Wells Fargo Reports Third Quarter 2017 Net Income of $4.6 Billion

Diluted EPS of $0.84 included the impact of a discrete litigation accrual of $(0.20) per share for previously disclosed mortgage-related regulatory investigations

SAN FRANCISCO--()--Wells Fargo & Company (NYSE:WFC):

  • Financial results:
    • Revenue of $21.9 billion, down 2 percent from third quarter 2016
      • Net interest income of $12.5 billion, up $524 million, or 4 percent
      • Noninterest income of $9.5 billion, down $926 million, or 9 percent
    • Noninterest expense of $14.4 billion, up $1.1 billion, or 8 percent, including $752 million higher operating losses
      • Third quarter 2017 included a $1 billion discrete litigation accrual (not tax-deductible), or $(0.20) per share, for previously disclosed mortgage-related regulatory investigations
    • Total average deposits of $1.3 trillion, up $44.8 billion, or 4 percent
    • Total average loans of $952.3 billion, down $5.1 billion, or 1 percent
    • Return on assets (ROA) of 0.94 percent and return on equity (ROE) of 9.06 percent

  • Solid credit quality:
    • Net charge-offs of $717 million, down $88 million from third quarter 2016
      • Net charge-offs were 0.30 percent of average loans (annualized), down from 0.33 percent
    • Nonaccrual loans of $8.6 billion, down $2.4 billion, or 22 percent
    • No reserve build or release1, consistent with third quarter 2016
  • Strong capital position while returning more capital to shareholders:
  • Common Equity Tier 1 ratio (fully phased-in) of 11.8 percent2
    • Returned $4.0 billion to shareholders in the third quarter through common stock dividends and net share repurchases
      • Net share repurchases of $2.0 billion, up 59 percent from third quarter 2016
      • Period-end common shares outstanding down 96.0 million shares from third quarter 2016
      • Quarterly common stock dividend of $0.39 per share, up from $0.38 per share in third quarter 2016

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

 

Selected Financial Information

    Quarter ended
Sep 30,       Jun 30,     Sep 30,
      2017       2017     2016
Earnings
Diluted earnings per common share $ 0.84 1.07 1.03
Wells Fargo net income (in billions) 4.60 5.81 5.64
Return on assets (ROA) 0.94 % 1.21 1.17
Return on equity (ROE) 9.06 11.95 11.60
Return on average tangible common equity (ROTCE)(a) 10.79 14.26 13.96
Asset Quality
Net charge-offs (annualized) as a % of average total loans 0.30

%

0.27 0.33
Allowance for credit losses as a % of total loans 1.27 1.27 1.32
Allowance for credit losses as a % of annualized net charge-offs 426 462 396
Other
Revenue (in billions) $ 21.9 22.2 22.3
Efficiency ratio (b) 65.5 % 61.1 59.4
Average loans (in billions) $ 952.3 956.9 957.5
Average deposits (in billions) 1,306.4 1,301.2 1,261.5
Net interest margin     2.87 %       2.90     2.82

(a) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity investments but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it enables investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on page 35.

(b) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

 

Wells Fargo & Company (NYSE:WFC) reported net income of $4.6 billion, or $0.84 per diluted common share, for third quarter 2017, compared with $5.6 billion, or $1.03 per share, for third quarter 2016, and $5.8 billion, or $1.07 per share, for second quarter 2017.

Chief Executive Officer Tim Sloan said, “Over the past year we have made fundamental changes to transform Wells Fargo as part of our effort to rebuild trust and build a better bank. While our financial performance in the third quarter included the impact of a litigation accrual for previously disclosed, pre-crisis mortgage-related regulatory investigations, I am proud of the commitment of our 268,000 team members who put our customers first. We saw total average deposit growth; loan growth in our residential mortgage, credit card and subscription finance portfolios; as well as higher assets under management in Wealth and Investment Management. We also continued to invest in customer-focused innovation and have begun the rollout of our online mortgage application and “Intuitive Investor,” our online platform for digital investing and professional advice. We’re also committed to helping our communities recover from the devastation of the recent hurricanes by providing payment relief and proactively waiving fees for impacted customers, and our foundation donated $2.6 million for hurricane relief efforts.”

Chief Financial Officer John Shrewsberry said, “Wells Fargo reported $4.6 billion of net income in the third quarter, which included the impact of the $1 billion, or $(0.20) per share, discrete litigation accrual. We continued to see good credit performance and our liquidity and capital remained exceptionally strong. During the quarter, our first under our 2017 Capital Plan, we returned $4.0 billion to shareholders through common stock dividends and net share repurchases, up from $3.4 billion in the second quarter. We remain committed to our target of $2 billion of expense reductions by the end of 2018 which will be reinvested in the business and an additional $2 billion by the end of 2019 intended to go to the bottom line.”

Net Interest Income

Net interest income in third quarter 2017 was $12.5 billion, in line with second quarter 2017, as the impacts of lower investment portfolio yields driven by accelerated prepayments and lower average loan balances were offset by the impact of one additional day and a modest benefit from all other growth and repricing.

Net interest margin was 2.87 percent, down 3 basis points from second quarter 2017. The impacts of lower investment portfolio yields driven by accelerated prepayments, lower average loan balances, growth in average deposits, and growth in trading assets and related funding were partially offset by lower average long-term debt and a modest benefit from all other growth and repricing.

Noninterest Income

Noninterest income in the third quarter was $9.5 billion, compared with $9.7 billion in second quarter 2017. Third quarter noninterest income reflected lower mortgage banking and other income, partially offset by higher market sensitive revenue3.

  • Mortgage banking noninterest income was $1.0 billion, compared with $1.1 billion in second quarter 2017. Residential mortgage loan originations were $59 billion in the third quarter, up from $56 billion in the second quarter. The production margin on residential held-for-sale mortgage loan originations4 was 1.24 percent, consistent with the second quarter. Mortgage servicing income was $309 million in the third quarter, down from $400 million in the second quarter, primarily due to higher unreimbursed servicing costs.
  • Other income was $97 million, compared with $249 million in the second quarter. Second quarter 2017 included a $309 million gain on the sale of a Pick-a-Pay purchased credit-impaired (PCI) loan portfolio. Third quarter 2017 included a net hedge ineffectiveness gain of $93 million, up from $21 million in the prior quarter.

Noninterest Expense

Noninterest expense in the third quarter was $14.4 billion, compared with $13.5 billion in the prior quarter. Third quarter expenses included operating losses of $1.3 billion, which included the $1 billion litigation accrual for previously disclosed mortgage-related regulatory investigations. This increase in noninterest expense was partially offset by lower charitable donations, outside professional services, employee benefits, and travel and entertainment expenses. The efficiency ratio was 65.5 percent in third quarter 2017, which included a 456 basis point impact from the $1 billion litigation accrual.

Income Taxes

The Company’s effective income tax rate was 32.4 percent for third quarter 2017, and included net discrete tax expense totaling $186 million, primarily resulting from the non-deductible treatment of the $1 billion litigation accrual, partially offset by discrete tax benefits arising from favorable resolutions of prior period matters with certain state tax authorities.

Loans

Total average loans were $952.3 billion in the third quarter, down $4.5 billion from the second quarter. Period-end loan balances were $951.9 billion at September 30, 2017, down $5.6 billion from June 30, 2017. Consumer loans increased $201 million from the prior quarter as growth in real estate 1-4 family first mortgage loans and consumer credit card loans was largely offset by expected declines in automobile loans and the legacy junior lien mortgage portfolio. Commercial loans were down $5.8 billion from June 30, 2017 reflecting paydowns and continued underwriting discipline.

 

Period-End Loan Balances

    Sep 30,   Jun 30,   Mar 31,   Dec 31,     Sep 30,
(in millions)     2017     2017     2017     2016     2016
Commercial $ 500,150 505,901 505,004 506,536 496,454
Consumer     451,723     451,522     453,401     461,068     464,872
Total loans     $ 951,873     957,423     958,405     967,604     961,326

Change from prior quarter

    $

(5,550

)

 

(982

)

 

(9,199

)

 

6,278

   

4,169

 

Investment Securities

Investment securities were $414.6 billion at September 30, 2017, up $5.0 billion from the second quarter, as approximately $31.2 billion of purchases, mostly federal agency mortgage-backed securities (MBS) in the available-for-sale portfolio, were partially offset by run-off and sales.

Net unrealized gains on available-for-sale securities were $1.8 billion at September 30, 2017, compared with $1.1 billion at June 30, 2017, primarily due to tighter credit and agency MBS spreads during the quarter.

Deposits

Total average deposits for third quarter 2017 were $1.3 trillion, up $5.2 billion from the prior quarter. The average deposit cost for third quarter 2017 was 26 basis points, up 5 basis points from the prior quarter and 15 basis points from a year ago, primarily driven by an increase in commercial and Wealth and Investment Management deposit rates.

Capital

Capital levels remained strong in the third quarter, with a Common Equity Tier 1 ratio (fully phased-in) of 11.8 percent2, compared with 11.6 percent in the prior quarter. In third quarter 2017, the Company repurchased 49.0 million shares of its common stock, which reduced period-end common shares outstanding by 38.9 million. The Company paid a quarterly common stock dividend of $0.39 per share, up from $0.38 per share a year ago.

Credit Quality

Credit results remained strong in the third quarter," said Chief Risk Officer Mike Loughlin. “The loan portfolio continued to perform well, led by strong performance in consumer real estate and continued solid performance in the commercial portfolio. Separately, while it is still early in the process, we have reviewed our portfolio for potential losses from recent hurricanes and have reflected that initial estimate in our allowance. After accounting for all these factors, the allowance for credit losses in the third quarter remained relatively unchanged from the second quarter.”

Net Loan Charge-offs

The quarterly loss rate was 0.30 percent (annualized), compared with 0.27 percent in the prior quarter. Commercial and consumer losses were 0.09 percent and 0.53 percent, respectively. Credit losses were $717 million in third quarter 2017, up $62 million from second quarter 2017. Commercial losses were up $38 million on higher losses in the commercial and industrial portfolio. Consumer losses increased $24 million as higher automobile losses from typically low second quarter levels more than offset lower credit card losses.

 

Net Loan Charge-Offs

    Quarter ended
      September 30, 2017     June 30, 2017     March 31, 2017
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 $ 125 0.15 % $ 78 0.10 % $ 171 0.21 %
Real estate mortgage (3 ) (0.01 ) (6 ) (0.02 ) (25 ) (0.08 )
Real estate construction (15 ) (0.24 ) (4 ) (0.05 ) (8 ) (0.15 )
Lease financing     6   0.12 7   0.15 5   0.11
Total commercial     113   0.09 75   0.06 143   0.11
Consumer:
Real estate 1-4 family first mortgage (16 ) (0.02 ) (16 ) (0.02 ) 7 0.01
Real estate 1-4 family junior lien mortgage 1 (4 ) (0.03 ) 23 0.21
Credit card 277 3.08 320 3.67 309 3.54
Automobile 202 1.41 126 0.86 167 1.10
Other revolving credit and installment     140   1.44 154   1.58 156   1.60
Total consumer     604   0.53 580   0.51 662   0.59
Total     $ 717   0.30 % $ 655   0.27 % $ 805   0.34 %
                                                       

(a) Quarterly net charge-offs as a percentage of average loans are annualized. See explanation on page 31 of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios.

 

Nonperforming Assets

Nonperforming assets decreased $512 million from second quarter 2017 to $9.3 billion. Nonaccrual loans decreased $437 million from second quarter 2017 to $8.6 billion primarily driven by declines in commercial and industrial nonaccruals, as well as continued lower consumer real estate nonaccruals.

 

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

      September 30, 2017     June 30, 2017     March 31, 2017
       

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 $ 2,397 0.73 % $ 2,632 0.79 % $ 2,898 0.88 %
Real estate mortgage 593 0.46 630 0.48 672 0.51
Real estate construction 38 0.15 34 0.13 40 0.16
Lease financing     81   0.42 89   0.46 96   0.50
Total commercial     3,109   0.62 3,385   0.67 3,706   0.73
Consumer:
Real estate 1-4 family first mortgage 4,213 1.50 4,413 1.60 4,743 1.73
Real estate 1-4 family junior lien mortgage 1,101 2.68 1,095 2.56 1,153 2.60
Automobile 137 0.25 104 0.18 101 0.17
Other revolving credit and installment     59   0.15 59   0.15 56   0.14
Total consumer     5,510   1.22 5,671   1.26 6,053   1.34
Total nonaccrual loans     8,619   0.91 9,056   0.95 9,759   1.02
Foreclosed assets:
Government insured/guaranteed 137 149 179
Non-government insured/guaranteed     569   632   726  
Total foreclosed assets     706   781   905  
Total nonperforming assets     $ 9,325   0.98 % $ 9,837   1.03 % $ 10,664   1.11 %
Change from prior quarter:
Total nonaccrual loans $ (437 ) $ (703 ) $ (625 )
Total nonperforming assets     (512 )           (827 )           (698 )      
 

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.1 billion at September 30, 2017, in line with June 30, 2017. The third quarter 2017 allowance for credit losses reflected strong credit performance due to continued improvement in consumer real estate as well as strength in the commercial loan portfolio, including improvement in the oil and gas portfolio. These factors were offset by $450 million for coverage of our preliminary estimate of potential hurricane-related losses. The allowance coverage for total loans of 1.27 percent was stable from second quarter 2017. The allowance covered 4.3 times annualized third quarter net charge-offs, compared with 4.6 times in the prior quarter. The allowance coverage for nonaccrual loans was 141 percent at September 30, 2017, compared with 134 percent at June 30, 2017. The Company believes the allowance was appropriate for losses inherent in the loan portfolio at September 30, 2017.

Business Segment Performance

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

       
    Quarter ended
Sep 30,     Jun 30,     Sep 30,
(in millions)     2017     2017     2016
Community Banking $ 2,229 2,993 3,227
Wholesale Banking 2,046 2,388 2,047
Wealth and Investment Management     710     682     677
 

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

 

Selected Financial Information

    Quarter ended
Sep 30,     Jun 30,     Sep 30,
(in millions)     2017     2017     2016
Total revenue $ 12,060 12,289 12,387
Provision for credit losses 650 623 651
Noninterest expense 7,834 7,223 6,953
Segment net income 2,229 2,993 3,227
(in billions)
Average loans 473.5 477.2 489.2
Average assets 988.9 983.5 993.6
Average deposits     734.5     727.2     708.0
 

Community Banking reported net income of $2.2 billion, down $764 million, or 26 percent, from second quarter 2017, and included the $1 billion litigation accrual (not tax-deductible) for previously disclosed mortgage-related regulatory investigations. Revenue of $12.1 billion decreased $229 million, or 2 percent, from second quarter 2017, primarily due to a gain on the sale of a Pick-a-Pay PCI loan portfolio in the prior quarter. The decline in revenue from the second quarter was also driven by lower mortgage banking revenue, partially offset by higher net interest income and the favorable accounting impact of net hedge ineffectiveness. Noninterest expense increased $611 million, or 8 percent, compared with second quarter 2017, due to higher operating losses and personnel expense, partially offset by lower charitable donations, lower professional services expense and the favorable impact of updated intra-segment allocations to Wholesale Banking and Wealth and Investment Management for regulatory, risk, cyber and technology expenses. The provision for credit losses increased $27 million from the prior quarter.

Net income was down $1.0 billion, or 31 percent, from third quarter 2016, and included the $1 billion litigation accrual (not tax-deductible) for previously disclosed mortgage-related regulatory investigations. Revenue decreased $327 million, or 3 percent, compared with a year ago due to lower mortgage banking revenue and deposit service charges, partially offset by higher net interest income and market sensitive revenue. Noninterest expense increased $881 million, or 13 percent, from a year ago due to higher operating losses, higher professional services expense and the favorable impact of updated intra-segment allocations to Wholesale Banking and Wealth and Investment Management for regulatory, risk, cyber and technology expenses.

Retail Banking and Consumer Payments, Virtual Solutions and Innovation

  • With nearly 400,000 branch customer experience surveys completed during the third quarter, ‘Loyalty’ and ‘Overall Satisfaction with Most Recent Visit’ scores declined in September after our announcement of the expanded third party account review, which followed post-sales practice settlement highs for ‘Loyalty’ in July of 58.8 percent and ‘Overall Satisfaction with Most Recent Visit’ in August of 78.2 percent
  • 5,927 retail bank branches as of the end of third quarter 2017, reflecting 145 branch consolidations year-to-date through September 30, 2017
  • Wells Fargo was the nation’s #1 SBA 7(a) lender in dollars and units for full year 20175
  • Primary consumer checking customers6,7down 0.2 percent year-over-year
  • Debit card point-of-sale purchase volume8 of $80.0 billion in third quarter, up 5 percent year-over-year
  • Credit card point-of-sale purchase volume of $18.2 billion in third quarter, up 4 percent year-over-year
  • Credit card penetration in retail banking households of 45.4 percent9
  • 27.8 million digital (online and mobile) active customers, including 20.9 million mobile active users7,10
  • According to BI Intelligence’s Mobile Banking Competitive Edge study, Wells Fargo scored top marks in the transfers, wallets, and security categories of our scorecard, and ranked first overall
  • For the fourth consecutive time, Dynatrace (formerly Keynote) ranked Wells Fargo #1 overall in online performance (August 2017)
  • In Javelin Strategy's recent 2017 Account Safety in Banking Scorecard, Wells Fargo was recognized as a leader in fraud prevention, detection, and resolution

Consumer Lending

  • Home Lending
    • Originations of $59 billion, up from $56 billion in prior quarter
    • Applications of $73 billion, down from $83 billion in prior quarter
    • Application pipeline of $29 billion at quarter end, down from $34 billion at June 30, 2017
  • Automobile originations of $4.3 billion in third quarter, down 6 percent from prior quarter and down 47 percent from prior year, as proactive steps to tighten underwriting standards resulted in lower origination volume

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $5 million. Products and businesses include Business Banking, Commercial Real Estate, Corporate Banking, Financial Institutions Group, Government and Institutional Banking, Insurance, Middle Market Banking, Principal Investments, Treasury Management, Wells Fargo Commercial Capital, and Wells Fargo Securities.

 

Selected Financial Information

    Quarter ended
Sep 30,     Jun 30,     Sep 30,
(in millions)     2017     2017     2016
Total revenue $ 7,085 6,951 7,147
Provision (reversal of provision) for credit losses 69 (65 ) 157
Noninterest expense 4,248 4,078 4,120
Segment net income 2,046 2,388 2,047
(in billions)
Average loans 463.8 464.9 454.3
Average assets 824.3 817.3 794.2
Average deposits     463.4       463.0       441.2
 

Wholesale Banking reported net income of $2.0 billion, down $342 million, or 14 percent, from second quarter 2017 which included a tax benefit resulting from our agreement to sell Wells Fargo Insurance Services USA and related businesses. Revenue of $7.1 billion increased $134 million, or 2 percent, from the prior quarter. Net interest income increased $75 million, or 2 percent, on higher trading related income and one additional business day in the quarter. Noninterest income increased $59 million, or 2 percent, on higher gains on equity investments and debt securities. Noninterest expense increased $170 million, or 4 percent, from the prior quarter reflecting updated intra-segment allocations from Community Banking for regulatory, risk, cyber and technology expenses. The provision for credit losses increased $134 million from the prior quarter, primarily due to a reserve release in the second quarter as well as higher losses in the third quarter.

Net income of $2.0 billion was in line with third quarter 2016. Revenue decreased $62 million, or 1 percent, from third quarter 2016, as higher net interest income was more than offset by lower noninterest income. Net interest income increased $291 million, or 7 percent, from third quarter 2016 on deposit and loan growth, including the GE Capital portfolio acquisitions in the second half of 2016, as well as the impact of rising interest rates. Noninterest income decreased $353 million, or 11 percent, from a year ago primarily due to lower customer accommodation trading and lower commercial mortgage banking results. Noninterest expense increased $128 million, or 3 percent, from a year ago reflecting updated intra-segment allocations from Community Banking for regulatory, risk, cyber and technology expenses. The provision for credit losses decreased $88 million from a year ago primarily due to improvements in the oil and gas portfolio.

  • Launched CEO Mobile Token which allows Treasury Management customers a secure, convenient way to provide secondary authentication anytime they need to complete a transaction (August 2017)

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
Sep 30,     Jun 30,     Sep 30,
(in millions)     2017     2017     2016
Total revenue $ 4,246 4,182 4,099
Provision (reversal of provision) for credit losses (1 ) 7 4
Noninterest expense 3,106 3,075 2,999
Segment net income 710 682 677
(in billions)
Average loans 72.4 71.7 68.4
Average assets 213.4 213.1 212.1
Average deposits     188.1       188.2       189.2
 

Wealth and Investment Management reported net income of $710 million, up $28 million, or 4 percent, from second quarter 2017. Revenue of $4.2 billion increased $64 million from the prior quarter, primarily due to higher net interest income, asset-based fees, and gains on deferred compensation plan investments (offset in employee benefits expense), partially offset by lower transaction revenue. Noninterest expense increased $31 million, or 1 percent, from the prior quarter, reflecting updated intra-segment allocations from Community Banking for regulatory, risk, cyber and technology expenses and higher deferred compensation plan expense (offset in trading revenue).

Net income was up $33 million, or 5 percent, from third quarter 2016. Revenue increased $147 million, or 4 percent, from a year ago primarily driven by higher net interest income and asset-based fees, partially offset by lower transaction revenue. Noninterest expense increased $107 million, or 4 percent, from a year ago, reflecting updated intra-segment allocations from Community Banking for regulatory, risk, cyber and technology expenses and higher personnel expense, partially offset by lower professional services expense.

  • WIM total client assets reached a record-high of $1.9 trillion, up 8 percent from a year ago, driven by higher market valuations and continued positive net flows
  • Third quarter 2017 average closed referred investment assets (referrals resulting from the WIM/Community Banking partnership) were down 12 percent from the prior quarter

Retail Brokerage

  • Client assets of $1.6 trillion, up 9 percent from prior year
  • Advisory assets of $522 billion, up 14 percent from prior year, primarily driven by higher market valuations and positive net flows
  • Strong loan growth, with average balances up 10 percent from prior year largely due to continued growth in non-conforming mortgage loans

Wealth Management

  • Client assets of $241 billion, up 5 percent from prior year
  • Average loan balances up 4 percent from prior year primarily driven by continued growth in non-conforming mortgage loans

Asset Management

  • Total assets under management of $496 billion, flat from prior year as equity and money market net outflows were offset by higher market valuations, positive fixed income net flows and assets acquired during the prior year

Retirement

  • IRA assets of $400 billion, up 6 percent from prior year
  • Institutional Retirement plan assets of $387 billion, up 11 percent from prior year

Conference Call

The Company will host a live conference call on Friday, October 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 440-424-4922 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and https://engage.vevent.com/rt/wells_fargo_ao~88580303.

A replay of the conference call will be available beginning at 10:00 a.m. PT (1:00 p.m. ET) on Friday, October 13 through Friday, October 27. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #88580303. 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~88580303.

 
Endnotes
1   Reserve build represents the amount by which the provision for credit losses exceeds net charge-offs, while reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
2 See table on page 36 for more information on Common Equity Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary estimate and is calculated assuming the full phase-in of the Basel III capital rules.
3 Market sensitive revenue represents net gains from trading activities, debt securities and equity investments.
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 41 for more information.
5 U.S. SBA data, federal fiscal year ended September 30, 2017.
6 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.
7 Data as of August 2017, comparisons with August 2016.
8 Combined consumer and business debit card purchase volume dollars.
9 Penetration defined as the percentage of Retail Banking households that have a credit card with Wells Fargo. Retail Banking households reflect only those households that maintain a retail checking account, which we believe provides the foundation for long-term retail banking relationships. Credit card household penetration rates have not been adjusted to reflect the impact of the potentially unauthorized accounts (determined principally based on whether the account was activated by the customer) identified by a third party consulting firm in August 2017 because the maximum impact in any one quarter was not greater than 127 bps.
10

Primarily includes retail banking, consumer lending, small business and business banking customers.

 

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance levels; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital or liquidity levels or targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

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

  • current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and the overall slowdown in global economic growth;
  • our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
  • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
  • the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications;
  • the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;
  • negative effects relating to our mortgage servicing and foreclosure practices, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;
  • our ability to realize our efficiency ratio target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;
  • losses related to recent hurricanes, which primarily impacted Texas, Florida and Puerto Rico, including from damage or loss to our collateral for loans in our consumer and commercial loan portfolios and from the impact on the ability of our borrowers to repay their loans;
  • the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
  • significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our investment securities portfolio;
  • the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;
  • negative effects from the retail banking sales practices matter, 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 (NYSE:WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,400 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 268,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2017 rankings of America’s largest corporations.

 
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
 
    Pages
 

Summary Information

Summary Financial Data

16
 

Income

Consolidated Statement of Income 18
Consolidated Statement of Comprehensive Income 20
Condensed Consolidated Statement of Changes in Total Equity 20
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 21
Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 23
Noninterest Income and Noninterest Expense 24
 

Balance Sheet

Consolidated Balance Sheet 26
Investment Securities 28
 

Loans

Loans 28
Nonperforming Assets 29
Loans 90 Days or More Past Due and Still Accruing 30
Purchased Credit-Impaired Loans 31
Pick-A-Pay Portfolio 32
Changes in Allowance for Credit Losses 34
 

Equity

Tangible Common Equity 35
Common Equity Tier 1 Under Basel III 36
 

Operating Segments

Operating Segment Results 37
 

Other

Mortgage Servicing and other related data 39
 
 

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA
       

% Change

       
Quarter ended

Sep 30, 2017 from

Nine months ended

 

Sep 30,   Jun 30,   Sep 30, Jun 30,   Sep 30, Sep 30,   Sep 30, %

($ in millions, except per share amounts)

    2017   2017   2016     2017   2016     2017   2016     Change
For the Period
Wells Fargo net income $ 4,596 5,810 5,644 (21 )% (19 ) $ 15,863 16,664 (5 )%
Wells Fargo net income applicable to common stock 4,185 5,404 5,243 (23 ) (20 ) 14,645 15,501 (6 )
Diluted earnings per common share 0.84 1.07 1.03 (21 ) (18 ) 2.91 3.03 (4 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 0.94 % 1.21 1.17 (22 ) (20 ) 1.10 % 1.19 (8 )
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 9.06 11.95 11.60 (24 ) (22 ) 10.83 11.68 (7 )
Return on average tangible common equity (ROTCE)(1) 10.79 14.26 13.96 (24 ) (23 ) 12.94 14.08 (8 )
Efficiency ratio (2) 65.5 61.1 59.4 7 10 63.1 58.7 7
Total revenue $ 21,926 22,169 22,328 (1 ) (2 ) $ 66,097 66,685 (1 )
Pre-tax pre-provision profit (PTPP) (3) 7,575 8,628 9,060 (12 ) (16 ) 24,413 27,523 (11 )
Dividends declared per common share 0.390 0.380 0.380 3 3 1.150 1.135 1
Average common shares outstanding 4,948.6 4,989.9 5,043.4 (1 ) (2 ) 4,982.1 5,061.9 (2 )
Diluted average common shares outstanding 4,996.8 5,037.7 5,094.6 (1 ) (2 ) 5,035.4 5,118.2 (2 )
Average loans $ 952,343 956,879 957,484 (1 ) $ 957,581 945,197 1
Average assets 1,938,523 1,927,079 1,914,586 1 1 1,932,242 1,865,694 4
Average total deposits 1,306,356 1,301,195 1,261,527 4 1,302,273 1,239,287 5
Average consumer and small business banking deposits (4) 755,094 760,149 739,066 (1 ) 2 758,443 726,798 4
Net interest margin 2.87 % 2.90 2.82 (1 ) 2 2.88 % 2.86 1
At Period End
Investment securities $ 414,633 409,594 390,832 1 6 $ 414,633 390,832 6
Loans 951,873 957,423 961,326 (1 ) (1 ) 951,873 961,326 (1 )
Allowance for loan losses 11,078 11,073 11,583 (4 ) 11,078 11,583 (4 )
Goodwill 26,581 26,573 26,688 26,581 26,688
Assets 1,934,939 1,930,871 1,942,124 1,934,939 1,942,124
Deposits 1,306,706 1,305,830 1,275,894 2 1,306,706 1,275,894 2
Common stockholders' equity 182,128 181,428 179,916 1 182,128 179,916 1
Wells Fargo stockholders’ equity 205,929 205,230 203,028 1 205,929 203,028 1
Total equity 206,824 206,145 203,958 1 206,824 203,958 1
Tangible common equity (1) 152,901 152,064 149,829 1 2 152,901 149,829 2
Common shares outstanding 4,927.9 4,966.8 5,023.9 (1 ) (2 ) 4,927.9 5,023.9 (2 )
Book value per common share (5) $ 36.96 36.53 35.81 1 3 $ 36.96 35.81 3
Tangible book value per common share (1)(5) 31.03 30.62 29.82 1 4 31.03 29.82 4
Common stock price:
High 56.45 56.60 51.00 11 59.99 53.27 13
Low 49.28 50.84 44.10 (3 ) 12 49.28 44.10 12
Period end 55.15 55.41 44.28 25 55.15 44.28 25
Team members (active, full-time equivalent)     268,000     270,600     268,800       (1 )         268,000     268,800        

(1) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity investments but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on page 35.

(2) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(3) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(4) Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.

(5) Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA
    Quarter ended
Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,
($ in millions, except per share amounts)     2017     2017     2017     2016     2016
For the Quarter
Wells Fargo net income $ 4,596 5,810 5,457 5,274 5,644
Wells Fargo net income applicable to common stock 4,185 5,404 5,056 4,872 5,243
Diluted earnings per common share 0.84 1.07 1.00 0.96 1.03
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 0.94 % 1.21 1.15 1.08 1.17
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 9.06 11.95 11.54 10.94 11.60
Return on average tangible common equity (ROTCE)(1) 10.79 14.26 13.85 13.16 13.96
Efficiency ratio (2) 65.5 61.1 62.7 61.2 59.4
Total revenue $ 21,926 22,169 22,002 21,582 22,328
Pre-tax pre-provision profit (PTPP) (3) 7,575 8,628 8,210 8,367 9,060
Dividends declared per common share 0.39 0.38 0.38 0.38 0.38
Average common shares outstanding 4,948.6 4,989.9 5,008.6 5,025.6 5,043.4
Diluted average common shares outstanding 4,996.8 5,037.7 5,070.4 5,078.2 5,094.6
Average loans $ 952,343 956,879 963,645 964,147 957,484
Average assets 1,938,523 1,927,079 1,931,041 1,944,250 1,914,586
Average total deposits 1,306,356 1,301,195 1,299,191 1,284,158 1,261,527
Average consumer and small business banking deposits (4) 755,094 760,149 758,754 749,946 739,066
Net interest margin 2.87 % 2.90 2.87 2.87 2.82
At Quarter End
Investment securities $ 414,633 409,594 407,560 407,947 390,832
Loans 951,873 957,423 958,405 967,604 961,326
Allowance for loan losses 11,078 11,073 11,168 11,419 11,583
Goodwill 26,581 26,573 26,666 26,693 26,688
Assets 1,934,939 1,930,871 1,951,564 1,930,115 1,942,124
Deposits 1,306,706 1,305,830 1,325,444 1,306,079 1,275,894
Common stockholders' equity 182,128 181,428 178,388 176,469 179,916
Wells Fargo stockholders’ equity 205,929 205,230 201,500 199,581 203,028
Total equity 206,824 206,145 202,489 200,497 203,958
Tangible common equity (1) 152,901 152,064 148,850 146,737 149,829
Common shares outstanding 4,927.9 4,966.8 4,996.7 5,016.1 5,023.9
Book value per common share (5) $ 36.96 36.53 35.70 35.18 35.81
Tangible book value per common share (1)(5) 31.03 30.62 29.79 29.25 29.82
Common stock price:
High 56.45 56.60 59.99 58.02 51.00
Low 49.28 50.84 53.35 43.55 44.10
Period end 55.15 55.41 55.66 55.11 44.28
Team members (active, full-time equivalent)     268,000       270,600       272,800       269,100       268,800

(1) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity investments but excluding mortgage servicing rights), net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on page 35.

(2) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(3) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(4) Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.

(5) Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

 
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME
    Quarter ended September 30,     %     Nine months ended September 30,     %
(in millions, except per share amounts)     2017     2016     Change     2017     2016     Change
Interest income        
Trading assets $ 754 593 27 % $ 2,107 1,761 20 %
Investment securities 2,662 2,298 16 8,035 6,736 19
Mortgages held for sale 219 207 6 598 549 9
Loans held for sale 5 2 150 10 7 43
Loans 10,522 9,978 5 31,021 29,377 6
Other interest income     896       409   119 2,228       1,175   90
Total interest income     15,058       13,487   12 43,999       39,605   11
Interest expense
Deposits 870 356 144 2,090 995 110
Short-term borrowings 226 85 166 503 229 120
Long-term debt 1,377 1,006 37 3,838 2,769 39
Other interest expense     109       88   24 309       260   19
Total interest expense     2,582       1,535   68 6,740       4,253   58
Net interest income 12,476 11,952 4 37,259 35,352 5
Provision for credit losses     717       805   (11 ) 1,877       2,965   (37 )
Net interest income after provision for credit losses     11,759       11,147   5 35,382       32,387   9
Noninterest income
Service charges on deposit accounts 1,276 1,370 (7 ) 3,865 4,015 (4 )
Trust and investment fees 3,609 3,613 10,808 10,545 2
Card fees 1,000 997 2,964 2,935 1
Other fees 877 926 (5 ) 2,644 2,765 (4 )
Mortgage banking 1,046 1,667 (37 ) 3,422 4,679 (27 )
Insurance 269 293 (8 ) 826 1,006 (18 )
Net gains from trading activities 245 415 (41 ) 921 943 (2 )
Net gains on debt securities 166 106 57 322 797 (60 )
Net gains from equity investments 238 140 70 829 573 45
Lease income 475 534 (11 ) 1,449 1,404 3
Other     249       315   (21 ) 788       1,671   (53 )
Total noninterest income     9,450       10,376   (9 ) 28,838       31,333   (8 )
Noninterest expense
Salaries 4,356 4,224 3 12,960 12,359 5
Commission and incentive compensation 2,553 2,520 1 7,777 7,769
Employee benefits 1,279 1,223 5 4,273 3,993 7
Equipment 523 491 7 1,629 1,512 8
Net occupancy 716 718 2,134 2,145 (1 )
Core deposit and other intangibles 288 299 (4 ) 864 891 (3 )
FDIC and other deposit assessments 314 310 1 975 815 20
Other     4,322       3,483   24 11,072       9,678   14
Total noninterest expense     14,351       13,268   8 41,684       39,162   6
Income before income tax expense 6,858 8,255 (17 ) 22,536       24,558   (8 )
Income tax expense     2,204       2,601   (15 ) 6,486       7,817   (17 )
Net income before noncontrolling interests 4,654 5,654 (18 ) 16,050 16,741 (4 )
Less: Net income from noncontrolling interests     58       10   480 187       77   143
Wells Fargo net income     $ 4,596       5,644   (19 ) $ 15,863       16,664   (5 )
Less: Preferred stock dividends and other     411       401   2 1,218       1,163   5
Wells Fargo net income applicable to common stock     $ 4,185       5,243   (20 ) $ 14,645       15,501   (6 )
Per share information
Earnings per common share $ 0.85 1.04 (18 ) $ 2.94 3.06 (4 )
Diluted earnings per common share 0.84 1.03 (18 ) 2.91 3.03 (4 )
Dividends declared per common share 0.390 0.380 3 1.150 1.135 1
Average common shares outstanding 4,948.6 5,043.4 (2 ) 4,982.1 5,061.9 (2 )
Diluted average common shares outstanding     4,996.8       5,094.6       (2 )     5,035.4       5,118.2       (2 )
 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
    Quarter ended
Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,
(in millions, except per share amounts)     2017     2017     2017     2016     2016
Interest income
Trading assets $ 754 710 643 745 593
Investment securities 2,662 2,698 2,675 2,512 2,298
Mortgages held for sale 219 195 184 235 207
Loans held for sale 5 4 1 2 2
Loans 10,522 10,358 10,141 10,128 9,978
Other interest income     896       750       582       436       409
Total interest income     15,058       14,715       14,226       14,058       13,487
Interest expense
Deposits 870 683 537 400 356
Short-term borrowings 226 163 114 101 85
Long-term debt 1,377 1,278 1,183 1,061 1,006
Other interest expense     109       108       92       94       88
Total interest expense     2,582       2,232       1,926       1,656       1,535
Net interest income 12,476 12,483 12,300 12,402 11,952
Provision for credit losses     717       555       605       805       805
Net interest income after provision for credit losses     11,759       11,928       11,695       11,597       11,147
Noninterest income
Service charges on deposit accounts 1,276 1,276 1,313 1,357 1,370
Trust and investment fees 3,609 3,629 3,570 3,698 3,613
Card fees 1,000 1,019 945 1,001 997
Other fees 877 902 865 962 926
Mortgage banking 1,046 1,148 1,228 1,417 1,667
Insurance 269 280 277 262 293
Net gains (losses) from trading activities 245 237 439 (109 ) 415
Net gains on debt securities 166 120 36 145 106
Net gains from equity investments 238 188 403 306 140
Lease income 475 493 481 523 534
Other     249       394       145       (382 )     315
Total noninterest income     9,450       9,686       9,702       9,180       10,376
Noninterest expense
Salaries 4,356 4,343 4,261 4,193 4,224
Commission and incentive compensation 2,553 2,499 2,725 2,478 2,520
Employee benefits 1,279 1,308 1,686 1,101 1,223
Equipment 523 529 577 642 491
Net occupancy 716 706 712 710 718
Core deposit and other intangibles 288 287 289 301 299
FDIC and other deposit assessments 314 328 333 353 310
Other     4,322       3,541       3,209       3,437       3,483
Total noninterest expense     14,351       13,541       13,792       13,215       13,268
Income before income tax expense 6,858 8,073 7,605 7,562 8,255
Income tax expense     2,204       2,225       2,057       2,258       2,601
Net income before noncontrolling interests 4,654 5,848 5,548 5,304 5,654
Less: Net income from noncontrolling interests     58       38       91       30       10
Wells Fargo net income     $ 4,596       5,810       5,457       5,274       5,644
Less: Preferred stock dividends and other     411       406       401       402       401
Wells Fargo net income applicable to common stock     $ 4,185       5,404       5,056       4,872       5,243
Per share information
Earnings per common share $ 0.85 1.08 1.01 0.97 1.04
Diluted earnings per common share 0.84 1.07 1.00 0.96 1.03
Dividends declared per common share 0.390 0.380 0.380 0.380 0.380
Average common shares outstanding 4,948.6 4,989.9 5,008.6 5,025.6 5,043.4
Diluted average common shares outstanding     4,996.8       5,037.7       5,070.4       5,078.2       5,094.6
 
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
   

Quarter ended September 30,

    %    

Nine months ended September 30,

 

  %
(in millions)     2017     2016     Change     2017     2016     Change
Wells Fargo net income     $ 4,596       5,644   (19)% $ 15,863       16,664   (5)%
Other comprehensive income (loss), before tax:        
Investment securities:
Net unrealized gains arising during the period 891 112 696 2,825 2,478 14
Reclassification of net gains to net income (200 ) (193 ) 4 (522 ) (1,001 ) (48)
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period 36 (445 ) NM 279 2,611 (89)
Reclassification of net gains on cash flow hedges to net income (105 ) (262 ) (60) (460 ) (783 ) (41)
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period 11 (447 ) NM 4 (474 ) NM
Amortization of net actuarial loss, settlements and other to net income 41 39 5 120 115 4
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period     40       (10 ) NM 87       27   222
Other comprehensive income (loss), before tax 714 (1,206 ) NM 2,333 2,973 (22)
Income tax benefit (expense) related to other comprehensive income     (265 )     461   NM (852 )     (1,110 ) (23)
Other comprehensive income (loss), net of tax 449 (745 ) NM 1,481 1,863 (21)
Less: Other comprehensive income (loss) from noncontrolling interests     (34 )     19   NM (29 )     (24 ) 21
Wells Fargo other comprehensive income (loss), net of tax     483       (764 ) NM 1,510       1,887   (20)
Wells Fargo comprehensive income 5,079 4,880 4 17,373 18,551 (6)
Comprehensive income from noncontrolling interests     24       29   (17) 158       53   198
Total comprehensive income     $ 5,103       4,909       4     $ 17,531       18,604       (6)

NM – Not meaningful

 
 

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

    Quarter ended
Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,
(in millions)     2017     2017     2017     2016     2016
Balance, beginning of period $ 206,145 202,489 200,497 203,958 202,661
Wells Fargo net income 4,596 5,810 5,457 5,274 5,644
Wells Fargo other comprehensive income (loss), net of tax 483 1,068 (41 ) (5,321 ) (764 )
Noncontrolling interests (20 ) (75 ) 75 (13 ) 14
Common stock issued 254 252 1,406 610 300
Common stock repurchased (1) (2,601 ) (2,287 ) (2,175 ) (2,034 ) (1,839 )
Preferred stock released by ESOP 209 406 43 236
Common stock warrants repurchased/exercised (19 ) (24 ) (44 ) (17 )
Preferred stock issued 677
Common stock dividends (1,936 ) (1,899 ) (1,903 ) (1,909 ) (1,918 )
Preferred stock dividends (411 ) (406 ) (401 ) (401 ) (401 )
Tax benefit from stock incentive compensation (2) 74 31
Stock incentive compensation expense 135 145 389 232 39
Net change in deferred compensation and related plans     (11 )     (11 )     (771 )     (16 )     (28 )
Balance, end of period     $ 206,824       206,145       202,489       200,497       203,958  

(1) For the quarter ended December 31, 2016, includes $750 million related to a private forward repurchase transaction that settled in first quarter 2017 for 14.7 million shares of common stock.

(2) Effective January 1, 2017, we adopted Accounting Standards Update 2016-09 (Improvements to Employee Share-Based Payment Accounting). Accordingly, tax benefit from stock incentive compensation is reported in income tax expense in the consolidated statement of income.

 
 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)

    Quarter ended September 30,
2017     2016
(in millions)     Average

balance

    Yields/

rates

    Interest

income/

expense

    Average

balance

    Yields/

rates

    Interest

income/

expense

Earning assets                
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 276,129 1.20 % $ 832 299,351 0.50 % $ 373
Trading assets 103,589 2.96 767 88,838 2.72 605
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 14,529 1.31 48 25,817 1.52 99
Securities of U.S. states and political subdivisions 52,500 4.16 546 55,170 4.28 590
Mortgage-backed securities:
Federal agencies 139,781 2.58 903 105,780 2.39 631
Residential and commercial     11,013   5.43 149   18,080   5.54 250
Total mortgage-backed securities 150,794 2.79 1,052 123,860 2.85 881
Other debt and equity securities     48,082   3.75 453   54,176   3.37 459
Total available-for-sale securities     265,905   3.15 2,099   259,023   3.13 2,029
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,708 2.18 246 44,678 2.19 246
Securities of U.S. states and political subdivisions 6,266 5.44 85 2,507 5.24 33
Federal agency and other mortgage-backed securities 88,272 2.26 498 47,971 1.97 236
Other debt securities     1,488   3.05 12   3,909   1.98 19
Total held-to-maturity securities     140,734   2.38 841   99,065   2.15 534
Total investment securities 406,639 2.89 2,940 358,088 2.86 2,563
Mortgages held for sale (4) 22,923 3.82 219 24,060 3.44 207
Loans held for sale (4) 152 13.35 5 199 3.04 2
Loans:
Commercial:
Commercial and industrial - U.S. 270,091 3.81 2,590 271,226 3.48 2,369
Commercial and industrial - Non U.S. 57,738 2.90 421 51,261 2.40 309
Real estate mortgage 129,087 3.83 1,245 128,809 3.48 1,127
Real estate construction 24,981 4.18 263 23,212 3.50 205
Lease financing     19,155   4.59 220   18,896   4.70 223
Total commercial     501,052   3.76 4,739   493,404   3.42 4,233
Consumer:
Real estate 1-4 family first mortgage 278,371 4.03 2,809 278,509 3.97 2,764
Real estate 1-4 family junior lien mortgage 41,916 4.95 521 48,927 4.37 537
Credit card 35,657 12.41 1,114 34,578 11.60 1,008
Automobile 56,746 5.34 764 62,461 5.60 880
Other revolving credit and installment     38,601   6.31 615   39,605   5.92 590
Total consumer     451,291   5.14 5,823   464,080   4.97 5,779
Total loans (4) 952,343 4.41 10,562 957,484 4.17 10,012
Other     15,007   1.69 65   6,488   2.30 36
Total earning assets     $ 1,776,782   3.45 % $ 15,390   1,734,508   3.17 % $ 13,798
Funding sources
Deposits:
Interest-bearing checking $ 48,278 0.57 % $ 69 44,056 0.15 % $ 17
Market rate and other savings 681,187 0.17 293 667,185 0.07 110
Savings certificates 21,806 0.31 16 25,185 0.30 19
Other time deposits 66,046 1.51 252 54,921 0.93 128
Deposits in foreign offices     124,746   0.76 240   107,072   0.30 82
Total interest-bearing deposits 942,063 0.37 870 898,419 0.16 356
Short-term borrowings 99,193 0.91 226 116,228 0.29 86
Long-term debt 243,137 2.26 1,377 252,400 1.59 1,006
Other liabilities     24,851   1.74 109   16,771   2.11 88
Total interest-bearing liabilities 1,309,244 0.79 2,582 1,283,818 0.48 1,536
Portion of noninterest-bearing funding sources     467,538     450,690  
Total funding sources     $ 1,776,782   0.58     2,582   1,734,508   0.35   1,536
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.87 %     $ 12,808   2.82 %     $ 12,262
Noninterest-earning assets
Cash and due from banks $ 18,456 18,682
Goodwill 26,600 26,979
Other     116,685   134,417  
Total noninterest-earning assets     $ 161,741   180,078  
Noninterest-bearing funding sources
Deposits $ 364,293 363,108
Other liabilities 57,052 63,777
Total equity 207,934 203,883
Noninterest-bearing funding sources used to fund earning assets     (467,538 ) (450,690 )
Net noninterest-bearing funding sources     $ 161,741   180,078  
Total assets     $ 1,938,523   1,914,586  
                                           
(1) Our average prime rate was 4.25% and 3.50% for the quarters ended September 30, 2017 and 2016, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 1.31% and 0.79% 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 $332 million and $310 million for the quarters ended September 30, 2017 and 2016, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

 
   

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Nine months ended September 30,
2017     2016
(in millions)     Average

balance

    Yields/

rates

    Interest

income/

expense

    Average

balance

    Yields/

rates

    Interest

income/

expense

Earning assets                
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 280,477 0.98 % $ 2,062 292,635 0.49 % $ 1,076
Trading assets 98,516 2.90 2,144 83,580 2.86 1,792
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 19,182 1.48 212 30,588 1.56 358
Securities of U.S. states and political subdivisions 52,748 4.07 1,612 52,637 4.25 1,678
Mortgage-backed securities:
Federal agencies 142,748 2.60 2,782 98,099 2.57 1,889
Residential and commercial     12,671   5.44 516   19,488   5.39 787
Total mortgage-backed securities 155,419 2.83 3,298 117,587 3.03 2,676
Other debt and equity securities     49,212   3.74 1,377   53,680   3.36 1,349
Total available-for-sale securities     276,561   3.13 6,499   254,492   3.18 6,061
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,701 2.19 733 44,671 2.19 733
Securities of U.S. states and political subdivisions 6,270 5.35 251 2,274 5.34 91
Federal agency and other mortgage-backed securities 74,525 2.38 1,329 37,087 2.08 577
Other debt securities     2,531   2.48 47   4,193   1.94 61
Total held-to-maturity securities     128,027   2.46 2,360   88,225   2.21 1,462
Total investment securities 404,588 2.92 8,859 342,717 2.93 7,523
Mortgages held for sale (4) 20,869 3.82 598 20,702 3.53 549
Loans held for sale (4) 158 8.44 10 240 3.71 7
Loans:
Commercial:
Commercial and industrial - U.S. 272,621 3.70 7,547 266,622 3.44 6,874
Commercial and industrial - Non U.S. 56,512 2.83 1,196 50,658 2.29 867
Real estate mortgage 130,931 3.69 3,615 125,902 3.43 3,236
Real estate construction 24,949 4.00 747 22,978 3.53 608
Lease financing     19,094   4.78 685   17,629   4.86 643
Total commercial     504,107   3.66 13,790   483,789   3.38 12,228
Consumer:
Real estate 1-4 family first mortgage 276,330 4.04 8,380 276,369 4.01 8,311
Real estate 1-4 family junior lien mortgage 43,589 4.77 1,557 50,585 4.38 1,659
Credit card 35,322 12.19 3,219 33,774 11.58 2,927
Automobile 59,105 5.41 2,392 61,246 5.64 2,588
Other revolving credit and installment     39,128   6.15 1,801   39,434   5.94 1,755
Total consumer     453,474   5.11 17,349   461,408   4.99 17,240
Total loans (4) 957,581 4.34 31,139 945,197 4.16 29,468
Other     10,892   2.06 169   6,104   2.23 101
Total earning assets     $ 1,773,081   3.39 % $ 44,981   1,691,175   3.20 % $ 40,516
Funding sources
Deposits:
Interest-bearing checking $ 49,134 0.43 % $ 156 40,858 0.13 % $ 41
Market rate and other savings 682,780 0.13 664 659,257 0.07 327
Savings certificates 22,618 0.30 50 26,432 0.37 73
Other time deposits 59,414 1.42 633 58,087 0.84 364
Deposits in foreign offices     123,553   0.64 587   100,783   0.25 190
Total interest-bearing deposits 937,499 0.30 2,090 885,417 0.15 995
Short-term borrowings 97,837 0.69 505 111,993 0.28 231
Long-term debt 250,755 2.04 3,838 235,209 1.57 2,769
Other liabilities     20,910   1.97 309   16,534   2.10 260
Total interest-bearing liabilities 1,307,001 0.69 6,742 1,249,153 0.45 4,255
Portion of noninterest-bearing funding sources     466,080     442,022  
Total funding sources     $ 1,773,081   0.51   6,742   1,691,175   0.34   4,255
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.88 %     $ 38,239   2.86 %     $ 36,261
Noninterest-earning assets
Cash and due from banks $ 18,443 18,499
Goodwill 26,645 26,696
Other     114,073   129,324  
Total noninterest-earning assets     $ 159,161   174,519  
Noninterest-bearing funding sources
Deposits $ 364,774 353,870
Other liabilities 55,221 62,169
Total equity 205,246 200,502
Noninterest-bearing funding sources used to fund earning assets     (466,080 ) (442,022 )
Net noninterest-bearing funding sources     $ 159,161   174,519  
Total assets     $ 1,932,242   1,865,694  
                                           
(1) Our average prime rate was 4.03% and 3.50% for the first nine months of 2017 and 2016, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 1.20% and 0.69% for the same periods, respectively.
(2) Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.
(4) Nonaccrual loans and related income are included in their respective loan categories.

(5) Includes taxable-equivalent adjustments of $980 million and $909 million for the first nine months of 2017 and 2016, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

 
   

Wells Fargo & Company and Subsidiaries

FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended
      Sep 30, 2017     Jun 30, 2017     Mar 31, 2017     Dec 31, 2016     Sep 30, 2016
($ in billions)     Average

balance

    Yields/

rates

    Average

balance

    Yields/

rates

    Average

balance

    Yields/

rates

    Average

balance

    Yields/

rates

    Average

balance

    Yields/

rates

Earning assets                                    
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 276.1 1.20 % $ 281.6 0.99 % $ 283.8 0.76 % $ 273.1 0.56 % $ 299.4 0.50 %
Trading assets 103.6 2.96 98.1 2.95 93.8 2.80 102.8 2.96 88.8 2.72
Investment securities (3):

Available-for-sale securities:

Securities of U.S. Treasury and federal agencies 14.5 1.31 18.1 1.53 25.0 1.54 25.9 1.53 25.8 1.52
Securities of U.S. states and political subdivisions 52.5 4.16 53.5 4.03 52.2 4.03 53.9 4.06 55.2 4.28
Mortgage-backed securities:
Federal agencies 139.8 2.58 132.0 2.63 156.6 2.58 148.0 2.37 105.8 2.39
Residential and commercial     11.0   5.43 12.6   5.55 14.5   5.32 16.5   5.87 18.1   5.54
Total mortgage-backed securities 150.8 2.79 144.6 2.89 171.1 2.81 164.5 2.72 123.9 2.85
Other debt and equity securities     48.1   3.75 49.0   3.87 50.7   3.60 52.7   3.71 54.2   3.37
Total available-for-sale securities     265.9   3.15 265.2   3.21 299.0   3.05 297.0   3.03 259.1   3.13
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44.7 2.18 44.7 2.19 44.7 2.20 44.7 2.20 44.6 2.19
Securities of U.S. states and political subdivisions 6.3 5.44 6.3 5.29 6.3 5.30 4.7 5.31 2.5 5.24
Federal agency and other mortgage-backed securities 88.3 2.26 83.1 2.44 51.8 2.51 46.0 1.81 48.0 1.97
Other debt securities     1.4   3.05 2.8   2.34 3.3   2.34 3.6   2.26 3.9   1.98
Total held-to-maturity securities     140.7   2.38 136.9   2.49 106.1   2.54 99.0   2.17 99.0   2.15
Total investment securities 406.6 2.89 402.1 2.96 405.1 2.92 396.0 2.82 358.1 2.86
Mortgages held for sale 22.9 3.82 19.8 3.94 19.9 3.70 27.5 3.43 24.1 3.44
Loans held for sale 0.2 13.35 0.2 6.95 0.1 4.44 0.2 5.42 0.2 3.04
Loans:
Commercial:
Commercial and industrial - U.S. 270.1 3.81 273.1 3.70 274.8 3.59 272.8 3.46 271.2 3.48
Commercial and industrial - Non U.S. 57.7 2.90 56.4 2.86 55.3 2.73 54.4 2.58 51.3 2.40
Real estate mortgage 129.1 3.83 131.3 3.68 132.4 3.56 131.2 3.44 128.8 3.48
Real estate construction 25.0 4.18 25.3 4.10 24.6 3.72 23.9 3.61 23.2 3.50
Lease financing     19.2   4.59 19.0   4.82 19.1   4.94 18.9   5.78 18.9   4.70
Total commercial     501.1   3.76 505.1   3.67 506.2   3.54 501.2   3.45 493.4   3.42
Consumer:
Real estate 1-4 family first mortgage 278.4 4.03 275.1 4.08 275.5 4.02 277.7 4.01 278.5 3.97
Real estate 1-4 family junior lien mortgage 41.9 4.95 43.6 4.78 45.3 4.60 47.2 4.42 48.9 4.37
Credit card 35.6 12.41 34.9 12.18 35.4 11.97 35.4 11.73 34.6 11.60
Automobile 56.7 5.34 59.1 5.43 61.5 5.46 62.5 5.54 62.5 5.60
Other revolving credit and installment     38.6   6.31 39.1   6.13 39.7   6.02 40.1   5.91 39.6   5.92
Total consumer     451.2   5.14 451.8   5.13 457.4   5.06 462.9   5.01 464.1   4.97
Total loans 952.3 4.41 956.9 4.36 963.6 4.26 964.1 4.20 957.5 4.17
Other     15.1   1.69 10.6   2.00 6.8   2.96 6.7   3.27 6.4   2.30
Total earning assets     $ 1,776.8   3.45

%

$ 1,769.3   3.41 % $ 1,773.1   3.31 % $ 1,770.4   3.24 % $ 1,734.5   3.17 %
Funding sources
Deposits:
Interest-bearing checking $ 48.3 0.57 % $ 48.5 0.41 % $ 50.7 0.29 % $ 46.9 0.17 % $ 44.0 0.15 %
Market rate and other savings 681.2 0.17 683.0 0.13 684.2 0.09 676.4 0.07 667.2 0.07
Savings certificates 21.8 0.31 22.6 0.30 23.5 0.29 24.4 0.30 25.2 0.30
Other time deposits 66.1 1.51 57.1 1.43 54.9 1.31 49.2 1.16 54.9 0.93
Deposits in foreign offices     124.7   0.76 123.7   0.65 122.2   0.49 110.4   0.35 107.1   0.30
Total interest-bearing deposits 942.1 0.37 934.9 0.29 935.5 0.23 907.3 0.18 898.4 0.16
Short-term borrowings 99.2 0.91 95.8 0.69 98.5 0.47 124.7 0.33 116.2 0.29
Long-term debt 243.1 2.26 249.5 2.05 259.8 1.83 252.2 1.68 252.4 1.59
Other liabilities     24.8   1.74 21.0   2.05 16.8   2.22 17.1   2.15 16.8   2.11
Total interest-bearing liabilities 1,309.2 0.79 1,301.2 0.69 1,310.6 0.59 1,301.3 0.51 1,283.8 0.48
Portion of noninterest-bearing funding sources     467.6   468.1   462.5   469.1   450.7  
Total funding sources     $ 1,776.8   0.58   $ 1,769.3   0.51   $ 1,773.1   0.44   $ 1,770.4   0.37   $ 1,734.5   0.35  
Net interest margin on a taxable-equivalent basis 2.87 % 2.90 % 2.87 % 2.87 % 2.82 %
Noninterest-earning assets
Cash and due from banks $ 18.5 18.2 18.7 19.0 18.7
Goodwill 26.6 26.7 26.7 26.7 27.0
Other     116.6   112.9   112.5   128.2   134.4  
Total noninterest-earnings assets     $ 161.7   157.8   157.9   173.9   180.1  
Noninterest-bearing funding sources
Deposits $ 364.3 366.3 363.7 376.9 363.1
Other liabilities 57.0 53.6 54.9 64.9 63.8
Total equity 207.9 206.0 201.8 201.2 203.9
Noninterest-bearing funding sources used to fund earning assets     (467.5 ) (468.1 ) (462.5 ) (469.1 ) (450.7 )
Net noninterest-bearing funding sources     $ 161.7   157.8   157.9   173.9   180.1  
Total assets     $ 1,938.5   1,927.1   1,931.0   1,944.3   1,914.6  
                                                                         

(1) Our average prime rate was 4.25% for the quarter ended September 30, 2017, 4.05% for the quarter ended June 30, 2017, 3.80% for the quarter ended March 31, 2017, 3.54% for the quarter ended December 31, 2016 and 3.50% for the quarter ended September 30, 2016. The average three-month London Interbank Offered Rate (LIBOR) was 1.31%, 1.21%, 1.07%, 0.92% and 0.79% 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 Sep 30, % Nine months ended Sep 30, %
(in millions)     2017     2016     Change     2017     2016     Change
Service charges on deposit accounts $ 1,276     1,370 (7 )% $ 3,865     4,015 (4 )%
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,304 2,344 (2 ) 6,957 6,874 1
Trust and investment management 840 849 (1 ) 2,506 2,499
Investment banking     465       420   11 1,345       1,172   15
Total trust and investment fees     3,609       3,613   10,808       10,545   2
Card fees 1,000 997 2,964 2,935 1
Other fees:
Charges and fees on loans 318 306 4 950 936 1
Cash network fees 126 138 (9 ) 386 407 (5 )
Commercial real estate brokerage commissions 120 119 1 303 322 (6 )
Letters of credit fees 77 81 (5 ) 227 242 (6 )
Wire transfer and other remittance fees 114 103 11 333 296 13
All other fees     122       179   (32 ) 445       562   (21 )
Total other fees     877       926   (5 ) 2,644       2,765   (4 )
Mortgage banking:
Servicing income, net 309 359 (14 ) 1,165 1,569 (26 )
Net gains on mortgage loan origination/sales activities     737       1,308   (44 ) 2,257       3,110   (27 )
Total mortgage banking     1,046       1,667   (37 ) 3,422       4,679   (27 )
Insurance 269 293 (8 ) 826 1,006 (18 )
Net gains from trading activities 245 415 (41 ) 921 943 (2 )
Net gains on debt securities 166 106 57 322 797 (60 )
Net gains from equity investments 238 140 70 829 573 45
Lease income 475 534 (11 ) 1,449 1,404 3
Life insurance investment income 152 152 441 455 (3 )
All other     97       163   (40 ) 347       1,216   (71 )
Total     $ 9,450       10,376       (9 )     $ 28,838       31,333       (8 )
                     

NONINTEREST EXPENSE

                               
Quarter ended Sep 30,

%

Nine months ended Sep 30, %
(in millions)     2017     2016     Change     2017     2016     Change
Salaries $ 4,356 4,224 3

%

$

12,960

12,359

 

5

%

Commission and incentive compensation 2,553 2,520 1 7,777 7,769
Employee benefits 1,279 1,223 5 4,273 3,993 7
Equipment 523 491 7 1,629 1,512 8
Net occupancy 716 718 2,134 2,145 (1 )
Core deposit and other intangibles 288 299 (4 ) 864 891 (3 )
FDIC and other deposit assessments 314 310 1 975 815 20
Outside professional services 955 802 19 2,788 2,154 29
Operating losses 1,329 577 130 1,961 1,365 44
Operating leases 347 363 (4 ) 1,026 950 8
Contract services 351 313 12 1,025 878 17
Outside data processing 227 233 (3 ) 683 666 3
Travel and entertainment 154 144 7 504 509 (1 )
Postage, stationery and supplies 128 150 (15 ) 407 466 (13 )
Advertising and promotion 137 117 17 414 417 (1 )
Telecommunications 90 101 (11 ) 272 287 (5 )
Foreclosed assets 66 (17 ) NM 204 127 61
Insurance 24 23 4 72 156 (54 )
All other     514     677   (24 ) 1,716     1,703 1
Total     $ 14,351     13,268     8      

$

41,684

   

39,162

 

 

6

 

NM – Not meaningful

 
   

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME
Quarter ended
(in millions)     Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
  Sep 30,
2016
Service charges on deposit accounts $ 1,276   1,276   1,313   1,357   1,370
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,304 2,329 2,324 2,342 2,344
Trust and investment management 840 837 829 837 849
Investment banking     465     463     417     519     420  
Total trust and investment fees     3,609     3,629     3,570     3,698     3,613  
Card fees 1,000 1,019 945 1,001 997
Other fees:
Charges and fees on loans 318 325 307 305 306
Cash network fees 126 134 126 130 138
Commercial real estate brokerage commissions 120 102 81 172 119
Letters of credit fees 77 76 74 79 81
Wire transfer and other remittance fees 114 112 107 105 103
All other fees     122     153     170     171     179  
Total other fees     877     902     865     962     926  
Mortgage banking:
Servicing income, net 309 400 456 196 359
Net gains on mortgage loan origination/sales activities     737     748     772     1,221     1,308  
Total mortgage banking     1,046     1,148     1,228     1,417     1,667  
Insurance 269 280 277 262 293
Net gains (losses) from trading activities 245 237 439 (109 ) 415
Net gains on debt securities 166 120 36 145 106
Net gains from equity investments 238 188 403 306 140
Lease income 475 493 481 523 534
Life insurance investment income 152 145 144 132 152
All other     97     249     1     (514 )   163  
Total     $ 9,450     9,686     9,702     9,180     10,376  
 
 

FIVE QUARTER NONINTEREST EXPENSE

     

 

Quarter ended
(in millions)     Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
  Sep 30,
2016
Salaries $ 4,356 4,343 4,261 4,193 4,224
Commission and incentive compensation 2,553 2,499 2,725 2,478 2,520
Employee benefits 1,279 1,308 1,686 1,101 1,223
Equipment 523 529 577 642 491
Net occupancy 716 706 712 710 718
Core deposit and other intangibles 288 287 289 301 299
FDIC and other deposit assessments 314 328 333 353 310
Outside professional services 955 1,029 804 984 802
Operating losses 1,329 350 282 243 577
Operating leases 347 334 345 379 363
Contract services 351 349 325 325 313
Outside data processing 227 236 220 222 233
Travel and entertainment 154 171 179 195 144
Postage, stationery and supplies 128 134 145 156 150
Advertising and promotion 137 150 127 178 117
Telecommunications 90 91 91 96 101
Foreclosed assets 66 52 86 75 (17 )
Insurance 24 24 24 23 23
All other     514     621     581     561     677  
Total     $ 14,351     13,541     13,792     13,215     13,268  
 
           

Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET
(in millions, except shares)     Sep 30,
2017
    Dec 31,
2016
    %

Change

Assets
Cash and due from banks $ 19,206 20,729 (7 )%
Federal funds sold, securities purchased under resale agreements and other short-term investments 273,105 266,038 3
Trading assets 88,404 74,397 19
Investment securities:
Available-for-sale, at fair value 272,210 308,364 (12 )
Held-to-maturity, at cost 142,423 99,583 43
Mortgages held for sale 20,009 26,309 (24 )
Loans held for sale 157 80 96
Loans 951,873 967,604 (2 )
Allowance for loan losses     (11,078 )     (11,419 ) (3 )
Net loans     940,795       956,185   (2 )
Mortgage servicing rights:
Measured at fair value 13,338 12,959 3
Amortized 1,406 1,406
Premises and equipment, net 8,449 8,333 1
Goodwill 26,581 26,693
Derivative assets 12,580 14,498 (13 )
Other assets     116,276       114,541   2
Total assets     $ 1,934,939       1,930,115  
Liabilities
Noninterest-bearing deposits $ 366,528 375,967 (3 )
Interest-bearing deposits     940,178       930,112   1
Total deposits 1,306,706 1,306,079
Short-term borrowings 93,811 96,781 (3 )
Derivative liabilities 9,497 14,492 (34 )
Accrued expenses and other liabilities 79,208 57,189 39
Long-term debt     238,893       255,077     (6 )
Total liabilities     1,728,115       1,729,618    
Equity
Wells Fargo stockholders’ equity:
Preferred stock 25,576 24,551 4
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136 9,136
Additional paid-in capital 60,759 60,234 1
Retained earnings 141,761 133,075 7
Cumulative other comprehensive income (loss) (1,627 ) (3,137 ) (48 )
Treasury stock – 553,940,326 shares and 465,702,148 shares (27,772 ) (22,713 ) 22
Unearned ESOP shares     (1,904 )     (1,565 ) 22
Total Wells Fargo stockholders’ equity 205,929 199,581 3
Noncontrolling interests     895       916   (2 )
Total equity     206,824       200,497   3
Total liabilities and equity     $ 1,934,939       1,930,115        
 
                   

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED BALANCE SHEET
(in millions)     Sep 30,
2017
    Jun 30,
2017
    Mar 31,
2017
    Dec 31,
2016
    Sep 30,
2016
Assets
Cash and due from banks $ 19,206 20,248 19,698 20,729 19,287
Federal funds sold, securities purchased under resale agreements and other short-term investments 273,105 264,706 308,747 266,038 298,325
Trading assets 88,404 83,607 80,326 74,397 81,094
Investment securities:
Available-for-sale, at fair value 272,210 269,202 299,530 308,364 291,591
Held-to-maturity, at cost 142,423 140,392 108,030 99,583 99,241
Mortgages held for sale 20,009 24,807 17,822 26,309 27,423
Loans held for sale 157 156 253 80 183
Loans 951,873 957,423 958,405 967,604 961,326
Allowance for loan losses     (11,078 )     (11,073 )     (11,168 )     (11,419 )     (11,583 )
Net loans     940,795       946,350       947,237       956,185       949,743  
Mortgage servicing rights:
Measured at fair value 13,338 12,789 13,208 12,959 10,415
Amortized 1,406 1,399 1,402 1,406 1,373
Premises and equipment, net 8,449 8,403 8,320 8,333 8,322
Goodwill 26,581 26,573 26,666 26,693 26,688
Derivative assets 12,580 13,273 12,564 14,498 18,736
Other assets     116,276       118,966       107,761       114,541       109,703  
Total assets     $ 1,934,939       1,930,871       1,951,564       1,930,115       1,942,124  
Liabilities
Noninterest-bearing deposits $ 366,528 372,766 365,780 375,967 376,136
Interest-bearing deposits     940,178       933,064       959,664       930,112       899,758  
Total deposits 1,306,706 1,305,830 1,325,444 1,306,079 1,275,894
Short-term borrowings 93,811 95,356 94,871 96,781 124,668
Derivative liabilities 9,497 11,636 12,461 14,492 13,603
Accrued expenses and other liabilities 79,208 73,035 59,831 57,189 69,166
Long-term debt     238,893       238,869       256,468       255,077       254,835  
Total liabilities     1,728,115       1,724,726       1,749,075       1,729,618       1,738,166  
Equity
Wells Fargo stockholders’ equity:
Preferred stock 25,576 25,785 25,501 24,551 24,594
Common stock 9,136 9,136 9,136 9,136 9,136
Additional paid-in capital 60,759 60,689 60,585 60,234 60,685
Retained earnings 141,761 139,524 136,032 133,075 130,288
Cumulative other comprehensive income (loss) (1,627 ) (2,110 ) (3,178 ) (3,137 ) 2,184
Treasury stock (27,772 ) (25,675 ) (24,030 ) (22,713 ) (22,247 )
Unearned ESOP shares     (1,904 )     (2,119 )     (2,546 )     (1,565 )     (1,612 )
Total Wells Fargo stockholders’ equity 205,929 205,230 201,500 199,581 203,028
Noncontrolling interests     895       915       989       916       930  
Total equity     206,824       206,145       202,489       200,497       203,958  
Total liabilities and equity     $ 1,934,939       1,930,871       1,951,564       1,930,115       1,942,124  
 
                   

Wells Fargo & Company and Subsidiaries

FIVE QUARTER INVESTMENT SECURITIES

(in millions)     Sep 30,
2017
    Jun 30,
2017
    Mar 31,
2017
    Dec 31,
2016
    Sep 30,
2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ 6,350 17,896 24,625 25,819 26,376
Securities of U.S. states and political subdivisions 52,774 52,013 52,061 51,101 55,366
Mortgage-backed securities:
Federal agencies 150,181 135,938 156,966 161,230 135,692
Residential and commercial     11,046     12,772     14,233     16,318     18,387
Total mortgage-backed securities 161,227 148,710 171,199 177,548 154,079
Other debt securities     50,966     49,555     50,520     52,685     54,537
Total available-for-sale debt securities 271,317 268,174 298,405 307,153 290,358
Marketable equity securities     893     1,028     1,125     1,211     1,233
Total available-for-sale securities     272,210     269,202     299,530     308,364     291,591
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,712 44,704 44,697 44,690 44,682
Securities of U.S. states and political subdivisions 6,321 6,325 6,331 6,336 2,994
Federal agency and other mortgage-backed securities (1) 90,071 87,525 53,778 45,161 47,721
Other debt securities     1,319     1,838     3,224     3,396     3,844
Total held-to-maturity debt securities     142,423     140,392     108,030     99,583     99,241
Total investment securities     $ 414,633     409,594     407,560     407,947     390,832

(1)  Predominantly consists of federal agency mortgage-backed securities.

 

FIVE QUARTER LOANS

(in millions)     Sep 30,
2017
    Jun 30,
2017
    Mar 31,
2017
    Dec 31,
2016
    Sep 30,
2016
Commercial:
Commercial and industrial $ 327,944 331,113 329,252 330,840 324,020
Real estate mortgage 128,475 130,277 131,532 132,491 130,223
Real estate construction 24,520 25,337 25,064 23,916 23,340
Lease financing     19,211     19,174     19,156     19,289     18,871
Total commercial     500,150     505,901     505,004     506,536     496,454
Consumer:
Real estate 1-4 family first mortgage 280,173 276,566 274,633 275,579 278,689
Real estate 1-4 family junior lien mortgage 41,152 42,747 44,333 46,237 48,105
Credit card 36,249 35,305 34,742 36,700 34,992
Automobile 55,455 57,958 60,408 62,286 62,873
Other revolving credit and installment     38,694     38,946     39,285     40,266     40,213
Total consumer     451,723     451,522     453,401     461,068     464,872
Total loans (1)