Wells Fargo

Wells Fargo Bank
101 N. Phillips Avenue
Sioux Falls, SD 57104

Concentration: All Other Specialization > 1 Billion
Established: 1870-01-01
FDIC Insurance: 1934-01-01
FDIC Cert: #3511
Holden By: Wells Fargo & Company
# of Branches: 5578
Website: www.wellsfargo.com
Total Assets: $1,699,842,000,000
Total Deposits: $1,346,183,000,000
Total Equity Capital: $168,759,000,000
Total Domestic Deposits: $1,291,135,000,000
Net Income: $11,948,000,000
Quarterly Net Income: $6,155,000,000
Return on Assets: 1%
Quarterly Return on Assets: 1%
Return on Equity: 14%
Quarterly Return on Equity: 15%
Charter Class: Commercial bank, national (federal) charter and Fed member, oversee by the Office of the Comptroller of the Currency (OCC)

In 2019

3rd Quarter (October 15, 2019)

Final monetary results and different disclosures are going to be reportable in our Quarterly Report on kind 10-Q for the quarter over September 30, 2019, and should take issue materially from the results and disclosures during this document thanks to, among different things, the completion of ultimate review procedures, the incidence of resulting events, or the invention of further data.

SAN FRANCISCO – October 15, 2019 – Wells Fargo & Company reported net income of $4.6 billion, or $0.92 per diluted common share, for third-quarter 2019, compared with $6.0 billion, or $1.13 per share, for third-quarter 2018, and $6.2 billion, or $1.30 per share, for second-quarter 2019.

The net interest margin was 2.66%, down 16 basis points from the prior quarter primarily due to balance sheet repricing driven by the impact of the lower interest rate environment, as well as higher MBS premium amortization.

Noninterest Income Noninterest income in the third quarter was $10.4 billion, up $896 million from the second quarter of 2019.

Third-quarter noninterest income included higher other income and market-sensitive revenue3, partially offset by lower mortgage banking income.

Mortgage banking financial gain was $466 million, down from $758 million in the second quarter of 2019.

The potency quantitative relation was 69.1% in the third quarter of 2019, compared with 62.3% within the second quarter.

Net mortgage servicing income was a loss of $142 million, down from a gain of $277 million in the second quarter, driven by the impact of higher prepayment rate estimates on the valuation of our residential mortgage servicing rights asset.

Net gains on mortgage loan origination and sales activities were $608 million, up from $481 million in the second quarter.

Residential held-for-sale mortgage loan originations increased in the third quarter to $38 billion from $33 billion in the second quarter, primarily due to lower mortgage loan interest rates.

The production margin on residential held-for-sale mortgage loan originations increased to 1.21% from 0.98% in the second quarter.

Market sensitive revenue was $1.2 billion, up from $871 million in second-quarter 2019, predominantly due to higher net gains from equity securities, driven by gains from our affiliated venture capital and private equity partnerships, partially offset by a $91 million decrease in deferred compensation plan investment results in the third quarter.

Noninterest Expense Noninterest expense in the third quarter was $15.2 billion, up $1.8 billion from the prior quarter.

Third-quarter expenses included operating losses of $1.9 billion, predominantly reflecting litigation accruals for a variety of matters, including a $1.6 billion discrete litigation accrual for previously disclosed retail sales practices matters.

Income Taxes the Company’s effective income tax rate was 22.1% for the third quarter 2019 and included net discrete income tax expense of $443 million predominantly related to the non-tax deductible treatment of a $1.6 billion discrete litigation accrual.

The Company currently expects the effective income tax rate in fourth-quarter 2019 to be approximately 17.5%, excluding the impact of any unanticipated discrete items.

Loans Average loans were $949.8 billion in the third quarter, up $2.3 billion from the second quarter.

Net unrealized gains on available-for-sale debt securities were $3.1 billion at September 30, 2019, compared with $2.5 billion at June 30, 2019, primarily due to lower long-term interest rates in the third quarter, partially offset by wider credit spreads.

The average deposit cost for the third quarter of 2019 was 71 basis points, up 1 basis point from the prior quarter and 24 basis points from a year ago.

Capital The Company’s Common Equity Tier 1 ratio was 11.6%2 and continued to exceed both the regulatory minimum of 9% and our current internal target of 10%. In third-quarter 2019, the Company repurchased 159.1 million shares of its common stock, which, net of issuances, reduced period-end common shares outstanding by 150.4 million.

The Company redeemed 1,550,000 shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series K, on September 16, 2019, which reduced diluted earnings per common share in third-quarter 2019 by $0.05 per share as a result of eliminating the purchase accounting discount recorded on these shares at the time of the Wachovia acquisition.

Credit Quality Net Loan Charge-offs the quarterly loss rate in the third quarter was 0.27%, down from 0.28% in the prior quarter and from 0.29% a year ago.

Total credit losses were $645 million in third-quarter 2019, down $8 million from the second quarter of 2019.

Nonperforming Assets Nonperforming assets decreased $317 million, or 5%, from the second quarter 2019 to $6.0 billion.

Nonaccrual loans decreased $377 million from the second quarter of 2019 to $5.5 billion.

For additional information, see the “Five Quarter Nonperforming Assets” table on page 33.

Allowance for Credit Losses The allowance for credit losses, as well as the allowance for unfunded commitments, destroyed $10.6 billion on September 30, 2019, up $10 million from June 30, 2019, and enclosed a $50 million reserve build1 in third quarter 2019.

The allowance coverage for total loans was 1.11%, compared with 1.12% in the second-quarter of 2019.

The allowance covered 4.1 times annualized third-quarter net charge-offs, compared with 4.0 times in the prior quarter.

Segment net income for each of the three business segments was: Quarter ended Community Banking $ Sep 30, 2019, Jun 30, 2019 Sep 30, 2018 999 3,147 2,816 Wholesale Banking 2,644 2,789 2,851 Wealth and Investment Management 1,280 602 732 Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and automobile, student, mortgage, home equity and small business lending, as well as referrals to Wholesale Banking and Wealth and Investment Management business partners.

Represents the impact of the partial redemption of preferred stock, Series K, in third-quarter 2019, and the redemption of preferred stock, Series J, in third quarter 2018.

The average three-month London Interbank Offered Rate was 2.20% and 2.34% for the same quarters, respectively.

Includes taxable-equivalent adjustments of $151 million and $161 million for the quarters ended September 30, 2019, and 2018, respectively, predominantly related to tax-exempt income on certain loans and securities.

The average three-month London Interbank Offered Rate was 2.20%, 2.51%, 2.69%, 2.62% and 2.34% for the same quarters, respectively.

Wells Fargo & Company and Subsidiaries FIVE QUARTER DEFERRED COMPENSATION PLAN INVESTMENT RESULTS Quarter ended Net interest income $ Net gains from equity securities Total revenue from deferred compensation plan investments Employee benefits expense Income before income tax expense Represents change in deferred compensation plan liability.

PCI loans totaled $119 million, $156 million, $243 million, $370 million and $567 million, at September 30, June 30 and March 31, 2019, and December 31 and September 30, 2018, respectively.

Fully phased-in capital ratios are calculated assuming the full phase-in of the Basel III capital rules.

Total hedge ineffectiveness accounting of $16 million in the quarter included $35 million in net interest income and $(19) million in other income.

In 2Q19 total hedge ineffectiveness accounting was $82 million and included $89 million in net interest income and $(7) million in other income.

Wells Fargo: The sum of outside professional services expense, Operating losses, and other expenses equals other noninterest expense in the Consolidated Statement of Income, pages 19 and 20 of the press release.

We don’t want to forgo revenue to manage to an expense target Total Noninterest Expense YTD 2019 Actual and 2019 Target 52.0 – 53.0 42.6 0.5 2.0 40.1 YTD 2019 Actual Represents operating losses in excess of $450 million for YTD 2019 Represents deferred compensation expense 2019 Target excludes annual operating losses in excess of $600 million, such as litigation and remediation accruals and penalties, and excludes deferred compensation expense YTD 2019 = year to date 2019 results through September 30.

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

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

Metrics reported on a one-month lag from reported quarter-end; for example, 3Q19 data includes June 2019, July 2019 and August 2019.

Wells Fargo 3Q19 Supplement 25 Appendix Sale of Institutional Retirement and Trust business we closed the previously announced sale of our IRT business on July 1, 2019,

The rules are being phased in through the end of 2021.

Wells Fargo: Fully phased-in capital amounts, ratios, and RWAs are calculated assuming the full phase-in of the Basel III capital rules.

Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, became fully phased-in.

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

Applicable deferred taxes relate to goodwill and other intangible assets.

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.

The Company’s September 30, 2019, RWAs and capital ratio are preliminary estimates.

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