaningful
NONINTEREST EXPENSE
Quarter ended December 31,
%
Year ended December 31,
%
(in millions)
2017
2016
Change
2017
2016
Change
Salaries
$
4,403
4,193
5
%
$ 17,363
16,552
5
%
Commission and incentive compensation
2,665
2,478
8
10,442
10,247
2
Employee benefits
1,293
1,101
17
5,566
5,094
9
Equipment
608
642
(5 )
2,237
2,154
4
Net occupancy
715
710
1
2,849
2,855
--
Core deposit and other intangibles
288
301
(4 )
1,152
1,192
(3 )
FDIC and other deposit assessments
312
353
(12 )
1,287
1,168
10
Operating losses
3,531
243
NM
5,492
1,608
242
Outside professional services
1,025
984
4
3,813
3,138
22
Contract services
344
325
6
1,369
1,203
14
Operating leases
325
379
(14 )
1,351
1,329
2
Outside data processing
208
222
(6 )
891
888
--
Travel and entertainment
183
195
(6 )
687
704
(2 )
Advertising and promotion
200
178
12
614
595
3
Postage, stationery and supplies
137
156
(12 )
544
622
(13 )
Telecommunications
92
96
(4 )
364
383
(5 )
Foreclosed assets
47
75
(37 )
251
202
24
Insurance
28
23
22
100
179
(44 )
All other
396
561
(29 )
2,112
2,264
(7 )
Total
$ 16,800
13,215
27
$ 58,484
52,377
12
NM - Not meaningful
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Service charges on deposit accounts
$ 1,246
1,276
1,276
1,313
1,357
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,401
2,304
2,329
2,324
2,342
Trust and investment management
866
840
837
829
837
Investment banking
420
465
463
417
519
Total trust and investment fees
3,687
3,609
3,629
3,570
3,698
Card fees
996
1,000
1,019
945
1,001
Other fees:
Charges and fees on loans
313
318
325
307
305
Cash network fees
120
126
134
126
130
Commercial real estate brokerage commissions
159
120
102
81
172
Letters of credit fees
78
77
76
74
79
Wire transfer and other remittance fees
115
114
112
107
105
All other fees
128
122
153
170
171
Total other fees
913
877
902
865
962
Mortgage banking:
Servicing income, net
262
309
400
456
196
Net gains on mortgage loan origination/sales activities
666
737
748
772
1,221
Total mortgage banking
928
1,046
1,148
1,228
1,417
Insurance
223
269
280
277
262
Net gains (losses) from trading activities
132
245
237
439
(109 )
Net gains on debt securities
157
166
120
36
145
Net gains from equity investments
439
238
188
403
306
Lease income
458
475
493
481
523
Life insurance investment income
153
152
145
144
132
All other (1)
405
47
327
230
(514 )
Total
$ 9,737
9,400
9,764
9,931
9,180
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Salaries
$
4,403
4,356
4,343
4,261
4,193
Commission and incentive compensation
2,665
2,553
2,499
2,725
2,478
Employee benefits
1,293
1,279
1,308
1,686
1,101
Equipment
608
523
529
577
642
Net occupancy
715
716
706
712
710
Core deposit and other intangibles
288
288
287
289
301
FDIC and other deposit assessments
312
314
328
333
353
Operating losses
3,531
1,329
350
282
243
Outside professional services
1,025
955
1,029
804
984
Contract services
344
351
349
325
325
Operating leases
325
347
334
345
379
Outside data processing
208
227
236
220
222
Travel and entertainment
183
154
171
179
195
Advertising and promotion
200
137
150
127
178
Postage, stationery and supplies
137
128
134
145
156
Telecommunications
92
90
91
91
96
Foreclosed assets
47
66
52
86
75
Insurance
28
24
24
24
23
All other
396
514
621
581
561
Total
$ 16,800
14,351
13,541
13,792
13,215
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)
Dec 31,
Dec 31,
%
2017
2016
Change
Assets
Cash and due from banks
$
23,367
20,729
13
%
Federal funds sold, securities purchased under resale agreements and
272,605
266,038
2
other short-term investments
Trading assets
92,329
74,397
24
Investment securities:
Available-for-sale, at fair value
277,085
308,364
(10 )
Held-to-maturity, at cost
139,335
99,583
40
Mortgages held for sale
20,070
26,309
(24 )
Loans held for sale
108
80
35
Loans
956,770
967,604
(1 )
Allowance for loan losses
(11,004 )
(11,419 )
(4 )
Net loans
945,766
956,185
(1 )
Mortgage servicing rights:
Measured at fair value
13,625
12,959
5
Amortized
1,424
1,406
1
Premises and equipment, net
8,847
8,333
6
Goodwill
26,587
26,693
--
Derivative assets
12,228
14,498
(16 )
Other assets
118,381
114,541
3
Total assets
$ 1,951,757
1,930,115
1
Liabilities
Noninterest-bearing deposits
$
373,722
375,967
(1 )
Interest-bearing deposits
962,269
930,112
3
Total deposits
1,335,991
1,306,079
2
Short-term borrowings
103,256
96,781
7
Derivative liabilities
8,796
14,492
(39 )
Accrued expenses and other liabilities
70,615
57,189
23
Long-term debt
225,020
255,077
(12 )
Total liabilities
1,743,678
1,729,618
1
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,358
24,551
3
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
60,893
60,234
1
Retained earnings
145,263
133,075
9
Cumulative other comprehensive income (loss)
(2,144 )
(3,137 )
(32 )
Treasury stock - 590,194,846 shares and 465,702,148 shares
(29,892 )
(22,713 )
32
Unearned ESOP shares
(1,678 )
(1,565 )
7
Total Wells Fargo stockholders’ equity
206,936
199,581
4
Noncontrolling interests
1,143
916
25
Total equity
208,079
200,497
4
Total liabilities and equity
$ 1,951,757
1,930,115
1
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Assets
Cash and due from banks
$
23,367
19,206
20,248
19,698
20,729
Federal funds sold, securities purchased under resale agreements and
272,605
273,105
264,706
308,747
266,038
other short-term investments
Trading assets
92,329
88,404
83,607
80,326
74,397
Investment securities:
Available-for-sale, at fair value
277,085
272,210
269,202
299,530
308,364
Held-to-maturity, at cost
139,335
142,423
140,392
108,030
99,583
Mortgages held for sale
20,070
20,009
24,807
17,822
26,309
Loans held for sale
108
157
156
253
80
Loans
956,770
951,873
957,423
958,405
967,604
Allowance for loan losses
(11,004 )
(11,078 )
(11,073 )
(11,168 )
(11,419 )
Net loans
945,766
940,795
946,350
947,237
956,185
Mortgage servicing rights:
Measured at fair value
13,625
13,338
12,789
13,208
12,959
Amortized
1,424
1,406
1,399
1,402
1,406
Premises and equipment, net
8,847
8,449
8,403
8,320
8,333
Goodwill
26,587
26,581
26,573
26,666
26,693
Derivative assets
12,228
12,580
13,273
12,564
14,498
Other assets (1)
118,381
116,217
118,887
107,698
114,541
Total assets (1)
$ 1,951,757
1,934,880
1,930,792
1,951,501
1,930,115
Liabilities
Noninterest-bearing deposits
$
373,722
366,528
372,766
365,780
375,967
Interest-bearing deposits
962,269
940,178
933,064
959,664
930,112
Total deposits
1,335,991
1,306,706
1,305,830
1,325,444
1,306,079
Short-term borrowings
103,256
93,811
95,356
94,871
96,781
Derivative liabilities
8,796
9,497
11,636
12,461
14,492
Accrued expenses and other liabilities (1)
70,615
78,993
72,799
59,629
57,189
Long-term debt (1)
225,020
239,256
239,222
256,786
255,077
Total liabilities (1)
1,743,678
1,728,263
1,724,843
1,749,191
1,729,618
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,358
25,576
25,785
25,501
24,551
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,893
60,759
60,689
60,585
60,234
Retained earnings (1)
145,263
141,549
139,366
135,828
133,075
Cumulative other comprehensive income (loss) (1)
(2,144 )
(1,622 )
(2,148 )
(3,153 )
(3,137 )
Treasury stock
(29,892 )
(27,772 )
(25,675 )
(24,030 )
(22,713 )
Unearned ESOP shares
(1,678 )
(1,904 )
(2,119 )
(2,546 )
(1,565 )
Total Wells Fargo stockholders’ equity (1)
206,936
205,722
205,034
201,321
199,581
Noncontrolling interests
1,143
895
915
989
916
Total equity (1)
208,079
206,617
205,949
202,310
200,497
Total liabilities and equity (1)
$ 1,951,757
1,934,880
1,930,792
1,951,501
1,930,115
(1) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER INVESTMENT SECURITIES
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
$
6,319
6,350
17,896
24,625
25,819
Securities of U.S. states and political subdivisions
51,326
52,774
52,013
52,061
51,101
Mortgage-backed securities:
Federal agencies
160,219
150,181
135,938
156,966
161,230
Residential and commercial
9,173
11,046
12,772
14,233
16,318
Total mortgage-backed securities
169,392
161,227
148,710
171,199
177,548
Other debt securities
49,370
50,966
49,555
50,520
52,685
Total available-for-sale debt securities
276,407
271,317
268,174
298,405
307,153
Marketable equity securities
678
893
1,028
1,125
1,211
Total available-for-sale securities
277,085
272,210
269,202
299,530
308,364
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,720
44,712
44,704
44,697
44,690
Securities of U.S. states and political subdivisions
6,313
6,321
6,325
6,331
6,336
Federal agency and other mortgage-backed securities (1)
87,527
90,071
87,525
53,778
45,161
Other debt securities
775
1,319
1,838
3,224
3,396
Total held-to-maturity debt securities
139,335
142,423
140,392
108,030
99,583
Total investment securities
$ 416,420
414,633
409,594
407,560
407,947
(1) Predominantly consists of federal agency mortgage-backed
securities.
FIVE QUARTER LOANS
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Commercial:
Commercial and industrial
$ 333,125
327,944
331,113
329,252
330,840
Real estate mortgage
126,599
128,475
130,277
131,532
132,491
Real estate construction
24,279
24,520
25,337
25,064
23,916
Lease financing
19,385
19,211
19,174
19,156
19,289
Total commercial
503,388
500,150
505,901
505,004
506,536
Consumer:
Real estate 1-4 family first mortgage
284,054
280,173
276,566
274,633
275,579
Real estate 1-4 family junior lien mortgage
39,713
41,152
42,747
44,333
46,237
Credit card
37,976
36,249
35,305
34,742
36,700
Automobile
53,371
55,455
57,958
60,408
62,286
Other revolving credit and installment
38,268
38,694
38,946
39,285
40,266
Total consumer
453,382
451,723
451,522
453,401
461,068
Total loans (1)
$ 956,770
951,873
957,423
958,405
967,604
(1) Includes $12.8 billion, $13.6 billion, $14.3 billion, $15.7
billion, and $16.7 billion of purchased credit-impaired (PCI)
loans at December 31, September 30, June 30, and March 31, 2017
and December 31, 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.
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Commercial foreign loans:
Commercial and industrial
$ 60,106
58,570
57,825
56,987
55,396
Real estate mortgage
8,033
8,032
8,359
8,206
8,541
Real estate construction
655
647
585
471
375
Lease financing
1,126
1,141
1,092
986
972
Total commercial foreign loans
$ 69,920
68,390
67,861
66,650
65,284
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND
FORECLOSED ASSETS)
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Nonaccrual loans:
Commercial:
Commercial and industrial
$ 1,899
2,397
2,632
2,898
3,216
Real estate mortgage
628
593
630
672
685
Real estate construction
37
38
34
40
43
Lease financing
76
81
89
96
115
Total commercial
2,640
3,109
3,385
3,706
4,059
Consumer:
Real estate 1-4 family first mortgage
4,122
4,213
4,413
4,743
4,962
Real estate 1-4 family junior lien mortgage
1,086
1,101
1,095
1,153
1,206
Automobile
130
137
104
101
106
Other revolving credit and installment
58
59
59
56
51
Total consumer
5,396
5,510
5,671
6,053
6,325
Total nonaccrual loans (1)(2)(3)
$ 8,036
8,619
9,056
9,759
10,384
As a percentage of total loans
0.84
%
0.91
0.95
1.02
1.07
Foreclosed assets:
Government insured/guaranteed
$
120
137
149
179
197
Non-government insured/guaranteed
522
569
632
726
781
Total foreclosed assets
642
706
781
905
978
Total nonperforming assets
$ 8,678
9,325
9,837
10,664
11,362
As a percentage of total loans
0.91
%
0.98
1.03
1.11
1.17
(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
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Total (excluding PCI)(1):
$
11,997
10,227
9,716
10,525
11,858
Less: FHA insured/guaranteed by the VA (2)(3)
10,934
9,266
8,873
9,585
10,883
Less: Student loans guaranteed under the FFELP (4)
--
--
--
--
3
Total, not government insured/guaranteed
$
1,063
961
843
940
972
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial
$
26
27
42
88
28
Real estate mortgage
23
11
2
11
36
Real estate construction
--
--
10
3
--
Total commercial
49
38
54
102
64
Consumer:
Real estate 1-4 family first mortgage (3)
219
190
145
149
175
Real estate 1-4 family junior lien mortgage (3)
60
49
44
42
56
Credit card
492
475
411
453
452
Automobile
143
111
91
79
112
Other revolving credit and installment
100
98
98
115
113
Total consumer
1,014
923
789
838
908
Total, not government insured/guaranteed
$
1,063
961
843
940
972
(1) PCI loans totaled $1.4 billion, $1.4 billion, $1.5 billion,
$1.8 billion and $2.0 billion, at December 31, September 30, June
30, and March 31, 2017 and December 31, 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.
(in millions)
Quarter
Year ended
2009-2016
ended
Dec 31,
Dec 31,
2017
2017
Balance, beginning of period
$
9,243
11,216
10,447
Change in accretable yield due to acquisitions
--
2
159
Accretion into interest income (1)
(335 )
(1,406 )
(15,577 )
Accretion into noninterest income due to sales (2)
--
(334 )
(467 )
Reclassification from nonaccretable difference for loans with
2
642
10,955
improving credit-related cash flows (3)
Changes in expected cash flows that do not affect nonaccretable
(23 )
(1,233 )
5,699
difference (4)
Balance, end of period
$
8,887
8,887
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 December 31, 2017, our carrying value for PCI loans totaled
$12.8 billion and the remainder of nonaccretable difference
established in purchase accounting totaled $474 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)
December 31, 2017
PCI loans
All other loans
(in millions)
Adjusted
Current
Carrying
Ratio of
Carrying
Ratio of
unpaid
LTV
value (4)
carrying
value (4)
carrying
principal
ratio (3)
value to
value to
balance (2)
current
current
value (5)
value (5)
California
$
11,286
60 %
$
8,632
45 %
$
6,365
43 %
Florida
1,436
67
1,065
49
1,372
53
New Jersey
565
74
410
53
909
61
New York
434
67
348
50
458
57
Texas
130
48
98
36
545
37
Other states
2,818
67
2,086
49
3,750
54
Total Pick-a-Pay loans
$
16,669
62
$
12,639
46
$
13,399
48
(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 December 31,
Year ended December 31,
(in millions)
2017
2016
2017
2016
Balance, beginning of period
$
12,109
12,694
12,540
12,512
Provision for credit losses
651
805
2,528
3,770
Interest income on certain impaired loans (1)
(49 )
(52 )
(186 )
(205 )
Loan charge-offs:
Commercial:
Commercial and industrial
(181 )
(309 )
(789 )
(1,419 )
Real estate mortgage
(4 )
(14 )
(38 )
(27 )
Real estate construction
--
--
--
(1 )
Lease financing
(14 )
(16 )
(45 )
(41 )
Total commercial
(199 )
(339 )
(872 )
(1,488 )
Consumer:
Real estate 1-4 family first mortgage
(49 )
(86 )
(240 )
(452 )
Real estate 1-4 family junior lien mortgage
(54 )
(110 )
(279 )
(495 )
Credit card
(398 )
(329 )
(1,481 )
(1,259 )
Automobile
(261 )
(243 )
(1,002 )
(845 )
Other revolving credit and installment
(169 )
(200 )
(713 )
(708 )
Total consumer
(931 )
(968 )
(3,715 )
(3,759 )
Total loan charge-offs
(1,130 )
(1,307 )
(4,587 )
(5,247 )
Loan recoveries:
Commercial:
Commercial and industrial
63
53
297
263
Real estate mortgage
14
26
82
116
Real estate construction
3
8
30
38
Lease financing
4
1
17
11
Total commercial
84
88
426
428
Consumer:
Real estate 1-4 family first mortgage
72
89
288
373
Real estate 1-4 family junior lien mortgage
61
66
266
266
Credit card
62
54
239
207
Automobile
73
77
319
325
Other revolving credit and installment
27
28
121
128
Total consumer
295
314
1,233
1,299
Total loan recoveries
379
402
1,659
1,727
Net loan charge-offs
(751 )
(905 )
(2,928 )
(3,520 )
Other
--
(2 )
6
(17 )
Balance, end of period
$
11,960
12,540
11,960
12,540
Components:
Allowance for loan losses
$
11,004
11,419
11,004
11,419
Allowance for unfunded credit commitments
956
1,121
956
1,121
Allowance for credit losses
$
11,960
12,540
11,960
12,540
Net loan charge-offs (annualized) as a percentage of average total
0.31
%
0.37
0.31
0.37
loans
Allowance for loan losses as a percentage of total loans
1.15
1.18
1.15
1.18
Allowance for credit losses as a percentage of total loans
1.25
1.30
1.25
1.30
(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
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Balance, beginning of quarter
$
12,109
12,146
12,287
12,540
12,694
Provision for credit losses
651
717
555
605
805
Interest income on certain impaired loans (1)
(49 )
(43 )
(46 )
(48 )
(52 )
Loan charge-offs:
Commercial:
Commercial and industrial
(181 )
(194 )
(161 )
(253 )
(309 )
Real estate mortgage
(4 )
(21 )
(8 )
(5 )
(14 )
Real estate construction
--
--
--
--
--
Lease financing
(14 )
(11 )
(13 )
(7 )
(16 )
Total commercial
(199 )
(226 )
(182 )
(265 )
(339 )
Consumer:
Real estate 1-4 family first mortgage
(49 )
(67 )
(55 )
(69 )
(86 )
Real estate 1-4 family junior lien mortgage
(54 )
(70 )
(62 )
(93 )
(110 )
Credit card
(398 )
(337 )
(379 )
(367 )
(329 )
Automobile
(261 )
(274 )
(212 )
(255 )
(243 )
Other revolving credit and installment
(169 )
(170 )
(185 )
(189 )
(200 )
Total consumer
(931 )
(918 )
(893 )
(973 )
(968 )
Total loan charge-offs
(1,130 )
(1,144 )
(1,075 )
(1,238 )
(1,307 )
Loan recoveries:
Commercial:
Commercial and industrial
63
69
83
82
53
Real estate mortgage
14
24
14
30
26
Real estate construction
3
15
4
8
8
Lease financing
4
5
6
2
1
Total commercial
84
113
107
122
88
Consumer:
Real estate 1-4 family first mortgage
72
83
71
62
89
Real estate 1-4 family junior lien mortgage
61
69
66
70
66
Credit card
62
60
59
58
54
Automobile
73
72
86
88
77
Other revolving credit and installment
27
30
31
33
28
Total consumer
295
314
313
311
314
Total loan recoveries
379
427
420
433
402
Net loan charge-offs
(751 )
(717 )
(655 )
(805 )
(905 )
Other
--
6
5
(5 )
(2 )
Balance, end of quarter
$
11,960
12,109
12,146
12,287
12,540
Components:
Allowance for loan losses
$
11,004
11,078
11,073
11,168
11,419
Allowance for unfunded credit commitments
956
1,031
1,073
1,119
1,121
Allowance for credit losses
$
11,960
12,109
12,146
12,287
12,540
Net loan charge-offs (annualized) as a percentage of average total
0.31
%
0.30
0.27
0.34
0.37
loans
Allowance for loan losses as a percentage of:
Total loans
1.15
1.16
1.16
1.17
1.18
Nonaccrual loans
137
129
122
114
110
Nonaccrual loans and other nonperforming assets
127
119
113
105
101
Allowance for credit losses as a percentage of:
Total loans
1.25
1.27
1.27
1.28
1.30
Nonaccrual loans
149
141
134
126
121
Nonaccrual loans and other nonperforming assets
138
130
123
115
110
(1) Certain impaired loans with an allowance calculated by
discounting expected cash flows using the loan’s effective
interest rate over the remaining life of the loan recognize
changes in allowance attributable to the passage of time as
interest income.
Wells Fargo & Company and Subsidiaries
TANGIBLE
COMMON EQUITY (1)
(in millions, except ratios)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Tangible book value per common share (1):
Total equity (2)
$ 208,079
206,617
205,949
202,310
200,497
Adjustments:
Preferred stock
(25,358 )
(25,576 )
(25,785 )
(25,501 )
(24,551 )
Additional paid-in capital on ESOP
(122 )
(130 )
(136 )
(157 )
(126 )
preferred stock
Unearned ESOP shares
1,678
1,904
2,119
2,546
1,565
Noncontrolling interests
(1,143 )
(895 )
(915 )
(989 )
(916 )
Total common stockholders’ equity (2)
(A)
183,134
181,920
181,232
178,209
176,469
Adjustments:
Goodwill
(26,587 )
(26,581 )
(26,573 )
(26,666 )
(26,693 )
Certain identifiable intangible assets
(1,624 )
(1,913 )
(2,147 )
(2,449 )
(2,723 )
(other than MSRs)
Other assets (3)
(2,155 )
(2,282 )
(2,268 )
(2,121 )
(2,088 )
Applicable deferred taxes (4)
962
1,550
1,624
1,698
1,772
Tangible common equity (2)
(B)
$ 153,730
152,694
151,868
148,671
146,737
Common shares outstanding
(C)
4,891.6
4,927.9
4,966.8
4,996.7
5,016.1
Book value per common share (2)
(A)/(C)
$
37.44
36.92
36.49
35.67
35.18
Tangible book value per common share (2)
(B)/(C)
31.43
30.99
30.58
29.75
29.25
Quarter ended
Year ended
(in millions, except ratios)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
Dec 31,
2017
2017
2017
2017
2016
2017
2016
Return on average tangible common equity (1):
Net income applicable to common stock (2)
(A)
$
5,740
4,131
5,450
5,233
4,872
20,554
20,373
Average total equity (2)
207,413
207,723
205,755
201,559
201,247
205,654
200,690
Adjustments:
Preferred stock
(25,569 )
(25,780 )
(25,849 )
(25,163 )
(24,579 )
(25,592 )
(24,363 )
Additional paid-in capital on ESOP preferred stock
(129 )
(136 )
(144 )
(146 )
(128 )
(139 )
(161 )
Unearned ESOP shares
1,896
2,114
2,366
2,198
1,596
2,143
2,011
Noncontrolling interests
(998 )
(926 )
(910 )
(957 )
(928 )
(948 )
(936 )
Average common stockholders’ equity (2)
(B)
182,613
182,995
181,218
177,491
177,208
181,118
177,241
Adjustments:
Goodwill
(26,579 )
(26,600 )
(26,664 )
(26,673 )
(26,713 )
(26,629 )
(26,700 )
Certain identifiable intangible assets (other than MSRs)
(1,767 )
(2,056 )
(2,303 )
(2,588 )
(2,871 )
(2,176 )
(3,254 )
Other assets (3)
(2,245 )
(2,231 )
(2,160 )
(2,095 )
(2,175 )
(2,184 )
(2,117 )
Applicable deferred taxes (4)
1,332
1,579
1,648
1,722
1,785
1,570
1,897
Average tangible common equity (2)
(C)
$ 153,354
153,687
151,739
147,857
147,234
151,699
147,067
Return on average common stockholders’ equity (ROE) (annualized) (2)
(A)/(B)
12.47
%
8.96
12.06
11.96
10.94
11.35
11.49
Return on average tangible common equity (ROTCE) (annualized) (2)
(A)/(C)
14.85
10.66
14.41
14.35
13.16
13.55
13.85
(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) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
(3) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(4) Applicable deferred taxes relate to goodwill and other
intangible assets. They were determined by applying the combined
federal statutory rate and composite state income tax rates to the
difference between book and tax basis of the respective goodwill
and intangible assets at period end.
Wells Fargo & Company and Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1)
Estimated
(in billions, except ratio)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Total equity (2)
$
208.1
206.6
205.9
202.3
200.5
Adjustments:
Preferred stock
(25.4 )
(25.6 )
(25.8 )
(25.5 )
(24.6 )
Additional paid-in capital on ESOP
(0.1 )
(0.1 )
(0.1 )
(0.2 )
(0.1 )
preferred stock
Unearned ESOP shares
1.7
1.9
2.1
2.5
1.6
Noncontrolling interests
(1.1 )
(0.9 )
(0.9 )
(1.0 )
(0.9 )
Total common stockholders’ equity (2)
183.2
181.9
181.2
178.1
176.5
Adjustments:
Goodwill
(26.6 )
(26.6 )
(26.6 )
(26.7 )
(26.7 )
Certain identifiable intangible assets (other than MSRs)
(1.6 )
(1.9 )
(2.1 )
(2.4 )
(2.7 )
Other assets (3)
(2.2 )
(2.3 )
(2.2 )
(2.1 )
(2.1 )
Applicable deferred taxes (4)
1.0
1.6
1.6
1.7
1.8
Investment in certain subsidiaries and other
0.2
(0.1 )
(0.2 )
(0.1 )
(0.4 )
Common Equity Tier 1 (Fully Phased-In) under Basel III
(A)
154.0
152.6
151.7
148.5
146.4
Total risk-weighted assets (RWAs) anticipated under Basel III (5)(6)
(B)
$ 1,292.3
1,292.8
1,310.5
1,324.5
1,358.9
Common Equity Tier 1 to total RWAs anticipated under Basel III
(A)/(B)
11.9
%
11.8
11.6
11.2
10.8
(Fully Phased-In) (6)
(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) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
(3) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(4) 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.
(5) 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 December 31, 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 September 30, June 30 and March 31, 2017, and December 31,
2016, was calculated under the Basel III Standardized Approach
RWAs.
(6) The Company’s December 31, 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 December 31,
Net interest income (3)
$
7,537
7,556
4,211
4,323
1,133
1,061
(568 )
(538 )
12,313
12,402
Provision (reversal of provision) for credit losses
636
631
20
168
(7 )
3
2
3
651
805
Noninterest income
4,491
4,105
2,883
2,830
3,172
3,013
(809 )
(768 )
9,737
9,180
Noninterest expense
10,200
6,985
4,204
4,002
3,244
3,042
(848 )
(814 )
16,800
13,215
Income (loss) before income tax expense (benefit)
1,192
4,045
2,870
2,983
1,068
1,029
(531 )
(495 )
4,599
7,562
Income tax expense (benefit)
(2,560 )
1,272
716
795
404
380
(202 )
(189 )
(1,642 )
2,258
Net income (loss) before noncontrolling interests
3,752
2,773
2,154
2,188
664
649
(329 )
(306 )
6,241
5,304
Less: Net income (loss) from noncontrolling interests
79
40
6
(6 )
5
(4 )
--
--
90
30
Net income (loss)
$
3,673
2,733
2,148
2,194
659
653
(329 )
(306 )
6,151
5,274
Average loans
$
473.5
488.1
463.5
461.5
72.8
70.0
(58.0 )
(55.5 )
951.8
964.1
Average assets
974.0
1,000.7
837.3
811.9
209.3
220.4
(85.3 )
(88.7 )
1,935.3
1,944.3
Average deposits
738.1
709.8
465.7
459.2
184.2
194.9
(76.4 )
(79.7 )
1,311.6
1,284.2
Year ended December 31,
Net interest income (3)
$ 30,365
29,833
16,967
16,052
4,493
3,913
(2,268 )
(2,044 )
49,557
47,754
Provision (reversal of provision) for credit losses
2,555
2,691
(19 )
1,073
(5 )
(5 )
(3 )
11
2,528
3,770
Noninterest income
18,342
19,033
11,206
12,490
12,433
12,033
(3,149 )
(3,043 )
38,832
40,513
Noninterest expense
32,478
27,422
16,755
16,126
12,631
12,059
(3,380 )
(3,230 )
58,484
52,377
Income (loss) before income tax expense (benefit)
13,674
18,753
11,437
11,343
4,300
3,892
(2,034 )
(1,868 )
27,377
32,120
Income tax expense (benefit)
1,327
6,182
2,753
3,136
1,610
1,467
(773 )
(710 )
4,917
10,075
Net income (loss) before noncontrolling interests
12,347
12,571
8,684
8,207
2,690
2,425
(1,261 )
(1,158 )
22,460
22,045
Less: Net income (loss) from noncontrolling interests
276
136
(15 )
(28 )
16
(1 )
--
--
277
107
Net income (loss)
$ 12,071
12,435
8,699
8,235
2,674
2,426
(1,261 )
(1,158 )
22,183
21,938
Average loans
$
476.7
486.9
464.6
449.3
71.9
67.3
(57.1 )
(53.5 )
956.1
950.0
Average assets
984.2
977.3
821.8
782.0
214.4
211.5
(87.4 )
(85.4 )
1,933.0
1,885.4
Average deposits
729.3
701.2
464.5
438.6
189.0
187.8
(78.2 )
(77.0 )
1,304.6
1,250.6
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is
not necessarily comparable with other similar information for
other financial services companies. We define our operating
segments by product type and customer segment.
(2) Includes the elimination of certain items that are included in
more than one business segment, most of which represents products
and services for Wealth and Investment Management customers served
through Community Banking distribution channels.
(3) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
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
(income/expense in millions, average balances in billions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
COMMUNITY BANKING
Net interest income (2)(4)
$
7,537
7,626
7,543
7,659
7,556
Provision for credit losses
636
650
623
646
631
Noninterest income (4)
4,491
4,358
4,810
4,683
4,105
Noninterest expense
10,200
7,834
7,223
7,221
6,985
Income before income tax expense (4)
1,192
3,500
4,507
4,475
4,045
Income tax expense (benefit) (4)
(2,560 )
1,263
1,423
1,201
1,272
Net income before noncontrolling interests (4)
3,752
2,237
3,084
3,274
2,773
Less: Net income from noncontrolling interests
79
61
46
90
40
Segment net income (4)
$
3,673
2,176
3,038
3,184
2,733
Average loans
$
473.5
473.5
477.2
482.7
488.1
Average assets
974.0
988.9
983.4
990.7
1,000.7
Average deposits
738.1
734.5
727.2
717.2
709.8
WHOLESALE BANKING
Net interest income (2)(4)
$
4,211
4,345
4,271
4,140
4,323
Provision (reversal of provision) for credit losses
20
69
(65 )
(43 )
168
Noninterest income (4)
2,883
2,739
2,682
2,902
2,830
Noninterest expense
4,204
4,248
4,078
4,225
4,002
Income before income tax expense (4)
2,870
2,767
2,940
2,860
2,983
Income tax expense (4)
716
729
560
748
795
Net income before noncontrolling interests (4)
2,154
2,038
2,380
2,112
2,188
Less: Net loss from noncontrolling interests
6
(7 )
(9 )
(5 )
(6 )
Segment net income (4)
$
2,148
2,045
2,389
2,117
2,194
Average loans
$
463.5
463.8
464.9
466.3
461.5
Average assets
837.3
824.3
817.3
807.8
811.9
Average deposits
465.7
463.4
463.0
466.0
459.2
WEALTH AND INVESTMENT MANAGEMENT
Net interest income (2)
$
1,133
1,159
1,127
1,074
1,061
Provision (reversal of provision) for credit losses
(7 )
(1 )
7
(4 )
3
Noninterest income
3,172
3,087
3,055
3,119
3,013
Noninterest expense
3,244
3,106
3,075
3,206
3,042
Income before income tax expense
1,068
1,141
1,100
991
1,029
Income tax expense
404
427
417
362
380
Net income before noncontrolling interests
664
714
683
629
649
Less: Net income (loss) from noncontrolling interests
5
4
1
6
(4 )
Segment net income
$
659
710
682
623
653
Average loans
$
72.8
72.4
71.7
70.7
70.0
Average assets
209.3
213.4
213.1
221.9
220.4
Average deposits
184.2
188.1
188.2
195.6
194.9
OTHER (3)
Net interest income (2)
$
(568 )
(681 )
(470 )
(549 )
(538 )
Provision (reversal of provision) for credit losses
2
(1 )
(10 )
6
3
Noninterest income
(809 )
(784 )
(783 )
(773 )
(768 )
Noninterest expense
(848 )
(837 )
(835 )
(860 )
(814 )
Loss before income tax benefit
(531 )
(627 )
(408 )
(468 )
(495 )
Income tax benefit
(202 )
(238 )
(155 )
(178 )
(189 )
Net loss before noncontrolling interests
(329 )
(389 )
(253 )
(290 )
(306 )
Less: Net income from noncontrolling interests
--
--
--
--
--
Other net loss
$
(329 )
(389 )
(253 )
(290 )
(306 )
Average loans
$
(58.0 )
(57.4 )
(56.9 )
(56.1 )
(55.5 )
Average assets
(85.3 )
(88.1 )
(86.8 )
(89.4 )
(88.7 )
Average deposits
(76.4 )
(79.6 )
(77.2 )
(79.6 )
(79.7 )
CONSOLIDATED COMPANY
Net interest income (2)(4)
$
12,313
12,449
12,471
12,324
12,402
Provision for credit losses
651
717
555
605
805
Noninterest income (4)
9,737
9,400
9,764
9,931
9,180
Noninterest expense
16,800
14,351
13,541
13,792
13,215
Income before income tax expense (4)
4,599
6,781
8,139
7,858
7,562
Income tax expense (benefit) (4)
(1,642 )
2,181
2,245
2,133
2,258
Net income before noncontrolling interests (4)
6,241
4,600
5,894
5,725
5,304
Less: Net income from noncontrolling interests
90
58
38
91
30
Wells Fargo net income (4)
$
6,151
4,542
5,856
5,634
5,274
Average loans
$
951.8
952.3
956.9
963.6
964.1
Average assets (4)
1,935.3
1,938.5
1,927.0
1,931.0
1,944.3
Average deposits
1,311.6
1,306.4
1,301.2
1,299.2
1,284.2
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is
not necessarily comparable with other similar information for
other financial services companies. We define our operating
segments by product type and customer segment.
(2) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
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, most of which represents products
and services for Wealth and Investment Management customers served
through Community Banking distribution channels.
(4) Financial information for prior quarters in 2017 has been
revised to reflect the impact of the adoption in fourth quarter
2017 of Accounting Standards Update (ASU) 2017-12 - Derivatives
and Hedging (Topic 815): Targeted Improvements to Accounting
for Hedging Activities. See footnote (1) to the Summary
Financial Data table on page 16 for more information.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED MORTGAGE SERVICING
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
MSRs measured using the fair value method:
Fair value, beginning of quarter
$
13,338
12,789
13,208
12,959
10,415
Purchases
--
541
--
--
--
Servicing from securitizations or asset transfers (1)
639
605
436
583
752
Sales and other (2)
(32 )
64
(8 )
(47 )
(47 )
Net additions
607
1,210
428
536
705
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)
221
(171 )
(305 )
152
2,367
Servicing and foreclosure costs (4)
23
60
(14 )
27
93
Discount rates (5)
13
--
--
--
--
Prepayment estimates and other (6)
(55 )
(31 )
(41 )
(5 )
(106 )
Net changes in valuation model inputs or assumptions
202
(142 )
(360 )
174
2,354
Changes due to collection/realization of expected cash flows over
(522 )
(519 )
(487 )
(461 )
(515 )
time
Total changes in fair value
(320 )
(661 )
(847 )
(287 )
1,839
Fair value, end of quarter
$
13,625
13,338
12,789
13,208
12,959
(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 or portfolios with
servicing liabilities.
(3) Includes prepayment speed changes as well as other valuation
changes due to changes in mortgage interest rates (such as changes
in estimated interest earned on custodial deposit balances)
(4) Includes costs to service and unreimbursed foreclosure costs.
(5) Reflects discount rate assumption change, excluding portion
attributable to changes in mortgage interest rates.
(6) Represents changes driven by other valuation model inputs or
assumptions including prepayment speed estimation changes and other
assumption updates. Prepayment speed estimation changes are
influenced by observed changes in borrower behavior and other
external factors that occur independent of interest rate changes.
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Amortized MSRs:
Balance, beginning of quarter
$
1,406
1,399
1,402
1,406
1,373
Purchases
40
31
26
18
34
Servicing from securitizations or asset transfers
43
41
37
45
66
Amortization
(65 )
(65 )
(66 )
(67 )
(67 )
Balance, end of quarter
$
1,424
1,406
1,399
1,402
1,406
Fair value of amortized MSRs:
Beginning of quarter
$
1,990
1,989
2,051
1,956
1,627
End of quarter
2,025
1,990
1,989
2,051
1,956
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Servicing income, net:
Servicing fees (1)
$
833
795
882
882
738
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)
(A)
202
(142 )
(360 )
174
2,354
Changes due to collection/realization of expected cash flows over
(522 )
(519 )
(487 )
(461 )
(515 )
time
Total changes in fair value of MSRs carried at fair value
(320 )
(661 )
(847 )
(287 )
1,839
Amortization
(65 )
(65 )
(66 )
(67 )
(67 )
Net derivative gains (losses) from economic hedges (3)
(B)
(186 )
240
431
(72 )
(2,314 )
Total servicing income, net
$
262
309
400
456
196
Market-related valuation changes to MSRs, net of hedge results (2)(3)
(A)+(B)
$
16
98
71
102
40
(1) Includes contractually specified servicing fees, late charges
and other ancillary revenues, net of unreimbursed direct servicing
costs.
(2) Refer to the changes in fair value MSRs table on the previous
page for more detail.
(3) Represents results from economic hedges used to hedge the risk
of changes in fair value of MSRs.
(in billions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Managed servicing portfolio (1):
Residential mortgage servicing:
Serviced for others
$
1,209
1,223
1,189
1,204
1,205
Owned loans serviced
342
340
343
335
347
Subserviced for others
3
3
4
4
8
Total residential servicing
1,554
1,566
1,536
1,543
1,560
Commercial mortgage servicing:
Serviced for others
495
480
475
474
479
Owned loans serviced
127
128
130
132
132
Subserviced for others
9
8
8
7
8
Total commercial servicing
631
616
613
613
619
Total managed servicing portfolio
$
2,185
2,182
2,149
2,156
2,179
Total serviced for others
$
1,704
1,703
1,664
1,678
1,684
Ratio of MSRs to related loans serviced for others
0.88 %
0.87
0.85
0.87
0.85
Weighted-average note rate (mortgage loans serviced for others)
4.23
4.23
4.23
4.23
4.26
(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
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Net gains on mortgage loan origination/sales activities (in
millions):
Residential
(A)
$
504
546
521
569
939
Commercial
95
81
81
101
90
Residential pipeline and unsold/repurchased loan management (1)
67
110
146
102
192
Total
$
666
737
748
772
1,221
Application data (in billions):
Wells Fargo first mortgage quarterly applications
$
63
73
83
59
75
Refinances as a percentage of applications
38 %
37
32
36
48
Wells Fargo first mortgage unclosed pipeline, at quarter end
$
23
29
34
28
30
Residential real estate originations:
Purchases as a percentage of originations
64 %
72
75
61
50
Refinances as a percentage of originations
36
28
25
39
50
Total
100 %
100
100
100
100
Wells Fargo first mortgage loans (in billions):
Retail
$
23
26
25
21
35
Correspondent
30
32
31
22
36
Other (2)
--
1
--
1
1
Total quarter-to-date
$
53
59
56
44
72
Held-for-sale
(B)
$
40
44
42
34
56
Held-for-investment
13
15
14
10
16
Total quarter-to-date
$
53
59
56
44
72
Total year-to-date
$
212
159
100
44
249
Production margin on residential held-for-sale mortgage
(A)/(B)
1.25 %
1.24
1.24
1.68
1.68
originations
(1) Predominantly 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
(in millions)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2017
2017
2017
2017
2016
Balance, beginning of period
$
179
178
222
229
239
Assumed with MSR purchases (1)
--
10
--
--
--
Provision for repurchase losses:
Loan sales
4
6
6
8
10
Change in estimate (2)
2
(12 )
(45 )
(8 )
(7 )
Net additions (reductions) to provision
6
(6 )
(39 )
--
3
Losses
(4 )
(3 )
(5 )
(7 )
(13 )
Balance, end of period
$
181
179
178
222
229
(1) Represents repurchase liability associated with portfolio of
loans underlying mortgage servicing rights acquired during the
period.
(2) 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
John M. Campbell, 415-396-0523