July 15, 2016 - 8:00 AM EDT
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Wells Fargo Reports $5.6 Billion in Quarterly Net Income

Diluted EPS of $1.01; Revenue Up 4 Percent from Prior Year

Wells Fargo & Company (NYSE:WFC):

  • Continued strong financial results:
    • Net income of $5.6 billion, compared with $5.7 billion in second quarter 2015
    • Diluted earnings per share (EPS) of $1.01, compared with $1.03
    • Revenue of $22.2 billion, up 4 percent
    • Pre-tax pre-provision profit1 of $9.3 billion, up 5 percent
    • Return on assets of 1.20 percent and return on equity of 11.70 percent
  • Strong growth in loans and deposits:
    • Total average loans of $950.8 billion, up $80.3 billion, or 9 percent, from second quarter 2015
    • Total average deposits of $1.2 trillion, up $51.4 billion, or 4 percent
  • Solid overall credit quality:
    • Net charge-offs of $924 million, up $274 million from second quarter 2015 on higher losses in the oil and gas portfolio
      • Net charge-offs were 0.39 percent of average loans (annualized), up from 0.30 percent
    • Nonaccrual loans down $480 million, or 4 percent
    • Reserve build2 of $150 million, primarily driven by loan growth, compared with a $350 million reserve release2 in second quarter 2015
  • Maintained strong capital levels while continuing to return capital to shareholders:
    • Common Equity Tier 1 ratio (fully phased-in) of 10.6 percent3
    • Total stockholders' equity exceeded $200 billion for the first time
    • Period-end common shares outstanding down 27.4 million from first quarter 2016
    • Increased quarterly common stock dividend to $0.38 per share under the Company's 2015 Comprehensive Capital Analysis and Review (CCAR) submission
  • Received a non-objection to the Company's 2016 CCAR submission from the Federal Reserve.
 

Selected Financial Information

    Quarter ended
      Jun 30,
2016
      Mar 31,
2016
      Jun 30,
2015
Earnings          
Diluted earnings per common share $ 1.01 0.99 1.03
Wells Fargo net income (in billions) 5.56 5.46 5.72
Return on assets (ROA) 1.20 % 1.21 1.33
Return on equity (ROE) 11.70 11.75 12.71
Return on average tangible common equity (ROTCE)(a) 14.15 14.15 15.32
Asset Quality
Net charge-offs (annualized) as a % of average total loans 0.39 % 0.38 0.30
Allowance for credit losses as a % of total loans 1.33 1.34 1.42
Allowance for credit losses as a % of annualized net charge-offs 343 355 484
Other
Revenue (in billions) $ 22.2 22.2 21.3
Efficiency ratio 58.1 % 58.7 58.5
Average loans (in billions) $ 950.8 927.2 870.4
Average deposits (in billions) 1,236.7 1,219.4 1,185.3
Net interest margin     2.86 %     2.90       2.97

(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.

 

Wells Fargo & Company (NYSE:WFC) reported net income of $5.6 billion, or $1.01 per diluted common share, for second quarter 2016, compared with $5.7 billion, or $1.03 per share, for second quarter 2015, and $5.5 billion, or $0.99 per share, for first quarter 2016.

Chairman and CEO John Stumpf said, “Wells Fargo's second quarter results demonstrated our ability to generate consistent performance during periods of economic, capital markets and interest rate uncertainty. Compared with a year ago, we had solid growth in loans, deposits and customers, which are our fundamental drivers of long-term value. We also improved our efficiency ratio while continuing to reinvest in the franchise. We returned more capital to our shareholders in the quarter and were pleased to have received a non-objection to our 2016 Capital Plan from the Federal Reserve. We remain well positioned to continue to meet the financial needs of our customers.”

Chief Financial Officer John Shrewsberry added, “Second quarter results benefited from our diversified business model, as demonstrated by higher linked-quarter net interest income, growth in many of our fee-based businesses and positive operating leverage. Earning assets increased in the second quarter, driven by growth in both loans and investment securities. Investment securities were up $18.5 billion in the second quarter, reflecting gross purchases of approximately $38 billion compared with $5 billion in first quarter. Second quarter purchases were made at interest rate levels above those available late in the quarter, after the 'Brexit' vote. We continue to have capacity for additional deployment of liquidity, but will remain disciplined in our investment approach. Capital remained strong with a net payout ratio4 of 62 percent in the quarter, as we returned $3.2 billion to shareholders through common stock dividends and net share repurchases."

Net Interest Income

Net interest income in second quarter 2016 increased $66 million from first quarter 2016 to $11.7 billion, primarily driven by loan growth, including the full quarter benefit of the assets acquired from GE Capital that closed late in the first quarter. The benefit to net interest income from loan growth was partially offset by reduced income in the investment securities portfolio reflecting accelerated prepayments, primarily on our mortgage-backed securities (MBS), increased interest expense from higher debt balances, and lower interest income from trading assets.

Net interest margin was 2.86 percent, down 4 basis points from first quarter 2016. The decline was primarily driven by the impact of growth in long-term debt, growth in deposits and reduced income on investment securities. The impact of all other balance sheet growth, mix changes and repricing was beneficial to the net interest margin.

Noninterest Income

Noninterest income in the second quarter was $10.4 billion, down from $10.5 billion in first quarter 2016. Second quarter noninterest income reflected higher net gains on debt securities, trust and investment fees, net gains from trading activities, lease income, card fees and service charges on deposit accounts. These increases were partially offset by a linked-quarter reduction in other income, driven by a decline in hedge ineffectiveness income from $379 million in first quarter 2016 to $56 million in second quarter. Other income also included a $290 million gain on the sale of our health benefit services business in second quarter 2016, while first quarter results included a $381 million gain from the sale of our crop insurance business. Insurance revenue declined $141 million linked quarter, due to the sale of our crop insurance business.

Trust and investment fees were $3.5 billion, up $162 million from the prior quarter, primarily due to higher investment banking fees, as well as higher retail brokerage asset-based fees and transaction activity, and trust and investment management fees.

Mortgage banking noninterest income was $1.4 billion, down $184 million from first quarter 2016, as a $306 million increase in origination gains was more than offset by a decline in servicing revenue due in part to lower mortgage servicing rights (MSR) hedging results. Residential mortgage loan originations were $63 billion in the second quarter, up $19 billion linked quarter. The production margin on residential held-for-sale mortgage loan originations5 was 1.66 percent, compared with 1.68 percent in first quarter.

Noninterest Expense

Noninterest expense declined $162 million from the prior quarter, primarily due to lower employee benefits, which were seasonally elevated in first quarter 2016, as well as lower operating losses. Insurance expense also declined as a result of the first quarter 2016 sale of our crop insurance business. The decline in noninterest expense was partially offset by higher outside professional services, primarily for project-related expenses, and higher operating lease depreciation expense as a result of the GE Capital transactions. The efficiency ratio was 58.1 percent in second quarter 2016, compared with 58.7 percent in the prior quarter. The Company continues to expect to operate at the higher end of its targeted efficiency ratio range of 55 to 59 percent for full year 2016.

Loans

Total loans were $957.2 billion at June 30, 2016, up $9.9 billion, or 1 percent, from March 31, 2016, driven by growth in commercial loans, including commercial and industrial and real estate mortgage loans, as well as growth in consumer loans, including real estate 1-4 family first mortgage loans, credit card and automobile. Total average loans were $950.8 billion in the second quarter, up $23.5 billion from the prior quarter, and included the full quarter impact of the March 1, 2016 acquisition of GE Capital's Commercial Distribution Finance and Vendor Finance businesses, as well as a portion of its Corporate Finance business.

 

Period-End Loan Balances

(in millions)     Jun 30,
2016
    Mar 31,
2016
    Dec 31,
2015
    Sep 30,
2015
    Jun 30,
2015
Commercial     $ 494,538     488,205     456,583     447,338     438,022
Consumer     462,619     459,053     459,976     455,895     450,437
Total loans     $ 957,157     947,258     916,559     903,233     888,459
Change from prior quarter     $ 9,899     30,699     13,326     14,774     27,228
                   

Investment Securities

Investment securities were $353.4 billion at June 30, 2016, up $18.5 billion from first quarter, as approximately $38 billion of purchases, predominantly federal agency MBS for our held-to-maturity portfolio, were partially offset by run-off, including accelerated prepayments of investment securities, and sales.

Net unrealized available-for-sale securities gains of $4.5 billion at June 30, 2016, increased from $3.5 billion at March 31, 2016, primarily due to a decline in interest rates, which was partially offset by widening credit spreads.

Deposits

Total average deposits for second quarter 2016 were $1.2 trillion, up 1 percent from the prior quarter, driven by a $13.4 billion increase in consumer and small business. The average deposit cost for second quarter 2016 was 11 basis points, up 3 basis points from a year ago and up 1 basis point from the prior quarter.

Capital

Capital levels remained strong in the second quarter, with Common Equity Tier 1 (fully phased-in) (CET1) of 10.6 percent3, compared with 10.6 percent in the prior quarter. In second quarter 2016, the Company repurchased 44.8 million shares of its common stock, reducing period-end common shares outstanding by 27.4 million shares. The Company paid a quarterly common stock dividend of $0.38 per share, up from $0.375 per share a year ago. The Company received a non-objection to its 2016 Capital Plan from the Federal Reserve.

Credit Quality

“Overall credit results were solid in the second quarter as our quarterly loss rate remained low, at 0.39 percent (annualized)," said Chief Risk Officer Mike Loughlin. "The loan portfolio continued to perform well, led by further improvement in consumer real estate. Oil and gas portfolio performance during the quarter was generally consistent with our expectations. Results in the oil and gas portfolio remained under pressure with higher credit losses and nonaccrual loans, while our allowance coverage ratio for the portfolio remained stable at 9.2 percent at quarter-end. The allowance for credit losses in the second quarter reflected a reserve build2 of $150 million, primarily attributable to loan growth in the commercial, automobile and credit card portfolios. Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general economic conditions.”

Net Loan Charge-offs

The quarterly loss rate of 0.39 percent (annualized) reflected commercial losses of 0.29 percent and consumer losses of 0.49 percent. Credit losses were $924 million in second quarter 2016, compared with $886 million in first quarter 2016, on $59 million higher oil and gas portfolio losses. Consumer losses decreased $82 million, driven by a $46 million decline in consumer real estate losses and a $37 million decline in automobile losses reflecting seasonality.

 

Net Loan Charge-Offs

    Quarter ended
      June 30, 2016     March 31, 2016     December 31, 2015
($ in millions)    

Net loan
charge-
offs

     

As a % of
average
loans (a)

     

Net loan
charge-
offs

     

As a % of
average
loans (a)

     

Net loan
charge-
offs

     

As a % of
average
loans (a)

 
Commercial:            
Commercial and industrial $ 368 0.46 % $ 273 0.36 % $ 215 0.29 %
Real estate mortgage (20 ) (0.06 ) (29 ) (0.10 ) (19 ) (0.06 )
Real estate construction (3 ) (0.06 ) (8 ) (0.13 ) (10 ) (0.18 )
Lease financing     12   0.27 1   0.01 1   0.01
Total commercial     357   0.29 237   0.20 187   0.16
Consumer:
Real estate 1-4 family first mortgage 14 0.02 48 0.07 50 0.07
Real estate 1-4 family junior lien mortgage 62 0.49 74 0.57 70 0.52
Credit card 270 3.25 262 3.16 243 2.93
Automobile 90 0.59 127 0.85 135 0.90
Other revolving credit and installment     131   1.32 138   1.42 146   1.49
Total consumer     567   0.49 649   0.57 644   0.56
Total     $ 924   0.39 % $ 886   0.38 % $ 831   0.36 %
             

(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 $433 million from first quarter 2016 to $13.1 billion. Nonaccrual loans decreased $271 million from first quarter to $12.0 billion as an $809 million decrease in consumer nonaccruals was partially offset by a $651 million increase in oil and gas nonaccruals. Foreclosed assets of $1.1 billion were down $162 million from first quarter 2016.

 

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

      June 30, 2016     March 31, 2016     December 31, 2015
($ in millions)    

Total
balances

     

As a
% of
total
loans

     

Total
balances

     

As a
% of
total
loans

     

Total
balances

     

As a
% of
total
loans

 
Commercial:                          
Commercial and industrial $ 3,464 1.07 % $ 2,911 0.91 % $ 1,363 0.45 %
Real estate mortgage 872 0.68 896 0.72 969 0.79
Real estate construction 59 0.25 63 0.27 66 0.30
Lease financing     112   0.59 99   0.52 26   0.21
Total commercial     4,507   0.91 3,969   0.81 2,424   0.53
Consumer:
Real estate 1-4 family first mortgage 5,970 2.15 6,683 2.43 7,293 2.66
Real estate 1-4 family junior lien mortgage 1,330 2.67 1,421 2.77 1,495 2.82
Automobile 111 0.18 114 0.19 121 0.20
Other revolving credit and installment     45   0.11 47   0.12 49   0.13
Total consumer     7,456   1.61 8,265   1.80 8,958   1.95
Total nonaccrual loans     11,963   1.25 12,234   1.29 11,382   1.24
Foreclosed assets:
Government insured/guaranteed 321 386 446
Non-government insured/guaranteed     796   893   979  
Total foreclosed assets     1,117   1,279   1,425  
Total nonperforming assets     $ 13,080   1.37 % $ 13,513   1.43 % $ 12,807   1.40 %
Change from prior quarter:
Total nonaccrual loans $ (271 ) $ 852 $ (155 )
Total nonperforming assets     (433 )             706               (497 )        
 

Loans 90 Days or More Past Due and Still Accruing

Loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $788 million at June 30, 2016, down from $803 million at March 31, 2016. Loans 90 days or more past due and still accruing with repayments insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgage loans and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $11.6 billion at June 30, 2016, down from $12.3 billion at March 31, 2016.

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $12.7 billion at June 30, 2016, compared with $12.7 billion at March 31, 2016. The allowance coverage for total loans was 1.33 percent, compared with 1.34 percent in first quarter 2016. The allowance covered 3.4 times annualized second quarter net charge-offs, compared with 3.6 times in the prior quarter. The allowance coverage for nonaccrual loans was 107 percent at June 30, 2016, compared with 104 percent at March 31, 2016. “We believe the allowance was appropriate for losses inherent in the loan portfolio at June 30, 2016,” said Loughlin.

Business Segment Performance

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

           
    Quarter ended
(in millions)     Jun 30,
2016
      Mar 31,
2016
      Jun 30,
2015
Community Banking $ 3,179       3,296       3,215
Wholesale Banking 2,073 1,921 2,191
Wealth and Investment Management     584       512       586
 

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

 

Selected Financial Information

   
    Quarter ended
(in millions)     Jun 30,
2016
      Mar 31,
2016
      Jun 30,
2015
Total revenue $ 12,204       12,614       11,967
Provision for credit losses 689 720 397
Noninterest expense 6,648 6,836 6,719
Segment net income 3,179 3,296 3,215
(in billions)
Average loans 485.7 484.3 472.3
Average assets 967.6 947.4 910.0
Average deposits     703.7       683.0       654.8
 

Community Banking reported net income of $3.2 billion, down $117 million, or 4 percent, from first quarter 2016. Revenue of $12.2 billion decreased $410 million, or 3 percent, from first quarter 2016 due to lower other income (hedge ineffectiveness), mortgage banking revenue, and net interest income, partially offset by higher gains from sale of debt securities. Noninterest expense decreased $188 million, or 3 percent, compared with first quarter 2016, due to lower operating losses and other expense, partially offset by higher project-related expense. The provision for credit losses decreased $31 million from the prior quarter.

Net income was down $36 million, or 1 percent, from second quarter 2015. Revenue increased $237 million, or 2 percent, compared with a year ago due to higher gains on sale of debt securities, other income (hedge ineffectiveness), net interest income and card fees, partially offset by lower mortgage banking revenue, gains on equity investments, and trust and investment fees. Noninterest expense decreased $71 million, or 1 percent, from a year ago driven by lower operating losses and foreclosed assets expense, partially offset by higher personnel costs. The provision for credit losses increased $292 million from a year ago primarily due to a reserve build compared with a reserve release in second quarter 2015.

Regional Banking

  • Retail Banking
    • Primary consumer checking customers6 up 4.7 percent year-over-year7
    • Debit card purchase volume8 of $76.4 billion in second quarter, up 8 percent year-over-year
    • Retail Banking household cross-sell ratio of 6.27 products per household, compared with 6.32 year-over-year7,9
  • Small Business Banking
    • Launched new online FastFlexSM Small Business Loan offering a fast decision and funding as soon as the next business day
    • Wells Fargo was the nation’s #1 SBA 7(a) small business lender in dollars and units for the first three quarters of the 2016 federal fiscal year10
  • Digital Banking
    • 27.4 million digital (online and mobile) active customers, including 18 million mobile active users7,11

Consumer Lending Group

  • Home Lending
    • Originations of $63 billion, up from $44 billion in prior quarter
    • Applications of $95 billion, up from $77 billion in prior quarter
    • Application pipeline of $47 billion at quarter end, up from $39 billion at March 31, 2016
    • Launched yourFirst MortgageSM to help more first-time homebuyers and low- to moderate-income families achieve sustainable homeownership
  • Consumer Credit
    • Credit card purchase volume of $19.4 billion in second quarter, up 10 percent year-over-year
    • Credit card penetration in retail banking households rose to 45.6 percent, up from 44.6 percent in prior year7,12
    • Auto originations of $8.3 billion in second quarter, up 8 percent from prior quarter and up 2 percent from prior year

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

 

Selected Financial Information

    Quarter ended
(in millions)     Jun 30,
2016
      Mar 31,
2016
      Jun 30,
2015
 
Total revenue $ 7,284       6,958       6,610
Provision (reversal of provision) for credit losses 385 363 (84 )
Noninterest expense 4,036 3,968 3,504
Segment net income 2,073 1,921 2,191
(in billions)
Average loans 451.4 429.8 386.2
Average assets 772.6 748.6 713.7
Average deposits     425.8       428.0       432.4  
 

Wholesale Banking reported net income of $2.1 billion, up $152 million, or 8 percent, from first quarter 2016. Revenue of $7.3 billion increased $326 million, or 5 percent, from prior quarter due to the full quarter impact of the March 1, 2016 GE Capital acquisition, broad-based loan growth, strong customer accommodation trading results and increased investment banking fees as well as the gain on sale of our health benefit services business, partially offset by lower insurance fees due to the sale of our crop insurance business in the first quarter. Noninterest expense increased $68 million, or 2 percent, from the prior quarter driven by the full quarter impact of the GE Capital acquisition, as well as higher project-related spending, partially offset by seasonally lower personnel expenses and lower insurance commissions due to the sale of our crop insurance business. The provision for credit losses increased $22 million from the prior quarter.

Net income was down $118 million, or 5 percent, from second quarter 2015. Revenue increased $674 million, or 10 percent, from second quarter 2015, on strong loan growth, including the GE Capital acquisitions, the gain on sale of our health benefit services business, higher customer accommodation trading, increased investment banking fees and higher treasury management fees, partially offset by lower insurance fees due to the sale of our crop insurance business, lower commercial real estate brokerage fees and lower gains on equity investments. Noninterest expense increased $532 million, or 15 percent, from a year ago primarily due to the GE Capital acquisitions and higher personnel expenses related to growth initiatives, compliance, and regulatory requirements. The provision for credit losses increased $469 million from a year ago primarily due to higher oil and gas net charge-offs. The second quarter 2015 results included an $89 million reserve release.

  • Average loans increased 17 percent from second quarter 2015, on broad-based growth, including asset-backed finance, commercial real estate, corporate banking, equipment finance and structured real estate as well as the GE Capital acquisitions
  • Treasury management revenue up 5 percent from second quarter 2015
  • The Commercial Electronic Office® (CEO) mobile channel piloted biometric authentication to customers in second quarter, using eyeprint image capture technology

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

 

Selected Financial Information

    Quarter ended
(in millions)     Jun 30,
2016
      Mar 31,
2016
      Jun 30,
2015
 
Total revenue $ 3,919       3,854     3,976
Provision (reversal of provision) for credit losses 2 (14 ) (10 )
Noninterest expense 2,976 3,042 3,038
Segment net income 584 512 586
(in billions)
Average loans 66.7 64.1 59.3
Average assets 205.3 208.1 189.1
Average deposits     182.5       184.5       168.2  
 

Wealth and Investment Management reported net income of $584 million, up $72 million, or 14 percent, from first quarter 2016. Revenue of $3.9 billion increased $65 million, or 2 percent, from the prior quarter, primarily due to higher asset-based fees and brokerage transaction revenue. Noninterest expense decreased $66 million, or 2 percent, from the prior quarter, primarily driven by lower personnel expenses from seasonally higher first quarter expense, partially offset by higher broker commissions. The provision for credit losses was up $16 million from first quarter 2016 due to higher net charge-offs.

Net income was relatively flat compared with second quarter 2015. Revenue decreased $57 million, or 1 percent, from a year ago primarily driven by lower asset-based fees and brokerage transaction revenue, partially offset by higher net interest income as average loans increased $7.4 billion, or 12 percent, to $66.7 billion. Noninterest expense decreased $62 million, or 2 percent, from a year ago, primarily due to lower operating losses. The provision for credit losses increased $12 million from a year ago primarily due to higher net charge-offs.

Retail Brokerage

  • Client assets of $1.5 trillion, up 2 percent from prior year
  • Advisory assets of $444 billion, up 2 percent from prior year, primarily driven by positive net flows
  • Strong loan growth, with average balances up 20 percent from prior year largely due to continued growth in non-conforming mortgage loans and security-based lending

Wealth Management

  • Client assets of $224 billion, stable from prior year
  • Average loan balances up 9 percent over prior year primarily driven by continued growth in non-conforming mortgage loans, commercial loans and security-based lending

Retirement

  • IRA assets of $367 billion, up 1 percent from prior year
  • Institutional Retirement plan assets of $337 billion, down 3 percent from prior year

Asset Management

  • Total assets under management of $484 billion, down 1 percent from prior year primarily due to equity fund outflows, partially offset by favorable fixed income net inflows and higher market valuations

Conference Call

The Company will host a live conference call on Friday, July 15, at 7 a.m. PT (10 a.m. ET). You may participate by dialing 866-872-5161 (U.S. and Canada) or 706-643-1962 (International). The call will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and at https://engage.vevent.com/rt/wells_fargo_ao~071516.

A replay of the conference call will be available beginning at 10 a.m. PT (1 p.m. ET) on Friday, July 15 through Friday, July 29. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #96514871. The replay will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/ and at https://engage.vevent.com/rt/wells_fargo_ao~071516.

 

Endnotes

1   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.
2 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.
3 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.
4 Net payout ratio means the ratio of (i) common stock dividends and share repurchases less issuances and stock compensation-related items, divided by (ii) net income applicable to common stock.
5 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.
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 May 2016, comparisons with May 2015.
8 Combined consumer and business debit card purchase volume dollars.
9 Effective second quarter 2016, Retail Banking households reflect only those households that maintain a retail checking account, which we believe provides the foundation for long-term retail banking relationships. Additionally, we updated the products included to capture business products in addition to retail products that have the potential for revenue generation and long-term viability. Products and services that generally do not meet these criteria - such as ATM cards, online banking, bill pay and direct deposit - are not included. Prior period metrics have been revised to conform with the updated methodology.
10 U.S. SBA data, partial fiscal year as of June 2016 (federal fiscal full-year 2016 is October 2015-September 2016).
11 Primarily includes retail banking, consumer lending, small business and business banking customers.
12 Effective second quarter 2016, Retail Banking households reflect only those households that maintain a retail checking account, which we believe provides the foundation for long-term retail banking relationships. Prior period metrics have been revised to conform with the updated methodology.
 

Forward-Looking Statements

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

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

  • current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and the overall slowdown in global economic growth;
  • our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
  • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
  • the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications;
  • the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;
  • negative effects relating to our mortgage servicing and foreclosure practices, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;
  • our ability to realize our efficiency ratio target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;
  • the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
  • significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our investment securities portfolio;
  • the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;
  • reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions;
  • a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks;
  • the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
  • fiscal and monetary policies of the Federal Reserve Board; and
  • the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015.

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

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, 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. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 36 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. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.

 

Wells Fargo & Company and Subsidiaries

QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
       
   

   Pages   

 

Summary Information

Summary Financial Data

16
 

Income

Consolidated Statement of Income 18
Consolidated Statement of Comprehensive Income 20
Condensed Consolidated Statement of Changes in Total Equity 20
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 21
Five Quarter Average Balances, Yields and Rates Paid (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   Jun 30, 2016 from   Six months ended  
($ in millions, except per share Jun 30,     Mar 31,       Jun 30, Mar 31,     Jun 30, Jun 30,       Jun 30, %
amounts)     2016       2016       2015       2016       2015       2016       2015       Change  
For the Period
Wells Fargo net income $ 5,558 5,462 5,719 2 % (3 ) $ 11,020 11,523 (4 )%
Wells Fargo net income applicable to common stock 5,173 5,085 5,363 2 (4 ) 10,258 10,824 (5 )
Diluted earnings per common share 1.01 0.99 1.03 2 (2 ) 2.00 2.07 (3 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.20 % 1.21 1.33 (1 ) (10 ) 1.20 1.35 (11 )

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)

11.70 11.75 12.71 (8 ) 11.72 12.94 (9 )
Return on average tangible common equity (ROTCE)(1) 14.15 14.15 15.32 (8 ) 14.15 15.61 (9 )
Efficiency ratio (2) 58.1 58.7 58.5 (1 ) (1 ) 58.4 58.6
Total revenue $ 22,162 22,195 21,318 4 $ 44,357 42,596 4
Pre-tax pre-provision profit (PTPP) (3) 9,296 9,167 8,849 1 5 18,463 17,620 5
Dividends declared per common share 0.380 0.375 0.375 1 1 0.755 0.725 4
Average common shares outstanding 5,066.9 5,075.7 5,151.9 (2 ) 5,071.3 5,156.1 (2 )
Diluted average common shares outstanding 5,118.1 5,139.4 5,220.5 (2 ) 5,129.8 5,233.2 (2 )
Average loans $ 950,751 927,220 870,446 3 9 $ 938,986 866,873 8
Average assets 1,862,084 1,819,875 1,729,278 2 8 1,840,980 1,718,597 7
Average total deposits 1,236,658 1,219,430 1,185,304 1 4 1,228,044 1,180,077 4
Average consumer and small business banking deposits (4) 726,359 714,837 674,889 2 8 720,598 670,418 7
Net interest margin 2.86 % 2.90 2.97 (1 ) (4 ) 2.88 2.96 (3 )
At Period End
Investment securities $ 353,426 334,899 340,769 6 4 $ 353,426 340,769 4
Loans 957,157 947,258 888,459 1 8 957,157 888,459 8
Allowance for loan losses 11,664 11,621 11,754 (1 ) 11,664 11,754 (1 )
Goodwill 26,963 27,003 25,705 5 26,963 25,705 5
Assets 1,889,235 1,849,182 1,720,617 2 10 1,889,235 1,720,617 10
Deposits 1,245,473 1,241,490 1,185,828 5 1,245,473 1,185,828 5
Common stockholders' equity 178,633 175,534 169,596 2 5 178,633 169,596 5
Wells Fargo stockholders’ equity 201,745 197,496 189,558 2 6 201,745 189,558 6
Total equity 202,661 198,504 190,676 2 6 202,661 190,676 6
Tangible common equity (1) 148,110 144,679 140,520 2 5 148,110 140,520 5
Common shares outstanding 5,048.5 5,075.9 5,145.2 (1 ) (2 ) 5,048.5 5,145.2 (2 )
Book value per common share (5) $ 35.38 34.58 32.96 2 7 $ 35.38 32.96 7
Tangible book value per common share (1)(5) 29.34 28.50 27.31 3 7 29.34 27.31 7
Common stock price:
High 51.41 53.27 58.26 (3 ) (12 ) 53.27 58.26 (9 )
Low 44.50 44.50 53.56 (17 ) 44.50 50.42 (12 )
Period end 47.33 48.36 56.24 (2 ) (16 ) 47.33 56.24 (16 )
Team members (active, full-time equivalent)       267,900       268,600       265,800             1         267,900       265,800       1  

(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  
Jun 30,     Mar 31,       Dec 31,       Sep 30,       Jun 30,
($ in millions, except per share amounts)     2016       2016       2015       2015       2015  
For the Quarter
Wells Fargo net income $5,558 5,462 5,575 5,796 5,719
Wells Fargo net income applicable to common stock 5,173 5,085 5,203 5,443 5,363
Diluted earnings per common share 1.01 0.99 1.00 1.05 1.03
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.20 % 1.21 1.24 1.32 1.33
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 11.70 11.75 11.93 12.62 12.71
Return on average tangible common equity (ROTCE)(1) 14.15 14.15 14.30 15.19 15.32
Efficiency ratio (2) 58.1 58.7 58.4 56.7 58.5
Total revenue $22,162 22,195 21,586 21,875 21,318
Pre-tax pre-provision profit (PTPP) (3) 9,296 9,167 8,987 9,476 8,849
Dividends declared per common share 0.380 0.375 0.375 0.375 0.375
Average common shares outstanding 5,066.9 5,075.7 5,108.5 5,125.8 5,151.9
Diluted average common shares outstanding 5,118.1 5,139.4 5,177.9 5,193.8 5,220.5
Average loans $950,751 927,220 912,280 895,095 870,446
Average assets 1,862,084 1,819,875 1,787,287 1,746,402 1,729,278
Average total deposits 1,236,658 1,219,430 1,216,809 1,198,874 1,185,304
Average consumer and small business banking deposits (4) 726,359 714,837 696,484 683,245 674,889
Net interest margin 2.86 % 2.90 2.92 2.96 2.97
At Quarter End
Investment securities $353,426 334,899 347,555 345,074 340,769
Loans 957,157 947,258 916,559 903,233 888,459
Allowance for loan losses 11,664 11,621 11,545 11,659 11,754
Goodwill 26,963 27,003 25,529 25,684 25,705
Assets 1,889,235 1,849,182 1,787,632 1,751,265 1,720,617
Deposits 1,245,473 1,241,490 1,223,312 1,202,179 1,185,828
Common stockholders' equity 178,633 175,534 172,036 172,089 169,596
Wells Fargo stockholders’ equity 201,745 197,496 192,998 193,051 189,558
Total equity 202,661 198,504 193,891 194,043 190,676
Tangible common equity (1) 148,110 144,679 143,337 143,352 140,520
Common shares outstanding 5,048.5 5,075.9 5,092.1 5,108.5 5,145.2
Book value per common share (5) $35.38 34.58 33.78 33.69 32.96
Tangible book value per common share (1)(5) 29.34 28.50 28.15 28.06 27.31
Common stock price:
High 51.41 53.27 56.34 58.77 58.26
Low 44.50 44.50 49.51 47.75 53.56
Period end 47.33 48.36 54.36 51.35 56.24
Team members (active, full-time equivalent)     267,900       268,600       264,700       265,200       265,800  

(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 June 30,     %     Six months ended June 30,     %
(in millions, except per share amounts)     2016       2015       Change       2016       2015       Change  
Interest income            
Trading assets $ 572 483 18 % $ 1,168 928 26 %
Investment securities 2,176 2,181 4,438 4,325 3
Mortgages held for sale 181 209 (13 ) 342 386 (11 )
Loans held for sale 3 5 (40 ) 5 10 (50 )
Loans 9,822 9,098 8 19,399 18,036 8
Other interest income       392       250   57       766       504   52
Total interest income       13,146       12,226   8       26,118       24,189   8
Interest expense
Deposits 332 232 43 639 490 30
Short-term borrowings 77 21 267 144 39 269
Long-term debt 921 620 49 1,763 1,224 44
Other interest expense       83       83         172       180   (4 )
Total interest expense       1,413       956   48       2,718       1,933   41
Net interest income 11,733 11,270 4 23,400 22,256 5
Provision for credit losses       1,074       300   258       2,160       908   138
Net interest income after provision for credit losses       10,659       10,970   (3 )       21,240       21,348   (1 )
Noninterest income
Service charges on deposit accounts 1,336 1,289 4 2,645 2,504 6
Trust and investment fees 3,547 3,710 (4 ) 6,932 7,387 (6 )
Card fees 997 930 7 1,938 1,801 8
Other fees 906 1,107 (18 ) 1,839 2,185 (16 )
Mortgage banking 1,414 1,705 (17 ) 3,012 3,252 (7 )
Insurance 286 461 (38 ) 713 891 (20 )
Net gains from trading activities 328 133 147 528 541 (2 )
Net gains on debt securities 447 181 147 691 459 51
Net gains from equity investments 189 517 (63 ) 433 887 (51 )
Lease income 497 155 221 870 287 203
Other       482       (140 ) NM       1,356       146   829
Total noninterest income       10,429       10,048   4       20,957       20,340   3
Noninterest expense
Salaries 4,099 3,936 4 8,135 7,787 4
Commission and incentive compensation 2,604 2,606 5,249 5,291 (1 )
Employee benefits 1,244 1,106 12 2,770 2,583 7
Equipment 493 470 5 1,021 964 6
Net occupancy 716 710 1 1,427 1,433
Core deposit and other intangibles 299 312 (4 ) 592 624 (5 )
FDIC and other deposit assessments 255 222 15 505 470 7
Other       3,156       3,107   2       6,195       5,824   6
Total noninterest expense       12,866       12,469   3       25,894       24,976   4
Income before income tax expense 8,222 8,549 (4 ) 16,303 16,712 (2 )
Income tax expense       2,649       2,763   (4 )       5,216       5,042   3
Net income before noncontrolling interests 5,573 5,786 (4 ) 11,087 11,670 (5 )
Less: Net income from noncontrolling interests       15       67   (78 )       67       147   (54 )
Wells Fargo net income     $ 5,558       5,719   (3 )     $ 11,020       11,523   (4 )
Less: Preferred stock dividends and other       385       356   8       762       699   9
Wells Fargo net income applicable to common stock     $ 5,173       5,363   (4 )     $ 10,258       10,824   (5 )
Per share information
Earnings per common share $ 1.02 1.04 (2 ) $ 2.02 2.10 (4 )
Diluted earnings per common share 1.01 1.03 (2 ) 2.00 2.07 (3 )
Dividends declared per common share 0.380 0.375 1 0.755 0.725 4
Average common shares outstanding 5,066.9 5,151.9 (2 ) 5,071.3 5,156.1 (2 )
Diluted average common shares outstanding       5,118.1       5,220.5       (2 )       5,129.8       5,233.2       (2 )

NM – Not meaningful

 
   

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME  
Quarter ended  
Jun 30,       Mar 31,       Dec 31,       Sep 30,     Jun 30,
(in millions, except per share amounts)     2016       2016       2015       2015       2015  
Interest income
Trading assets $ 572 596 558 485 483
Investment securities 2,176 2,262 2,323 2,289 2,181
Mortgages held for sale 181 161 176 223 209
Loans held for sale 3 2 5 4 5
Loans 9,822 9,577 9,323 9,216 9,098
Other interest income       392       374       258       228       250  
Total interest income       13,146       12,972       12,643       12,445       12,226  
Interest expense
Deposits 332 307 241 232 232
Short-term borrowings 77 67 13 12 21
Long-term debt 921 842 713 655 620
Other interest expense       83       89       88       89       83  
Total interest expense       1,413       1,305       1,055       988       956  
Net interest income 11,733 11,667 11,588 11,457 11,270
Provision for credit losses       1,074       1,086       831       703       300  
Net interest income after provision for credit losses       10,659       10,581       10,757       10,754       10,970  
Noninterest income
Service charges on deposit accounts 1,336 1,309 1,329 1,335 1,289
Trust and investment fees 3,547 3,385 3,511 3,570 3,710
Card fees 997 941 966 953 930
Other fees 906 933 1,040 1,099 1,107
Mortgage banking 1,414 1,598 1,660 1,589 1,705
Insurance 286 427 427 376 461
Net gains (losses) from trading activities 328 200 99 (26 ) 133
Net gains on debt securities 447 244 346 147 181
Net gains from equity investments 189 244 423 920 517
Lease income 497 373 145 189 155
Other       482       874       52       266       (140 )
Total noninterest income       10,429       10,528       9,998       10,418       10,048  
Noninterest expense
Salaries 4,099 4,036 4,061 4,035 3,936
Commission and incentive compensation 2,604 2,645 2,457 2,604 2,606
Employee benefits 1,244 1,526 1,042 821 1,106
Equipment 493 528 640 459 470
Net occupancy 716 711 725 728 710
Core deposit and other intangibles 299 293 311 311 312
FDIC and other deposit assessments 255 250 258 245 222
Other       3,156       3,039       3,105       3,196       3,107  
Total noninterest expense       12,866       13,028       12,599       12,399       12,469  
Income before income tax expense 8,222 8,081 8,156 8,773 8,549
Income tax expense       2,649       2,567       2,533       2,790       2,763  
Net income before noncontrolling interests 5,573 5,514 5,623 5,983 5,786
Less: Net income from noncontrolling interests       15       52       48       187       67  
Wells Fargo net income     $ 5,558       5,462       5,575       5,796       5,719  
Less: Preferred stock dividends and other       385       377       372       353       356  
Wells Fargo net income applicable to common stock     $ 5,173       5,085       5,203       5,443       5,363  
Per share information
Earnings per common share $ 1.02 1.00 1.02 1.06 1.04
Diluted earnings per common share 1.01 0.99 1.00 1.05 1.03
Dividends declared per common share 0.380 0.375 0.375 0.375 0.375
Average common shares outstanding 5,066.9 5,075.7 5,108.5 5,125.8 5,151.9
Diluted average common shares outstanding       5,118.1       5,139.4       5,177.9       5,193.8       5,220.5  
 
               

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended June 30, % Six months ended June 30, %
(in millions)       2016       2015       Change       2016       2015       Change
Wells Fargo net income     $ 5,558       5,719   (3 )% $ 11,020       11,523   (4 )%
Other comprehensive income (loss), before tax:        
Investment securities:
Net unrealized gains (losses) arising during the period 1,571 (1,969 ) NM 2,366 (1,576 ) NM
Reclassification of net gains to net income (504 ) (218 ) 131 (808 ) (518 ) 56
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period 1,057 (488 ) NM 3,056 464 559
Reclassification of net gains on cash flow hedges to net income (265 ) (268 ) (1 ) (521 ) (502 ) 4
Defined benefit plans adjustments:
Net actuarial losses arising during the period (19 ) NM (27 ) (11 ) 145
Amortization of net actuarial loss, settlements and other to net income 39 30 30 76 73 4
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period       (6 )     10   NM   37       (45 ) NM
Other comprehensive income (loss), before tax 1,873 (2,903 ) NM 4,179 (2,115 ) NM
Income tax (expense) benefit related to other comprehensive income       (714 )     1,040   NM   (1,571 )     812   NM
Other comprehensive income (loss), net of tax 1,159 (1,863 ) NM 2,608 (1,303 ) NM
Less: Other comprehensive income (loss) from noncontrolling interests       (15 )     (154 ) (90 )   (43 )     147   NM
Wells Fargo other comprehensive income (loss), net of tax       1,174       (1,709 ) NM   2,651       (1,450 ) NM
Wells Fargo comprehensive income 6,732 4,010 68 13,671 10,073 36
Comprehensive income (loss) from noncontrolling interests             (87 ) (100 )   24       294   (92 )
Total comprehensive income     $ 6,732       3,923       72       $ 13,695       10,367       32  

NM – Not meaningful

 
 

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

    Quarter ended  
Jun 30,     Mar 31,     Dec 31,     Sep 30,     Jun 30,
(in millions)     2016       2016       2015       2015       2015  
Balance, beginning of period $ 198,504 193,891 194,043 190,676 189,964
Cumulative effect from change in consolidation accounting (1) 121
Wells Fargo net income 5,558 5,462 5,575 5,796 5,719
Wells Fargo other comprehensive income (loss), net of tax 1,174 1,477 (2,092 ) 321 (1,709 )
Noncontrolling interests (92 ) (5 ) (100 ) (123 ) (51 )
Common stock issued 397 1,079 310 505 502
Common stock repurchased (2) (2,214 ) (2,029 ) (1,974 ) (2,137 ) (1,994 )
Preferred stock released by ESOP 371 313 210 225 349
Common stock warrants repurchased/exercised (17 ) (24 )
Preferred stock issued 1,126 975 975
Common stock dividends (1,930 ) (1,904 ) (1,917 ) (1,926 ) (1,932 )
Preferred stock dividends (386 ) (378 ) (371 ) (356 ) (355 )
Tax benefit from stock incentive compensation 23 149 22 22 55
Stock incentive compensation expense 139 369 204 98 166
Net change in deferred compensation and related plans       (9 )     (1,016 )     (19 )     (16 )     (14 )
Balance, end of period     $ 202,661       198,504       193,891       194,043       190,676  

(1) Effective January 1, 2016, we adopted changes in consolidation accounting pursuant to Accounting Standards Update 2015-02 (Amendments to the Consolidation Analysis). Accordingly, we recorded a $121 million net increase to beginning noncontrolling interests as a cumulative-effect adjustment.

(2) For the quarters ended December 31 and June 30, 2015, includes $500 million and $750 million related to private forward repurchase transactions that settled in subsequent quarters for 9.2 million and 13.6 million shares of common stock, respectively.

 
 
Wells Fargo & Company and Subsidiaries

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

    Quarter ended June 30,  
2016       2015  
        Interest           Interest
Average Yields/ income/ Average Yields/ income/
(in millions)     balance       rates       expense       balance       rates       expense  
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 293,783 0.49 % $ 359 267,101 0.28 % $ 186
Trading assets 81,380 2.86 582 67,615 2.91 492
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 31,525 1.56 123 31,748 1.58 125
Securities of U.S. states and political subdivisions 52,201 4.24 553 47,075 4.13 486
Mortgage-backed securities:
Federal agencies 92,010 2.53 583 97,958 2.65 650
Residential and commercial     19,571   5.44 266   22,677   5.84 331  
Total mortgage-backed securities 111,581 3.04 849 120,635 3.25 981
Other debt and equity securities     53,301   3.48 461   48,816   3.51 427  
Total available-for-sale securities     248,608   3.20 1,986   248,274   3.25 2,019  
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,671 2.19 243 44,492 2.19 243
Securities of U.S. states and political subdivisions 2,155 5.41 29 2,090 5.17 27
Federal agency mortgage-backed securities 35,057 1.90 166 21,044 2.00 105
Other debt securities     4,077   1.92 20   6,270   1.70 26  
Total held-to-maturity securities     85,960   2.14 458   73,896   2.18 401  
Total investment securities 334,568 2.93 2,444 322,170 3.01 2,420
Mortgages held for sale (4) 20,140 3.60 181 23,456 3.57 209
Loans held for sale (4) 239 4.83 3 666 3.51 5
Loans:
Commercial:
Commercial and industrial - U.S. 270,862 3.45 2,328 231,551 3.36 1,939
Commercial and industrial - Non U.S. 51,201 2.35 300 45,123 1.93 217
Real estate mortgage 126,126 3.41 1,069 113,089 3.48 982
Real estate construction 23,115 3.49 200 20,771 4.12 214
Lease financing     18,930   5.12 242   12,364   5.16 160  
Total commercial     490,234   3.39 4,139   422,898   3.33 3,512  
Consumer:
Real estate 1-4 family first mortgage 275,854 4.01 2,765 266,023 4.12 2,740
Real estate 1-4 family junior lien mortgage 50,609 4.37 551 57,066 4.23 603
Credit card 33,368 11.52 956 30,373 11.69 885
Automobile 61,149 5.66 860 56,974 5.88 836
Other revolving credit and installment     39,537   5.91 581   37,112   5.88 544  
Total consumer     460,517   4.98 5,713   447,548   5.02 5,608  
Total loans (4) 950,751 4.16 9,852 870,446 4.20 9,120
Other     6,014   2.30 35   4,859   5.14 64  
Total earning assets     $ 1,686,875   3.20 % $ 13,456   1,556,313   3.22 % $ 12,496  
Funding sources
Deposits:
Interest-bearing checking $ 39,772 0.13 % $ 13 38,551 0.05 % $ 5
Market rate and other savings 658,944 0.07 110 619,837 0.06 87
Savings certificates 26,246 0.35 23 32,454 0.63 52
Other time deposits 61,170 0.85 129 52,238 0.42 55
Deposits in foreign offices     97,525   0.23 57   104,334   0.13 33  
Total interest-bearing deposits 883,657 0.15 332 847,414 0.11 232
Short-term borrowings 111,848 0.28 78 84,499 0.09 21
Long-term debt 236,156 1.56 921 185,093 1.34 620
Other liabilities     16,336   2.06 83   16,405   2.03 83  
Total interest-bearing liabilities 1,247,997 0.45 1,414 1,133,411 0.34 956
Portion of noninterest-bearing funding sources     438,878       422,902      
Total funding sources     $ 1,686,875   0.34   1,414   1,556,313   0.25   956  
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.86 %     $ 12,042   2.97 %     $ 11,540  
Noninterest-earning assets
Cash and due from banks $ 18,818 17,462
Goodwill 27,037 25,705
Other     129,354   129,798  
Total noninterest-earning assets     $ 175,209   172,965  
Noninterest-bearing funding sources
Deposits $ 353,001 337,890
Other liabilities 60,083 67,595
Total equity 201,003 190,382
Noninterest-bearing funding sources used to fund earning assets     (438,878 ) (422,902 )
Net noninterest-bearing funding sources     $ 175,209   172,965  
Total assets     $ 1,862,084   1,729,278  
             

(1) Our average prime rate was 3.50% and 3.25% for the quarters ended June 30, 2016 and 2015, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.64% and 0.28% 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 $309 million and $270 million for the quarters ended June 30, 2016 and 2015, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

 
 
Wells Fargo & Company and Subsidiaries

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

    Six months ended June 30,  
2016       2015  
        Interest           Interest
Average Yields/ income/ Average Yields/ income/
(in millions)     balance       rates       expense       balance       rates       expense  
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 289,240 0.49 % $ 703 271,392 0.28 % $ 376
Trading assets 80,922 2.94 1,187 65,309 2.89 945
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 33,000 1.58 259 28,971 1.56 225
Securities of U.S. states and political subdivisions 51,357 4.24 1,088 46,017 4.16 958
Mortgage-backed securities:
Federal agencies 94,216 2.67 1,258 100,064 2.71 1,356
Residential and commercial       20,199   5.32   537   23,304   5.77   673  
Total mortgage-backed securities 114,415 3.14 1,795 123,368 3.29 2,029
Other debt and equity securities       53,430   3.34   890   47,938   3.47   827  
Total available-for-sale securities       252,202   3.20   4,032   246,294   3.28   4,039  
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,667 2.19 487 43,685 2.20 477
Securities of U.S. states and political subdivisions 2,155 5.41 58 2,019 5.16 52
Federal agency mortgage-backed securities 31,586 2.16 341 16,208 1.95 158
Other debt securities       4,338   1.92   42   6,530   1.71   55  
Total held-to-maturity securities       82,746   2.25   928   68,442   2.18   742  
Total investment securities 334,948 2.97 4,960 314,736 3.04 4,781
Mortgages held for sale (4) 19,005 3.60 342 21,530 3.59 386
Loans held for sale (4) 260 3.97 5 683 3.08 10
Loans:
Commercial:
Commercial and industrial - U.S. 264,295 3.42 4,505 229,627 3.32 3,783
Commercial and industrial - Non U.S. 50,354 2.23 558 45,093 1.90 426
Real estate mortgage 124,432 3.41 2,109 112,298 3.52 1,963
Real estate construction 22,859 3.55 403 20,135 3.83 383
Lease financing       16,989   4.95   420   12,341   5.06   312  
Total commercial       478,929   3.35   7,995   419,494   3.30   6,867  
Consumer:
Real estate 1-4 family first mortgage 275,288 4.03 5,547 265,923 4.12 5,481
Real estate 1-4 family junior lien mortgage 51,423 4.38 1,122 57,968 4.25 1,224
Credit card 33,367 11.56 1,919 30,376 11.74 1,768
Automobile 60,631 5.66 1,708 56,492 5.91 1,657
Other revolving credit and installment       39,348   5.95   1,165   36,620   5.94   1,079  
Total consumer       460,057   5.00   11,461   447,379   5.03   11,209  
Total loans (4) 938,986 4.16 19,456 866,873 4.19 18,076
Other       5,910   2.18   65   4,795   5.27   127  
Total earning assets     $ 1,669,271   3.21 % $ 26,718   1,545,318   3.21 % $ 24,701  
Funding sources
Deposits:
Interest-bearing checking $ 39,242 0.12 % $ 24 38,851 0.05 % $ 10
Market rate and other savings 655,247 0.07 217 616,643 0.06 184
Savings certificates 27,063 0.40 54 33,525 0.69 116
Other time deposits 59,688 0.80 236 54,381 0.41 111
Deposits in foreign offices       97,604   0.22   108   104,932   0.13   69  
Total interest-bearing deposits 878,844 0.15 639 848,332 0.12 490
Short-term borrowings 109,853 0.27 145 78,141 0.10 39
Long-term debt 226,519 1.56 1,763 184,432 1.33 1,224
Other liabilities       16,414   2.10   172   16,648   2.17   180  
Total interest-bearing liabilities 1,231,630 0.44 2,719 1,127,553 0.34 1,933
Portion of noninterest-bearing funding sources       437,641       417,765      
Total funding sources     $ 1,669,271   0.33     2,719   1,545,318   0.25     1,933  
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.88 %     $ 23,999   2.96 %     $ 22,768  
Noninterest-earning assets
Cash and due from banks $ 18,407 17,262
Goodwill 26,553 25,705
Other       126,749   130,312  
Total noninterest-earning assets     $ 171,709   173,279  
Noninterest-bearing funding sources
Deposits $ 349,200 331,745
Other liabilities 61,355 69,779
Total equity 198,795 189,520
Noninterest-bearing funding sources used to fund earning assets       (437,641 ) (417,765 )
Net noninterest-bearing funding sources     $ 171,709   173,279  
Total assets     $ 1,840,980   1,718,597  
 

(1) Our average prime rate was 3.50% and 3.25% for the first half of 2016 and 2015, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.63% and 0.27% 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 $599 million and $512 million for the first half of 2016 and 2015, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

 
 

Wells Fargo & Company and Subsidiaries

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

    Quarter ended  
      Jun 30, 2016       Mar 31, 2016       Dec 31, 2015       Sep 30, 2015       Jun 30, 2015  
Average     Yields/     Average     Yields/     Average     Yields/     Average     Yields/     Average     Yields/
($ in billions)     balance       rates       balance       rates       balance       rates       balance       rates       balance       rates  
Earning assets

Federal funds sold, securities purchased under resale agreements and other short-term investments

$ 293.8 0.49 % $ 284.7 0.49 % $ 274.6 0.28 % $ 250.1 0.26 % $ 267.1 0.28 %
Trading assets 81.4 2.86 80.5 3.01 68.8 3.33 67.2 2.93 67.6 2.91
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 31.5 1.56 34.4 1.59 34.6 1.58 35.7 1.59 31.7 1.58
Securities of U.S. states and political subdivisions 52.2 4.24 50.5 4.24 49.3 4.37 48.2 4.22 47.1 4.13
Mortgage-backed securities:
Federal agencies 92.0 2.53 96.5 2.80 102.3 2.79 98.4 2.70 98.0 2.65
Residential and commercial     19.6   5.44 20.8   5.20 21.5   5.51 21.9   5.84 22.7   5.84
Total mortgage-backed securities 111.6 3.04 117.3 3.23 123.8 3.26 120.3 3.27 120.7 3.25
Other debt and equity securities     53.3   3.48 53.6   3.21 52.7   3.35 50.4   3.40 48.8   3.51
Total available-for-sale securities     248.6   3.20 255.8   3.20 260.4   3.27 254.6   3.24 248.3   3.25
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44.6 2.19 44.7 2.20 44.7 2.18 44.6 2.18 44.5 2.19
Securities of U.S. states and political subdivisions 2.2 5.41 2.1 5.41 2.1 6.07 2.2 5.17 2.1 5.17
Federal agency mortgage-backed securities 35.1 1.90 28.1 2.49 28.2 2.42 27.1 2.38 21.0 2.00
Other debt securities     4.1   1.92 4.6   1.92 4.9   1.77 5.4   1.75 6.3   1.70
Total held-to-maturity securities     86.0   2.14 79.5   2.37 79.9   2.35 79.3   2.30 73.9   2.18

Total investment securities

334.6 2.93 335.3 3.01 340.3 3.05 333.9 3.02 322.2 3.01
Mortgages held for sale 20.1 3.60 17.9 3.59 19.2 3.66 24.2 3.69 23.5 3.57
Loans held for sale 0.2 4.83 0.3 3.23 0.4 4.96 0.6 2.57 0.7 3.51
Loans:
Commercial:
Commercial and industrial - U.S. 270.9 3.45 257.7 3.39 250.5 3.25 241.4 3.30 231.5 3.36
Commercial and industrial - Non U.S. 51.2 2.35 49.5 2.10 48.0 1.97 45.9 1.83 45.1 1.93
Real estate mortgage 126.1 3.41 122.7 3.41 121.8 3.30 121.0 3.31 113.1 3.48
Real estate construction 23.1 3.49 22.6 3.61 22.0 3.27 21.6 3.39 20.8 4.12
Lease financing     19.0   5.12 15.1   4.74 12.2   4.48 12.3   4.18 12.4   5.16
Total commercial     490.3   3.39 467.6   3.31 454.5   3.16 442.2   3.18 422.9   3.33
Consumer:
Real estate 1-4 family first mortgage 275.9 4.01 274.7 4.05 272.9 4.04 269.4 4.10 266.0 4.12
Real estate 1-4 family junior lien mortgage 50.6 4.37 52.2 4.39 53.8 4.28 55.3 4.22 57.0 4.23
Credit card 33.4 11.52 33.4 11.61 32.8 11.61 31.7 11.73 30.4 11.69
Automobile 61.1 5.66 60.1 5.67 59.5 5.74 58.5 5.80 57.0 5.88
Other revolving credit and installment     39.5   5.91 39.2   5.99 38.8   5.83 38.0   5.84 37.1   5.88
Total consumer     460.5   4.98 459.6   5.02 457.8   4.99 452.9   5.01 447.5   5.02
Total loans 950.8 4.16 927.2 4.16 912.3 4.08 895.1 4.11 870.4 4.20
Other     6.0   2.30 5.8   2.06 5.1   4.82 5.0   5.11 4.8   5.14
Total earning assets     $ 1,686.9   3.20 % $ 1,651.7   3.22 % $ 1,620.7   3.18 % $ 1,576.1   3.21 % $ 1,556.3   3.22 %
Funding sources
Deposits:
Interest-bearing checking $ 39.8 0.13 % $ 38.7 0.12 % $ 39.1 0.05 % $ 37.8 0.05 % $ 38.6 0.05 %
Market rate and other savings 659.0 0.07 651.5 0.07 640.5 0.06 628.1 0.06 619.8 0.06
Savings certificates 26.2 0.35 27.9 0.45 29.6 0.54 30.9 0.58 32.5 0.63
Other time deposits 61.2 0.85 58.2 0.74 49.8 0.52 48.7 0.46 52.2 0.42
Deposits in foreign offices     97.5   0.23 97.7   0.21 107.1   0.14 111.5   0.13 104.3   0.13
Total interest-bearing deposits 883.7 0.15 874.0 0.14 866.1 0.11 857.0 0.11 847.4 0.11
Short-term borrowings 111.8 0.28 107.9 0.25 102.9 0.05 90.4 0.06 84.5 0.09
Long-term debt 236.2 1.56 216.9 1.56 190.9 1.49 180.6 1.45 185.1 1.34
Other liabilities     16.3   2.06 16.5   2.14 16.5   2.14 16.4   2.13 16.4   2.03
Total interest-bearing liabilities 1,248.0 0.45 1,215.3 0.43 1,176.4 0.36 1,144.4 0.34 1,133.4 0.34
Portion of noninterest-bearing funding sources     438.9   436.4   444.3   431.7   422.9  
Total funding sources     $ 1,686.9   0.34   $ 1,651.7   0.32   $ 1,620.7   0.26   $ 1,576.1   0.25   $ 1,556.3   0.25  
Net interest margin on a taxable-equivalent basis 2.86 % 2.90 % 2.92 % 2.96 % 2.97 %
Noninterest-earning assets
Cash and due from banks $ 18.8 18.0 17.8 17.0 17.5
Goodwill 27.0 26.1 25.6 25.7 25.7
Other     129.4   124.1   123.2   127.6   129.8  
Total noninterest-earnings assets     $ 175.2   168.2   166.6   170.3   173.0  
Noninterest-bearing funding sources
Deposits $ 353.0 345.4 350.7 341.9 337.9
Other liabilities 60.1 62.6 65.2 67.9 67.6
Total equity 201.0 196.6 195.0 192.2 190.4
Noninterest-bearing funding sources used to fund earning assets     (438.9 ) (436.4 ) (444.3 ) (431.7 ) (422.9 )
Net noninterest-bearing funding sources     $ 175.2   168.2   166.6   170.3   173.0  
Total assets     $ 1,862.1   1,819.9   1,787.3   1,746.4   1,729.3  
                     

(1) Our average prime rate was 3.50% for the quarters ended June 30 and March 31, 2016, 3.29% for the quarter ended December 31, 2015, and 3.25% for the quarters ended September 30 and June 30, 2015. The average three-month London Interbank Offered Rate (LIBOR) was 0.64%, 0.62%, 0.41%, 0.31% and 0.28% 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 June 30,

     

%

      Six months ended June 30,       %
(in millions)    

2016

   

2015

     

Change

     

2016

   

2015

      Change  
Service charges on deposit accounts $ 1,336     1,289

4

%

$

2,645

    2,504 6 %
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,291 2,399

(5

)

4,530

4,779 (5 )
Trust and investment management 835 861

(3

)

1,650

1,713 (4 )
Investment banking       421     450  

(6

)

 

752

    895   (16 )
Total trust and investment fees       3,547     3,710  

(4

)

 

6,932

    7,387   (6 )
Card fees 997 930 7 1,938 1,801 8
Other fees:
Charges and fees on loans 317 304 4 630 613 3
Cash network fees 138 132 5 269 257 5
Commercial real estate brokerage commissions 86 141

(39

)

203

270 (25 )
Letters of credit fees 83 90

(8

)

161

178 (10 )
Wire transfer and other remittance fees 101 93 9 193 180 7
All other fees (1)(2)(3)       181     347  

(48

)

 

383

    687   (44 )
Total other fees       906     1,107  

(18

)

 

1,839

    2,185   (16 )
Mortgage banking:
Servicing income, net 360 514

(30

)

1,210

1,037 17
Net gains on mortgage loan origination/sales activities       1,054     1,191  

(12

)

 

1,802

    2,215   (19 )
Total mortgage banking       1,414     1,705  

(17

)

 

3,012

    3,252   (7 )
Insurance 286 461

(38

)

713

891 (20 )
Net gains (losses) from trading activities 328 133 147 528 541 (2 )
Net gains on debt securities 447 181 147 691 459 51
Net gains from equity investments 189 517

(63

)

433

887 (51 )
Lease income 497 155 221 870 287 203
Life insurance investment income 149 145 3 303 290 4
All other (3)       333    

(285

)

NM

  1,053     (144 ) NM
Total     $ 10,429     10,048       4       $ 20,957     20,340       3  
NM – Not meaningful
(1) Wire transfer and other remittance fees, reflected in all other fees prior to 2016, have been separately disclosed.
(2) All other fees have been revised to include merchant processing fees for all periods presented.

(3) Effective fourth quarter 2015, the Company's proportionate share of its merchant services joint venture earnings is included in All other income.

 

NONINTEREST EXPENSE

Quarter ended June 30,   % Six months ended June 30,   %
(in millions)     2016     2015       Change       2016     2015       Change  
Salaries $ 4,099 3,936 4 %

$

8,135

7,787 4 %
Commission and incentive compensation 2,604 2,606 5,249 5,291 (1 )
Employee benefits 1,244 1,106 12 2,770 2,583 7
Equipment 493 470 5 1,021 964 6
Net occupancy 716 710 1 1,427 1,433
Core deposit and other intangibles 299 312 (4 ) 592 624 (5 )
FDIC and other deposit assessments 255 222 15 505 470 7
Outside professional services 769 627 23 1,352 1,175 15
Operating losses 334 521 (36 ) 788 816 (3 )
Outside data processing 225 269 (16 ) 433 522 (17 )
Contract services 283 238 19 565 463 22
Postage, stationery and supplies 153 180 (15 ) 316 351 (10 )
Travel and entertainment 193 172 12 365 330 11
Advertising and promotion 166 169 (2 ) 300 287 5
Insurance 22 156 (86 ) 133 296 (55 )
Telecommunications 94 113 (17 ) 186 224 (17 )
Foreclosed assets 66 117 (44 ) 144 252 (43 )
Operating leases 352 64 450 587 126 366
All other       499     481   4   1,026     982   4
Total     $ 12,866     12,469       3      

$

25,894

    24,976       4  
 
 
Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME

    Quarter ended  
Jun 30,       Mar 31,       Dec 31,     Sep 30,     Jun 30,
(in millions)     2016       2016       2015       2015       2015  
Service charges on deposit accounts $ 1,336 1,309 1,329 1,335 1,289
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,291 2,239 2,288 2,368 2,399
Trust and investment management 835 815 838 843 861
Investment banking       421       331       385       359       450  
Total trust and investment fees       3,547       3,385       3,511       3,570       3,710  
Card fees 997 941 966 953 930
Other fees:
Charges and fees on loans 317 313 308 307 304
Cash network fees 138 131 129 136 132
Commercial real estate brokerage commissions 86 117 224 124 141
Letters of credit fees 83 78 86 89 90
Wire transfer and other remittance fees 101 92 95 95 93
All other fees (1)(2)(3)       181       202       198       348       347  
Total other fees       906       933       1,040       1,099       1,107  
Mortgage banking:
Servicing income, net 360 850 730 674 514
Net gains on mortgage loan origination/sales activities       1,054       748       930       915       1,191  
Total mortgage banking       1,414       1,598       1,660       1,589       1,705  
Insurance 286 427 427 376 461
Net gains (losses) from trading activities 328 200 99 (26 ) 133
Net gains on debt securities 447 244 346 147 181
Net gains from equity investments 189 244 423 920 517
Lease income 497 373 145 189 155
Life insurance investment income 149 154 139 150 145
All other (3)       333       720       (87 )     116       (285 )
Total     $ 10,429       10,528       9,998       10,418       10,048  

(1) Wire transfer and other remittance fees, reflected in all other fees prior to 2016, have been separately disclosed.

(2) All other fees have been revised to include merchant processing fees for all periods presented.

(3) Effective fourth quarter 2015, the Company's proportionate share of its merchant services joint venture earnings is included in All other income.

 

FIVE QUARTER NONINTEREST EXPENSE

 
Quarter ended  
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(in millions)     2016       2016       2015       2015       2015  
Salaries $ 4,099 4,036 4,061 4,035 3,936
Commission and incentive compensation 2,604 2,645 2,457 2,604 2,606
Employee benefits 1,244 1,526 1,042 821 1,106
Equipment 493 528 640 459 470
Net occupancy 716 711 725 728 710
Core deposit and other intangibles 299 293 311 311 312
FDIC and other deposit assessments 255 250 258 245 222
Outside professional services 769 583 827 663 627
Operating losses 334 454 532 523 521
Outside data processing 225 208 205 258 269
Contract services 283 282 266 249 238
Postage, stationery and supplies 153 163 177 174 180
Travel and entertainment 193 172 196 166 172
Advertising and promotion 166 134 184 135 169
Insurance 22 111 57 95 156
Telecommunications 94 92 106 109 113
Foreclosed assets 66 78 20 109 117
Operating leases 352 235 73 79 64
All other       499       527       462       636       481  
Total     $ 12,866       13,028       12,599       12,399       12,469  
 
 
Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

    Jun 30,     Dec 31,     %
(in millions, except shares)     2016       2015       Change  
Assets
Cash and due from banks $ 20,407 19,111 7 %
Federal funds sold, securities purchased under resale agreements and other short-term investments 295,521 270,130 9
Trading assets 80,093 77,202 4
Investment securities:
Available-for-sale, at fair value 253,006 267,358 (5 )
Held-to-maturity, at cost 100,420 80,197 25
Mortgages held for sale 23,930 19,603 22
Loans held for sale 220 279 (21 )
Loans 957,157 916,559 4
Allowance for loan losses       (11,664 )     (11,545 ) 1
Net loans       945,493       905,014   4
Mortgage servicing rights:
Measured at fair value 10,396 12,415 (16 )
Amortized 1,353 1,308 3
Premises and equipment, net 8,289 8,704 (5 )
Goodwill <