WFC
$53.16
Wells Fargo &
$.26
.49%
Earnings Details
1st Quarter March 2017
Thursday, April 13, 2017 8:00:12 AM
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Summary

Wells Fargo & Beats

Wells Fargo & (WFC) reported 1st Quarter March 2017 earnings of $1.00 per share on revenue of $23.9 billion. The consensus earnings estimate was $0.97 per share on revenue of $22.2 billion. The Earnings Whisper number was $0.98 per share. Revenue grew 1.8% 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
$1.00
Earnings Whisper
$0.98
Consensus Estimate
$0.97
Reported Revenue
$23.93 Bil
Revenue Estimate
$22.17 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Wells Fargo Reports $5.5 Billion in Quarterly Net Income

Wells Fargo & Company (WFC):

Solid financial results: -- Net income of $5.5 billion, in line with first quarter 2016

-- Diluted earnings per share (EPS) of $1.00, compared with $0.99

Revenue of $22.0 billion -- Net interest income of $12.3 billion, up $633 million, or 5 percent

Total average deposits of $1.3 trillion, up $79.8 billion, or 7 percent, from first quarter 2016

Total average loans of $963.6 billion, up $36.4 billion, or 4 percent -- Quarter-end loans of $958.4 billion, up $11.1 billion, or 1 percent

Return on assets (ROA) of 1.15 percent and return on equity (ROE) of 11.54 percent

Improved credit quality: -- Provision expense of $605 million, down $481 million, or 44 percent, from first quarter 2016 -- Net charge-offs of $805 million, down $81 million -- Net charge-offs were 0.34 percent of average loans (annualized), down from 0.38 percent

-- Reserve release(1) of $200 million

-- Nonaccrual loans of $9.8 billion, down $2.5 billion, or 20 percent

Strong capital position: -- Common Equity Tier 1 ratio (fully phased-in) of 11.2 percent(2)

Period-end common shares outstanding down 79.2 million from first quarter 2016

Returned $3.1 billion to shareholders in the first quarter through common stock dividends and net share repurchases

Selected Financial Information
Quarter ended
Mar 31,
Dec 31,
Mar 31,
2017
2016
2016
Earnings
Diluted earnings per common share
$
1.00
0.96
0.99
Wells Fargo net income (in billions)
5.46
5.27
5.46
Return on assets (ROA)
1.15 %
1.08
1.21
Return on equity (ROE)
11.54
10.94
11.75
Return on average tangible common equity (ROTCE)(a)
13.85
13.16
14.15
Asset Quality
Net charge-offs (annualized) as a % of average total loans
0.34 %
0.37
0.38
Allowance for credit losses as a % of total loans
1.28
1.30
1.34
Allowance for credit losses as a % of annualized net charge-offs
376
348
355
Other
Revenue (in billions)
$
22.0
21.6
22.2
Efficiency ratio (b)
62.7 %
61.2
58.7
Average loans (in billions)
$
963.6
964.1
927.2
Average deposits (in billions)
1,299.2
1,284.2
1,219.4
Net interest margin
2.87 %
2.87
2.90
(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 32.
(b) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).

Wells Fargo & Company (WFC) reported net income of $5.5 billion, or $1.00 per diluted common share, for first quarter 2017, compared with $5.5 billion, or $0.99 per share, for first quarter 2016, and $5.3 billion, or $0.96 per share, for fourth quarter 2016.

Chief Executive Officer Tim Sloan said, "Wells Fargo continued to make meaningful progress in the first quarter in rebuilding trust with customers and other important stakeholders, while producing solid financial results. We have taken significant actions throughout the company to date and we are committed to building a better bank as we move Wells Fargo forward. Earlier this week, the independent directors of Wells Fargo’s Board of Directors issued a report on their investigation into the company’s retail banking sales practices. The findings are valuable to us and beneficial in helping to identify areas for further improvement. While we have more work to do, I am pleased with all we have accomplished thus far. Our 273,000 team members have remained committed to helping our customers succeed financially, as reflected in improved retail customer service scores, record levels of deposits, more primary consumer checking customers, record client assets in Wealth and Investment Management, and industry-leading mortgage originations."

Chief Financial Officer John Shrewsberry said, "Our diversified business model generated higher revenue and net income compared with last quarter, as well as higher ROA and ROE. Expenses were elevated compared with last quarter, driven by typically-higher first quarter personnel-related expenses. Credit results improved, with lower net charge-offs and nonaccrual loans, and we benefited from lower income tax expense. The balance sheet remained strong with high levels of capital and liquidity, and record deposits. We ended first quarter with Common Equity Tier 1 (fully phased-in) of $148.7 billion, or a Common Equity Tier 1 ratio (fully phased-in) of 11.2 percent(2), and returned $3.1 billion to shareholders during the quarter, for a net payout ratio(3) of 61 percent."

Net Interest Income

Net interest income in first quarter 2017 decreased $102 million from fourth quarter 2016 to $12.3 billion, primarily due to two fewer days in the quarter. The impact of balance declines in trading assets and mortgages held-for-sale, as well as lower income from variable sources, was offset by average balance growth in investment securities and the benefit from higher interest rates in the quarter.

Net interest margin was 2.87 percent, stable with fourth quarter 2016. The benefit of higher interest rates, a reduction in short-term market funding, and average balance growth in investment securities was offset by lower income from trading assets and mortgages held-for-sale, higher deposit and long-term debt balances, and lower income from variable sources.

Noninterest Income

Noninterest income in the first quarter was $9.7 billion, up from $9.2 billion in fourth quarter 2016, driven by higher other income and higher market-sensitive revenue, particularly in trading. These increases were partially offset by lower mortgage banking income, investment banking fees and commercial real estate brokerage commissions.

Net gain from trading activities was $439 million in the first quarter, compared with a net loss of $109 million in the fourth quarter. Results in the first quarter were driven by higher secondary trading, as well as higher deferred compensation plan investment results (offset in employee benefits expense).

Mortgage banking noninterest income was $1.2 billion, compared with $1.4 billion in fourth quarter 2016. As expected, residential mortgage loan originations declined in the first quarter, down to $44 billion, from $72 billion in the fourth quarter. The production margin on residential held-for-sale mortgage loan originations(4) was 1.68 percent, in line with the fourth quarter. Mortgage servicing income increased to $456 million in the first quarter from $196 million in the fourth quarter, primarily due to lower unreimbursed servicing costs and lower prepayments.

Other income was $145 million, compared with $(382) million in the fourth quarter. First quarter 2017 included a $(193) million net hedge ineffectiveness accounting impact, resulting largely from foreign currency fluctuations, compared with a $(592) million net hedge ineffectiveness accounting impact in the fourth quarter, which reflected both an increase in interest rates and foreign currency fluctuations.

Noninterest Expense

Noninterest expense in the first quarter was $13.8 billion, compared with $13.2 billion in fourth quarter 2016. First quarter expenses included $790 million of seasonally higher employee benefits and incentive compensation expense, and an increase in deferred compensation expense (included in employee benefits expense and offset in revenue), partially offset by lower outside professional services, equipment, and advertising and promotion expenses, which typically decline in first quarter. The efficiency ratio increased to 62.7 percent in first quarter 2017, compared with 61.2 percent in the prior quarter. The Company currently expects the efficiency ratio to remain elevated.

Income Taxes

The Company’s effective income tax rate was 27.4 percent for first quarter 2017, compared with 30.0 percent in the prior quarter. The effective tax rate for the first quarter included discrete tax benefits totaling $197 million, of which $183 million resulted from tax benefits associated with stock compensation activity during the quarter which was subject to ASU 2016-09 accounting guidance adopted in first quarter 2017. The Company currently expects the full year 2017 tax rate to be approximately 30 percent.

Loans

Total average loans were $963.6 billion in the first quarter, down $502 million from the fourth quarter. Period-end loan balances were $958.4 billion at March 31, 2017, down $9.2 billion from December 31, 2016, driven by a decline in credit card balances due to seasonality, a slowdown in new credit card account openings, and a continued decline in junior lien mortgage loans. In addition, there was an expected decline in auto loans from the fourth quarter as continued proactive steps to tighten underwriting standards resulted in lower origination volume.

Period-End Loan Balances
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Commercial
$ 505,004
506,536
496,454
494,538
488,205
Consumer
453,401
461,068
464,872
462,619
459,053
Total loans
$ 958,405
967,604
961,326
957,157
947,258
Change from prior quarter
$
(9,199 )
6,278
4,169
9,899
30,699

Cash, Cash Equivalents and Investment Securities

Cash, federal funds sold, securities purchased under resale agreements and other short-term investments reached an all-time high of $328.4 billion at March 31, 2017, up $41.7 billion from the fourth quarter, driven by deposit growth and a linked-quarter decline in the loan portfolio. Investment securities were $407.6 billion at March 31, 2017, down $387 million from the fourth quarter, as approximately $16 billion of purchases were more than offset by run-off and sales.

Net unrealized losses on available-for-sale securities were $1.2 billion at March 31, 2017, compared with net unrealized losses on available-for-sale securities of $1.8 billion at December 31, 2016, primarily due to tighter credit spreads during the quarter and a modest benefit from lower long-term interest rates.

Deposits

Total average deposits for first quarter 2017 were $1.3 trillion, up 1 percent from the prior quarter, driven by growth in consumer and small business, as well as commercial. The average deposit cost for first quarter 2017 was 17 basis points, up 5 basis points from the prior quarter and 7 basis points from a year ago, primarily driven by an increase in commercial deposit rates.

Capital

Capital levels remained strong in the first quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 11.2 percent(2), compared with 10.8 percent in the prior quarter. In first quarter 2017, the Company repurchased 53.1 million shares of its common stock, which reduced period-end common shares outstanding by 19.4 million after taking into account seasonally higher common stock issuances to employee benefit plans. The Company paid a quarterly common stock dividend of $0.38 per share, up from $0.375 per share a year ago.

Credit Quality

"First quarter credit results reflected strong performance in our commercial portfolios and consumer real estate portfolios," said Chief Risk Officer Mike Loughlin. "Improvement in the oil and gas portfolio, as well as continued improvement in residential real estate, drove a $200 million reserve release(1) in the quarter."

Net Loan Charge-offs

The quarterly loss rate of 0.34 percent (annualized) reflected commercial losses of 0.11 percent and consumer losses of 0.59 percent. Credit losses were $805 million in first quarter 2017, down $100 million from fourth quarter 2016. Consumer losses increased $8 million, driven by higher credit card losses, predominantly offset by lower losses in 1-4 family junior lien mortgage and other revolving credit and installment portfolios. Commercial losses were down $108 million driven by lower oil and gas losses and increased recoveries.

Net Loan Charge-Offs
Quarter ended
March 31, 2017
December 31, 2016
September 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
$
171
0.21
%
$
256
0.31
%
$
259
0.32
%
Real estate mortgage
(25 )
(0.08 )
(12 )
(0.04 )
(28 )
(0.09 )
Real estate construction
(8 )
(0.15 )
(8 )
(0.13 )
(18 )
(0.32 )
Lease financing
5
0.11
15
0.32
2
0.04
Total commercial
143
0.11
251
0.20
215
0.17
Consumer:
Real estate 1-4 family first mortgage
7
0.01
(3 )
--
20
0.03
Real estate 1-4 family junior lien mortgage
23
0.21
44
0.38
49
0.40
Credit card
309
3.54
275
3.09
245
2.82
Automobile
167
1.10
166
1.05
137
0.87
Other revolving credit and installment
156
1.60
172
1.70
139
1.40
Total consumer
662
0.59
654
0.56
590
0.51
Total
$
805
0.34
%
$
905
0.37
%
$
805
0.33
%
(a) Quarterly net charge-offs as a percentage of average loans are
annualized. See explanation on page 29 of the accounting for
purchased credit-impaired (PCI) loans and the impact on selected
financial ratios.

Nonperforming Assets

Nonperforming assets decreased $698 million from fourth quarter 2016 to $10.7 billion. Nonaccrual loans decreased $625 million from fourth quarter to $9.8 billion reflecting declines across all major commercial asset classes, as well as continued lower consumer real estate nonaccruals.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
March 31, 2017
December 31, 2016
September 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
$
2,898
0.88
%
$
3,216
0.97
%
$
3,331
1.03
%
Real estate mortgage
672
0.51
685
0.52
780
0.60
Real estate construction
40
0.16
43
0.18
59
0.25
Lease financing
96
0.50
115
0.60
92
0.49
Total commercial
3,706
0.73
4,059
0.80
4,262
0.86
Consumer:
Real estate 1-4 family first mortgage
4,743
1.73
4,962
1.80
5,310
1.91
Real estate 1-4 family junior lien mortgage
1,153
2.60
1,206
2.61
1,259
2.62
Automobile
101
0.17
106
0.17
108
0.17
Other revolving credit and installment
56
0.14
51
0.13
47
0.12
Total consumer
6,053
1.34
6,325
1.37
6,724
1.45
Total nonaccrual loans
9,759
1.02
10,384
1.07
10,986
1.14
Foreclosed assets:
Government insured/guaranteed
179
197
282
Non-government insured/guaranteed
726
781
738
Total foreclosed assets
905
978
1,020
Total nonperforming assets
$ 10,664
1.11
%
$ 11,362
1.17
%
$ 12,006
1.25
%
Change from prior quarter:
Total nonaccrual loans
$
(625 )
$
(602 )
$
(977 )
Total nonperforming assets
(698 )
(644 )
(1,074 )

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.3 billion at March 31, 2017, which was down $253 million from December 31, 2016. The allowance coverage for total loans was 1.28 percent, compared with 1.30 percent in fourth quarter 2016. The allowance covered 3.8 times annualized first quarter net charge-offs, compared with 3.5 times in the prior quarter. The allowance coverage for nonaccrual loans was 126 percent at March 31, 2017, compared with 121 percent at December 31, 2016. "We believe the allowance was appropriate for losses inherent in the loan portfolio at March 31, 2017," said Loughlin.

Business Segment Performance

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

Quarter ended
Mar 31,
Dec 31,
Mar 31,
(in millions)
2017
2016
2016
Community Banking
$ 3,009
2,733
3,296
Wholesale Banking
2,115
2,194
1,921
Wealth and Investment Management
623
653
512

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
Mar 31,
Dec 31,
Mar 31,
(in millions)
2017
2016
2016
Total revenue
$ 12,093
11,661
12,614
Provision for credit losses
646
631
720
Noninterest expense
7,221
6,985
6,836
Segment net income
3,009
2,733
3,296
(in billions)
Average loans
482.7
488.1
484.3
Average assets
990.7
1,000.7
947.4
Average deposits
717.2
709.8
683.0

Community Banking reported net income of $3.0 billion, up $276 million, or 10 percent, from fourth quarter 2016. Revenue of $12.1 billion increased $432 million, or 4 percent, from fourth quarter 2016, driven by higher other income (reflecting the accounting impact of net hedge ineffectiveness), gains on equity investments, and net interest income, partially offset by lower mortgage banking revenue and gains on sales of debt securities. Noninterest expense increased $236 million, compared with fourth quarter 2016, due to seasonally higher personnel expense and higher deferred compensation plan expense (offset in trading revenue), partially offset by lower professional services, equipment, and advertising expense.

Net income was down $287 million, or 9 percent, from first quarter 2016. Revenue decreased $521 million, or 4 percent, compared with a year ago due to lower other income (reflecting the accounting impact of net hedge ineffectiveness), mortgage banking revenue, and gains on sales of debt securities, partially offset by higher gains on equity investments, net interest income, and deferred compensation plan investments (offset in employee benefits expense). Noninterest expense increased $385 million, or 6 percent, from a year ago driven by higher personnel, deferred compensation plan expense (offset in trading revenue), professional services, and equipment expense, partially offset by lower operating losses and other expense. The provision for credit losses decreased $74 million from a year ago primarily due to improvement in the consumer real estate portfolios.

Retail Banking and Consumer Payments

With over 400,000 branch customer experience surveys completed, ’Overall Satisfaction with Most Recent Visit’ and ’Loyalty’ scores continued to improve each month in the first quarter

Primary consumer checking customers(5) in March up 1.6 percent year-over-year

Debit card purchase volume(6) of $75.7 billion in first quarter, up 4 percent year-over-year

Credit card purchase volume of $17.9 billion in first quarter, up 3 percent year-over-year

Credit card penetration in retail banking households rose to 45.5 percent, up 19 basis points year-over-year(7,8)

28.1 million digital (online and mobile) active customers in March, including 20.3 million mobile active users(9)

#1 overall performance in Keynote Mobile Banking Scorecard; also best in "Functionality," "Quality & Availability" and "Best App & Mobile Web Experiences" (March 2017)

First large bank in the U.S. to offer card-free account access through One-Time Access Code mobile technology at all 13,000 ATMs

Consumer Lending

Auto originations of $5.5 billion in first quarter, down 15 percent from prior quarter and down 29 percent from prior year, as continued proactive steps to tighten underwriting standards resulted in lower origination volume

Home Lending -- Originations of $44 billion, down from $72 billion in prior quarter

-- Applications of $59 billion, down from $75 billion in prior quarter

Application pipeline of $28 billion at quarter end, down from $30 billion at December 31, 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
Mar 31,
Dec 31,
Mar 31,
(in millions)
2017
2016
2016
Total revenue
$ 7,038
7,153
6,958
Provision (reversal of provision) for credit losses
(43 )
168
363
Noninterest expense
4,225
4,002
3,968
Segment net income
2,115
2,194
1,921
(in billions)
Average loans
466.3
461.5
429.8
Average assets
807.8
811.9
748.6
Average deposits
466.0
459.2
428.0

Wholesale Banking reported net income of $2.1 billion, down $79 million, or 4 percent, from fourth quarter 2016. Revenue of $7.0 billion decreased $115 million, or 2 percent, from the prior quarter. Net interest income decreased $175 million, or 4 percent, as loan growth was more than offset by lower trading-related interest income as well as the impact of two fewer days in the quarter. Noninterest income increased $60 million, or 2 percent, as strong customer accommodation trading results were partially offset by lower investment banking and commercial real estate brokerage fees. Noninterest expense increased $223 million, or 6 percent, from the prior quarter due to seasonally higher personnel expenses. The provision for credit losses decreased $211 million from the prior quarter, primarily due to improvements in the oil and gas portfolio.

Net income increased $194 million, or 10 percent, from first quarter 2016. Revenue increased $80 million, or 1 percent, from first quarter 2016, driven by a $400 million increase in net interest income primarily related to loan growth including the GE Capital portfolio acquisitions. Noninterest income decreased $320 million, or 10 percent, primarily due to the first quarter 2016 sale of our crop insurance business which resulted in lower insurance and gain on sale income, partially offset by higher investment banking fees, customer accommodation trading, and lease income related to the GE Capital portfolio acquisitions. Noninterest expense increased $257 million, or 6 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 decreased $406 million from a year ago primarily due to improvements in the oil and gas portfolio.

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

Selected Financial Information
Quarter ended
Mar 31,
Dec 31,
Mar 31,
(in millions)
2017
2016
2016
Total revenue
$ 4,193
4,074
3,854
Provision (reversal of provision) for credit losses
(4 )
3
(14 )
Noninterest expense
3,206
3,042
3,042
Segment net income
623
653
512
(in billions)
Average loans
70.7
70.0
64.1
Average assets
221.9
220.4
208.1
Average deposits
195.6
194.9
184.5

Wealth and Investment Management reported net income of $623 million, down $30 million, or 5 percent, from fourth quarter 2016. Revenue of $4.2 billion increased $119 million, or 3 percent, from the prior quarter, primarily due to higher gains on deferred compensation plan investments (offset in employee benefits expense), other fee income, and net interest income. Noninterest expense increased $164 million, or 5 percent, from the prior quarter, primarily driven by seasonally higher personnel expenses and deferred compensation plan expense (offset in trading revenue).

Net income was up $111 million, or 22 percent, from first quarter 2016. Revenue increased $339 million, or 9 percent, from a year ago primarily driven by higher net interest income, asset-based fees, deferred compensation plan investments (offset in employee benefits expense), and other fee income. Noninterest expense increased $164 million, or 5 percent, from a year ago, primarily due to higher non-personnel expenses, deferred compensation plan expense (offset in trading revenue), and broker commissions.

March closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) totaled $1 billion for the first time since the month of the sales practices settlement announcement

WIM total client assets reached a record-high of $1.8 trillion in the first quarter, up 9 percent from a year ago, driven by higher market valuations and continued positive net flows

Retail Brokerage

-- Client assets of $1.6 trillion, up 10 percent from prior year

Advisory assets of $490 billion, up 14 percent from prior year, primarily driven by higher market valuations and positive net flows

Strong loan growth, with average balances up 15 percent from prior year largely due to continued growth in non-conforming mortgage loans

Wealth Management

-- Client assets of $237 billion, up 5 percent from prior year

Average loan balances up 8 percent from prior year primarily driven by continued growth in non-conforming mortgage loans

Retirement

-- IRA assets of $383 billion, up 7 percent from prior year

Institutional Retirement plan assets of $361 billion, up 9 percent from prior year

Asset Management

Total assets under management of $481 billion, flat from prior year as higher market valuations, positive fixed income net flows and assets acquired during the prior year, were offset by equity and money market net outflows.

Conference Call

The Company will host a live conference call on Thursday, April 13, at 7:00 a.m. PT (10:00 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 https://engage.vevent.com/rt/wells_fargo_ao~56300037.

A replay of the conference call will be available beginning at 10:00 a.m. PT (1:00 p.m. ET) on Thursday, April 13 through Friday, April 28. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #56300037. The replay will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and https://engage.vevent.com/rt/wells_fargo_ao~56300037.

Endnotes
(1)
Reserve build represents the amount by which the provision for
credit losses exceeds net charge-offs, while reserve release
represents the amount by which net charge-offs exceed the provision
for credit losses.
(2)
See table on page 33 for more information on Common Equity Tier 1.
Common Equity Tier 1 (fully phased-in) is a preliminary estimate and
is calculated assuming the full phase-in of the Basel III capital
rules.
(3)
Net payout ratio means the ratio of (i) common stock dividends and
share repurchases less issuances and stock compensation-related
items, divided by (ii) net income applicable to common stock.
(4)
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 38 for more
information.
(5)
Customers who actively use their checking account with transactions
such as debit card purchases, online bill payments, and direct
deposit.
(6)
Combined consumer and business debit card purchase volume dollars.
(7)
Data as of February 2017, comparisons with February 2016.
(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, 2016.

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

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

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

About Wells Fargo

Wells Fargo & Company (WFC) is a diversified, community-based financial services company with $2.0 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 273,000 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
15
Income
Consolidated Statement of Income
17
Consolidated Statement of Comprehensive Income
19
Condensed Consolidated Statement of Changes in Total Equity
19
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis)
20
Five Quarter Average Balances, Yields and Rates Paid
21
(Taxable-Equivalent Basis)
Noninterest Income and Noninterest Expense
22
Balance Sheet
Consolidated Balance Sheet
24
Investment Securities
26
Loans
Loans
26
Nonperforming Assets
27
Loans 90 Days or More Past Due and Still Accruing
28
Purchased Credit-Impaired Loans
29
Pick-A-Pay Portfolio
30
Changes in Allowance for Credit Losses
31
Equity
Tangible Common Equity
32
Common Equity Tier 1 Under Basel III
33
Operating Segments
Operating Segment Results
34
Other
Mortgage Servicing and other related data
36
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
% Change
Quarter ended
Mar 31, 2017 from
Mar 31,
Dec 31,
Mar 31,
Dec 31,
Mar 31,
($ in millions, except per share amounts)
2017
2016
2016
2016
2016
For the Period
Wells Fargo net income
$
5,457
5,274
5,462
3
%
--
Wells Fargo net income applicable to common stock
5,056
4,872
5,085
4
(1 )
Diluted earnings per common share
1.00
0.96
0.99
4
1
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.15
%
1.08
1.21
6
(5 )
Wells Fargo net income applicable to common stock to average Wells
11.54
10.94
11.75
5
(2 )
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
13.85
13.16
14.15
5
(2 )
Efficiency ratio (2)
62.7
61.2
58.7
2
7
Total revenue
$
22,002
21,582
22,195
2
(1 )
Pre-tax pre-provision profit (PTPP) (3)
8,210
8,367
9,167
(2 )
(10 )
Dividends declared per common share
0.380
0.380
0.375
--
1
Average common shares outstanding
5,008.6
5,025.6
5,075.7
--
(1 )
Diluted average common shares outstanding
5,070.4
5,078.2
5,139.4
--
(1 )
Average loans
$
963,645
964,147
927,220
--
4
Average assets
1,931,041
1,944,250
1,819,875
(1 )
6
Average total deposits
1,299,191
1,284,158
1,219,430
1
7
Average consumer and small business banking deposits (4)
758,754
749,946
714,837
1
6
Net interest margin
2.87
%
2.87
2.90
--
(1 )
At Period End
Investment securities
$
407,560
407,947
334,899
--
22
Loans
958,405
967,604
947,258
(1 )
1
Allowance for loan losses
11,168
11,419
11,621
(2 )
(4 )
Goodwill
26,666
26,693
27,003
--
(1 )
Assets
1,951,564
1,930,115
1,849,182
1
6
Deposits
1,325,444
1,306,079
1,241,490
1
7
Common stockholders’ equity
178,388
176,469
175,534
1
2
Wells Fargo stockholders’ equity
201,500
199,581
197,496
1
2
Total equity
202,489
200,497
198,504
1
2
Tangible common equity (1)
148,850
146,737
144,679
1
3
Common shares outstanding
4,996.7
5,016.1
5,075.9
--
(2 )
Book value per common share (5)
$
35.70
35.18
34.58
1
3
Tangible book value per common share (1)(5)
29.79
29.25
28.50
2
5
Common stock price:
High
59.99
58.02
53.27
3
13
Low
53.35
43.55
44.50
23
20
Period end
55.66
55.11
48.36
1
15
Team members (active, full-time equivalent)
272,800
269,100
268,600
1
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 32.
(2) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to
assess the Company’s ability to generate capital to cover credit
losses through a credit cycle.
(4) Consumer and small business banking deposits are total
deposits excluding mortgage escrow and wholesale deposits.
(5) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per
common share is tangible common equity divided by common shares
outstanding.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
($ in millions, except per share amounts)
2017
2016
2016
2016
2016
For the Quarter
Wells Fargo net income
$
5,457
5,274
5,644
5,558
5,462
Wells Fargo net income applicable to common stock
5,056
4,872
5,243
5,173
5,085
Diluted earnings per common share
1.00
0.96
1.03
1.01
0.99
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)
1.15
%
1.08
1.17
1.20
1.21
Wells Fargo net income applicable to common stock to average Wells
11.54
10.94
11.60
11.70
11.75
Fargo common stockholders’ equity (ROE)
Return on average tangible common equity (ROTCE)(1)
13.85
13.16
13.96
14.15
14.15
Efficiency ratio (2)
62.7
61.2
59.4
58.1
58.7
Total revenue
$
22,002
21,582
22,328
22,162
22,195
Pre-tax pre-provision profit (PTPP) (3)
8,210
8,367
9,060
9,296
9,167
Dividends declared per common share
0.380
0.380
0.380
0.380
0.375
Average common shares outstanding
5,008.6
5,025.6
5,043.4
5,066.9
5,075.7
Diluted average common shares outstanding
5,070.4
5,078.2
5,094.6
5,118.1
5,139.4
Average loans
$
963,645
964,147
957,484
950,751
927,220
Average assets
1,931,041
1,944,250
1,914,586
1,862,084
1,819,875
Average total deposits
1,299,191
1,284,158
1,261,527
1,236,658
1,219,430
Average consumer and small business banking deposits (4)
758,754
749,946
739,066
726,359
714,837
Net interest margin
2.87
%
2.87
2.82
2.86
2.90
At Quarter End
Investment securities
$
407,560
407,947
390,832
353,426
334,899
Loans
958,405
967,604
961,326
957,157
947,258
Allowance for loan losses
11,168
11,419
11,583
11,664
11,621
Goodwill
26,666
26,693
26,688
26,963
27,003
Assets
1,951,564
1,930,115
1,942,124
1,889,235
1,849,182
Deposits
1,325,444
1,306,079
1,275,894
1,245,473
1,241,490
Common stockholders’ equity
178,388
176,469
179,916
178,633
175,534
Wells Fargo stockholders’ equity
201,500
199,581
203,028
201,745
197,496
Total equity
202,489
200,497
203,958
202,661
198,504
Tangible common equity (1)
148,850
146,737
149,829
148,110
144,679
Common shares outstanding
4,996.7
5,016.1
5,023.9
5,048.5
5,075.9
Book value per common share (5)
$
35.70
35.18
35.81
35.38
34.58
Tangible book value per common share (1)(5)
29.79
29.25
29.82
29.34
28.50
Common stock price:
High
59.99
58.02
51.00
51.41
53.27
Low
53.35
43.55
44.10
44.50
44.50
Period end
55.66
55.11
44.28
47.33
48.36
Team members (active, full-time equivalent)
272,800
269,100
268,800
267,900
268,600
(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 32.
(2) The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(3) Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to
assess the Company’s ability to generate capital to cover credit
losses through a credit cycle.
(4) Consumer and small business banking deposits are total
deposits excluding mortgage escrow and wholesale deposits.
(5) Book value per common share is common stockholders’ equity
divided by common shares outstanding. Tangible book value per
common share is tangible common equity divided by common shares
outstanding.
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
Quarter ended March 31,
%
(in millions, except per share amounts)
2017
2016
Change
Interest income
Trading assets
$
643
596
8 %
Investment securities
2,675
2,262
18
Mortgages held for sale
184
161
14
Loans held for sale
1
2
(50 )
Loans
10,141
9,577
6
Other interest income
582
374
56
Total interest income
14,226
12,972
10
Interest expense
Deposits
537
307
75
Short-term borrowings
114
67
70
Long-term debt
1,183
842
40
Other interest expense
92
89
3
Total interest expense
1,926
1,305
48
Net interest income
12,300
11,667
5
Provision for credit losses
605
1,086
(44 )
Net interest income after provision for credit losses
11,695
10,581
11
Noninterest income
Service charges on deposit accounts
1,313
1,309
--
Trust and investment fees
3,570
3,385
5
Card fees
945
941
--
Other fees
865
933
(7 )
Mortgage banking
1,228
1,598
(23 )
Insurance
277
427
(35 )
Net gains from trading activities
439
200
120
Net gains on debt securities
36
244
(85 )
Net gains from equity investments
403
244
65
Lease income
481
373
29
Other
145
874
(83 )
Total noninterest income
9,702
10,528
(8 )
Noninterest expense
Salaries
4,261
4,036
6
Commission and incentive compensation
2,725
2,645
3
Employee benefits
1,686
1,526
10
Equipment
577
528
9
Net occupancy
712
711
--
Core deposit and other intangibles
289
293
(1 )
FDIC and other deposit assessments
333
250
33
Other
3,209
3,039
6
Total noninterest expense
13,792
13,028
6
Income before income tax expense
7,605
8,081
(6 )
Income tax expense
2,057
2,567
(20 )
Net income before noncontrolling interests
5,548
5,514
1
Less: Net income from noncontrolling interests
91
52
75
Wells Fargo net income
$
5,457
5,462
--
Less: Preferred stock dividends and other
401
377
6
Wells Fargo net income applicable to common stock
$
5,056
5,085
(1 )
Per share information
Earnings per common share
$
1.01
1.00
1
Diluted earnings per common share
1.00
0.99
1
Dividends declared per common share
0.380
0.375
1
Average common shares outstanding
5,008.6
5,075.7
(1 )
Diluted average common shares outstanding
5,070.4
5,139.4
(1 )
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions, except per share amounts)
2017
2016
2016
2016
2016
Interest income
Trading assets
$
643
745
593
572
596
Investment securities
2,675
2,512
2,298
2,176
2,262
Mortgages held for sale
184
235
207
181
161
Loans held for sale
1
2
2
3
2
Loans
10,141
10,128
9,978
9,822
9,577
Other interest income
582
436
409
392
374
Total interest income
14,226
14,058
13,487
13,146
12,972
Interest expense
Deposits
537
400
356
332
307
Short-term borrowings
114
101
85
77
67
Long-term debt
1,183
1,061
1,006
921
842
Other interest expense
92
94
88
83
89
Total interest expense
1,926
1,656
1,535
1,413
1,305
Net interest income
12,300
12,402
11,952
11,733
11,667
Provision for credit losses
605
805
805
1,074
1,086
Net interest income after provision for credit losses
11,695
11,597
11,147
10,659
10,581
Noninterest income
Service charges on deposit accounts
1,313
1,357
1,370
1,336
1,309
Trust and investment fees
3,570
3,698
3,613
3,547
3,385
Card fees
945
1,001
997
997
941
Other fees
865
962
926
906
933
Mortgage banking
1,228
1,417
1,667
1,414
1,598
Insurance
277
262
293
286
427
Net gains (losses) from trading activities
439
(109 )
415
328
200
Net gains on debt securities
36
145
106
447
244
Net gains from equity investments
403
306
140
189
244
Lease income
481
523
534
497
373
Other
145
(382 )
315
482
874
Total noninterest income
9,702
9,180
10,376
10,429
10,528
Noninterest expense
Salaries
4,261
4,193
4,224
4,099
4,036
Commission and incentive compensation
2,725
2,478
2,520
2,604
2,645
Employee benefits
1,686
1,101
1,223
1,244
1,526
Equipment
577
642
491
493
528
Net occupancy
712
710
718
716
711
Core deposit and other intangibles
289
301
299
299
293
FDIC and other deposit assessments
333
353
310
255
250
Other
3,209
3,437
3,483
3,156
3,039
Total noninterest expense
13,792
13,215
13,268
12,866
13,028
Income before income tax expense
7,605
7,562
8,255
8,222
8,081
Income tax expense
2,057
2,258
2,601
2,649
2,567
Net income before noncontrolling interests
5,548
5,304
5,654
5,573
5,514
Less: Net income from noncontrolling interests
91
30
10
15
52
Wells Fargo net income
$
5,457
5,274
5,644
5,558
5,462
Less: Preferred stock dividends and other
401
402
401
385
377
Wells Fargo net income applicable to common stock
$
5,056
4,872
5,243
5,173
5,085
Per share information
Earnings per common share
$
1.01
0.97
1.04
1.02
1.00
Diluted earnings per common share
1.00
0.96
1.03
1.01
0.99
Dividends declared per common share
0.380
0.380
0.380
0.380
0.375
Average common shares outstanding
5,008.6
5,025.6
5,043.4
5,066.9
5,075.7
Diluted average common shares outstanding
5,070.4
5,078.2
5,094.6
5,118.1
5,139.4
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended Mar 31,
%
(in millions)
2017
2016
Change
Wells Fargo net income
$ 5,457
5,462
--%
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized gains arising during the period
369
795
(54)
Reclassification of net gains to net income
(145 )
(304 )
(52)
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period
(133 )
1,999
NM
Reclassification of net gains on cash flow hedges to net income
(202 )
(256 )
(21)
Defined benefit plans adjustments:
Net actuarial and prior service losses arising during the period
(7 )
(8 )
(13)
Amortization of net actuarial loss, settlements and other to net
38
37
3
income
Foreign currency translation adjustments:
Net unrealized gains arising during the period
16
43
(63)
Other comprehensive income (loss), before tax
(64 )
2,306
NM
Income tax (expense) benefit related to other comprehensive income
37
(857 )
NM
Other comprehensive income (loss), net of tax
(27 )
1,449
NM
Less: Other comprehensive income (loss) from noncontrolling interests
14
(28 )
NM
Wells Fargo other comprehensive income (loss), net of tax
(41 )
1,477
NM
Wells Fargo comprehensive income
5,416
6,939
(22)
Comprehensive income from noncontrolling interests
105
24
338
Total comprehensive income
$ 5,521
6,963
(21)
NM - Not meaningful
FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
TOTAL EQUITY
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Balance, beginning of period
$
200,497
203,958
202,661
198,504
193,891
Cumulative effect from change in consolidation accounting (1)
--
--
--
--
121
Wells Fargo net income
5,457
5,274
5,644
5,558
5,462
Wells Fargo other comprehensive income (loss), net of tax
(41 )
(5,321 )
(764 )
1,174
1,477
Noncontrolling interests
75
(13 )
14
(92 )
(5 )
Common stock issued
1,406
610
300
397
1,079
Common stock repurchased (2)
(2,175 )
(2,034 )
(1,839 )
(2,214 )
(2,029 )
Preferred stock released by ESOP
--
43
236
371
313
Common stock warrants repurchased/exercised
(44 )
--
(17 )
--
--
Preferred stock issued
--
--
--
1,126
975
Common stock dividends
(1,903 )
(1,909 )
(1,918 )
(1,930 )
(1,904 )
Preferred stock dividends
(401 )
(401 )
(401 )
(386 )
(378 )
Tax benefit from stock incentive compensation (3)
--
74
31
23
149
Stock incentive compensation expense
389
232
39
139
369
Net change in deferred compensation and related plans
(771 )
(16 )
(28 )
(9 )
(1,016 )
Balance, end of period
$
202,489
200,497
203,958
202,661
198,504
(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.
(3) Effective January 1, 2017, we adopted Accounting Standards
Update 2016-09 (Improvements to Employee Share-Based Payment
Accounting). Accordingly, tax benefit from stock incentive
compensation is reported in income tax expense in the consolidated
statement of income.
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
Quarter ended March 31,
2017
2016
Interest
Interest
Average
Yields/
income/
Average
Yields/
income/
(in millions)
balance
rates
expense
balance
rates
expense
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
283,767
0.76 %
$
532
284,697
0.49 %
$
344
other short-term investments
Trading assets
93,765
2.80
655
80,464
3.01
605
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
25,034
1.54
95
34,474
1.59
136
Securities of U.S. states and political subdivisions
52,248
4.03
526
50,512
4.24
535
Mortgage-backed securities:
Federal agencies
156,617
2.58
1,011
96,423
2.80
675
Residential and commercial
14,452
5.32
192
20,827
5.20
271
Total mortgage-backed securities
171,069
2.81
1,203
117,250
3.23
946
Other debt and equity securities
50,620
3.60
452
53,558
3.21
429
Total available-for-sale securities
298,971
3.05
2,276
255,794
3.20
2,046
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,693
2.20
243
44,664
2.20
244
Securities of U.S. states and political subdivisions
6,273
5.30
83
2,156
5.41
29
Federal agency and other mortgage-backed securities
51,786
2.51
324
28,114
2.49
175
Other debt securities
3,329
2.34
19
4,598
1.92
22
Total held-to-maturity securities
106,081
2.54
669
79,532
2.37
470
Total investment securities
405,052
2.92
2,945
335,326
3.01
2,516
Mortgages held for sale (4)
19,893
3.70
184
17,870
3.59
161
Loans held for sale (4)
112
4.44
1
282
3.23
2
Loans:
Commercial:
Commercial and industrial - U.S.
274,749
3.59
2,436
257,727
3.39
2,177
Commercial and industrial - Non U.S.
55,347
2.73
373
49,508
2.10
258
Real estate mortgage
132,449
3.56
1,164
122,739
3.41
1,040
Real estate construction
24,591
3.72
225
22,603
3.61
203
Lease financing
19,070
4.94
235
15,047
4.74
178
Total commercial
506,206
3.54
4,433
467,624
3.31
3,856
Consumer:
Real estate 1-4 family first mortgage
275,480
4.02
2,766
274,722
4.05
2,782
Real estate 1-4 family junior lien mortgage
45,285
4.60
515
52,236
4.39
571
Credit card
35,437
11.97
1,046
33,366
11.61
963
Automobile
61,510
5.46
828
60,114
5.67
848
Other revolving credit and installment
39,727
6.02
590
39,158
5.99
584
Total consumer
457,439
5.06
5,745
459,596
5.02
5,748
Total loans (4)
963,645
4.26
10,178
927,220
4.16
9,604
Other
6,865
2.96
50
5,808
2.06
30
Total earning assets
$
1,773,099
3.31 %
$
14,545
1,651,667
3.22 %
$
13,262
Funding sources
Deposits:
Interest-bearing checking
$
50,686
0.29 %
$
37
38,711
0.12 %
$
11
Market rate and other savings
684,175
0.09
157
651,551
0.07
107
Savings certificates
23,466
0.29
17
27,880
0.45
31
Other time deposits
54,915
1.31
178
58,206
0.74
107
Deposits in foreign offices
122,200
0.49
148
97,682
0.21
51
Total interest-bearing deposits
935,442
0.23
537
874,030
0.14
307
Short-term borrowings
98,549
0.47
115
107,857
0.25
67
Long-term debt
259,793
1.83
1,183
216,883
1.56
842
Other liabilities
16,806
2.22
92
16,492
2.14
89
Total interest-bearing liabilities
1,310,590
0.59
1,927
1,215,262
0.43
1,305
Portion of noninterest-bearing funding sources
462,509
--
--
436,405
--
--
Total funding sources
$
1,773,099
0.44
1,927
1,651,667
0.32
1,305
Net interest margin and net interest income on a
2.87 %
$
12,618
2.90 %
$
11,957
taxable-equivalent basis (5)
Noninterest-earning assets
Cash and due from banks
$
18,706
17,995
Goodwill
26,673
26,069
Other
112,563
124,144
Total noninterest-earning assets
$
157,942
168,208
Noninterest-bearing funding sources
Deposits
$
363,749
345,400
Other liabilities
54,935
62,627
Total equity
201,767
196,586
Noninterest-bearing funding sources used to fund earning assets
(462,509 )
(436,405 )
Net noninterest-bearing funding sources
$
157,942
168,208
Total assets
$
1,931,041
1,819,875
(1) Our average prime rate was 3.80% and 3.50% for the quarters
ended March 31, 2017 and 2016, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 1.07% and
0.62% 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 $318 million and
$290 million for the quarters ended March 31, 2017 and 2016,
respectively, predominantly related to tax-exempt income on
certain loans and securities. The federal statutory tax rate was
35% for the periods presented.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
Mar 31, 2017
Dec 31, 2016
Sep 30, 2016
Jun 30, 2016
Mar 31, 2016
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
Average
Yields/
($ in billions)
balance
rates
balance
rates
balance
rates
balance
rates
balance
rates
Earning assets
Federal funds sold, securities purchased under resale agreements and
$
283.8
0.76 %
$
273.1
0.56
%
$
299.4
0.50 %
$
293.8
0.49 %
$
284.7
0.49 %
other short-term investments
Trading assets
93.8
2.80
102.8
2.96
88.8
2.72
81.4
2.86
80.5
3.01
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
25.0
1.54
25.9
1.53
25.8
1.52
31.5
1.56
34.4
1.59
Securities of U.S. states and political subdivisions
52.2
4.03
53.9
4.06
55.2
4.28
52.2
4.24
50.5
4.24
Mortgage-backed securities:
Federal agencies
156.6
2.58
148.0
2.37
105.8
2.39
92.0
2.53
96.5
2.80
Residential and commercial
14.5
5.32
16.5
5.87
18.1
5.54
19.6
5.44
20.8
5.20
Total mortgage-backed securities
171.1
2.81
164.5
2.72
123.9
2.85
111.6
3.04
117.3
3.23
Other debt and equity securities
50.7
3.60
52.7
3.71
54.2
3.37
53.3
3.48
53.6
3.21
Total available-for-sale securities
299.0
3.05
297.0
3.03
259.1
3.13
248.6
3.20
255.8
3.20
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44.7
2.20
44.7
2.20
44.6
2.19
44.6
2.19
44.7
2.20
Securities of U.S. states and political subdivisions
6.3
5.30
4.7
5.31
2.5
5.24
2.2
5.41
2.1
5.41
Federal agency and other mortgage-backed securities
51.8
2.51
46.0
1.81
48.0
1.97
35.1
1.90
28.1
2.49
Other debt securities
3.3
2.34
3.6
2.26
3.9
1.98
4.1
1.92
4.6
1.92
Total held-to-maturity securities
106.1
2.54
99.0
2.17
99.0
2.15
86.0
2.14
79.5
2.37
Total investment securities
405.1
2.92
396.0
2.82
358.1
2.86
334.6
2.93
335.3
3.01
Mortgages held for sale
19.9
3.70
27.5
3.43
24.1
3.44
20.1
3.60
17.9
3.59
Loans held for sale
0.1
4.44
0.2
5.42
0.2
3.04
0.2
4.83
0.3
3.23
Loans:
Commercial:
Commercial and industrial - U.S.
274.8
3.59
272.8
3.46
271.2
3.48
270.9
3.45
257.7
3.39
Commercial and industrial - Non U.S.
55.3
2.73
54.4
2.58
51.3
2.40
51.2
2.35
49.5
2.10
Real estate mortgage
132.4
3.56
131.2
3.44
128.8
3.48
126.1
3.41
122.7
3.41
Real estate construction
24.6
3.72
23.9
3.61
23.2
3.50
23.1
3.49
22.6
3.61
Lease financing
19.1
4.94
18.9
5.78
18.9
4.70
19.0
5.12
15.1
4.74
Total commercial
506.2
3.54
501.2
3.45
493.4
3.42
490.3
3.39
467.6
3.31
Consumer:
Real estate 1-4 family first mortgage
275.5
4.02
277.7
4.01
278.5
3.97
275.9
4.01
274.7
4.05
Real estate 1-4 family junior lien mortgage
45.3
4.60
47.2
4.42
48.9
4.37
50.6
4.37
52.2
4.39
Credit card
35.4
11.97
35.4
11.73
34.6
11.60
33.4
11.52
33.4
11.61
Automobile
61.5
5.46
62.5
5.54
62.5
5.60
61.1
5.66
60.1
5.67
Other revolving credit and installment
39.7
6.02
40.1
5.91
39.6
5.92
39.5
5.91
39.2
5.99
Total consumer
457.4
5.06
462.9
5.01
464.1
4.97
460.5
4.98
459.6
5.02
Total loans
963.6
4.26
964.1
4.20
957.5
4.17
950.8
4.16
927.2
4.16
Other
6.8
2.96
6.7
3.27
6.4
2.30
6.0
2.30
5.8
2.06
Total earning assets
$
1,773.1
3.31 %
$
1,770.4
3.24
%
$
1,734.5
3.17 %
$
1,686.9
3.20 %
$
1,651.7
3.22 %
Funding sources
Deposits:
Interest-bearing checking
$
50.7
0.29 %
$
46.9
0.17
%
$
44.0
0.15 %
$
39.8
0.13 %
$
38.7
0.12 %
Market rate and other savings
684.2
0.09
676.4
0.07
667.2
0.07
659.0
0.07
651.5
0.07
Savings certificates
23.5
0.29
24.4
0.30
25.2
0.30
26.2
0.35
27.9
0.45
Other time deposits
54.9
1.31
49.2
1.16
54.9
0.93
61.2
0.85
58.2
0.74
Deposits in foreign offices
122.2
0.49
110.4
0.35
107.1
0.30
97.5
0.23
97.7
0.21
Total interest-bearing deposits
935.5
0.23
907.3
0.18
898.4
0.16
883.7
0.15
874.0
0.14
Short-term borrowings
98.5
0.47
124.7
0.33
116.2
0.29
111.8
0.28
107.9
0.25
Long-term debt
259.8
1.83
252.2
1.68
252.4
1.59
236.2
1.56
216.9
1.56
Other liabilities
16.8
2.22
17.1
2.15
16.8
2.11
16.3
2.06
16.5
2.14
Total interest-bearing liabilities
1,310.6
0.59
1,301.3
0.51
1,283.8
0.48
1,248.0
0.45
1,215.3
0.43
Portion of noninterest-bearing funding sources
462.5
--
469.1
--
450.7
--
438.9
--
436.4
--
Total funding sources
$
1,773.1
0.44
$
1,770.4
0.37
$
1,734.5
0.35
$
1,686.9
0.34
$
1,651.7
0.32
Net interest margin on a taxable-equivalent basis
2.87 %
2.87
%
2.82 %
2.86 %
2.90 %
Noninterest-earning assets
Cash and due from banks
$
18.7
19.0
18.7
18.8
18.0
Goodwill
26.7
26.7
27.0
27.0
26.1
Other
112.5
128.2
134.4
129.4
124.1
Total noninterest-earnings assets
$
157.9
173.9
180.1
175.2
168.2
Noninterest-bearing funding sources
Deposits
$
363.7
376.9
363.1
353.0
345.4
Other liabilities
54.9
64.9
63.8
60.1
62.6
Total equity
201.8
201.2
203.9
201.0
196.6
Noninterest-bearing funding sources used to fund earning assets
(462.5 )
(469.1 )
(450.7 )
(438.9 )
(436.4 )
Net noninterest-bearing funding sources
$
157.9
173.9
180.1
175.2
168.2
Total assets
$
1,931.0
1,944.3
1,914.6
1,862.1
1,819.9
(1) Our average prime rate was 3.80% for the quarter ended March
31, 2017, 3.54% for the quarter ended December 31, 2016, and 3.50%
for the quarters ended September 30, June 30 and March 31, 2016.
The average three-month London Interbank Offered Rate (LIBOR) was
1.07%, 0.92%, 0.79%, 0.64% and 0.62% for the same quarters,
respectively.
(2) Yields/rates include the effects of hedge and risk management
activities associated with the respective asset and liability
categories.
(3) Yields and rates are based on interest income/expense amounts
for the period, annualized based on the accrual basis for the
respective accounts. The average balance amounts represent
amortized cost for the periods presented.
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
Quarter ended March 31,
%
(in millions)
2017
2016
Change
Service charges on deposit accounts
$ 1,313
1,309
--
%
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,324
2,239
4
Trust and investment management
829
815
2
Investment banking
417
331
26
Total trust and investment fees
3,570
3,385
5
Card fees
945
941
--
Other fees:
Charges and fees on loans
307
313
(2 )
Cash network fees
126
131
(4 )
Commercial real estate brokerage commissions
81
117
(31 )
Letters of credit fees
74
78
(5 )
Wire transfer and other remittance fees
107
92
16
All other fees
170
202
(16 )
Total other fees
865
933
(7 )
Mortgage banking:
Servicing income, net
456
850
(46 )
Net gains on mortgage loan origination/sales activities
772
748
3
Total mortgage banking
1,228
1,598
(23 )
Insurance
277
427
(35 )
Net gains from trading activities
439
200
120
Net gains on debt securities
36
244
(85 )
Net gains from equity investments
403
244
65
Lease income
481
373
29
Life insurance investment income
144
154
(6 )
All other
1
720
(100 )
Total
$ 9,702
10,528
(8 )
NONINTEREST EXPENSE
Quarter ended Mar 31,
%
(in millions)
2017
2016
Change
Salaries
$
4,261
4,036
6
%
Commission and incentive compensation
2,725
2,645
3
Employee benefits
1,686
1,526
10
Equipment
577
528
9
Net occupancy
712
711
--
Core deposit and other intangibles
289
293
(1 )
FDIC and other deposit assessments
333
250
33
Outside professional services
804
583
38
Operating losses
282
454
(38 )
Operating leases
345
235
47
Contract services
325
282
15
Outside data processing
220
208
6
Travel and entertainment
179
172
4
Postage, stationery and supplies
145
163
(11 )
Advertising and promotion
127
134
(5 )
Telecommunications
91
92
(1 )
Foreclosed assets
86
78
10
Insurance
24
111
(78 )
All other
581
527
10
Total
$ 13,792
13,028
6
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Service charges on deposit accounts
$ 1,313
1,357
1,370
1,336
1,309
Trust and investment fees:
Brokerage advisory, commissions and other fees
2,324
2,342
2,344
2,291
2,239
Trust and investment management
829
837
849
835
815
Investment banking
417
519
420
421
331
Total trust and investment fees
3,570
3,698
3,613
3,547
3,385
Card fees
945
1,001
997
997
941
Other fees:
Charges and fees on loans
307
305
306
317
313
Cash network fees
126
130
138
138
131
Commercial real estate brokerage commissions
81
172
119
86
117
Letters of credit fees
74
79
81
83
78
Wire transfer and other remittance fees
107
105
103
101
92
All other fees
170
171
179
181
202
Total other fees
865
962
926
906
933
Mortgage banking:
Servicing income, net
456
196
359
360
850
Net gains on mortgage loan origination/sales activities
772
1,221
1,308
1,054
748
Total mortgage banking
1,228
1,417
1,667
1,414
1,598
Insurance
277
262
293
286
427
Net gains (losses) from trading activities
439
(109 )
415
328
200
Net gains on debt securities
36
145
106
447
244
Net gains from equity investments
403
306
140
189
244
Lease income
481
523
534
497
373
Life insurance investment income
144
132
152
149
154
All other
1
(514 )
163
333
720
Total
$ 9,702
9,180
10,376
10,429
10,528
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Salaries
$
4,261
4,193
4,224
4,099
4,036
Commission and incentive compensation
2,725
2,478
2,520
2,604
2,645
Employee benefits
1,686
1,101
1,223
1,244
1,526
Equipment
577
642
491
493
528
Net occupancy
712
710
718
716
711
Core deposit and other intangibles
289
301
299
299
293
FDIC and other deposit assessments
333
353
310
255
250
Outside professional services
804
984
802
769
583
Operating losses
282
243
577
334
454
Operating leases
345
379
363
352
235
Contract services
325
325
313
283
282
Outside data processing
220
222
233
225
208
Travel and entertainment
179
195
144
193
172
Postage, stationery and supplies
145
156
150
153
163
Advertising and promotion
127
178
117
166
134
Telecommunications
91
96
101
94
92
Foreclosed assets
86
75
(17 )
66
78
Insurance
24
23
23
22
111
All other
581
561
677
499
527
Total
$ 13,792
13,215
13,268
12,866
13,028
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
Mar 31,
Dec 31,
%
(in millions, except shares)
2017
2016
Change
Assets
Cash and due from banks
$
19,698
20,729
(5 )%
Federal funds sold, securities purchased under resale agreements and
308,747
266,038
16
other short-term investments
Trading assets
80,326
74,397
8
Investment securities:
Available-for-sale, at fair value
299,530
308,364
(3 )
Held-to-maturity, at cost
108,030
99,583
8
Mortgages held for sale
17,822
26,309
(32 )
Loans held for sale
253
80
216
Loans
958,405
967,604
(1 )
Allowance for loan losses
(11,168 )
(11,419 )
(2 )
Net loans
947,237
956,185
(1 )
Mortgage servicing rights:
Measured at fair value
13,208
12,959
2
Amortized
1,402
1,406
--
Premises and equipment, net
8,320
8,333
--
Goodwill
26,666
26,693
--
Derivative assets
12,564
14,498
(13 )
Other assets
107,761
114,541
(6 )
Total assets
$ 1,951,564
1,930,115
1
Liabilities
Noninterest-bearing deposits
$
365,780
375,967
(3 )
Interest-bearing deposits
959,664
930,112
3
Total deposits
1,325,444
1,306,079
1
Short-term borrowings
94,871
96,781
(2 )
Derivative liabilities
12,461
14,492
(14 )
Accrued expenses and other liabilities
59,831
57,189
5
Long-term debt
256,468
255,077
1
Total liabilities
1,749,075
1,729,618
1
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,501
24,551
4
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
60,585
60,234
1
Retained earnings
136,032
133,075
2
Cumulative other comprehensive income (loss)
(3,178 )
(3,137 )
1
Treasury stock - 485,076,875 shares and 465,702,148 shares
(24,030 )
(22,713 )
6
Unearned ESOP shares
(2,546 )
(1,565 )
63
Total Wells Fargo stockholders’ equity
201,500
199,581
1
Noncontrolling interests
989
916
8
Total equity
202,489
200,497
1
Total liabilities and equity
$ 1,951,564
1,930,115
1
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Assets
Cash and due from banks
$
19,698
20,729
19,287
20,407
19,084
Federal funds sold, securities purchased under resale agreements and
308,747
266,038
298,325
295,521
300,547
other short-term investments
Trading assets
80,326
74,397
81,094
71,556
62,657
Investment securities:
Available-for-sale, at fair value
299,530
308,364
291,591
253,006
255,551
Held-to-maturity, at cost
108,030
99,583
99,241
100,420
79,348
Mortgages held for sale
17,822
26,309
27,423
23,930
18,041
Loans held for sale
253
80
183
220
280
Loans
958,405
967,604
961,326
957,157
947,258
Allowance for loan losses
(11,168 )
(11,419 )
(11,583 )
(11,664 )
(11,621 )
Net loans
947,237
956,185
949,743
945,493
935,637
Mortgage servicing rights:
Measured at fair value
13,208
12,959
10,415
10,396
11,333
Amortized
1,402
1,406
1,373
1,353
1,359
Premises and equipment, net
8,320
8,333
8,322
8,289
8,349
Goodwill
26,666
26,693
26,688
26,963
27,003
Derivative assets
12,564
14,498
18,736
20,999
20,043
Other assets
107,761
114,541
109,703
110,682
109,950
Total assets
$ 1,951,564
1,930,115
1,942,124
1,889,235
1,849,182
Liabilities
Noninterest-bearing deposits
$
365,780
375,967
376,136
361,934
348,888
Interest-bearing deposits
959,664
930,112
899,758
883,539
892,602
Total deposits
1,325,444
1,306,079
1,275,894
1,245,473
1,241,490
Short-term borrowings
94,871
96,781
124,668
120,258
107,703
Derivative liabilities
12,461
14,492
13,603
15,483
15,184
Accrued expenses and other liabilities
59,831
57,189
69,166
61,433
58,413
Long-term debt
256,468
255,077
254,835
243,927
227,888
Total liabilities
1,749,075
1,729,618
1,738,166
1,686,574
1,650,678
Equity
Wells Fargo stockholders’ equity:
Preferred stock
25,501
24,551
24,594
24,830
24,051
Common stock
9,136
9,136
9,136
9,136
9,136
Additional paid-in capital
60,585
60,234
60,685
60,691
60,602
Retained earnings
136,032
133,075
130,288
127,076
123,891
Cumulative other comprehensive income (loss)
(3,178 )
(3,137 )
2,184
2,948
1,774
Treasury stock
(24,030 )
(22,713 )
(22,247 )
(21,068 )
(19,687 )
Unearned ESOP shares
(2,546 )
(1,565 )
(1,612 )
(1,868 )
(2,271 )
Total Wells Fargo stockholders’ equity
201,500
199,581
203,028
201,745
197,496
Noncontrolling interests
989
916
930
916
1,008
Total equity
202,489
200,497
203,958
202,661
198,504
Total liabilities and equity
$ 1,951,564
1,930,115
1,942,124
1,889,235
1,849,182
Wells Fargo & Company and Subsidiaries
FIVE QUARTER INVESTMENT SECURITIES
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies
$
24,625
25,819
26,376
27,939
33,813
Securities of U.S. states and political subdivisions
52,061
51,101
55,366
54,024
51,574
Mortgage-backed securities:
Federal agencies
156,966
161,230
135,692
95,868
95,463
Residential and commercial
14,233
16,318
18,387
19,938
21,246
Total mortgage-backed securities
171,199
177,548
154,079
115,806
116,709
Other debt securities
50,520
52,685
54,537
53,935
51,956
Total available-for-sale debt securities
298,405
307,153
290,358
251,704
254,052
Marketable equity securities
1,125
1,211
1,233
1,302
1,499
Total available-for-sale securities
299,530
308,364
291,591
253,006
255,551
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies
44,697
44,690
44,682
44,675
44,667
Securities of U.S. states and political subdivisions
6,331
6,336
2,994
2,181
2,183
Federal agency and other mortgage-backed securities (1)
53,778
45,161
47,721
49,594
28,016
Other debt securities
3,224
3,396
3,844
3,970
4,482
Total held-to-maturity debt securities
108,030
99,583
99,241
100,420
79,348
Total investment securities
$ 407,560
407,947
390,832
353,426
334,899
(1) Predominantly consists of federal agency mortgage-backed
securities.
FIVE QUARTER LOANS
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Commercial:
Commercial and industrial
$ 329,252
330,840
324,020
323,858
321,547
Real estate mortgage
131,532
132,491
130,223
128,320
124,711
Real estate construction
25,064
23,916
23,340
23,387
22,944
Lease financing
19,156
19,289
18,871
18,973
19,003
Total commercial
505,004
506,536
496,454
494,538
488,205
Consumer:
Real estate 1-4 family first mortgage
274,633
275,579
278,689
277,162
274,734
Real estate 1-4 family junior lien mortgage
44,333
46,237
48,105
49,772
51,324
Credit card
34,742
36,700
34,992
34,137
33,139
Automobile
60,408
62,286
62,873
61,939
60,658
Other revolving credit and installment
39,285
40,266
40,213
39,609
39,198
Total consumer
453,401
461,068
464,872
462,619
459,053
Total loans (1)
$ 958,405
967,604
961,326
957,157
947,258
(1) Includes $15.7 billion, $16.7 billion, $17.7 billion, $19.3
billion, and $20.3 billion of purchased credit-impaired (PCI)
loans at March 31, 2017, and December 31, September 30, June 30,
and March 31, 2016, respectively.
Our foreign loans are reported by respective class of financing
receivable in the table above. Substantially all of our foreign
loan portfolio is commercial loans. Loans are classified as
foreign primarily based on whether the borrower’s primary address
is outside of the United States. The following table presents
total commercial foreign loans outstanding by class of financing
receivable.
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Commercial foreign loans:
Commercial and industrial
$
56,987
55,396
51,515
50,515
51,884
Real estate mortgage
8,206
8,541
8,466
8,467
8,367
Real estate construction
471
375
310
246
311
Lease financing
986
972
958
987
983
Total commercial foreign loans
$
66,650
65,284
61,249
60,215
61,545
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND
FORECLOSED ASSETS)
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Nonaccrual loans:
Commercial:
Commercial and industrial
$
2,898
3,216
3,331
3,464
2,911
Real estate mortgage
672
685
780
872
896
Real estate construction
40
43
59
59
63
Lease financing
96
115
92
112
99
Total commercial
3,706
4,059
4,262
4,507
3,969
Consumer:
Real estate 1-4 family first mortgage
4,743
4,962
5,310
5,970
6,683
Real estate 1-4 family junior lien mortgage
1,153
1,206
1,259
1,330
1,421
Automobile
101
106
108
111
114
Other revolving credit and installment
56
51
47
45
47
Total consumer
6,053
6,325
6,724
7,456
8,265
Total nonaccrual loans (1)(2)(3)
$
9,759
10,384
10,986
11,963
12,234
As a percentage of total loans
1.02 %
1.07
1.14
1.25
1.29
Foreclosed assets:
Government insured/guaranteed
$
179
197
282
321
386
Non-government insured/guaranteed
726
781
738
796
893
Total foreclosed assets
905
978
1,020
1,117
1,279
Total nonperforming assets
$ 10,664
11,362
12,006
13,080
13,513
As a percentage of total loans
1.11 %
1.17
1.25
1.37
1.43
(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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Total (excluding PCI)(1):
$
10,525
11,858
12,068
12,385
13,060
Less: FHA insured/guaranteed by the VA (2)(3)
9,585
10,883
11,198
11,577
12,233
Less: Student loans guaranteed under the FFELP (4)
--
3
17
20
24
Total, not government insured/guaranteed
$
940
972
853
788
803
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial
$
88
28
47
36
24
Real estate mortgage
11
36
4
22
8
Real estate construction
3
--
--
--
2
Total commercial
102
64
51
58
34
Consumer:
Real estate 1-4 family first mortgage (3)
149
175
171
169
167
Real estate 1-4 family junior lien mortgage (3)
42
56
54
52
55
Credit card
453
452
392
348
389
Automobile
79
112
81
64
55
Other revolving credit and installment
115
113
104
97
103
Total consumer
838
908
802
730
769
Total, not government insured/guaranteed
$
940
972
853
788
803
(1) PCI loans totaled $1.8 billion, $2.0 billion, $2.2 billion,
$2.4 billion and $2.7 billion, at March 31, 2017, and December 31,
September 30, June 30, and March 31, 2016, respectively.
(2) Represents loans whose repayments are predominantly insured by
the FHA or guaranteed by the VA.
(3) Includes mortgages held for sale 90 days or more past due and
still accruing.
(4) Represents loans whose repayments are largely guaranteed by
agencies on behalf of the U.S. Department of Education under the
FFELP.
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
ended
March 31,
(in millions)
2017
2009-2016
Balance, beginning of period
$
11,216
10,447
Change in accretable yield due to acquisitions
2
159
Accretion into interest income (1)
(357 )
(15,577 )
Accretion into noninterest income due to sales (2)
(25 )
(467 )
Reclassification from nonaccretable difference for loans with
406
10,955
improving credit-related cash flows (3)
Changes in expected cash flows that do not affect nonaccretable
(927 )
5,699
difference (4)
Balance, end of period
$
10,315
11,216
(1) Includes accretable yield released as a result of settlements
with borrowers, which is included in interest income.
(2) Includes accretable yield released as a result of sales to
third parties, which is included in noninterest income.
(3) At March 31, 2017, our carrying value for PCI loans totaled
$15.7 billion and the remainder of nonaccretable difference
established in purchase accounting totaled $585 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)
March 31, 2017
PCI loans
All other loans
Ratio of
Ratio of
Adjusted
carrying
carrying
unpaid
Current
value to
value to
principal
LTV
Carrying
current
Carrying
current
(in millions)
balance (2)
ratio (3)
value (4)
value (5)
value (4)
value (5)
California
$ 13,659
64 %
$ 10,525
49 %
$
7,477
46 %
Florida
1,597
71
1,210
53
1,582
57
New Jersey
632
78
473
57
1,048
64
New York
471
70
385
53
523
61
Texas
168
49
127
37
626
38
Other states
3,195
71
2,445
54
4,370
58
Total Pick-a-Pay loans
$ 19,722
66
$ 15,165
50
$ 15,626
52
========================= ==================== ===== ====== ==================== -------------------- --------- -------------------- -------------------- ==== ====== ==================== -------------------- --------- -------------------- -------------------- ==== ====== ==================== -------------------- --------- --------------------
(1) The individual states shown in this table represent the top
five states based on the total net carrying value of the
Pick-a-Pay loans at the beginning of 2017.
(2) Adjusted unpaid principal balance includes write-downs taken
on loans where severe delinquency (normally 180 days) or other
indications of severe borrower financial stress exist that
indicate there will be a loss of contractually due amounts upon
final resolution of the loan.
(3) The current LTV ratio is calculated as the adjusted unpaid
principal balance divided by the collateral value. Collateral
values are generally determined using automated valuation models
(AVM) and are updated quarterly. AVMs are computer-based tools
used to estimate market values of homes based on processing large
volumes of market data including market comparables and price
trends for local market areas.
(4) Carrying value, which does not reflect the allowance for loan
losses, includes remaining purchase accounting adjustments, which,
for PCI loans may include the nonaccretable difference and the
accretable yield and, for all other loans, an adjustment to mark
the loans to a market yield at date of merger less any subsequent
charge-offs.
(5) The ratio of carrying value to current value is calculated as
the carrying value divided by the collateral value.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Balance, beginning of quarter
$
12,540
12,694
12,749
12,668
12,512
Provision for credit losses
605
805
805
1,074
1,086
Interest income on certain impaired loans (1)
(48 )
(52 )
(54 )
(51 )
(48 )
Loan charge-offs:
Commercial:
Commercial and industrial
(253 )
(309 )
(324 )
(437 )
(349 )
Real estate mortgage
(5 )
(14 )
(7 )
(3 )
(3 )
Real estate construction
--
--
--
(1 )
--
Lease financing
(7 )
(16 )
(4 )
(17 )
(4 )
Total commercial
(265 )
(339 )
(335 )
(458 )
(356 )
Consumer:
Real estate 1-4 family first mortgage
(69 )
(86 )
(106 )
(123 )
(137 )
Real estate 1-4 family junior lien mortgage
(93 )
(110 )
(119 )
(133 )
(133 )
Credit card
(367 )
(329 )
(296 )
(320 )
(314 )
Automobile
(255 )
(243 )
(215 )
(176 )
(211 )
Other revolving credit and installment
(189 )
(200 )
(170 )
(163 )
(175 )
Total consumer
(973 )
(968 )
(906 )
(915 )
(970 )
Total loan charge-offs
(1,238 )
(1,307 )
(1,241 )
(1,373 )
(1,326 )
Loan recoveries:
Commercial:
Commercial and industrial
82
53
65
69
76
Real estate mortgage
30
26
35
23
32
Real estate construction
8
8
18
4
8
Lease financing
2
1
2
5
3
Total commercial
122
88
120
101
119
Consumer:
Real estate 1-4 family first mortgage
62
89
86
109
89
Real estate 1-4 family junior lien mortgage
70
66
70
71
59
Credit card
58
54
51
50
52
Automobile
88
77
78
86
84
Other revolving credit and installment
33
28
31
32
37
Total consumer
311
314
316
348
321
Total loan recoveries
433
402
436
449
440
Net loan charge-offs
(805 )
(905 )
(805 )
(924 )
(886 )
Other
(5 )
(2 )
(1 )
(18 )
4
Balance, end of quarter
$
12,287
12,540
12,694
12,749
12,668
Components:
Allowance for loan losses
$
11,168
11,419
11,583
11,664
11,621
Allowance for unfunded credit commitments
1,119
1,121
1,111
1,085
1,047
Allowance for credit losses
$
12,287
12,540
12,694
12,749
12,668
Net loan charge-offs (annualized) as a percentage of average total
0.34 %
0.37
0.33
0.39
0.38
loans
Allowance for loan losses as a percentage of:
Total loans
1.17
1.18
1.20
1.22
1.23
Nonaccrual loans
114
110
105
98
95
Nonaccrual loans and other nonperforming assets
105
101
96
89
86
Allowance for credit losses as a percentage of:
Total loans
1.28
1.30
1.32
1.33
1.34
Nonaccrual loans
126
121
116
107
104
Nonaccrual loans and other nonperforming assets
115
110
106
97
94
(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)
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions, except ratios)
2017
2016
2016
2016
2016
Tangible book value per common share (1):
Total equity
$202,489
200,497
203,958
202,661
198,504
Adjustments:
Preferred stock
(25,501 )
(24,551 )
(24,594 )
(24,830 )
(24,051 )
Additional paid-in capital on ESOP
(157 )
(126 )
(130 )
(150 )
(182 )
preferred stock
Unearned ESOP shares
2,546
1,565
1,612
1,868
2,271
Noncontrolling interests
(989 )
(916 )
(930 )
(916 )
(1,008 )
Total common stockholders’ equity
(A)
178,388
176,469
179,916
178,633
175,534
Adjustments:
Goodwill
(26,666 )
(26,693 )
(26,688 )
(26,963 )
(27,003 )
Certain identifiable intangible assets
(2,449 )
(2,723 )
(3,001 )
(3,356 )
(3,814 )
(other than MSRs)
Other assets (2)
(2,121 )
(2,088 )
(2,230 )
(2,110 )
(2,023 )
Applicable deferred taxes (3)
1,698
1,772
1,832
1,906
1,985
Tangible common equity
(B)
$148,850
146,737
149,829
148,110
144,679
Common shares outstanding
(C)
4,996.7
5,016.1
5,023.9
5,048.5
5,075.9
Book value per common share
(A)/(C)
$35.70
35.18
35.81
35.38
34.58
Tangible book value per common share
(B)/(C)
29.79
29.25
29.82
29.34
28.50
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions, except ratios)
2017
2016
2016
2016
2016
Return on average tangible common equity (1):
Net income applicable to common stock
(A)
$
5,056
4,872
5,243
5,173
5,085
Average total equity
201,767
201,247
203,883
201,003
196,586
Adjustments:
Preferred stock
(25,163 )
(24,579 )
(24,813 )
(24,091 )
(23,963 )
Additional paid-in capital on ESOP preferred stock
(146 )
(128 )
(148 )
(168 )
(201 )
Unearned ESOP shares
2,198
1,596
1,850
2,094
2,509
Noncontrolling interests
(957 )
(928 )
(927 )
(984 )
(904 )
Average common stockholders’ equity
(B)
177,699
177,208
179,845
177,854
174,027
Adjustments:
Goodwill
(26,673 )
(26,713 )
(26,979 )
(27,037 )
(26,069 )
Certain identifiable intangible assets (other than MSRs)
(2,588 )
(2,871 )
(3,145 )
(3,600 )
(3,407 )
Other assets (2)
(2,095)
(2,175 )
(2,131 )
(2,096 )
(2,065 )
Applicable deferred taxes (3)
1,722
1,785
1,855
1,934
2,014
Average tangible common equity
(C)
$ 148,065
147,234
149,445
147,055
144,500
Return on average common stockholders’ equity (ROE)
(A)/(B)
11.54 %
10.94
11.60
11.70
11.75
Return on average tangible common equity (ROTCE)
(A)/(C)
13.85
13.16
13.96
14.15
14.15
(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity investments but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company’s
use of equity.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to goodwill and other
intangible assets. They were determined by applying the combined
federal statutory rate and composite state income tax rates to the
difference between book and tax basis of the respective goodwill
and intangible assets at period end.
Wells Fargo & Company and Subsidiaries
COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1)
Estimated
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in billions, except ratio)
2017
2016
2016
2016
2016
Total equity
$
202.5
200.5
204.0
202.7
198.5
Adjustments:
Preferred stock
(25.5 )
(24.6 )
(24.6 )
(24.8 )
(24.1 )
(0.2 )
(0.1 )
(0.1 )
(0.2 )
(0.2 )
Additional paid-in capital on ESOP
preferred stock
Unearned ESOP shares
2.5
1.6
1.6
1.9
2.3
Noncontrolling interests
(1.0 )
(0.9 )
(1.0 )
(1.0 )
(1.0 )
Total common stockholders’ equity
178.3
176.5
179.9
178.6
175.5
Adjustments:
Goodwill
(26.7 )
(26.7 )
(26.7 )
(27.0 )
(27.0 )
Certain identifiable intangible assets (other than MSRs)
(2.4 )
(2.7 )
(3.0 )
(3.4 )
(3.8 )
Other assets (2)
(2.1 )
(2.1 )
(2.2 )
(2.0 )
(2.1 )
Applicable deferred taxes (3)
1.7
1.8
1.8
1.9
2.0
Investment in certain subsidiaries and other
(0.1 )
(0.4 )
(2.0 )
(2.5 )
(1.9 )
Common Equity Tier 1 (Fully Phased-In) under Basel III
(A)
148.7
146.4
147.8
145.6
142.7
Total risk-weighted assets (RWAs) anticipated under Basel III (4)(5)
(B)
$ 1,327.4
1,358.9
1,380.0
1,372.9
1,345.1
Common Equity Tier 1 to total RWAs anticipated under Basel III
(A)/(B)
11.2 %
10.8
10.7
10.6
10.6
(Fully Phased-In) (5)
(1) Basel III capital rules, adopted by the Federal Reserve Board
on July 2, 2013, revised the definition of capital, increased
minimum capital ratios, and introduced a minimum Common Equity
Tier 1 (CET1) ratio. These rules established a new comprehensive
capital framework for U.S. banking organizations that implements
the Basel III capital framework and certain provisions of the
Dodd-Frank Act. The rules are being phased in through the end of
2021. Fully phased-in capital amounts, ratios and RWAs are
calculated assuming the full phase-in of the Basel III capital
rules. Fully phased-in regulatory capital amounts, ratios and RWAs
are considered non-GAAP financial measures that are used by
management, bank regulatory agencies, investors and analysts to
assess and monitor the Company’s capital position.
(2) Represents goodwill and other intangibles on nonmarketable
equity investments, which are included in other assets.
(3) Applicable deferred taxes relate to goodwill and other
intangible assets. They were determined by applying the combined
federal statutory rate and composite state income tax rates to the
difference between book and tax basis of the respective goodwill
and intangible assets at period end.
(4) The final Basel III capital rules provide for two capital
frameworks: the Standardized Approach, which replaced Basel I, and
the Advanced Approach applicable to certain institutions. Under
the final rules, we are subject to the lower of our CET1 ratio
calculated under the Standardized Approach and under the Advanced
Approach in the assessment of our capital adequacy. Because the
final determination of our CET1 ratio and which approach will
produce the lower CET1 ratio as of March 31, 2017, is subject to
detailed analysis of considerable data, our CET1 ratio at that
date has been estimated using the Basel III definition of capital
under the Basel III Standardized Approach RWAs. The capital ratio
for December 31, September 30, June 30, and March 31, 2016, was
calculated under the Basel III Standardized Approach RWAs.
(5) The Company’s March 31, 2017, RWAs and capital ratio are
preliminary estimates.
Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT RESULTS (1)
(income/expense in millions,
Community
Wholesale
Wealth and
Other (2)
Consolidated
average balances in billions)
Banking
Banking
Investment
Company
Management
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Quarter ended Mar 31,
Net interest income (3)
$
7,627
7,468
4,148
3,748
1,074
943
(549 )
(492 )
12,300
11,667
Provision (reversal of provision) for credit losses
646
720
(43 )
363
(4 )
(14 )
6
17
605
1,086
Noninterest income
4,466
5,146
2,890
3,210
3,119
2,911
(773 )
(739 )
9,702
10,528
Noninterest expense
7,221
6,836
4,225
3,968
3,206
3,042
(860 )
(818 )
13,792
13,028
Income (loss) before income tax expense (benefit)
4,226
5,058
2,856
2,627
991
826
(468 )
(430 )
7,605
8,081
Income tax expense (benefit)
1,127
1,697
746
719
362
314
(178 )
(163 )
2,057
2,567
Net income (loss) before noncontrolling interests
3,099
3,361
2,110
1,908
629
512
(290 )
(267 )
5,548
5,514
Less: Net income (loss) from noncontrolling interests
90
65
(5 )
(13 )
6
--
--
--
91
52
Net income (loss)
$
3,009
3,296
2,115
1,921
623
512
(290 )
(267 )
5,457
5,462
Average loans
$
482.7
484.3
466.3
429.8
70.7
64.1
(56.1 )
(51.0 )
963.6
927.2
Average assets
990.7
947.4
807.8
748.6
221.9
208.1
(89.4 )
(84.2 )
1,931.0
1,819.9
Average deposits
717.2
683.0
466.0
428.0
195.6
184.5
(79.6 )
(76.1 )
1,299.2
1,219.4
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is
not necessarily comparable with other similar information for
other financial services companies. We define our operating
segments by product type and customer segment.
(2) Includes the elimination of certain items that are included in
more than one business segment, substantially all of which
represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels.
(3) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(income/expense in millions, average balances in billions)
2017
2016
2016
2016
2016
COMMUNITY BANKING
Net interest income (2)
$
7,627
7,556
7,430
7,379
7,468
Provision for credit losses
646
631
651
689
720
Noninterest income
4,466
4,105
4,957
4,825
5,146
Noninterest expense
7,221
6,985
6,953
6,648
6,836
Income before income tax expense
4,226
4,045
4,783
4,867
5,058
Income tax expense
1,127
1,272
1,546
1,667
1,697
Net income before noncontrolling interests
3,099
2,773
3,237
3,200
3,361
Less: Net income from noncontrolling interests
90
40
10
21
65
Segment net income
$
3,009
2,733
3,227
3,179
3,296
Average loans
$
482.7
488.1
489.2
485.7
484.3
Average assets
990.7
1,000.7
993.6
967.6
947.4
Average deposits
717.2
709.8
708.0
703.7
683.0
WHOLESALE BANKING
Net interest income (2)
$
4,148
4,323
4,062
3,919
3,748
Provision (reversal of provision) for credit losses
(43 )
168
157
385
363
Noninterest income
2,890
2,830
3,085
3,365
3,210
Noninterest expense
4,225
4,002
4,120
4,036
3,968
Income before income tax expense
2,856
2,983
2,870
2,863
2,627
Income tax expense
746
795
827
795
719
Net income before noncontrolling interests
2,110
2,188
2,043
2,068
1,908
Less: Net loss from noncontrolling interests
(5 )
(6 )
(4 )
(5 )
(13 )
Segment net income
$
2,115
2,194
2,047
2,073
1,921
Average loans
$
466.3
461.5
454.3
451.4
429.8
Average assets
807.8
811.9
794.2
772.6
748.6
Average deposits
466.0
459.2
441.2
425.8
428.0
WEALTH AND INVESTMENT MANAGEMENT
Net interest income (2)
$
1,074
1,061
977
932
943
Provision (reversal of provision) for credit losses
(4 )
3
4
2
(14 )
Noninterest income
3,119
3,013
3,122
2,987
2,911
Noninterest expense
3,206
3,042
2,999
2,976
3,042
Income before income tax expense
991
1,029
1,096
941
826
Income tax expense
362
380
415
358
314
Net income before noncontrolling interests
629
649
681
583
512
Less: Net income (loss) from noncontrolling interests
6
(4 )
4
(1 )
--
Segment net income
$
623
653
677
584
512
Average loans
$
70.7
70.0
68.4
66.7
64.1
Average assets
221.9
220.4
212.1
205.3
208.1
Average deposits
195.6
194.9
189.2
182.5
184.5
OTHER (3)
Net interest income (2)
$
(549 )
(538 )
(517 )
(497 )
(492 )
Provision (reversal of provision) for credit losses
6
3
(7 )
(2 )
17
Noninterest income
(773 )
(768 )
(788 )
(748 )
(739 )
Noninterest expense
(860 )
(814 )
(804 )
(794 )
(818 )
Loss before income tax benefit
(468 )
(495 )
(494 )
(449 )
(430 )
Income tax benefit
(178 )
(189 )
(187 )
(171 )
(163 )
Net loss before noncontrolling interests
(290 )
(306 )
(307 )
(278 )
(267 )
Less: Net income from noncontrolling interests
--
--
--
--
--
Other net loss
$
(290 )
(306 )
(307 )
(278 )
(267 )
Average loans
$
(56.1 )
(55.5 )
(54.4 )
(53.0 )
(51.0 )
Average assets
(89.4 )
(88.7 )
(85.3 )
(83.4 )
(84.2 )
Average deposits
(79.6 )
(79.7 )
(76.9 )
(75.3 )
(76.1 )
CONSOLIDATED COMPANY
Net interest income (2)
$
12,300
12,402
11,952
11,733
11,667
Provision for credit losses
605
805
805
1,074
1,086
Noninterest income
9,702
9,180
10,376
10,429
10,528
Noninterest expense
13,792
13,215
13,268
12,866
13,028
Income before income tax expense
7,605
7,562
8,255
8,222
8,081
Income tax expense
2,057
2,258
2,601
2,649
2,567
Net income before noncontrolling interests
5,548
5,304
5,654
5,573
5,514
Less: Net income from noncontrolling interests
91
30
10
15
52
Wells Fargo net income
$
5,457
5,274
5,644
5,558
5,462
Average loans
$
963.6
964.1
957.5
950.8
927.2
Average assets
1,931.0
1,944.3
1,914.6
1,862.1
1,819.9
Average deposits
1,299.2
1,284.2
1,261.5
1,236.7
1,219.4
(1) The management accounting process measures the performance of
the operating segments based on our management structure and is
not necessarily comparable with other similar information for
other financial services companies. We define our operating
segments by product type and customer segment.
(2) Net interest income is the difference between interest earned
on assets and the cost of liabilities to fund those assets.
Interest earned includes actual interest earned on segment assets
and, if the segment has excess liabilities, interest credits for
providing funding to other segments. The cost of liabilities
includes interest expense on segment liabilities and, if the
segment does not have enough liabilities to fund its assets, a
funding charge based on the cost of excess liabilities from
another segment.
(3) Includes the elimination of certain items that are included in
more than one business segment, substantially all of which
represents products and services for Wealth and Investment
Management customers served through Community Banking distribution
channels.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
MSRs measured using the fair value method:
Fair value, beginning of quarter
$ 12,959
10,415
10,396
11,333
12,415
Servicing from securitizations or asset transfers (1)
583
752
609
477
366
Sales and other (2)
(47 )
(47 )
4
(22 )
--
Net additions
536
705
613
455
366
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)
152
2,367
39
(779 )
(1,084 )
Servicing and foreclosure costs (4)
27
93
(10 )
(4 )
27
Prepayment estimates and other (5)
(5 )
(106 )
(37 )
(41 )
100
Net changes in valuation model inputs or assumptions
174
2,354
(8 )
(824 )
(957 )
Changes due to collection/realization of expected cash flows over
(461 )
(515 )
(586 )
(568 )
(491 )
time
Total changes in fair value
(287 )
1,839
(594 )
(1,392 )
(1,448 )
Fair value, end of quarter
$ 13,208
12,959
10,415
10,396
11,333
(1) Includes impacts associated with exercising our right to
repurchase delinquent loans from GNMA loan securitization pools.
(2) Includes sales and transfers of MSRs, which can result in an
increase of total reported MSRs if the sales or transfers are
related to nonperforming loan portfolios.
(3) Includes prepayment speed changes as well as other valuation
changes due to changes in mortgage interest rates (such as changes
in estimated interest earned on custodial deposit balances)
(4) Includes costs to service and unreimbursed foreclosure costs.
(5) Represents changes driven by other valuation model inputs or
assumptions including prepayment speed estimation changes and
other assumption updates. Prepayment speed estimation changes are
influenced by observed changes in borrower behavior and other
external factors that occur independent of interest rate changes.
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Amortized MSRs:
Balance, beginning of quarter
$ 1,406
1,373
1,353
1,359
1,308
Purchases
18
34
18
24
21
Servicing from securitizations or asset transfers
45
66
69
38
97
Amortization
(67 )
(67 )
(67 )
(68 )
(67 )
Balance, end of quarter
$ 1,402
1,406
1,373
1,353
1,359
Fair value of amortized MSRs:
Beginning of quarter
$ 1,956
1,627
1,620
1,725
1,680
End of quarter
2,051
1,956
1,627
1,620
1,725
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Servicing income, net:
Servicing fees (1)
$
882
738
878
842
910
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)
(A)
174
2,354
(8 )
(824 )
(957 )
Changes due to collection/realization of expected cash flows over
(461 )
(515 )
(586 )
(568 )
(491 )
time
Total changes in fair value of MSRs carried at fair value
(287 )
1,839
(594 )
(1,392 )
(1,448 )
Amortization
(67 )
(67 )
(67 )
(68 )
(67 )
Net derivative gains (losses) from economic hedges (3)
(B)
(72 )
(2,314 )
142
978
1,455
Total servicing income, net
$
456
196
359
360
850
Market-related valuation changes to MSRs, net of hedge results (2)(3)
(A)+(B)
$
102
40
134
154
498
(1) Includes contractually specified servicing fees, late charges
and other ancillary revenues, net of unreimbursed direct servicing
costs.
(2) Refer to the changes in fair value MSRs table on the previous
page for more detail.
(3) Represents results from economic hedges used to hedge the risk
of changes in fair value of MSRs.
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in billions)
2017
2016
2016
2016
2016
Managed servicing portfolio (1):
Residential mortgage servicing:
Serviced for others
$
1,204
1,205
1,226
1,250
1,280
Owned loans serviced
335
347
352
349
342
Subserviced for others
4
8
4
4
4
Total residential servicing
1,543
1,560
1,582
1,603
1,626
Commercial mortgage servicing:
Serviced for others
474
479
477
478
485
Owned loans serviced
132
132
130
128
125
Subserviced for others
7
8
8
8
8
Total commercial servicing
613
619
615
614
618
Total managed servicing portfolio
$
2,156
2,179
2,197
2,217
2,244
Total serviced for others
$
1,678
1,684
1,703
1,728
1,765
Ratio of MSRs to related loans serviced for others
0.87 %
0.85
0.69
0.68
0.72
Weighted-average note rate (mortgage loans serviced for others)
4.23
4.26
4.28
4.32
4.34
(1)
The components of our managed servicing portfolio are
presented at unpaid principal balance for loans serviced and
subserviced for others and at book value for owned loans serviced.
Wells Fargo & Company and Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
Quarter ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2017
2016
2016
2016
2016
Net gains on mortgage loan origination/sales activities (in
millions):
Residential
(A)
$
569
939
953
744
532
Commercial
101
90
167
72
71
Residential pipeline and unsold/repurchased loan management (1)
102
192
188
238
145
Total
$
772
1,221
1,308
1,054
748
Application data (in billions):
Wells Fargo first mortgage quarterly applications
$
59
75
100
95
77
Refinances as a percentage of applications
36 %
48
55
46
52
Wells Fargo first mortgage unclosed pipeline, at quarter end
$
28
30
50
47
39
Residential real estate originations:
Purchases as a percentage of originations
61 %
50
58
60
55
Refinances as a percentage of originations
39
50
42
40
45
Total
100 %
100
100
100
100
Wells Fargo first mortgage loans (in billions):
Retail
$
21
35
37
34
24
Correspondent
22
36
32
28
19
Other (2)
1
1
1
1
1
Total quarter-to-date
$
44
72
70
63
44
Held-for-sale
(B)
$
34
56
53
46
31
Held-for-investment
10
16
17
17
13
Total quarter-to-date
$
44
72
70
63
44
Total year-to-date
$
44
249
177
107
44
Production margin on residential held-for-sale mortgage
(A)/(B)
1.68 %
1.68
1.81
1.66
1.68
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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(in millions)
2017
2016
2016
2016
2016
Balance, beginning of period
$
229
239
255
355
378
Provision for repurchase losses:
Loan sales
8
10
11
8
7
Change in estimate (1)
(8 )
(7 )
(24 )
(89 )
(19 )
Net additions (reductions)
--
3
(13 )
(81 )
(12 )
Losses
(7 )
(13 )
(3 )
(19 )
(11 )
Balance, end of period
$
222
229
239
255
355
(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