WFC
$54.58
Wells Fargo &
$.31
.57%
Earnings Details
Quarter December 2016
Friday, January 13, 2017 8:00:15 AM
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Summary

Wells Fargo & Beats

Wells Fargo & (WFC) reported Quarter December 2016 earnings of $1.03 per share on revenue of $23.2 billion. The consensus earnings estimate was $1.00 per share on revenue of $22.5 billion. The Earnings Whisper number was $1.02 per share. Revenue grew 2.6% on a year-over-year basis.

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

Results
Reported Earnings
$1.03
Earnings Whisper
$1.02
Consensus Estimate
$1.00
Reported Revenue
$23.24 Bil
Revenue Estimate
$22.47 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wells Fargo Reports $5.3 Billion in Quarterly Net Income

Wells Fargo & Company (WFC):

Full year 2016 -- Net income of $21.9 billion, compared with $22.9 billion in 2015

-- Diluted earnings per share (EPS) of $3.99, compared with $4.12

-- Revenue of $88.3 billion, up 3 percent

Return on assets (ROA) of 1.16 percent and return on equity (ROE) of 11.49 percent

Returned $12.5 billion to shareholders through common stock dividends and net share repurchases

Fourth quarter 2016 -- Net income of $5.3 billion, compared with $5.6 billion in fourth quarter 2015 -- Included net hedge ineffectiveness accounting impact of $(592) million

Diluted EPS of $0.96, compared with $1.00 -- Included net hedge ineffectiveness accounting impact of $(0.07)

Revenue of $21.6 billion, consistent with fourth quarter 2015 -- Net interest income of $12.4 billion, up 7 percent

-- ROA of 1.08 percent and ROE of 10.94 percent

Total average loans of $964.1 billion, up $51.9 billion, or 6 percent

Total average deposits of $1.3 trillion, up $67.3 billion, or 6 percent

-- Provision expense of $805 million, down $26 million, or 3%

-- Nonaccrual loans of $10.4 billion, down $998 million, or 9 percent

-- Common Equity Tier 1 ratio (fully phased-in) of 10.7 percent(1)

Selected Financial Information
Quarter ended
Year ended Dec. 31,
Dec 31,
Sep 30,
Dec 31,
2016
2016
2015
2016
2015
Earnings
Diluted earnings per common share
$
0.96
1.03
1.00
3.99
4.12
Wells Fargo net income (in billions)
5.27
5.64
5.58
21.94
22.89
Return on assets (ROA)
1.08
%
1.17
1.24
1.16
1.31
Return on equity (ROE)
10.94
11.60
11.93
11.49
12.60
Return on average tangible common equity (ROTCE)(a)
13.16
13.96
14.30
13.85
15.17
Asset Quality
Net charge-offs (annualized) as a % of average total loans
0.37
%
0.33
0.36
0.37
0.33
Allowance for credit losses as a % of total loans
1.30
1.32
1.37
1.30
1.37
Allowance for credit losses as a % of annualized net charge-offs
348
396
380
356
433
Other
Revenue (in billions)
$
21.6
22.3
21.6
88.3
86.1
Efficiency ratio (b)
61.2
%
59.4
58.4
59.3
58.1
Average loans (in billions)
$ 964.1
957.5
912.3
950.0
885.4
Average deposits (in billions)
1,284.2
1,261.5
1,216.8
1,250.6
1,194.1
Net interest margin
2.87
%
2.82
2.92
2.86
2.95
(a) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity, which utilizes tangible common equity, is a useful
financial measure because it enables investors and others to
assess the Company’s use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 35.
(b) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).

Wells Fargo & Company (WFC) reported diluted earnings per common share of $3.99 for 2016, compared with $4.12 for 2015. Full year net income in 2016 was $21.9 billion, compared with $22.9 billion in 2015. For fourth quarter 2016, net income was $5.3 billion, or $0.96 per share, compared with $5.6 billion, or $1.00 per share, for fourth quarter 2015, and $5.6 billion, or $1.03 per share, for third quarter 2016.

Chief Executive Officer Tim Sloan said, "We continued to make progress in the fourth quarter in rebuilding the trust of our customers, team members and other key stakeholders. I am pleased with the progress we have made in customer remediation, the ongoing review of sales practices across the company and fulfilling our regulatory requirements for sales practices matters. As planned, we launched our new Retail Bank compensation program this month, which is based on building lifelong relationships with our customers. While we have more work to do, I am proud of the effort of our entire team to make things right for our customers and team members and to continue building a better Wells Fargo for the future."

Chief Financial Officer John Shrewsberry said, "Wells Fargo had solid underlying performance in the fourth quarter as we continued to benefit from our diversified business model. Net interest income increased from the prior quarter, largely driven by growth in loans and investments, as well as higher interest rates. Noninterest income declined from the prior quarter due to net hedge accounting ineffectiveness associated with our hedging of long-term debt as part of our asset/liability management program, as well as lower market-sensitive revenue. Other sources of noninterest income were diversified and stable with the prior quarter. Credit quality remained solid in the quarter, and we returned $3.0 billion to shareholders in the quarter, with a full year 2016 net payout ratio(2) of 61 percent."

Net Interest Income

Net interest income in fourth quarter 2016 increased $450 million from third quarter 2016 to $12.4 billion, primarily due to growth in loans and investment securities, higher interest income on trading assets, higher variable income including periodic dividends and fees, and a modest benefit from higher interest rates in the quarter.

Net interest margin was 2.87 percent, up 5 basis points from third quarter 2016, driven by growth in loans, investment securities and trading assets, and the impact from higher interest rates. Income from variable sources contributed approximately two basis points in the quarter. These benefits were partially offset by growth in funding balances, primarily long-term debt and deposits.

Noninterest Income

Noninterest income in the fourth quarter was $9.2 billion, compared with $10.4 billion in third quarter 2016. Fee income in many of the businesses in the quarter was stable compared with the prior quarter; however, linked-quarter results included a $592 million loss due to the impact of higher interest rates and currency movements on hedging results (net hedge ineffectiveness accounting loss) reflected in Other income. The linked-quarter decline also reflected decreases in trading income and mortgage banking fees, partially offset by higher equity gains and stronger investment banking fees.

Net loss from trading activities was $109 million in the fourth quarter, compared with a net gain of $415 million in the third quarter. Of the total linked-quarter decline of $524 million, $223 million resulted from a decrease in secondary trading, reflecting lower client volumes compared with a strong third quarter, as well as seasonality and fewer trading days in the quarter. Market-driven changes in credit spreads and higher swap rates resulted in a $61 million decline from credit valuation adjustments (CVA) in the quarter. Additionally, $204 million of the decline was associated with items that were offset in other areas, and were therefore neutral to net income:

$98 million of losses resulted from certain hedged trading positions in our equity and residential mortgage-backed security books in which dividend and interest payments were recognized in net interest income and corresponding declines in the value of associated hedges were reflected in trading losses.

Deferred compensation trading gains, which were largely offset in employee benefits expense, declined $106 million from the third quarter.

Mortgage banking noninterest income was $1.4 billion, compared with $1.7 billion in third quarter 2016. Residential mortgage loan originations were $72 billion in the fourth quarter, up from $70 billion in the third quarter. The production margin on residential held-for-sale mortgage loan originations(3) was 1.68 percent, down from 1.81 percent in the third quarter. Mortgage servicing income declined to $196 million in the fourth quarter from $359 million in the third quarter, primarily due to higher unreimbursed servicing costs.

Other income was $(382) million, compared with $315 million in third quarter, and included $592 million in hedge ineffectiveness losses, net of related economic hedges, resulting from certain key interest rate and foreign currency fluctuations. Full year 2016 net hedge ineffectiveness losses were $15 million, as prior quarters included net gains. Substantially all of the ineffectiveness related to hedges of U.S. dollar and non-U.S. dollar long-term debt.

Background on Hedge Ineffectiveness

As part of Wells Fargo’s ongoing funding strategy, the Company is a regular issuer of long-term debt, which typically is fixed rate in order to meet the demands of debt investors. As part of the Company’s asset/liability management program, however, this fixed rate is typically swapped to floating rate in order to balance the Company’s deposit-oriented liability structure to better align with the interest rate sensitivity characteristics of the Company’s assets. While the majority of long-term debt is issued in U.S. dollars, non-U.S. dollar issuances are also used to diversify funding sources. Any non-U.S. dollar issuance is either swapped to U.S. dollars or is identified to be directly funding non-U.S. dollar assets. While the Company believes this hedging strategy is prudent from an asset/liability management perspective, it is generally not possible to achieve a perfect accounting hedge due to differences in the required valuation measurement of the hedging instrument, such as an interest rate swap, and the hedged risk component of the Company’s long-term debt.

From an accounting standpoint, the measurement of the "effectiveness" of the hedge occurs throughout the quarter up to and including the last day of the quarter and results, therefore, can be affected by that point-in time calculation. While the hedge ineffectiveness recognized over the life of hedging relationships is expected to be zero as long as hedge accounting is maintained and the hedges are held to maturity, periodic ineffectiveness is recognized in other noninterest income as interest rate and foreign currency fluctuations occur. In first quarter 2016, for example, a sharp decline in interest rates and foreign currency fluctuations drove a net hedge accounting gain of $379 million in the Company’s other noninterest income. Conversely, the net hedge accounting losses in fourth quarter 2016 were driven by a sharp increase in certain interest rates and foreign currency fluctuations. Reported results in any quarter can also be affected by a related but separate economic hedging strategy the Company employs, also utilizing interest rate swaps, to partially offset the periodic volatility caused by the required effectiveness measurement.

The Financial Accounting Standards Board issued an exposure draft on hedge accounting guidelines and is expected to issue new guidance in 2017. If issued in its current form, the interest rate-related ineffectiveness associated with the Company’s long-term debt hedges would be significantly reduced.

Noninterest Expense

Noninterest expense in the fourth quarter declined $53 million from the prior quarter to $13.2 billion, primarily due to lower operating losses, charitable donations, which were elevated in the third quarter due to a $107 million donation to the Wells Fargo Foundation, and deferred compensation expense (included in employee benefits expense and largely offset in revenue). Fourth quarter expenses included typically higher outside professional services, equipment, and advertising. Fourth quarter foreclosed asset expense increased from the third quarter which included an elevated level of commercial real estate recoveries. The efficiency ratio increased to 61.2 percent in fourth quarter 2016, compared with 59.4 percent in the prior quarter, primarily due to the impact of hedge ineffectiveness losses on revenue. The efficiency ratio for full year 2016 was 59.3 percent. The Company expects the efficiency ratio to remain at an elevated level.

Loans

Total loans were $967.6 billion at December 31, 2016, up $6.3 billion from September 30, 2016. Loan growth in the quarter was affected by the deconsolidation of certain previously sold reverse mortgage loans, which resulted from the sale of the related servicing, and reduced real estate 1-4 family first mortgages by $3.8 billion (offset in long-term debt). Commercial and industrial, commercial real estate, credit card and lease financing all grew in the quarter, while real estate 1-4 family junior lien mortgage and automobile declined. Total average loans were $964.1 billion in the fourth quarter, up $6.7 billion from the prior quarter.

Period-End Loan Balances
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Commercial
$
506,536
496,454
494,538
488,205
456,583
Consumer
461,068
464,872
462,619
459,053
459,976
Total loans
$
967,604
961,326
957,157
947,258
916,559
Change from prior quarter
$
6,278
4,169
9,899
30,699
13,326

Investment Securities

Investment securities were $407.9 billion at December 31, 2016, up $17.1 billion from third quarter, as approximately $44 billion of purchases, predominantly federal agency mortgage-backed securities in the available-for-sale portfolio, were partially offset by run-off.

Net unrealized losses on available-for-sale securities were $1.8 billion at December 31, 2016, compared with net unrealized gains on available-for-sale securities of $4.5 billion at September 30, 2016, as the impact from higher interest rates was partially offset by tighter credit spreads.

Deposits

Total average deposits for fourth quarter 2016 were $1.3 trillion, up 2 percent from the prior quarter, driven by both commercial and consumer growth. The average deposit cost for fourth quarter 2016 was 12 basis points, up 1 basis point from the prior quarter.

Capital

Capital levels remained strong in the fourth quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 10.7 percent(1). While flat from the prior quarter, Common Equity Tier 1 experienced a decline due to changes in unrealized gains/losses recognized in Other comprehensive income (OCI) resulting from higher interest rates experienced in the fourth quarter, which were largely offset by a decline in standardized risk-weighted assets, primarily due to a decrease in the Company’s exposure to counterparty risk. In fourth quarter 2016, the Company repurchased 24.9 million shares of its common stock and entered into a $750 million forward repurchase transaction, which settled on January 12, 2017, for 14.7 million shares. The Company paid a quarterly common stock dividend of $0.38 per share, up from $0.375 per share a year ago.

Credit Quality

"Credit results were stable in the fourth quarter and overall credit quality continued to be driven by strong performance in the commercial and consumer real estate portfolios," said Chief Risk Officer Mike Loughlin. "Continued improvement in residential real estate and stabilization in oil and gas industry conditions drove a $100 million reserve release(4) in the fourth quarter."

Net Loan Charge-offs

The quarterly loss rate of 0.37 percent (annualized) reflected commercial losses of 0.20 percent and consumer losses of 0.56 percent. Credit losses were $905 million in fourth quarter 2016, up $100 million, from third quarter 2016. Consumer losses increased $64 million, driven by losses in the credit card, automobile and other revolving credit and installment portfolios. Commercial losses were up $36 million, driven by $32 million in lower recoveries.

Net Loan Charge-Offs
Quarter ended
December 31, 2016
September 30, 2016
June 30, 2016
Net loan
As a % of
Net loan
As a % of
Net loan
As a % of
charge-
average
charge-
average
charge-
average
($ in millions)
offs
loans (a)
offs
loans (a)
offs
loans (a)
Commercial:
Commercial and industrial
$
256
0.31
%
$
259
0.32
%
$
368
0.46
%
Real estate mortgage
(12 )
(0.04 )
(28 )
(0.09 )
(20 )
(0.06 )
Real estate construction
(8 )
(0.13 )
(18 )
(0.32 )
(3 )
(0.06 )
Lease financing
15
0.32
2
0.04
12
0.27
Total commercial
251
0.20
215
0.17
357
0.29
Consumer:
Real estate 1-4 family first mortgage
(3 )
--
20
0.03
14
0.02
Real estate 1-4 family junior lien mortgage
44
0.38
49
0.40
62
0.49
Credit card
275
3.09
245
2.82
270
3.25
Automobile
166
1.05
137
0.87
90
0.59
Other revolving credit and installment
172
1.70
139
1.40
131
1.32
Total consumer
654
0.56
590
0.51
567
0.49
Total
$
905
0.37
%
$
805
0.33
%
$
924
0.39
%
(a) Quarterly net charge-offs as a percentage of average loans are
annualized. See explanation on page 31 of the accounting for
purchased credit-impaired (PCI) loans and the impact on selected
financial ratios.

Nonperforming Assets

Nonperforming assets decreased $644 million from third quarter 2016 to $11.4 billion. Nonaccrual loans decreased $602 million from third quarter to $10.4 billion reflecting lower consumer real estate, commercial and industrial, and commercial real estate nonaccruals.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
December 31, 2016
September 30, 2016
June 30, 2016
As a
As a
As a
% of
% of
% of
Total
total
Total
total
Total
total
($ in millions)
balances
loans
balances
loans
balances
loans
Commercial:
Commercial and industrial
$
3,216
0.97
%
$
3,331
1.03
%
$
3,464
1.07
%
Real estate mortgage
685
0.52
780
0.60
872
0.68
Real estate construction
43
0.18
59
0.25
59
0.25
Lease financing
115
0.60
92
0.49
112
0.59
Total commercial
4,059
0.80
4,262
0.86
4,507
0.91
Consumer:
Real estate 1-4 family first mortgage
4,962
1.80
5,310
1.91
5,970
2.15
Real estate 1-4 family junior lien mortgage
1,206
2.61
1,259
2.62
1,330
2.67
Automobile
106
0.17
108
0.17
111
0.18
Other revolving credit and installment
51
0.13
47
0.12
45
0.11
Total consumer
6,325
1.37
6,724
1.45
7,456
1.61
Total nonaccrual loans
10,384
1.07
10,986
1.14
11,963
1.25
Foreclosed assets:
Government insured/guaranteed
197
282
321
Non-government insured/guaranteed
781
738
796
Total foreclosed assets
978
1,020
1,117
Total nonperforming assets
$ 11,362
1.17
%
$ 12,006
1.25
%
$ 13,080
1.37
%
Change from prior quarter:
Total nonaccrual loans
$
(602 )
$
(977 )
$
(271 )
Total nonperforming assets
(644 )
(1,074 )
(433 )

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.5 billion at December 31, 2016, which was down $154 million from September 30, 2016. The allowance coverage for total loans was 1.30 percent, compared with 1.32 percent in third quarter 2016. The allowance covered 3.5 times annualized fourth quarter net charge-offs, compared with 4.0 times in the prior quarter. The allowance coverage for nonaccrual loans was 121 percent at December 31, 2016, compared with 116 percent at September 30, 2016. "We believe the allowance was appropriate for losses inherent in the loan portfolio at December 31, 2016," said Loughlin.

Business Segment Performance

Wells Fargo defines its operating segments by product type and customer segment. Effective fourth quarter 2016, we realigned some personnel and business activities from Wholesale Banking to Community Banking, as a result of the formation of the new Payments, Virtual Solutions, and Innovation Group. Results for these operating segments reflect the shift prospectively from November 1, 2016. Segment net income for each of the three business segments was:

Quarter ended
Dec 31,
Sep 30,
Dec 31,
(in millions)
2016
2016
2015
Community Banking
$ 2,733
3,227
3,169
Wholesale Banking
2,194
2,047
2,104
Wealth and Investment Management
653
677
595

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and auto, student, and small business lending. Community Banking also offers investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Lending business units.

Selected Financial Information
Quarter ended
Dec 31,
Sep 30,
Dec 31,
(in millions)
2016
2016
2015
Total revenue
$
11,661
12,387
12,330
Provision for credit losses
631
651
704
Noninterest expense
6,985
6,953
6,893
Segment net income
2,733
3,227
3,169
(in billions)
Average loans
488.1
489.2
482.2
Average assets
1,000.7
993.6
921.4
Average deposits
709.8
708.0
663.7

Community Banking reported net income of $2.7 billion, down $494 million, or 15 percent, from third quarter 2016. Revenue of $11.7 billion decreased $726 million, or 6 percent, from third quarter 2016 due to lower other income (hedge ineffectiveness), mortgage banking revenue, and deposit service charges, partially offset by higher net interest income, market sensitive revenue, primarily higher gains on sales of debt securities and equity investments, and other fees. Noninterest expense increased $32 million, compared with third quarter 2016, due to higher equipment, project-related, and advertising expense, which are typically elevated in the fourth quarter, as well as higher legal expense. The increase in noninterest expense was partially offset by lower operating losses and a donation to the Wells Fargo Foundation in the prior quarter. The provision for credit losses decreased $20 million from the prior quarter.

Net income was down $436 million, or 14 percent, from fourth quarter 2015. Revenue decreased $669 million, or 5 percent, compared with a year ago due to lower other income (hedge ineffectiveness), mortgage banking revenue, and gains on equity investments, partially offset by higher net interest income and other fees. Noninterest expense increased $92 million, or 1 percent, from a year ago driven by higher personnel, legal, project-related, and FDIC expense, partially offset by lower operating losses. The provision for credit losses decreased $73 million from a year ago due to improvement in the consumer real estate portfolios.

Retail Banking and Consumer Payments

We recently launched a new compensation plan in our Retail Bank focused on customer service, growth in primary customers, household relationship growth and risk management. These measures are consistent with other success metrics we have introduced in the recent past and, as part of this evolution, the cross-sell metric will not be included going forward.

Branch customer experience survey scores continued to improve throughout the fourth quarter, with many metrics reaching close to pre-settlement ranges by the end of December; loyalty, which has also shown a strong improvement trajectory, will require a longer period to recover previous highs.

Primary consumer checking customers(5) up 3.5 percent year-over-year(6)

Primary consumer checking customers(5) in December up 3.0 percent year-over-year

Debit card purchase volume(7) of $78.4 billion in fourth quarter, up 7 percent year-over-year

Credit card purchase volume of $20.2 billion in fourth quarter, up 7 percent year-over-year

Credit card penetration in retail banking households rose to 45.5 percent, up from 45.4 percent in prior year(6,8)

27.4 million digital (online and mobile) active customers, including 19.6 million mobile active users(6,9)

Consumer Lending

Auto originations of $6.4 billion in fourth quarter, down 21 percent from prior quarter and down 15 percent from prior year

Home Lending -- Originations of $72 billion, up from $70 billion in prior quarter

Applications of $75 billion, down from $100 billion in prior quarter

Application pipeline of $30 billion at quarter end, down from $50 billion at September 30, 2016

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $5 million. Products and businesses include Business Banking, Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments and Asset Backed Finance.

Selected Financial Information
Quarter ended
Dec 31,
Sep 30,
Dec 31,
(in millions)
2016
2016
2015
Total revenue
$
7,153
7,147
6,559
Provision for credit losses
168
157
126
Noninterest expense
4,002
4,120
3,491
Segment net income
2,194
2,047
2,104
(in billions)
Average loans
461.5
454.3
417.0
Average assets
811.9
794.2
755.4
Average deposits
459.2
441.2
449.3

Wholesale Banking reported net income of $2.2 billion, up $147 million, or 7 percent, from third quarter 2016. Revenue of $7.2 billion increased $6 million as higher net interest income, investment banking fees, equity investment gains and commercial real estate brokerage fees were partially offset by lower sales and trading results, and lower mortgage banking fees in multi-family capital and structured real estate. Noninterest expense decreased $118 million, or 3 percent, from the prior quarter primarily due to lower personnel expense and operating losses. The provision for credit losses increased $11 million from the prior quarter on lower recoveries.

Net income was up $90 million, or 4 percent, from fourth quarter 2015. Revenue increased $594 million, or 9 percent, from fourth quarter 2015, on increased net interest income driven by strong loan growth, including the GE Capital portfolio acquisitions, and higher trading and other earning assets. Noninterest income was down 1 percent from the prior year due to lower insurance fees driven by the sale of our crop insurance business in first quarter 2016, lower gains from trading activities, and lower gains on debt securities, partially offset by higher leasing income related to the GE Capital portfolio acquisitions and strong investment banking fees. Noninterest expense increased $511 million, or 15 percent, from a year ago primarily due to the GE Capital portfolio acquisitions and higher expenses related to growth initiatives, compliance, and regulatory requirements. The provision for credit losses increased $42 million from a year ago primarily due to higher oil and gas net charge-offs.

Average loans increased 11 percent from fourth quarter 2015, on broad-based growth, including asset-backed finance, commercial real estate, corporate banking, equipment finance, government and institutional banking, international, and structured real estate as well as the GE Capital portfolio acquisitions

-- Treasury management revenue up 4 percent from fourth quarter 2015

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
Dec 31,
Sep 30,
Dec 31,
(in millions)
2016
2016
2015
Total revenue
$ 4,074
4,099
3,947
Provision (reversal of provision) for credit losses
3
4
(6 )
Noninterest expense
3,042
2,999
2,998
Segment net income
653
677
595
(in billions)
Average loans
70.0
68.4
63.0
Average assets
220.4
212.1
197.9
Average deposits
194.9
189.2
177.9

Wealth and Investment Management reported net income of $653 million, down $24 million, or 4 percent, from third quarter 2016. Revenue of $4.1 billion decreased $25 million, or 1 percent, from the prior quarter, primarily due to lower deferred compensation plan investment results (offset in employee benefits expense), transaction revenue and other fee income, partially offset by higher net interest income and asset-based fees. Noninterest expense increased $43 million, or 1 percent, from the prior quarter, largely driven by higher operating losses and other non-personnel expenses, partially offset by lower deferred compensation plan expense (offset in trading revenue). The provision for credit losses decreased $1 million from third quarter 2016.

Net income was up $58 million, or 10 percent, from fourth quarter 2015. Revenue increased $127 million, or 3 percent, from a year ago primarily driven by higher net interest income and asset-based fees, partially offset by lower transaction revenue and deferred compensation plan investment results (offset in employee benefits expense). Noninterest expense increased $44 million, or 1 percent, from a year ago, primarily due to higher broker commissions and non-personnel expenses, partially offset by lower deferred compensation plan expense (offset in trading revenue). The provision for credit losses increased $9 million from a year ago.

Retail Brokerage

-- Client assets of $1.5 trillion, up 7 percent from prior year

Advisory assets of $464 billion, up 10 percent from prior year, primarily driven by higher market valuations and positive net flows

Strong loan growth, with average balances up 16 percent from prior year largely due to continued growth in non-conforming mortgage loans and security-based lending

Wealth Management

-- Client assets of $231 billion, up 3 percent from prior year

Average loan balances up 9 percent over prior year primarily driven by continued growth in non-conforming mortgage loans, security-based lending and commercial loans

Retirement

-- IRA assets of $379 billion, up 7 percent from prior year

Institutional Retirement plan assets of $351 billion, up 5 percent from prior year

Asset Management

Total assets under management of $482 billion, down 2 percent from prior year primarily due to equity and money market net outflows, partially offset by higher market valuations, fixed income inflows and assets acquired during the quarter

Conference Call

The Company will host a live conference call on Friday, January 13, at 8:30 a.m. PT (11:30 a.m. ET). You may participate by dialing 866-872-5161 (U.S. and Canada) or 706-643-1962 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and at https://engage.vevent.com/rt/wells_fargo_ao~31502149.

A replay of the conference call will be available beginning at 11:30 a.m. PT (2:30 p.m. ET) on Friday, January 13 through Friday, January 27. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #31502149. The replay will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and at https://engage.vevent.com/rt/wells_fargo_ao~31502149.

Endnotes
(1)
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.
(2)
Net payout ratio means the ratio of (i) common stock dividends and
share repurchases less issuances and stock compensation-related
items, divided by (ii) net income applicable to common stock.
(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)
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.
(5)
Customers who actively use their checking account with transactions
such as debit card purchases, online bill payments, and direct
deposit.
(6)
Data as of November 2016, comparisons with November 2015.
(7)
Combined consumer and business debit card purchase volume dollars.
(8)
Credit card penetration defined as the percentage of Retail Banking
households that have a credit card with Wells Fargo. Effective
second quarter 2016, 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.
Prior period metrics have been revised to conform with the updated
definition of Retail Banking households. Credit card household
penetration rates have not been adjusted to reflect the impact of
the approximately 565,000 potentially unauthorized accounts
identified by an independent consulting firm because the maximum
impact in any one quarter was not greater than 86 basis points, or
approximately 2 percent.
(9)
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 levels or targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

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

current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and the overall slowdown in global economic growth;

our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

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

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

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

our ability to realize our efficiency ratio target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;

the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;

significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our investment securities portfolio;

the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;

negative effects from the retail banking sales practices matter, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;

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

a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks;

the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

-- fiscal and monetary policies of the Federal Reserve Board; and

the other risk factors and uncertainties described under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 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, 2015 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

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

About Wells Fargo

Wells Fargo & Company (WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 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 269,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.

Wells Fargo & Company and Subsidiaries
QUARTERLY
FINANCIAL DATA
TABLE OF CONTENTS
Pages
Summary Information
Summary Financial Data
16
Income
Consolidated Statement of Income
18
Consolidated Statement of Comprehensive Income
20
Condensed Consolidated Statement of Changes in Total Equity
20
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis)
21
Five Quarter Average Balances, Yields and Rates Paid
23
(Taxable-Equivalent Basis)
Noninterest Income and Noninterest Expense
24
Balance Sheet
Consolidated Balance Sheet
26
Investment Securities
28
Loans
Loans
28
Nonperforming Assets
29
Loans 90 Days or More Past Due and Still Accruing
30
Purchased Credit-Impaired Loans
31
Pick-A-Pay Portfolio
32
Changes in Allowance for Credit Losses
34
Equity
Tangible Common Equity
35
Common Equity Tier 1 Under Basel III
36
Operating Segments
Operating Segment Results
37
Other
Mortgage Servicing and other related data
39
Wells Fargo & Company and Subsidiaries
SUMMARY
FINANCIAL DATA
% Change
Quarter ended
Dec 31, 2016 from
Year ended
Dec 31,
Sep 30,
Dec 31,
Sep 30,
Dec 31,
Dec 31,
Dec 31,
%
($ in millions, except per share amounts)
2016
2016
2015
2016
2015
2016
2015
Change
For the Period
Wells Fargo net income
$
5,274
5,644
5,575
(7
)%
(5 )
$
21,938
22,894
(4
)%
Wells Fargo net income applicable to common stock
4,872
5,243
5,203
(7 )
(6 )
20,373
21,470
(5 )
Diluted earnings per common share
0.96
1.03
1.00
(7 )
(4 )
3.99
4.12
(3 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.08
%
1.17
1.24
(8 )
(13 )
1.16
%
1.31
(11 )
Wells Fargo net income applicable to common stock to average Wells
10.94
11.60
11.93
(6 )
(8 )
11.49
12.60
(9 )
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
13.16
13.96
14.30
(6 )
(8 )
13.85
15.17
(9 )
Efficiency ratio (2)
61.2
59.4
58.4
3
5
59.3
58.1
2
Total revenue
$
21,582
22,328
21,586
(3 )
--
$
88,267
86,057
3
Pre-tax pre-provision profit (PTPP) (3)
8,367
9,060
8,987
(8 )
(7 )
35,890
36,083
(1 )
Dividends declared per common share
0.380
0.380
0.375
--
1
1.515
1.475
3
Average common shares outstanding
5,025.6
5,043.4
5,108.5
--
(2 )
5,052.8
5,136.5
(2 )
Diluted average common shares outstanding
5,078.2
5,094.6
5,177.9
--
(2 )
5,108.3
5,209.8
(2 )
Average loans
$ 964,147
957,484
912,280
1
6
$ 949,960
885,432
7
Average assets
1,944,250
1,914,586
1,787,287
2
9
1,885,441
1,742,919
8
Average total deposits
1,284,158
1,261,527
1,216,809
2
6
1,250,566
1,194,073
5
Average consumer and small business banking deposits (4)
749,946
739,066
696,484
1
8
732,620
680,221
8
Net interest margin
2.87
%
2.82
2.92
2
(2 )
2.86
%
2.95
(3 )
At Period End
Investment securities
$ 407,947
390,832
347,555
4
17
$ 407,947
347,555
17
Loans
967,604
961,326
916,559
1
6
967,604
916,559
6
Allowance for loan losses
11,419
11,583
11,545
(1 )
(1 )
11,419
11,545
(1 )
Goodwill
26,693
26,688
25,529
--
5
26,693
25,529
5
Assets
1,930,115
1,942,124
1,787,632
(1 )
8
1,930,115
1,787,632
8
Deposits
1,306,079
1,275,894
1,223,312
2
7
1,306,079
1,223,312
7
Common stockholders’ equity
176,469
179,916
172,036
(2 )
3
176,469
172,036
3
Wells Fargo stockholders’ equity
199,581
203,028
192,998
(2 )
3
199,581
192,998
3
Total equity
200,497
203,958
193,891
(2 )
3
200,497
193,891
3
Tangible common equity (1)
146,737
149,829
143,337
(2 )
2
146,737
143,337
2
Common shares outstanding
5,016.1
5,023.9
5,092.1
--
(1 )
5,016.1
5,092.1
(1 )
Book value per common share (5)
$
35.18
35.81
33.78
(2 )
4
$
35.18
33.78
4
Tangible book value per common share (1)(5)
29.25
29.82
28.15
(2 )
4
29.25
28.15
4
Common stock price:
High
58.02
51.00
56.34
14
3
58.02
58.77
(1 )
Low
43.55
44.10
49.51
(1 )
(12 )
43.55
47.75
(9 )
Period end
55.11
44.28
54.36
24
1
55.11
54.36
1
Team members (active, full-time equivalent)
269,100
268,800
264,700
--
2
269,100
264,700
2
(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company’s
use of equity. For additional information, including a
corresponding reconciliation to GAAP financial measures, see the
"Tangible Common Equity" tables on page 35.
(2) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to
assess the Company’s ability to generate capital to cover credit
losses through a credit cycle.
(4) Consumer and small business banking deposits are total
deposits excluding mortgage escrow and wholesale deposits.
(5) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per
common share is tangible common equity divided by common shares
outstanding.
Wells Fargo & Company and Subsidiaries
FIVE
QUARTER SUMMARY FINANCIAL DATA
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
($ in millions, except per share amounts)
2016
2016
2016
2016
2015
For the Quarter
Wells Fargo net income
$
5,274
5,644
5,558
5,462
5,575
Wells Fargo net income applicable to common stock
4,872
5,243
5,173
5,085
5,203
Diluted earnings per common share
0.96
1.03
1.01
0.99
1.00
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.08
%
1.17
1.20
1.21
1.24
Wells Fargo net income applicable to common stock to average Wells
10.94
11.60
11.70
11.75
11.93
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
13.16
13.96
14.15
14.15
14.30
Efficiency ratio (2)
61.2
59.4
58.1
58.7
58.4
Total revenue
$
21,582
22,328
22,162
22,195
21,586
Pre-tax pre-provision profit (PTPP) (3)
8,367
9,060
9,296
9,167
8,987
Dividends declared per common share
0.380
0.380
0.380
0.375
0.375
Average common shares outstanding
5,025.6
5,043.4
5,066.9
5,075.7
5,108.5
Diluted average common shares outstanding
5,078.2
5,094.6
5,118.1
5,139.4
5,177.9
Average loans
$ 964,147
957,484
950,751
927,220
912,280
Average assets
1,944,250
1,914,586
1,862,084
1,819,875
1,787,287
Average total deposits
1,284,158
1,261,527
1,236,658
1,219,430
1,216,809
Average consumer and small business banking deposits (4)
749,946
739,066
726,359
714,837
696,484
Net interest margin
2.87
%
2.82
2.86
2.90
2.92
At Quarter End
Investment securities
$ 407,947
390,832
353,426
334,899
347,555
Loans
967,604
961,326
957,157
947,258
916,559
Allowance for loan losses
11,419
11,583
11,664
11,621
11,545
Goodwill
26,693
26,688
26,963
27,003
25,529
Assets
1,930,115
1,942,124
1,889,235
1,849,182
1,787,632
Deposits
1,306,079
1,275,894
1,245,473
1,241,490
1,223,312
Common stockholders’ equity
176,469
179,916
178,633
175,534
172,036
Wells Fargo stockholders’ equity
199,581
203,028
201,745
197,496
192,998
Total equity
200,497
203,958
202,661
198,504
193,891
Tangible common equity (1)
146,737
149,829
148,110
144,679
143,337
Common shares outstanding
5,016.1
5,023.9
5,048.5
5,075.9
5,092.1
Book value per common share (5)
$
35.18
35.81
35.38
34.58
33.78
Tangible book value per common share (1)(5)
29.25
29.82
29.34
28.50
28.15
Common stock price:
High
58.02
51.00
51.41
53.27
56.34
Low
43.55
44.10
44.50
44.50
49.51
Period end
55.11
44.28
47.33
48.36
54.36
Team members (active, full-time equivalent)
269,100
268,800
267,900
268,600
264,700
(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company’s
use of equity. For additional information, including a
corresponding reconciliation to GAAP financial measures, see the
"Tangible Common Equity" tables on page 35.
(2) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to
assess the Company’s ability to generate capital to cover credit
losses through a credit cycle.
(4) Consumer and small business banking deposits are total
deposits excluding mortgage escrow and wholesale deposits.
(5) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per
common share is tangible common equity divided by common shares
outstanding.
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
Quarter ended December 31,
%
Year ended December 31,
%
(in millions, except per share amounts)
2016
2015
Change
2016
2015
Change
Interest income
Trading assets
$
745
558
34
%
$
2,506
1,971
27
%
Investment securities
2,512
2,323
8
9,248
8,937
3
Mortgages held for sale
235
176
34
784
785
--
Loans held for sale
2
5
(60 )
9
19
(53 )
Loans
10,128
9,323
9
39,505
36,575
8
Other interest income
436
258
69
1,611
990
63
Total interest income
14,058
12,643
11
53,663
49,277
9
Interest expense
Deposits
400
241
66
1,395
963
45
Short-term borrowings
101
13
677
330
64
416
Long-term debt
1,061
713
49
3,830
2,592
48
Other interest expense
94
88
7
354
357
(1 )
Total interest expense
1,656
1,055
57
5,909
3,976
49
Net interest income
12,402
11,588
7
47,754
45,301
5
Provision for credit losses
805
831
(3 )
3,770
2,442
54
Net interest income after provision for credit losses
11,597
10,757
8
43,984
42,859
3
Noninterest income
Service charges on deposit accounts
1,357
1,329
2
5,372
5,168
4
Trust and investment fees
3,698
3,511
5
14,243
14,468
(2 )
Card fees
1,001
966
4
3,936
3,720
6
Other fees
962
1,040
(8 )
3,727
4,324
(14 )
Mortgage banking
1,417
1,660
(15 )
6,096
6,501
(6 )
Insurance
262
427
(39 )
1,268
1,694
(25 )
Net gains (losses) from trading activities
(109 )
99
NM
834
614
36
Net gains on debt securities
145
346
(58 )
942
952
(1 )
Net gains from equity investments
306
423
(28 )
879
2,230
(61 )
Lease income
523
145
261
1,927
621
210
Other
(382 )
52
NM
1,289
464
178
Total noninterest income
9,180
9,998
(8 )
40,513
40,756
(1 )
Noninterest expense
Salaries
4,193
4,061
3
16,552
15,883
4
Commission and incentive compensation
2,478
2,457
1
10,247
10,352
(1 )
Employee benefits
1,101
1,042
6
5,094
4,446
15
Equipment
642
640
--
2,154
2,063
4
Net occupancy
710
725
(2 )
2,855
2,886
(1 )
Core deposit and other intangibles
301
311
(3 )
1,192
1,246
(4 )
FDIC and other deposit assessments
353
258
37
1,168
973
20
Other
3,437
3,105
11
13,115
12,125
8
Total noninterest expense
13,215
12,599
5
52,377
49,974
5
Income before income tax expense
7,562
8,156
(7 )
32,120
33,641
(5 )
Income tax expense
2,258
2,533
(11 )
10,075
10,365
(3 )
Net income before noncontrolling interests
5,304
5,623
(6 )
22,045
23,276
(5 )
Less: Net income from noncontrolling interests
30
48
(38 )
107
382
(72 )
Wells Fargo net income
$ 5,274
5,575
(5 )
$ 21,938
22,894
(4 )
Less: Preferred stock dividends and other
402
372
8
1,565
1,424
10
Wells Fargo net income applicable to common stock
$ 4,872
5,203
(6 )
$ 20,373
21,470
(5 )
Per share information
Earnings per common share
$
0.97
1.02
(5 )
$
4.03
4.18
(4 )
Diluted earnings per common share
0.96
1.00
(4 )
3.99
4.12
(3 )
Dividends declared per common share
0.380
0.375
1
1.515
1.475
3
Average common shares outstanding
5,025.6
5,108.5
(2 )
5,052.8
5,136.5
(2 )
Diluted average common shares outstanding
5,078.2
5,177.9
(2 )
5,108.3
5,209.8
(2 )
NM - Not meaningful
Wells Fargo & Company and Subsidiaries
FIVE
QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions, except per share amounts)
2016
2016
2016
2016
2015
Interest income
Trading assets
$
745
593
572
596
558
Investment securities
2,512
2,298
2,176
2,262
2,323
Mortgages held for sale
235
207
181
161
176
Loans held for sale
2
2
3
2
5
Loans
10,128
9,978
9,822
9,577
9,323
Other interest income
436
409
392
374
258
Total interest income
14,058
13,487
13,146
12,972
12,643
Interest expense
Deposits
400
356
332
307
241
Short-term borrowings
101
85
77
67
13
Long-term debt
1,061
1,006
921
842
713
Other interest expense
94
88
83
89
88
Total interest expense
1,656
1,535
1,413
1,305
1,055
Net interest income
12,402
11,952
11,733
11,667
11,588
Provision for credit losses
805
805
1,074
1,086
831
Net interest income after provision for credit losses
11,597
11,147
10,659
10,581
10,757
Noninterest income
Service charges on deposit accounts
1,357
1,370
1,336
1,309
1,329
Trust and investment fees
3,698
3,613
3,547
3,385
3,511
Card fees
1,001
997
997
941
966
Other fees
962
926
906
933
1,040
Mortgage banking
1,417
1,667
1,414
1,598
1,660
Insurance
262
293
286
427
427
Net gains (losses) from trading activities
(109 )
415
328
200
99
Net gains on debt securities
145
106
447
244
346
Net gains from equity investments
306
140
189
244
423
Lease income
523
534
497
373
145
Other
(382 )
315
482
874
52
Total noninterest income
9,180
10,376
10,429
10,528
9,998
Noninterest expense
Salaries
4,193
4,224
4,099
4,036
4,061
Commission and incentive compensation
2,478
2,520
2,604
2,645
2,457
Employee benefits
1,101
1,223
1,244
1,526
1,042
Equipment
642
491
493
528
640
Net occupancy
710
718
716
711
725
Core deposit and other intangibles
301
299
299
293
311
FDIC and other deposit assessments
353
310
255
250
258
Other
3,437
3,483
3,156
3,039
3,105
Total noninterest expense
13,215
13,268
12,866
13,028
12,599
Income before income tax expense
7,562
8,255
8,222
8,081
8,156
Income tax expense
2,258
2,601
2,649
2,567
2,533
Net income before noncontrolling interests
5,304
5,654
5,573
5,514
5,623
Less: Net income from noncontrolling interests
30
10
15
52
48
Wells Fargo net income
$
5,274
5,644
5,558
5,462
5,575
Less: Preferred stock dividends and other
402
401
385
377
372
Wells Fargo net income applicable to common stock
$
4,872
5,243
5,173
5,085
5,203
Per share information
Earnings per common share
$
0.97
1.04
1.02
1.00
1.02
Diluted earnings per common share
0.96
1.03
1.01
0.99
1.00
Dividends declared per common share
0.380
0.380
0.380
0.375
0.375
Average common shares outstanding
5,025.6
5,043.4
5,066.9
5,075.7
5,108.5
Diluted average common shares outstanding
5,078.2
5,094.6
5,118.1
5,139.4
5,177.9
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended Dec 31,
%
Year ended Dec 31,
%
(in millions)
2016
2015
Change
2016
2015
Change
Wells Fargo net income
$
5,274
5,575
(5 )%
$
21,938
22,894
(4 )%
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized losses arising during the period
(5,936 )
(1,301 )
356
(3,458 )
(3,318 )
4
Reclassification of net gains to net income
(239 )
(573 )
(58 )
(1,240 )
(1,530 )
(19 )
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period
(2,434 )
(684 )
256
177
1,549
(89 )
Reclassification of net gains on cash flow hedges to net income
(246 )
(294 )
(16 )
(1,029 )
(1,089 )
(6 )
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the
422
(501 )
NM
(52 )
(512 )
(90 )
period
Amortization of net actuarial loss, settlements and other to net
43
11
291
158
114
39
income
Foreign currency translation adjustments:
Net unrealized losses arising during the period
(30 )
(33 )
(9 )
(3 )
(137 )
(98 )
Reclassification of net gains to net income
--
(5 )
--
--
(5 )
--
Other comprehensive loss, before tax
(8,420 )
(3,380 )
149
(5,447 )
(4,928 )
11
Income tax benefit related to other comprehensive income
3,106
1,230
153
1,996
1,774
13
Other comprehensive loss, net of tax
(5,314 )
(2,150 )
147
(3,451 )
(3,154 )
9
Less: Other comprehensive income (loss) from noncontrolling interests
7
(58 )
NM
(17 )
67
NM
Wells Fargo other comprehensive loss, net of tax
(5,321 )
(2,092 )
154
(3,434 )
(3,221 )
7
Wells Fargo comprehensive income (loss)
(47 )
3,483
NM
18,504
19,673
(6 )
Comprehensive income (loss) from noncontrolling interests
37
(10 )
NM
90
449
(80 )
Total comprehensive income (loss)
$
(10 )
3,473
NM
$
18,594
20,122
(8 )
NM - Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
TOTAL EQUITY
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Balance, beginning of period
$
203,958
202,661
198,504
193,891
194,043
Cumulative effect from change in consolidation accounting (1)
--
--
--
121
--
Wells Fargo net income
5,274
5,644
5,558
5,462
5,575
Wells Fargo other comprehensive income (loss), net of tax
(5,321 )
(764 )
1,174
1,477
(2,092 )
Noncontrolling interests
(13 )
14
(92 )
(5 )
(100 )
Common stock issued
610
300
397
1,079
310
Common stock repurchased (2)
(2,034 )
(1,839 )
(2,214 )
(2,029 )
(1,974 )
Preferred stock released by ESOP
43
236
371
313
210
Common stock warrants repurchased/exercised
--
(17 )
--
--
--
Preferred stock issued
--
--
1,126
975
--
Common stock dividends
(1,909 )
(1,918 )
(1,930 )
(1,904 )
(1,917 )
Preferred stock dividends
(401 )
(401 )
(386 )
(378 )
(371 )
Tax benefit from stock incentive compensation
74
31
23
149
22
Stock incentive compensation expense
232
39
139
369
204
Net change in deferred compensation and related plans
(16 )
(28 )
(9 )
(1,016 )
(19 )
Balance, end of period
$
200,497
203,958
202,661
198,504
193,891
(1) Effective January 1, 2016, we adopted changes in consolidation
accounting pursuant to Accounting Standards Update 2015-02 (Amendments
to the Consolidation Analysis). Accordingly, we recorded a
$121 million net increase to beginning noncontrolling interests as
a cumulative-effect adjustment.
(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. For
the quarter ended December 31, 2015, includes $500 million related
to a private forward repurchase transaction that settled in first
quarter 2016 for 9.2 million shares of common stock.
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
Quarter ended December 31,
2016
2015
Interest
Interest
Average
Yields/
income/
Average
Yields/
income/
(in millions)
balance
rates
expense
balance
rates
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
273,073
0.56 %
$
381
274,589
0.28 %
$
195
other short-term investments
Trading assets
102,757
2.96
761
68,833
3.33
573
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
25,935
1.53
99
34,617
1.58
137
Securities of U.S. states and political subdivisions
53,917
4.06
547
49,300
4.37
539
Mortgage-backed securities:
Federal agencies
147,980
2.37
875
102,281
2.79
712
Residential and commercial
16,456
5.87
242
21,502
5.51
297
Total mortgage-backed securities
164,436
2.72
1,117
123,783
3.26
1,009
Other debt and equity securities
52,692
3.71
492
52,701
3.35
444
Total available-for-sale securities
296,980
3.03
2,255
260,401
3.27
2,129
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,686
2.20
246
44,656
2.18
246
Securities of U.S. states and political subdivisions
4,738
5.31
63
2,158
6.07
33
Federal agency and other mortgage-backed securities
46,009
1.81
209
28,185
2.42
170
Other debt securities
3,597
2.26
20
4,876
1.77
22
Total held-to-maturity securities
99,030
2.17
538
79,875
2.35
471
Total investment securities
396,010
2.82
2,793
340,276
3.05
2,600
Mortgages held for sale (4)
27,503
3.43
235
19,189
3.66
176
Loans held for sale (4)
155
5.42
2
363
4.96
5
Loans:
Commercial:
Commercial and industrial - U.S.
272,828
3.46
2,369
250,445
3.25
2,048
Commercial and industrial - Non U.S.
54,410
2.58
352
47,972
1.97
239
Real estate mortgage
131,195
3.44
1,135
121,844
3.30
1,012
Real estate construction
23,850
3.61
216
21,993
3.27
182
Lease financing
18,904
5.78
273
12,241
4.48
136
Total commercial
501,187
3.45
4,345
454,495
3.16
3,617
Consumer:
Real estate 1-4 family first mortgage
277,732
4.01
2,785
272,871
4.04
2,759
Real estate 1-4 family junior lien mortgage
47,203
4.42
524
53,788
4.28
579
Credit card
35,383
11.73
1,043
32,795
11.61
960
Automobile
62,521
5.54
870
59,505
5.74
862
Other revolving credit and installment
40,121
5.91
595
38,826
5.83
571
Total consumer
462,960
5.01
5,817
457,785
4.99
5,731
Total loans (4)
964,147
4.20
10,162
912,280
4.08
9,348
Other
6,729
3.27
56
5,166
4.82
61
Total earning assets
$ 1,770,374
3.24 %
$
14,390
1,620,696
3.18 %
$
12,958
Funding sources
Deposits:
Interest-bearing checking
$
46,907
0.17 %
$
19
39,082
0.05 %
$
5
Market rate and other savings
676,365
0.07
122
640,503
0.06
93
Savings certificates
24,362
0.30
18
29,654
0.54
41
Other time deposits
49,170
1.16
144
49,806
0.52
64
Deposits in foreign offices
110,425
0.35
97
107,094
0.14
38
Total interest-bearing deposits
907,229
0.18
400
866,139
0.11
241
Short-term borrowings
124,698
0.33
102
102,915
0.05
12
Long-term debt
252,162
1.68
1,061
190,861
1.49
713
Other liabilities
17,210
2.15
94
16,453
2.14
88
Total interest-bearing liabilities
1,301,299
0.51
1,657
1,176,368
0.36
1,054
Portion of noninterest-bearing funding sources
469,075
--
--
444,328
--
--
Total funding sources
$ 1,770,374
0.37
1,657
1,620,696
0.26
1,054
Net interest margin and net interest income on a
2.87 %
$
12,733
2.92 %
$
11,904
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,967
17,804
Goodwill
26,713
25,580
Other
128,196
123,207
Total noninterest-earning assets
$
173,876
166,591
Noninterest-bearing funding sources
Deposits
$
376,929
350,670
Other liabilities
64,775
65,224
Total equity
201,247
195,025
Noninterest-bearing funding sources used to fund earning assets
(469,075 )
(444,328 )
Net noninterest-bearing funding sources
$
173,876
166,591
Total assets
$ 1,944,250
1,787,287
(1) Our average prime rate was 3.54% and 3.29% for the quarters
ended December 31, 2016 and 2015, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 0.92% and
0.41% 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 $331 million and
$316 million for the quarters ended December 31, 2016 and 2015,
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,
2016
2015
Interest
Interest
Average
Yields/
income/
Average
Yields/
income/
(in millions)
balance
rates
expense
balance
rates
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
287,718
0.51 %
$
1,457
266,832
0.28 %
$
738
other short-term investments
Trading assets
88,400
2.89
2,553
66,679
3.01
2,010
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
29,418
1.56
457
32,093
1.58
505
Securities of U.S. states and political subdivisions
52,959
4.20
2,225
47,404
4.23
2,007
Mortgage-backed securities:
Federal agencies
110,637
2.50
2,764
100,218
2.73
2,733
Residential and commercial
18,725
5.49
1,029
22,490
5.73
1,289
Total mortgage-backed securities
129,362
2.93
3,793
122,708
3.28
4,022
Other debt and equity securities
53,433
3.44
1,841
49,752
3.42
1,701
Total available-for-sale securities
265,172
3.14
8,316
251,957
3.27
8,235
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,675
2.19
979
44,173
2.19
968
Securities of U.S. states and political subdivisions
2,893
5.32
154
2,087
5.40
113
Federal agency and other mortgage-backed securities
39,330
2.00
786
21,967
2.23
489
Other debt securities
4,043
2.01
81
5,821
1.73
101
Total held-to-maturity securities
90,941
2.20
2,000
74,048
2.26
1,671
Total investment securities
356,113
2.90
10,316
326,005
3.04
9,906
Mortgages held for sale (4)
22,412
3.50
784
21,603
3.63
785
Loans held for sale (4)
218
4.01
9
573
3.25
19
Loans:
Commercial:
Commercial and industrial - U.S.
268,182
3.45
9,243
237,844
3.29
7,836
Commercial and industrial - Non U.S.
51,601
2.36
1,219
46,028
1.90
877
Real estate mortgage
127,232
3.44
4,371
116,893
3.41
3,984
Real estate construction
23,197
3.55
824
20,979
3.57
749
Lease financing
17,950
5.10
916
12,301
4.70
577
Total commercial
488,162
3.39
16,573
434,045
3.23
14,023
Consumer:
Real estate 1-4 family first mortgage
276,712
4.01
11,096
268,560
4.10
11,002
Real estate 1-4 family junior lien mortgage
49,735
4.39
2,183
56,242
4.25
2,391
Credit card
34,178
11.62
3,970
31,307
11.70
3,664
Automobile
61,566
5.62
3,458
57,766
5.84
3,374
Other revolving credit and installment
39,607
5.93
2,350
37,512
5.89
2,209
Total consumer
461,798
4.99
23,057
451,387
5.02
22,640
Total loans (4)
949,960
4.17
39,630
885,432
4.14
36,663
Other
6,262
2.51
157
4,947
5.11
252
$ 1,711,083
3.21 %
$
54,906
1,572,071
3.20 %
$
50,373
Total earning assets
Funding sources
Deposits:
Interest-bearing checking
$
42,379
0.14 %
$
60
38,640
0.05 %
$
20
Market rate and other savings
663,557
0.07
449
625,549
0.06
367
Savings certificates
25,912
0.35
91
31,887
0.63
201
Other time deposits
55,846
0.91
508
51,790
0.45
232
Deposits in foreign offices
103,206
0.28
287
107,138
0.13
143
Total interest-bearing deposits
890,900
0.16
1,395
855,004
0.11
963
Short-term borrowings
115,187
0.29
333
87,465
0.07
64
Long-term debt
239,471
1.60
3,830
185,078
1.40
2,592
Other liabilities
16,702
2.12
354
16,545
2.15
357
Total interest-bearing liabilities
1,262,260
0.47
5,912
1,144,092
0.35
3,976
Portion of noninterest-bearing funding sources
448,823
--
--
427,979
--
--
Total funding sources
$ 1,711,083
0.35
5,912
1,572,071
0.25
3,976
Net interest margin and net interest income on a
2.86 %
$
48,994
2.95 %
$
46,397
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,617
17,327
Goodwill
26,700
25,673
Other
129,041
127,848
Total noninterest-earning assets
$
174,358
170,848
Noninterest-bearing funding sources
Deposits
$
359,666
339,069
Other liabilities
62,825
68,174
Total equity
200,690
191,584
Noninterest-bearing funding sources used to fund earning assets
(448,823 )
(427,979 )
Net noninterest-bearing funding sources
$
174,358
170,848
Total assets
$ 1,885,441
1,742,919
(1) Our average prime rate was 3.51% and 3.26% for the years ended
December 31, 2016 and 2015, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 0.74% and 0.32% 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 $1.2 billion and
$1.1 billion for the years ended December 31, 2016 and 2015,
respectively, predominantly related to tax-exempt income on
certain loans and securities. The federal statutory tax rate was
35% for the periods presented.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Dec 31, 2016
Sep 30, 2016
Jun 30, 2016
Mar 31, 2016
Dec 31, 2015
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
($ in billions)
balance
rates
balance
rates
balance
rates
balance
rates
balance
rates
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
273.1
0.56 %
$
299.4
0.50 %
$
293.8
0.49 %
$
284.7
0.49 %
$
274.6
0.28 %
other short-term investments
Trading assets
102.8
2.96
88.8
2.72
81.4
2.86
80.5
3.01
68.8
3.33
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
25.9
1.53
25.8
1.52
31.5
1.56
34.4
1.59
34.6
1.58
Securities of U.S. states and political subdivisions
53.9
4.06
55.2
4.28
52.2
4.24
50.5
4.24
49.3
4.37
Mortgage-backed securities:
Federal agencies
148.0
2.37
105.8
2.39
92.0
2.53
96.5
2.80
102.3
2.79
Residential and commercial
16.5
5.87
18.1
5.54
19.6
5.44
20.8
5.20
21.5
5.51
Total mortgage-backed securities
164.5
2.72
123.9
2.85
111.6
3.04
117.3
3.23
123.8
3.26
Other debt and equity securities
52.7
3.71
54.2
3.37
53.3
3.48
53.6
3.21
52.7
3.35
Total available-for-sale securities
297.0
3.03
259.1
3.13
248.6
3.20
255.8
3.20
260.4
3.27
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44.7
2.20
44.6
2.19
44.6
2.19
44.7
2.20
44.7
2.18
Securities of U.S. states and political subdivisions
4.7
5.31
2.5
5.24
2.2
5.41
2.1
5.41
2.1
6.07
Federal agency and other mortgage-backed securities
46.0
1.81
48.0
1.97
35.1
1.90
28.1
2.49
28.2
2.42
Other debt securities
3.6
2.26
3.9
1.98
4.1
1.92
4.6
1.92
4.9
1.77
Total held-to-maturity securities
99.0
2.17
99.0
2.15
86.0
2.14
79.5
2.37
79.9
2.35
Total investment securities
396.0
2.82
358.1
2.86
334.6
2.93
335.3
3.01
340.3
3.05
Mortgages held for sale
27.5
3.43
24.1
3.44
20.1
3.60
17.9
3.59
19.2
3.66
Loans held for sale
0.2
5.42
0.2
3.04
0.2
4.83
0.3
3.23
0.4
4.96
Loans:
Commercial:
Commercial and industrial - U.S.
272.8
3.46
271.2
3.48
270.9
3.45
257.7
3.39
250.5
3.25
Commercial and industrial - Non U.S.
54.4
2.58
51.3
2.40
51.2
2.35
49.5
2.10
48.0
1.97
Real estate mortgage
131.2
3.44
128.8
3.48
126.1
3.41
122.7
3.41
121.8
3.30
Real estate construction
23.9
3.61
23.2
3.50
23.1
3.49
22.6
3.61
22.0
3.27
Lease financing
18.9
5.78
18.9
4.70
19.0
5.12
15.1
4.74
12.2
4.48
Total commercial
501.2
3.45
493.4
3.42
490.3
3.39
467.6
3.31
454.5
3.16
Consumer:
Real estate 1-4 family first mortgage
277.7
4.01
278.5
3.97
275.9
4.01
274.7
4.05
272.9
4.04
Real estate 1-4 family junior lien mortgage
47.2
4.42
48.9
4.37
50.6
4.37
52.2
4.39
53.8
4.28
Credit card
35.4
11.73
34.6
11.60
33.4
11.52
33.4
11.61
32.8
11.61
Automobile
62.5
5.54
62.5
5.60
61.1
5.66
60.1
5.67
59.5
5.74
Other revolving credit and installment
40.1
5.91
39.6
5.92
39.5
5.91
39.2
5.99
38.8
5.83
Total consumer
462.9
5.01
464.1
4.97
460.5
4.98
459.6
5.02
457.8
4.99
Total loans
964.1
4.20
957.5
4.17
950.8
4.16
927.2
4.16
912.3
4.08
Other
6.7
3.27
6.4
2.30
6.0
2.30
5.8
2.06
5.1
4.82
Total earning assets
$ 1,770.4
3.24 %
$ 1,734.5
3.17 %
$ 1,686.9
3.20 %
$ 1,651.7
3.22 %
$ 1,620.7
3.18 %
Funding sources
Deposits:
Interest-bearing checking
$
46.9
0.17 %
$
44.0
0.15 %
$
39.8
0.13 %
$
38.7
0.12 %
$
39.1
0.05 %
Market rate and other savings
676.4
0.07
667.2
0.07
659.0
0.07
651.5
0.07
640.5
0.06
Savings certificates
24.4
0.30
25.2
0.30
26.2
0.35
27.9
0.45
29.6
0.54
Other time deposits
49.2
1.16
54.9
0.93
61.2
0.85
58.2
0.74
49.8
0.52
Deposits in foreign offices
110.4
0.35
107.1
0.30
97.5
0.23
97.7
0.21
107.1
0.14
Total interest-bearing deposits
907.3
0.18
898.4
0.16
883.7
0.15
874.0
0.14
866.1
0.11
Short-term borrowings
124.7
0.33
116.2
0.29
111.8
0.28
107.9
0.25
102.9
0.05
Long-term debt
252.2
1.68
252.4
1.59
236.2
1.56
216.9
1.56
190.9
1.49
Other liabilities
17.1
2.15
16.8
2.11
16.3
2.06
16.5
2.14
16.5
2.14
Total interest-bearing liabilities
1,301.3
0.51
1,283.8
0.48
1,248.0
0.45
1,215.3
0.43
1,176.4
0.36
Portion of noninterest-bearing funding sources
469.1
--
450.7
--
438.9
--
436.4
--
444.3
--
Total funding sources
$ 1,770.4
0.37
$ 1,734.5
0.35
$ 1,686.9
0.34
$ 1,651.7
0.32
$ 1,620.7
0.26
Net interest margin on a taxable-equivalent basis
2.87 %
2.82 %
2.86 %
2.90 %
2.92 %
Noninterest-earning assets
Cash and due from banks
$
19.0
18.7
18.8
18.0
17.8
Goodwill
26.7
27.0
27.0
26.1
25.6
Other
128.2
134.4
129.4
124.1
123.2
Total noninterest-earnings assets
$
173.9
180.1
175.2
168.2
166.6
Noninterest-bearing funding sources
Deposits
$
376.9
363.1
353.0
345.4
350.7
Other liabilities
64.9
63.8
60.1
62.6
65.2
Total equity
201.2
203.9
201.0
196.6
195.0
Noninterest-bearing funding sources used to fund earning assets
(469.1 )
(450.7 )
(438.9 )
(436.4 )
(444.3 )
Net noninterest-bearing funding sources
$
173.9
180.1
175.2
168.2
166.6
Total assets
$ 1,944.3
1,914.6
1,862.1
1,819.9
1,787.3
(1) Our average prime rate was 3.54% for the quarter ended
December 31, 2016, 3.50% for the quarters ended September 30, June
30 and March 31, 2016, and 3.29% for the quarter ended December
31, 2015. The average three-month London Interbank Offered Rate
(LIBOR) was 0.92%, 0.79%, 0.64%, 0.62% and 0.41% for the same
quarters, respectively.
(2) Yields/rates include the effects of hedge and risk management
activities associated with the respective asset and liability
categories.
(3) Yields and rates are based on interest income/expense amounts
for the period, annualized based on the accrual basis for the
respective accounts. The average balance amounts represent
amortized cost for the periods presented.
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
Quarter ended December 31,
%
Year ended December 31,
%
(in millions)
2016
2015
Change
2016
2015
Change
Service charges on deposit accounts
$ 1,357
1,329
2 %
$
5,372
5,168
4 %
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,342
2,288
2
9,216
9,435
(2 )
Trust and investment management
837
838
--
3,336
3,394
(2 )
Investment banking
519
385
35
1,691
1,639
3
Total trust and investment fees
3,698
3,511
5
14,243
14,468
(2 )
Card fees
1,001
966
4
3,936
3,720
6
Other fees:
Charges and fees on loans
305
308
(1 )
1,241
1,228
1
Cash network fees
130
129
1
537
522
3
Commercial real estate brokerage commissions
172
224
(23 )
494
618
(20 )
Letters of credit fees
79
86
(8 )
321
353
(9 )
Wire transfer and other remittance fees
105
95
11
401
370
8
All other fees (1)(2)(3)
171
198
(14 )
733
1,233
(41 )
Total other fees
962
1,040
(8 )
3,727
4,324
(14 )
Mortgage banking:
Servicing income, net
196
730
(73 )
1,765
2,441
(28 )
Net gains on mortgage loan origination/sales activities
1,221
930
31
4,331
4,060
7
Total mortgage banking
1,417
1,660
(15 )
6,096
6,501
(6 )
Insurance
262
427
(39 )
1,268
1,694
(25 )
Net gains (losses) from trading activities
(109 )
99
NM
834
614
36
Net gains on debt securities
145
346
(58 )
942
952
(1 )
Net gains from equity investments
306
423
(28 )
879
2,230
(61 )
Lease income
523
145
261
1,927
621
210
Life insurance investment income
132
139
(5 )
587
579
1
All other (3)
(514 )
(87 )
491
702
(115 )
NM
Total
$ 9,180
9,998
(8 )
$ 40,513
40,756
(1 )
NM - Not meaningful
(1) Wire transfer and other remittance fees, reflected in all other
fees prior to 2016, have been separately disclosed.
(2) All other fees have been revised to include merchant processing
fees for all periods presented.
(3) Effective fourth quarter 2015, the Company’s proportionate share
of its merchant services joint venture earnings is included in All
other income.
NONINTEREST EXPENSE
Quarter ended Dec 31,
%
Year ended Dec 31,
%
(in millions)
2016
2015
Change
2016
2015
Change
Salaries
$
4,193
4,061
3 %
$ 16,552
15,883
4 %
Commission and incentive compensation
2,478
2,457
1
10,247
10,352
(1 )
Employee benefits
1,101
1,042
6
5,094
4,446
15
Equipment
642
640
--
2,154
2,063
4
Net occupancy
710
725
(2 )
2,855
2,886
(1 )
Core deposit and other intangibles
301
311
(3 )
1,192
1,246
(4 )
FDIC and other deposit assessments
353
258
37
1,168
973
20
Outside professional services
984
827
19
3,138
2,665
18
Operating losses
243
532
(54 )
1,608
1,871
(14 )
Operating leases
379
73
419
1,329
278
378
Contract services
325
266
22
1,203
978
23
Outside data processing
222
205
8
888
985
(10 )
Travel and entertainment
195
196
(1 )
704
692
2
Postage, stationery and supplies
156
177
(12 )
622
702
(11 )
Advertising and promotion
178
184
(3 )
595
606
(2 )
Telecommunications
96
106
(9 )
383
439
(13 )
Foreclosed assets
75
20
275
202
381
(47 )
Insurance
23
57
(60 )
179
448
(60 )
All other
561
462
21
2,264
2,080
9
Total
$ 13,215
12,599
5
$ 52,377
49,974
5
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Service charges on deposit accounts
$
1,357
1,370
1,336
1,309
1,329
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,342
2,344
2,291
2,239
2,288
Trust and investment management
837
849
835
815
838
Investment banking
519
420
421
331
385
Total trust and investment fees
3,698
3,613
3,547
3,385
3,511
Card fees
1,001
997
997
941
966
Other fees:
Charges and fees on loans
305
306
317
313
308
Cash network fees
130
138
138
131
129
Commercial real estate brokerage commissions
172
119
86
117
224
Letters of credit fees
79
81
83
78
86
Wire transfer and other remittance fees
105
103
101
92
95
All other fees (1)(2)(3)
171
179
181
202
198
Total other fees
962
926
906
933
1,040
Mortgage banking:
Servicing income, net
196
359
360
850
730
Net gains on mortgage loan origination/sales activities
1,221
1,308
1,054
748
930
Total mortgage banking
1,417
1,667
1,414
1,598
1,660
Insurance
262
293
286
427
427
Net gains (losses) from trading activities
(109 )
415
328
200
99
Net gains on debt securities
145
106
447
244
346
Net gains from equity investments
306
140
189
244
423
Lease income
523
534
497
373
145
Life insurance investment income
132
152
149
154
139
All other (3)
(514 )
163
333
720
(87 )
Total
$
9,180
10,376
10,429
10,528
9,998
(1) Wire transfer and other remittance fees, reflected in all
other fees prior to 2016, have been separately disclosed.
(2) All other fees have been revised to include merchant processing
fees for all periods presented.
(3) Effective fourth quarter 2015, the Company’s proportionate
share of its merchant services joint venture earnings is included
in All other income.
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Salaries
$
4,193
4,224
4,099
4,036
4,061
Commission and incentive compensation
2,478
2,520
2,604
2,645
2,457
Employee benefits
1,101
1,223
1,244
1,526
1,042
Equipment
642
491
493
528
640
Net occupancy
710
718
716
711
725
Core deposit and other intangibles
301
299
299
293
311
FDIC and other deposit assessments
353
310
255
250
258
Outside professional services
984
802
769
583
827
Operating losses
243
577
334
454
532
Operating leases
379
363
352
235
73
Contract services
325
313
283
282
266
Outside data processing
222
233
225
208
205
Travel and entertainment
195
144
193
172
196
Postage, stationery and supplies
156
150
153
163
177
Advertising and promotion
178
117
166
134
184
Telecommunications
96
101
94
92
106
Foreclosed assets
75
(17 )
66
78
20
Insurance
23
23
22
111
57
All other
561
677
499
527
462
Total
$
13,215
13,268
12,866
13,028
12,599
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
Dec 31,
Dec 31,
%
(in millions, except shares)
2016
2015
Change
Assets
Cash and due from banks
$
20,729
19,111
8 %
Federal funds sold, securities purchased under resale agreements and
266,038
270,130
(2 )
other short-term investments
Trading assets (1)
74,397
64,815
15
Investment securities:
Available-for-sale, at fair value
308,364
267,358
15
Held-to-maturity, at cost
99,583
80,197
24
Mortgages held for sale
26,309
19,603
34
Loans held for sale
80
279
(71 )
Loans
967,604
916,559
6
Allowance for loan losses
(11,419 )
(11,545 )
(1 )
Net loans
956,185
905,014
6
Mortgage servicing rights:
Measured at fair value
12,959
12,415
4
Amortized
1,406
1,308
7
Premises and equipment, net
8,333
8,704
(4 )
Goodwill
26,693
25,529
5
Derivative assets
14,498
17,656
(18 )
Other assets (1)
114,541
95,513
20
Total assets
$ 1,930,115
1,787,632
8
Liabilities
Noninterest-bearing deposits
$
375,967
351,579
7
Interest-bearing deposits
930,112
871,733
7
Total deposits
1,306,079
1,223,312
7
Short-term borrowings
96,781
97,528
(1 )
Derivative liabilities
14,492
13,920
4
Accrued expenses and other liabilities (1)
57,189
59,445
(4 )
Long-term debt
255,077
199,536
28
Total liabilities
1,729,618
1,593,741
9
Equity
Wells Fargo stockholders’ equity:
Preferred stock
24,551
22,214
11
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
60,234
60,714
(1 )
Retained earnings
133,075
120,866
10
Cumulative other comprehensive income (loss)
(3,137 )
297
NM
Treasury stock - 465,702,148 shares and 389,682,664 shares
(22,713 )
(18,867 )
20
Unearned ESOP shares
(1,565 )
(1,362 )
15
Total Wells Fargo stockholders’ equity
199,581
192,998
3
Noncontrolling interests
916
893
3
Total equity
200,497
193,891
3
Total liabilities and equity
$ 1,930,115
1,787,632
8
NM - Not meaningful
(1) Prior period has been revised to conform to the current period
presentation of reporting derivative assets and liabilities
separately.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Assets
Cash and due from banks
$
20,729
19,287
20,407
19,084
19,111
Federal funds sold, securities purchased under resale agreements and
266,038
298,325
295,521
300,547
270,130
other short-term investments
Trading assets (1)
74,397
81,094
71,556
62,657
64,815
Investment securities:
Available-for-sale, at fair value
308,364
291,591
253,006
255,551
267,358
Held-to-maturity, at cost
99,583
99,241
100,420
79,348
80,197
Mortgages held for sale
26,309
27,423
23,930
18,041
19,603
Loans held for sale
80
183
220
280
279
Loans
967,604
961,326
957,157
947,258
916,559
Allowance for loan losses
(11,419 )
(11,583 )
(11,664 )
(11,621 )
(11,545 )
Net loans
956,185
949,743
945,493
935,637
905,014
Mortgage servicing rights:
Measured at fair value
12,959
10,415
10,396
11,333
12,415
Amortized
1,406
1,373
1,353
1,359
1,308
Premises and equipment, net
8,333
8,322
8,289
8,349
8,704
Goodwill
26,693
26,688
26,963
27,003
25,529
Derivative assets
14,498
18,736
20,999
20,043
17,656
Other assets (1)
114,541
109,703
110,682
109,950
95,513
Total assets
$ 1,930,115
1,942,124
1,889,235
1,849,182
1,787,632
Liabilities
Noninterest-bearing deposits
$
375,967
376,136
361,934
348,888
351,579
Interest-bearing deposits
930,112
899,758
883,539
892,602
871,733
Total deposits
1,306,079
1,275,894
1,245,473
1,241,490
1,223,312
Short-term borrowings
96,781
124,668
120,258
107,703
97,528
Derivative liabilities
14,492
13,603
15,483
15,184
13,920
Accrued expenses and other liabilities (1)
57,189
69,166
61,433
58,413
59,445
Long-term debt
255,077
254,835
243,927
227,888
199,536
Total liabilities
1,729,618
1,738,166
1,686,574
1,650,678
1,593,741
Equity
Wells Fargo stockholders’ equity:
Preferred stock
24,551
24,594
24,830
24,051
22,214
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,234
60,685
60,691
60,602
60,714
Retained earnings
133,075
130,288
127,076
123,891
120,866
Cumulative other comprehensive income (loss)
(3,137 )
2,184
2,948
1,774
297
Treasury stock
(22,713 )
(22,247 )
(21,068 )
(19,687 )
(18,867 )
Unearned ESOP shares
(1,565 )
(1,612 )
(1,868 )
(2,271 )
(1,362 )
Total Wells Fargo stockholders’ equity
199,581
203,028
201,745
197,496
192,998
Noncontrolling interests
916
930
916
1,008
893
Total equity
200,497
203,958
202,661
198,504
193,891
Total liabilities and equity
$ 1,930,115
1,942,124
1,889,235
1,849,182
1,787,632
(1) Prior periods have been revised to conform to the current
period presentation of reporting derivative assets and liabilities
separately.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER INVESTMENT SECURITIES
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
$
25,819
26,376
27,939
33,813
36,250
Securities of U.S. states and political subdivisions
51,101
55,366
54,024
51,574
49,990
Mortgage-backed securities:
Federal agencies
161,230
135,692
95,868
95,463
104,546
Residential and commercial
16,318
18,387
19,938
21,246
22,646
Total mortgage-backed securities
177,548
154,079
115,806
116,709
127,192
Other debt securities
52,685
54,537
53,935
51,956
52,289
Total available-for-sale debt securities
307,153
290,358
251,704
254,052
265,721
Marketable equity securities
1,211
1,233
1,302
1,499
1,637
Total available-for-sale securities
308,364
291,591
253,006
255,551
267,358
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,690
44,682
44,675
44,667
44,660
Securities of U.S. states and political subdivisions
6,336
2,994
2,181
2,183
2,185
Federal agency and other mortgage-backed securities (1)
45,161
47,721
49,594
28,016
28,604
Other debt securities
3,396
3,844
3,970
4,482
4,748
Total held-to-maturity debt securities
99,583
99,241
100,420
79,348
80,197
Total investment securities
$ 407,947
390,832
353,426
334,899
347,555
(1) Predominantly consists of federal agency mortgage-backed
securities.
FIVE QUARTER LOANS
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Commercial:
Commercial and industrial
$ 330,840
324,020
323,858
321,547
299,892
Real estate mortgage
132,491
130,223
128,320
124,711
122,160
Real estate construction
23,916
23,340
23,387
22,944
22,164
Lease financing
19,289
18,871
18,973
19,003
12,367
Total commercial
506,536
496,454
494,538
488,205
456,583
Consumer:
Real estate 1-4 family first mortgage
275,579
278,689
277,162
274,734
273,869
Real estate 1-4 family junior lien mortgage
46,237
48,105
49,772
51,324
53,004
Credit card
36,700
34,992
34,137
33,139
34,039
Automobile
62,286
62,873
61,939
60,658
59,966
Other revolving credit and installment
40,266
40,213
39,609
39,198
39,098
Total consumer
461,068
464,872
462,619
459,053
459,976
Total loans (1)
$ 967,604
961,326
957,157
947,258
916,559
(1) Includes $16.7 billion, $17.7 billion, $19.3 billion, $20.3
billion, and $20.0 billion of purchased credit-impaired (PCI)
loans at December 31, September 30, June 30, and March 31, 2016,
and December 31, 2015, 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.
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Commercial foreign loans:
Commercial and industrial
$
55,396
51,515
50,515
51,884
49,049
Real estate mortgage
8,541
8,466
8,467
8,367
8,350
Real estate construction
375
310
246
311
444
Lease financing
972
958
987
983
274
Total commercial foreign loans
$
65,284
61,249
60,215
61,545
58,117
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND
FORECLOSED ASSETS)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Nonaccrual loans:
Commercial:
Commercial and industrial
$
3,216
3,331
3,464
2,911
1,363
Real estate mortgage
685
780
872
896
969
Real estate construction
43
59
59
63
66
Lease financing
115
92
112
99
26
Total commercial
4,059
4,262
4,507
3,969
2,424
Consumer:
Real estate 1-4 family first mortgage
4,962
5,310
5,970
6,683
7,293
Real estate 1-4 family junior lien mortgage
1,206
1,259
1,330
1,421
1,495
Automobile
106
108
111
114
121
Other revolving credit and installment
51
47
45
47
49
Total consumer
6,325
6,724
7,456
8,265
8,958
Total nonaccrual loans (1)(2)(3)
$ 10,384
10,986
11,963
12,234
11,382
As a percentage of total loans
1.07 %
1.14
1.25
1.29
1.24
Foreclosed assets:
Government insured/guaranteed
$
197
282
321
386
446
Non-government insured/guaranteed
781
738
796
893
979
Total foreclosed assets
978
1,020
1,117
1,279
1,425
Total nonperforming assets
$ 11,362
12,006
13,080
13,513
12,807
As a percentage of total loans
1.17 %
1.25
1.37
1.43
1.40
(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.
Wells Fargo & Company and Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Total (excluding PCI)(1):
$
11,858
12,068
12,385
13,060
14,380
Less: FHA insured/guaranteed by the VA (2)(3)
10,883
11,198
11,577
12,233
13,373
Less: Student loans guaranteed under the FFELP (4)
3
17
20
24
26
Total, not government insured/guaranteed
$
972
853
788
803
981
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial
$
28
47
36
24
97
Real estate mortgage
36
4
22
8
13
Real estate construction
--
--
--
2
4
Total commercial
64
51
58
34
114
Consumer:
Real estate 1-4 family first mortgage (3)
175
171
169
167
224
Real estate 1-4 family junior lien mortgage (3)
56
54
52
55
65
Credit card
452
392
348
389
397
Automobile
112
81
64
55
79
Other revolving credit and installment
113
104
97
103
102
Total consumer
908
802
730
769
867
Total, not government insured/guaranteed
$
972
853
788
803
981
(1) PCI loans totaled $2.0 billion, $2.2 billion, $2.4 billion,
$2.7 billion and $2.9 billion, at December 31, September 30, June
30, and March 31, 2016, and December 31, 2015, 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.
Wells Fargo & Company and Subsidiaries
CHANGES IN ACCRETABLE YIELD RELATED TO PURCHASED
CREDIT-IMPAIRED (PCI) LOANS
Loans purchased with evidence of credit deterioration since
origination and for which it is probable that all contractually
required payments will not be collected are considered to be
credit impaired. PCI loans predominantly represent loans acquired
from Wachovia that were deemed to be credit impaired. Evidence of
credit quality deterioration as of the purchase date may include
statistics such as past due and nonaccrual status, recent borrower
credit scores and recent LTV percentages. PCI loans are initially
measured at fair value, which includes estimated future credit
losses expected to be incurred over the life of the loan.
Accordingly, the associated allowance for credit losses related to
these loans is not carried over at the acquisition date.
As a result of PCI loan accounting, certain credit-related ratios
cannot be used to compare a portfolio that includes PCI loans
against one that does not, or to compare ratios across quarters or
years. The ratios particularly affected include the allowance for
loan losses and allowance for credit losses as percentages of
loans, of nonaccrual loans and of nonperforming assets; nonaccrual
loans and nonperforming assets as a percentage of total loans; and
net charge-offs as a percentage of loans.
The excess of cash flows expected to be collected over the
carrying value of PCI loans is referred to as the accretable yield
and is accreted into interest income over the estimated lives of
the PCI loans using the effective yield method. The accretable
yield is affected by:
?
Changes in interest rate indices for variable rate PCI loans -
Expected future cash flows are based on the variable rates in
effect at the time of the quarterly assessment of expected cash
flows;
?
Changes in prepayment assumptions - Prepayments affect the
estimated life of PCI loans which may change the amount of
interest income, and possibly principal, expected to be collected;
and
?
Changes in the expected principal and interest payments over the
estimated life - Updates to changes in expected cash flows are
driven by the credit outlook and actions taken with borrowers.
Changes in expected future cash flows from loan modifications are
included in the regular evaluations of cash flows expected to be
collected.
The change in the accretable yield related to PCI loans since the
merger with Wachovia is presented in the following table.
Quarter
Year
ended
ended
Dec 31,
Dec 31,
(in millions)
2016
2016
2009-2015
Balance, beginning of period
$
11,619
16,301
10,447
Change in accretable yield due to acquisitions
(31 )
27
132
Accretion into interest income (1)
(373 )
(1,365 )
(14,212 )
Accretion into noninterest income due to sales (2)
--
(9 )
(458 )
--
1,221
9,734
Reclassification from nonaccretable difference for loans with
improving credit-related cash flows (3)
1
(4,959 )
10,658
Changes in expected cash flows that do not affect nonaccretable
difference (4)
Balance, end of period
$
11,216
11,216
16,301
(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, 2016, our carrying value for PCI loans totaled
$16.7 billion and the remainder of nonaccretable difference
established in purchase accounting totaled $954 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, 2016
PCI loans
All other loans
Ratio of
Ratio of
Adjusted
carrying
carrying
unpaid
Current
value to
value to
principal
LTV
Carrying
current
Carrying
current
(in millions)
balance (2)
ratio (3)
value (4)
value (5)
value (4)
value (5)
California
$ 14,219
65 %
$ 11,070
50 %
$
7,871
47 %
Florida
1,648
72
1,216
52
1,651
58
New Jersey
663
77
470
54
1,090
65
New York
483
72
408
56
542
61
Texas
175
50
154
44
654
39
Other states
3,323
72
2,585
55
4,581
59
Total Pick-a-Pay loans
$ 20,511
67
$ 15,903
51
$ 16,389
53
(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 2016.
(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)
2016
2015
2016
2015
Balance, beginning of period
$
12,694
12,562
12,512
13,169
Provision for credit losses
805
831
3,770
2,442
Interest income on certain impaired loans (1)
(52 )
(48 )
(205 )
(198 )
Loan charge-offs:
Commercial:
Commercial and industrial
(309 )
(275 )
(1,419 )
(734 )
Real estate mortgage
(14 )
(11 )
(27 )
(59 )
Real estate construction
--
(2 )
(1 )
(4 )
Lease financing
(16 )
(3 )
(41 )
(14 )
Total commercial
(339 )
(291 )
(1,488 )
(811 )
Consumer:
Real estate 1-4 family first mortgage
(86 )
(113 )
(452 )
(507 )
Real estate 1-4 family junior lien mortgage
(110 )
(134 )
(495 )
(635 )
Credit card
(329 )
(295 )
(1,259 )
(1,116 )
Automobile
(243 )
(211 )
(845 )
(742 )
Other revolving credit and installment
(200 )
(178 )
(708 )
(643 )
Total consumer
(968 )
(931 )
(3,759 )
(3,643 )
Total loan charge-offs
(1,307 )
(1,222 )
(5,247 )
(4,454 )
Loan recoveries:
Commercial:
Commercial and industrial
53
60
263
252
Real estate mortgage
26
30
116
127
Real estate construction
8
12
38
37
Lease financing
1
2
11
8
Total commercial
88
104
428
424
Consumer:
Real estate 1-4 family first mortgage
89
63
373
245
Real estate 1-4 family junior lien mortgage
66
64
266
259
Credit card
54
52
207
175
Automobile
77
76
325
325
Other revolving credit and installment
28
32
128
134
Total consumer
314
287
1,299
1,138
Total loan recoveries
402
391
1,727
1,562
Net loan charge-offs
(905 )
(831 )
(3,520 )
(2,892 )
Other
(2 )
(2 )
(17 )
(9 )
Balance, end of period
$
12,540
12,512
12,540
12,512
Components:
Allowance for loan losses
$
11,419
11,545
11,419
11,545
Allowance for unfunded credit commitments
1,121
967
1,121
967
Allowance for credit losses
$
12,540
12,512
12,540
12,512
Net loan charge-offs (annualized) as a percentage of average total
0.37 %
0.36
0.37
0.33
loans
Allowance for loan losses as a percentage of total loans
1.18
1.26
1.18
1.26
Allowance for credit losses as a percentage of total loans
1.30
1.37
1.30
1.37
(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
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Balance, beginning of quarter
$
12,694
12,749
12,668
12,512
12,562
Provision for credit losses
805
805
1,074
1,086
831
Interest income on certain impaired loans (1)
(52 )
(54 )
(51 )
(48 )
(48 )
Loan charge-offs:
Commercial:
Commercial and industrial
(309 )
(324 )
(437 )
(349 )
(275 )
Real estate mortgage
(14 )
(7 )
(3 )
(3 )
(11 )
Real estate construction
--
--
(1 )
--
(2 )
Lease financing
(16 )
(4 )
(17 )
(4 )
(3 )
Total commercial
(339 )
(335 )
(458 )
(356 )
(291 )
Consumer:
Real estate 1-4 family first mortgage
(86 )
(106 )
(123 )
(137 )
(113 )
Real estate 1-4 family junior lien mortgage
(110 )
(119 )
(133 )
(133 )
(134 )
Credit card
(329 )
(296 )
(320 )
(314 )
(295 )
Automobile
(243 )
(215 )
(176 )
(211 )
(211 )
Other revolving credit and installment
(200 )
(170 )
(163 )
(175 )
(178 )
Total consumer
(968 )
(906 )
(915 )
(970 )
(931 )
Total loan charge-offs
(1,307 )
(1,241 )
(1,373 )
(1,326 )
(1,222 )
Loan recoveries:
Commercial:
Commercial and industrial
53
65
69
76
60
Real estate mortgage
26
35
23
32
30
Real estate construction
8
18
4
8
12
Lease financing
1
2
5
3
2
Total commercial
88
120
101
119
104
Consumer:
Real estate 1-4 family first mortgage
89
86
109
89
63
Real estate 1-4 family junior lien mortgage
66
70
71
59
64
Credit card
54
51
50
52
52
Automobile
77
78
86
84
76
Other revolving credit and installment
28
31
32
37
32
Total consumer
314
316
348
321
287
Total loan recoveries
402
436
449
440
391
Net loan charge-offs
(905 )
(805 )
(924 )
(886 )
(831 )
Other
(2 )
(1 )
(18 )
4
(2 )
Balance, end of quarter
$
12,540
12,694
12,749
12,668
12,512
Components:
Allowance for loan losses
$
11,419
11,583
11,664
11,621
11,545
Allowance for unfunded credit commitments
1,121
1,111
1,085
1,047
967
Allowance for credit losses
$
12,540
12,694
12,749
12,668
12,512
Net loan charge-offs (annualized) as a percentage of average total
0.37 %
0.33
0.39
0.38
0.36
loans
Allowance for loan losses as a percentage of:
Total loans
1.18
1.20
1.22
1.23
1.26
Nonaccrual loans
110
105
98
95
101
Nonaccrual loans and other nonperforming assets
101
96
89
86
90
Allowance for credit losses as a percentage of:
Total loans
1.30
1.32
1.33
1.34
1.37
Nonaccrual loans
121
116
107
104
110
Nonaccrual loans and other nonperforming assets
110
106
97
94
98
(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)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions, except ratios)
2016
2016
2016
2016
2015
Tangible book value per common share (1):
Total equity
$ 200,497
203,958
202,661
198,504
193,891
Adjustments:
Preferred stock
(24,551 )
(24,594 )
(24,830 )
(24,051 )
(22,214 )
(126 )
(130 )
(150 )
(182 )
(110 )
Additional paid-in capital on ESOP preferred stock
Unearned ESOP shares
1,565
1,612
1,868
2,271
1,362
Noncontrolling interests
(916 )
(930 )
(916 )
(1,008 )
(893 )
Total common stockholders’ equity
(A)
176,469
179,916
178,633
175,534
172,036
Adjustments:
Goodwill
(26,693 )
(26,688 )
(26,963 )
(27,003 )
(25,529 )
(2,723 )
(3,001 )
(3,356 )
(3,814 )
(3,167 )
Certain identifiable intangible assets (other than MSRs)
Other assets (2)
(2,088 )
(2,230 )
(2,110 )
(2,023 )
(2,074 )
Applicable deferred taxes (3)
1,772
1,832
1,906
1,985
2,071
Tangible common equity
(B)
$ 146,737
149,829
148,110
144,679
143,337
Common shares outstanding
(C)
5,016.1
5,023.9
5,048.5
5,075.9
5,092.1
Book value per common share
(A)/(C)
$
35.18
35.81
35.38
34.58
33.78
Tangible book value per common share
(B)/(C)
29.25
29.82
29.34
28.50
28.15
Quarter ended
Year ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
Dec 31,
(in millions, except ratios)
2016
2016
2016
2016
2015
2016
2015
Return on average tangible common equity (1):
Net income applicable to common stock
(A)
$
4,872
5,243
5,173
5,085
5,203
20,373
21,470
Average total equity
201,247
203,883
201,003
196,586
195,025
200,690
191,584
Adjustments:
Preferred stock
(24,579 )
(24,813 )
(24,091 )
(23,963 )
(22,407 )
(24,363 )
(21,715 )
(128 )
(148 )
(168 )
(201 )
(127 )
(161 )
(138 )
Additional paid-in capital on ESOP preferred stock
Unearned ESOP shares
1,596
1,850
2,094
2,509
1,572
2,011
1,716
Noncontrolling interests
(928 )
(927 )
(984 )
(904 )
(979 )
(936 )
(1,048 )
Average common stockholders’ equity
(B)
177,208
179,845
177,854
174,027
173,084
177,241
170,399
Adjustments:
Goodwill
(26,713 )
(26,979 )
(27,037 )
(26,069 )
(25,580 )
(26,700 )
(25,673 )
Certain identifiable intangible assets
(2,871 )
(3,145 )
(3,600 )
(3,407 )
(3,317 )
(3,254 )
(3,793 )
(other than MSRs)
Other assets (2)
(2,175 )
(2,131 )
(2,096 )
(2,065 )
(1,987 )
(2,117 )
(1,654 )
Applicable deferred taxes (3)
1,785
1,855
1,934
2,014
2,103
1,897
2,248
Average tangible common equity
(C)
$ 147,234
149,445
147,055
144,500
144,303
147,067
141,527
Return on average common stockholders’ equity (ROE)
(A)/(B)
10.94 %
11.60
11.70
11.75
11.93
11.49
12.60
Return on average tangible common equity (ROTCE)
(A)/(C)
13.16
13.96
14.15
14.15
14.30
13.85
15.17
(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company’s
use of equity.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to goodwill and other
intangible assets. They were determined by applying the combined
federal statutory rate and composite state income tax rates to the
difference between book and tax basis of the respective goodwill
and intangible assets at period end.
Wells Fargo & Company and Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1)
Estimated
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in billions, except ratio)
2016
2016
2016
2016
2015
Total equity
$
200.5
204.0
202.7
198.5
193.9
Adjustments:
Preferred stock
(24.6 )
(24.6 )
(24.8 )
(24.1 )
(22.2 )
(0.1 )
(0.1 )
(0.2 )
(0.2 )
(0.1 )
Additional paid-in capital on ESOP preferred stock
Unearned ESOP shares
1.6
1.6
1.9
2.3
1.3
Noncontrolling interests
(0.9 )
(1.0 )
(1.0 )
(1.0 )
(0.9 )
Total common stockholders’ equity
176.5
179.9
178.6
175.5
172.0
Adjustments:
Goodwill
(26.7 )
(26.7 )
(27.0 )
(27.0 )
(25.5 )
Certain identifiable intangible assets (other than MSRs)
(2.7 )
(3.0 )
(3.4 )
(3.8 )
(3.2 )
Other assets (2)
(2.1 )
(2.2 )
(2.0 )
(2.1 )
(2.1 )
Applicable deferred taxes (3)
1.8
1.8
1.9
2.0
2.1
Investment in certain subsidiaries and other
(0.4 )
(2.0 )
(2.5 )
(1.9 )
(0.9 )
Common Equity Tier 1 (Fully Phased-In) under Basel III
(A)
146.4
147.8
145.6
142.7
142.4
Total risk-weighted assets (RWAs) anticipated under Basel III (4)(5)
(B)
$ 1,369.8
1,380.0
1,372.9
1,345.1
1,321.7
Common Equity Tier 1 to total RWAs anticipated under Basel III
(A)/(B)
10.7 %
10.7
10.6
10.6
10.8
(Fully Phased-In) (5)
(1) Basel III capital rules, adopted by the Federal Reserve Board
on July 2, 2013, revised the definition of capital, increased
minimum capital ratios, and introduced a minimum Common Equity
Tier 1 (CET1) ratio. These rules established a new comprehensive
capital framework for U.S. banking organizations that implements
the Basel III capital framework and certain provisions of the
Dodd-Frank Act. The rules are being phased in through the end of
2021. Fully phased-in capital amounts, ratios and RWAs are
calculated assuming the full phase-in of the Basel III capital
rules. Fully phased-in regulatory capital amounts, ratios and RWAs
are considered non-GAAP financial measures that are used by
management, bank regulatory agencies, investors and analysts to
assess and monitor the Company’s capital position.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to goodwill and other
intangible assets. They were determined by applying the combined
federal statutory rate and composite state income tax rates to the
difference between book and tax basis of the respective goodwill
and intangible assets at period end.
(4) The final Basel III capital rules provide for two capital
frameworks: the Standardized Approach, which replaced Basel I, and
the Advanced Approach applicable to certain institutions. Under
the final rules, we are subject to the lower of our CET1 ratio
calculated under the Standardized Approach and under the Advanced
Approach in the assessment of our capital adequacy. Because the
final determination of our CET1 ratio and which approach will
produce the lower CET1 ratio as of December 31, 2016, 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, 2016, and December 31,
2015, was calculated under the Basel III Standardized Approach
RWAs.
(5) The Company’s December 31, 2016, 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
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Quarter ended Dec 31,
Net interest income (3)
$
7,556
7,409
4,323
3,711
1,061
933
(538 )
(465 )
12,402
11,588
Provision (reversal of provision) for credit losses
631
704
168
126
3
(6 )
3
7
805
831
Noninterest income
4,105
4,921
2,830
2,848
3,013
3,014
(768 )
(785 )
9,180
9,998
Noninterest expense
6,985
6,893
4,002
3,491
3,042
2,998
(814 )
(783 )
13,215
12,599
Income (loss) before income tax expense (benefit)
4,045
4,733
2,983
2,942
1,029
955
(495 )
(474 )
7,562
8,156
Income tax expense (benefit)
1,272
1,507
795
841
380
366
(189 )
(181 )
2,258
2,533
Net income (loss) before noncontrolling interests
2,773
3,226
2,188
2,101
649
589
(306 )
(293 )
5,304
5,623
Less: Net income (loss) from noncontrolling interests
40
57
(6 )
(3 )
(4 )
(6 )
--
--
30
48
Net income (loss)
$
2,733
3,169
2,194
2,104
653
595
(306 )
(293 )
5,274
5,575
Average loans
$
488.1
482.2
461.5
417.0
70.0
63.0
(55.5 )
(49.9 )
964.1
912.3
Average assets
1,000.7
921.4
811.9
755.4
220.4
197.9
(88.7 )
(87.4 )
1,944.3
1,787.3
Average deposits
709.8
663.7
459.2
449.3
194.9
177.9
(79.7 )
(74.1 )
1,284.2
1,216.8
Year ended Dec 31,
Net interest income (3)
$
29,833
29,242
16,052
14,350
3,913
3,478
(2,044 )
(1,769 )
47,754
45,301
Provision (reversal of provision) for credit losses
2,691
2,427
1,073
27
(5 )
(25 )
11
13
3,770
2,442
Noninterest income
19,033
20,099
12,490
11,554
12,033
12,299
(3,043 )
(3,196 )
40,513
40,756
Noninterest expense
27,422
26,981
16,126
14,116
12,059
12,067
(3,230 )
(3,190 )
52,377
49,974
Income (loss) before income tax expense (benefit)
18,753
19,933
11,343
11,761
3,892
3,735
(1,868 )
(1,788 )
32,120
33,641
Income tax expense (benefit)
6,182
6,202
3,136
3,424
1,467
1,420
(710 )
(681 )
10,075
10,365
Net income (loss) before noncontrolling interests
12,571
13,731
8,207
8,337
2,425
2,315
(1,158 )
(1,107 )
22,045
23,276
Less: Net income (loss) from noncontrolling interests
136
240
(28 )
143
(1 )
(1 )
--
--
107
382
Net income (loss)
$
12,435
13,491
8,235
8,194
2,426
2,316
(1,158 )
(1,107 )
21,938
22,894
Average loans
$
486.9
475.9
449.3
397.3
67.3
60.1
(53.5 )
(47.9 )
950.0
885.4
Average assets
977.3
910.0
782.0
724.9
211.5
192.8
(85.4 )
(84.8 )
1,885.4
1,742.9
Average deposits
701.2
654.4
438.6
438.9
187.8
172.3
(77.0 )
(71.5 )
1,250.6
1,194.1
(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. Effective fourth
quarter 2016, we realigned some personnel and business activities
from Wholesale Banking to Community Banking, as a result of the
formation of the new Payments, Virtual Solutions, and Innovation
Group. Results for these operating segments reflect the shift
prospectively from November 1, 2016.
(2) Includes the elimination of certain items that are included in
more than one business segment, substantially all of which
represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels.
(3) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(income/expense in millions, average balances in billions)
2016
2016
2016
2016
2015
COMMUNITY BANKING
Net interest income (2)
$
7,556
7,430
7,379
7,468
7,409
Provision for credit losses
631
651
689
720
704
Noninterest income
4,105
4,957
4,825
5,146
4,921
Noninterest expense
6,985
6,953
6,648
6,836
6,893
Income before income tax expense
4,045
4,783
4,867
5,058
4,733
Income tax expense
1,272
1,546
1,667
1,697
1,507
Net income before noncontrolling interests
2,773
3,237
3,200
3,361
3,226
Less: Net income from noncontrolling interests
40
10
21
65
57
Segment net income
$
2,733
3,227
3,179
3,296
3,169
Average loans
$
488.1
489.2
485.7
484.3
482.2
Average assets
1,000.7
993.6
967.6
947.4
921.4
Average deposits
709.8
708.0
703.7
683.0
663.7
WHOLESALE BANKING
Net interest income (2)
$
4,323
4,062
3,919
3,748
3,711
Provision for credit losses
168
157
385
363
126
Noninterest income
2,830
3,085
3,365
3,210
2,848
Noninterest expense
4,002
4,120
4,036
3,968
3,491
Income before income tax expense
2,983
2,870
2,863
2,627
2,942
Income tax expense
795
827
795
719
841
Net income before noncontrolling interests
2,188
2,043
2,068
1,908
2,101
Less: Net loss from noncontrolling interests
(6 )
(4 )
(5 )
(13 )
(3 )
Segment net income
$
2,194
2,047
2,073
1,921
2,104
Average loans
$
461.5
454.3
451.4
429.8
417.0
Average assets
811.9
794.2
772.6
748.6
755.4
Average deposits
459.2
441.2
425.8
428.0
449.3
WEALTH AND INVESTMENT MANAGEMENT
Net interest income (2)
$
1,061
977
932
943
933
Provision (reversal of provision) for credit losses
3
4
2
(14 )
(6 )
Noninterest income
3,013
3,122
2,987
2,911
3,014
Noninterest expense
3,042
2,999
2,976
3,042
2,998
Income before income tax expense
1,029
1,096
941
826
955
Income tax expense
380
415
358
314
366
Net income before noncontrolling interests
649
681
583
512
589
Less: Net income (loss) from noncontrolling interests
(4 )
4
(1 )
--
(6 )
Segment net income
$
653
677
584
512
595
Average loans
$
70.0
68.4
66.7
64.1
63.0
Average assets
220.4
212.1
205.3
208.1
197.9
Average deposits
194.9
189.2
182.5
184.5
177.9
OTHER (3)
Net interest income (2)
$
(538 )
(517 )
(497 )
(492 )
(465 )
Provision (reversal of provision) for credit losses
3
(7 )
(2 )
17
7
Noninterest income
(768 )
(788 )
(748 )
(739 )
(785 )
Noninterest expense
(814 )
(804 )
(794 )
(818 )
(783 )
Loss before income tax benefit
(495 )
(494 )
(449 )
(430 )
(474 )
Income tax benefit
(189 )
(187 )
(171 )
(163 )
(181 )
Net loss before noncontrolling interests
(306 )
(307 )
(278 )
(267 )
(293 )
Less: Net income from noncontrolling interests
--
--
--
--
--
Other net loss
$
(306 )
(307 )
(278 )
(267 )
(293 )
Average loans
$
(55.5 )
(54.4 )
(53.0 )
(51.0 )
(49.9 )
Average assets
(88.7 )
(85.3 )
(83.4 )
(84.2 )
(87.4 )
Average deposits
(79.7 )
(76.9 )
(75.3 )
(76.1 )
(74.1 )
CONSOLIDATED COMPANY
Net interest income (2)
$
12,402
11,952
11,733
11,667
11,588
Provision for credit losses
805
805
1,074
1,086
831
Noninterest income
9,180
10,376
10,429
10,528
9,998
Noninterest expense
13,215
13,268
12,866
13,028
12,599
Income before income tax expense
7,562
8,255
8,222
8,081
8,156
Income tax expense
2,258
2,601
2,649
2,567
2,533
Net income before noncontrolling interests
5,304
5,654
5,573
5,514
5,623
Less: Net income from noncontrolling interests
30
10
15
52
48
Wells Fargo net income
$
5,274
5,644
5,558
5,462
5,575
Average loans
$
964.1
957.5
950.8
927.2
912.3
Average assets
1,944.3
1,914.6
1,862.1
1,819.9
1,787.3
Average deposits
1,284.2
1,261.5
1,236.7
1,219.4
1,216.8
(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. Effective fourth
quarter 2016, we realigned some personnel and business activities
from Wholesale Banking to Community Banking, as a result of the
formation of the new Payments, Virtual Solutions, and Innovation
Group. Results for these operating segments reflect the shift
prospectively from November 1, 2016.
(2) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
(3) Includes the elimination of certain items that are included in
more than one business segment, substantially all of which
represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
MSRs measured using the fair value method:
Fair value, beginning of quarter
$ 10,415
10,396
11,333
12,415
11,778
Servicing from securitizations or asset transfers (1)
752
609
477
366
372
Sales and other (2)
(47 )
4
(22 )
--
(9 )
Net additions
705
613
455
366
363
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)
2,367
39
(779 )
(1,084 )
560
Servicing and foreclosure costs (4)
93
(10 )
(4 )
27
(37 )
Prepayment estimates and other (5)
(106 )
(37 )
(41 )
100
244
Net changes in valuation model inputs or assumptions
2,354
(8 )
(824 )
(957 )
767
Other changes in fair value (6)
(515 )
(586 )
(568 )
(491 )
(493 )
Total changes in fair value
1,839
(594 )
(1,392 )
(1,448 )
274
Fair value, end of quarter
$ 12,959
10,415
10,396
11,333
12,415
(1) Includes impacts associated with exercising our right to
repurchase delinquent loans from GNMA loan securitization pools.
(2) Includes sales and transfers of MSRs, which can result in an
increase of total reported MSRs if the sales or transfers are
related to nonperforming loan portfolios.
(3) Includes prepayment speed changes as well as other valuation
changes due to changes in mortgage interest rates (such as changes
in estimated interest earned on custodial deposit balances)
(4) Includes costs to service and unreimbursed foreclosure costs.
(5) Represents changes driven by other valuation model inputs or
assumptions including prepayment speed estimation changes and
other assumption updates. Prepayment speed estimation changes are
influenced by observed changes in borrower behavior and other
external factors that occur independent of interest rate changes.
(6) Represents changes due to collection/realization of expected
cash flows over time.
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Amortized MSRs:
Balance, beginning of quarter
$ 1,373
1,353
1,359
1,308
1,277
Purchases
34
18
24
21
48
Servicing from securitizations or asset transfers
66
69
38
97
49
Amortization
(67 )
(67 )
(68 )
(67 )
(66 )
Balance, end of quarter
$ 1,406
1,373
1,353
1,359
1,308
Fair value of amortized MSRs:
Beginning of quarter
$ 1,627
1,620
1,725
1,680
1,643
End of quarter
1,956
1,627
1,620
1,725
1,680
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Servicing income, net:
Servicing fees (1)
$
738
878
842
910
872
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)
(A)
2,354
(8 )
(824 )
(957 )
767
Other changes in fair value (3)
(515 )
(586 )
(568 )
(491 )
(493 )
Total changes in fair value of MSRs carried at fair value
1,839
(594 )
(1,392 )
(1,448 )
274
Amortization
(67 )
(67 )
(68 )
(67 )
(66 )
Net derivative gains (losses) from economic hedges (4)
(B)
(2,314 )
142
978
1,455
(350 )
Total servicing income, net
$
196
359
360
850
730
Market-related valuation changes to MSRs, net of hedge results (2)(4)
(A)+(B)
$
40
134
154
498
417
(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 changes due to collection/realization of expected
cash flows over time.
(4) Represents results from economic hedges used to hedge the risk
of changes in fair value of MSRs.
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in billions)
2016
2016
2016
2016
2015
Managed servicing portfolio (1):
Residential mortgage servicing:
Serviced for others
$
1,205
1,226
1,250
1,280
1,300
Owned loans serviced
347
352
349
342
345
Subserviced for others
8
4
4
4
4
Total residential servicing
1,560
1,582
1,603
1,626
1,649
Commercial mortgage servicing:
Serviced for others
479
477
478
485
478
Owned loans serviced
132
130
128
125
122
Subserviced for others
8
8
8
8
7
Total commercial servicing
619
615
614
618
607
Total managed servicing portfolio
$
2,179
2,197
2,217
2,244
2,256
Total serviced for others
$
1,684
1,703
1,728
1,765
1,778
Ratio of MSRs to related loans serviced for others
0.85 %
0.69
0.68
0.72
0.77
Weighted-average note rate (mortgage loans serviced for others)
4.26
4.28
4.32
4.34
4.37
(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,
2016
2016
2016
2016
2015
Net gains on mortgage loan origination/sales activities (in
millions):
Residential
(A)
$
939
953
744
532
600
Commercial
90
167
72
71
108
Residential pipeline and unsold/repurchased loan management (1)
192
188
238
145
222
Total
$
1,221
1,308
1,054
748
930
Application data (in billions):
Wells Fargo first mortgage quarterly applications
$
75
100
95
77
64
Refinances as a percentage of applications
48 %
55
46
52
48
Wells Fargo first mortgage unclosed pipeline, at quarter end
$
30
50
47
39
29
Residential real estate originations:
Purchases as a percentage of originations
50 %
58
60
55
59
Refinances as a percentage of originations
50
42
40
45
41
Total
100 %
100
100
100
100
Wells Fargo first mortgage loans (in billions):
Retail
$
35
37
34
24
27
Correspondent
36
32
28
19
19
Other (2)
1
1
1
1
1
Total quarter-to-date
$
72
70
63
44
47
Held-for-sale
(B)
$
56
53
46
31
33
Held-for-investment
16
17
17
13
14
Total quarter-to-date
$
72
70
63
44
47
Total year-to-date
$
249
177
107
44
213
Production margin on residential held-for-sale mortgage
(A)/(B)
1.68 %
1.81
1.66
1.68
1.83
originations
(1) Primarily 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
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(in millions)
2016
2016
2016
2016
2015
Balance, beginning of period
$
239
255
355
378
538
Provision for repurchase losses:
Loan sales
10
11
8
7
9
Change in estimate (1)
(7 )
(24 )
(89 )
(19 )
(128 )
Net additions (reductions)
3
(13 )
(81 )
(12 )
(119 )
Losses
(13 )
(3 )
(19 )
(11 )
(41 )
Balance, end of period
$
229
239
255
355
378
(1) Results from changes in investor demand and mortgage insurer
practices, credit deterioration and changes in the financial
stability of correspondent lenders.

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SOURCE: Wells Fargo & Company

Wells Fargo & Company
Media
Ancel Martinez, 415-222-3858
or
Investors
Jim Rowe, 415-396-8216