News Release | October 14, 2020

Wells Fargo Reports Third Quarter 2020 Net Income of $2.0 Billion, or $0.42 Per Diluted Share

  • Financial results1:
    • Third quarter 2020 pre-tax results were impacted by the following:
      • $961 million of customer remediation accruals
      • $718 million of restructuring charges, predominantly severance expense
      • $452 million of noninterest income related to nonmarketable equity securities
    • Revenue of $18.9 billion, down from $22.0 billion
      • Net interest income of $9.4 billion, down $2.3 billion
      • Noninterest income of $9.5 billion, down $891 million
    • Noninterest expense of $15.2 billion, up $30 million
    • Average loans of $931.7 billion, down $18.1 billion, or 2%
    • Average deposits of $1.4 trillion, up $107.7 billion, or 8%
  • Credit quality1:
    • Provision expense of $769 million, up $74 million
      • Total net charge-offs of $731 million, up $86 million
        • Net loan charge-offs of 0.29% of average loans (annualized), up from 0.27%
      • Allowance for credit losses for loans of $20.5 billion, flat compared with second quarter 2020
    • Nonaccrual loans of $8.0 billion, up $2.5 billion, or 45%
  • Liquidity and capital positions:
    • Liquidity coverage ratio2 (LCR) of 134%, which continued to exceed the regulatory minimum of 100%
    • Common Equity Tier 1 (CET1) ratio of 11.4%3, up from 11.0% in second quarter 2020; the CET1 ratio continued to exceed both the regulatory minimum of 9% and our current internal target of 10%

Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, 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.

  • Comparisons in the bullet points are for third quarter 2020 versus third quarter 2019, unless otherwise specified.
  • Liquidity coverage ratio (LCR) is calculated as high-quality liquid assets divided by projected net cash outflows, as each is defined under the LCR

rule. LCR is a preliminary estimate.

  • See table on page 36 for more information on Common Equity Tier 1. Common Equity Tier 1 is a preliminary estimate.

- 2 -

Selected Financial Information

Quarter ended

Sep 30,

Jun 30,

Sep 30,

2020

2020

2019

Earnings

Diluted earnings (loss) per common share

$

0.42

(0.66)

0.92

Wells Fargo net income (loss) (in billions)

2.04

(2.38)

4.61

Return on assets (ROA)

0.42 %

(0.49)

0.95

Return on equity (ROE)

4.22

(6.63)

9.00

Return on average tangible common equity (ROTCE) (a)

5.10

(8.00)

10.70

Asset Quality

Net loan charge-offs (annualized) as a % of average total loans

0.29

0.46

0.27

Allowance for credit losses for loans as a % of total loans

2.22

2.19

1.11

Allowance for credit losses for loans as a % of annualized net loan charge-offs

753

457

415

Other

Revenue (in billions)

$

18.9

17.8

22.0

Efficiency ratio (b)

80.7 %

81.6

69.1

Average loans (in billions)

$

931.7

971.3

949.8

Average deposits (in billions)

1,399.0

1,386.7

1,291.4

Net interest margin

2.13 %

2.25

2.66

  1. Tangible common equity and return on average tangible common equity are non-GAAP financial measures. 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).

SAN FRANCISCO - October 14, 2020 - Wells Fargo & Company (NYSE:WFC) reported net income of $2.0 billion, or $0.42 per diluted common share, for third quarter 2020, compared with net income of $4.6 billion, or $0.92 per share, for third quarter 2019, and a net loss of $2.4 billion, or $0.66 per share, for second quarter 2020.

Chief Executive Officer Charlie Scharf said, "Our third quarter results reflect the impact of aggressive monetary and fiscal stimulus on the US economy. Strong mortgage banking fees, higher equity markets, and declining sequential charge-offs positively impacted our results, while historically low interest rates reduced our net interest income and our expenses continued to remain elevated. We continue to provide support for our customers having helped more than 3.2 million consumers and small businesses by deferring payments and waiving fees."

"Our top priority continues to be the implementation of our risk, control, and regulatory work, but we are also taking targeted actions to improve the experience for our customers, clients, communities and employees. We expect that these actions will also improve our operational and financial performance," Scharf added.

"As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums," Scharf concluded.

Chief Financial Officer John Shrewsberry said, "Wells Fargo reported $2.0 billion of net income in the third quarter and diluted earnings per share of $0.42. While our net interest income declined in the third quarter, primarily due to the lower interest rate environment, we saw increases in several other income categories, including robust mortgage banking results. Our third quarter results also included a $718 million restructuring charge, predominantly related to severance expense, and $1.2 billion of operating losses, largely due to customer remediation accruals."

- 3 -

Net Interest Income

Net interest income in the third quarter was $9.4 billion, down $512 million from second quarter 2020; the net interest margin was 2.13%, down 12 basis points from the prior quarter. The decline in net interest income was due to balance sheet repricing driven by the impact of the lower interest rate environment and balance sheet mix shifts into lower yielding assets including the impact of lower commercial loan balances, as well as higher mortgage-backed securities (MBS) premium amortization. These impacts were partially offset by higher variable sources of income and the benefit of one additional day in the quarter.

Noninterest Income

Noninterest income in the third quarter was $9.5 billion, up $1.5 billion from second quarter 2020. Third quarter noninterest income included higher mortgage banking income, trust and investment fees, deposit-related fees, and card fees, partially offset by lower gains from trading activities. Additionally, third quarter 2020 included

$452 million related to a change in the accounting measurement model for certain nonmarketable equity securities from our affiliated venture capital partnerships (recognized in net gains from equity securities and other noninterest income).

  • Deposit-relatedfees were $1.3 billion, up from $1.1 billion in second quarter 2020, primarily due to higher debit card transaction volumes.
  • Trust and investment fees were $3.5 billion, up from $3.4 billion in second quarter 2020, driven by higher asset- based fees on retail brokerage advisory assets reflecting higher market valuations at June 30, 2020, partially offset by lower investment banking revenue.
  • Card fees were $912 million, up from $797 million in second quarter 2020, predominantly due to increased consumer spending.
  • Mortgage banking income was $1.6 billion, up from $317 million in second quarter 2020. Net mortgage servicing income was $341 million, up from a loss of $689 million in the second quarter, which included a negative valuation adjustment as a result of higher prepayment assumptions and higher expected servicing costs due to higher projected defaults. Net gains on mortgage loan production activities increased in the third quarter driven by higher residential held-for-sale mortgage loan originations and a higher production margin4. Held-for-sale mortgage loan originations increased to $48 billion in third quarter 2020 from $43 billion in the second quarter, and the production margin4 increased to 2.16% from 2.04%.
  • Net gains from trading activities were $361 million, down from a record $807 million in second quarter 2020, primarily due to lower fixed income trading results.

Noninterest Expense

Noninterest expense in the third quarter was $15.2 billion, up $678 million from the prior quarter predominantly due to $718 million of restructuring charges predominantly driven by severance expense. Additionally, operating losses of $1.2 billion in third quarter 2020 were flat compared with second quarter 2020, and included $961 million of customer remediation accruals for a variety of matters.

  • Production margin represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage originations. See the "Selected Five Quarter Residential Mortgage Production Data" table on page 41 for more information.

- 4 -

Income Taxes

The Company's effective income tax rate was 24.1% for third quarter 2020 and included net discrete income tax benefits primarily related to the resolution and reevaluation of prior period matters with U.S. federal and state tax authorities. The effective income tax rate in second quarter 2020 was 62.2%, which reflected the impact of annual income tax benefits, primarily tax credits, and included net discrete income tax benefits predominantly related to the resolution of prior period U.S. federal income tax matters.

Loans

Average loans were $931.7 billion in the third quarter, down $39.6 billion from the second quarter. Period-end loan balances were $920.1 billion at September 30, 2020, down $15.1 billion from June 30, 2020. Commercial loans were down $30.9 billion compared with June 30, 2020, predominantly due to a $29.2 billion decline in commercial and industrial loans as a result of lower loan demand and higher paydowns reflecting continued liquidity and strength in the capital markets. Consumer loans increased $15.8 billion from the prior quarter driven by a $17.0 billion increase in real estate 1-4 family first mortgage loans, as $14 billion of originations, $21.9 billion of loans repurchased from Ginnie Mae securitization pools (early pool buyouts), and a reclassification of $9.0 billion from held for sale to held for investment were partially offset by paydowns.

Period-End Loan Balances

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Commercial

$

482,289

513,187

567,735

515,719

512,332

Consumer

437,793

421,968

442,108

446,546

442,583

Total loans

$

920,082

935,155

1,009,843

962,265

954,915

Change from prior quarter

$

(15,073)

(74,688)

47,578

7,350

5,037

Debt and Equity Securities

Debt securities include available-for-sale and held-to-maturity debt securities, as well as debt securities held for trading. Period-end debt securities were $476.4 billion at September 30, 2020, up $3.8 billion from the second quarter driven by a $5.3 billion increase in debt securities available-for-sale and held-to-maturity, as purchases of approximately $40.1 billion, largely federal agency MBS, were partially offset by runoff and sales.

Net unrealized gains on available-for-sale debt securities were $4.3 billion at September 30, 2020, compared with $4.4 billion at June 30, 2020, as the impact of lower long-term interest rates was predominantly offset by tighter credit spreads.

Equity securities include marketable and nonmarketable equity securities, as well as equity securities held for trading. Period-end equity securities were $51.2 billion at September 30, 2020, down $1.3 billion from the second quarter.

- 5 -

Deposits

Period-end deposits were $1.4 trillion at September 30, 2020, down $27.5 billion from June 30, 2020. Total average deposits for third quarter 2020 were $1.4 trillion, up $12.4 billion from the prior quarter driven by growth in consumer deposits, partially offset by a decline in commercial deposits reflecting actions taken to manage under the asset cap. The average deposit cost for third quarter 2020 was 9 basis points, down 8 basis points from the prior quarter and down 62 basis points from a year ago.

Capital

The Company's CET1 ratio was 11.4%3 and continued to exceed both the regulatory minimum of 9% and our current internal target of 10%. As of September 30, 2020, our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.8%5, compared with the required minimum of 22.0%.

Credit Quality

Credit results improved in third quarter 2020 as consumer delinquencies remained low, commercial loan criticized/ classified levels stabilized, and net charge-offs decreased. However, customer payment deferral activities instituted in response to the COVID-19 pandemic could delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status.

Net Loan Charge-offs

The quarterly loss rate as a percentage of average loans in the third quarter was 0.29% (annualized), down from 0.46% in the prior quarter and up from 0.27% a year ago. Commercial and consumer losses were 0.29% and 0.30%, respectively. Total credit losses were $683 million in third quarter 2020, down $430 million from second quarter 2020. Commercial losses decreased $246 million driven by improved lending market conditions including strong capital markets. Consumer losses decreased $184 million driven by the impacts of government stimulus programs and customer accommodations including payment deferrals.

Net Loan Charge-Offs

Quarter ended

September 30, 2020

June 30, 2020

September 30, 2019

Net loan

As a % of

Net loan

As a % of

Net loan

As a % of

($ in millions)

charge-

average

charge-

average

charge-

average

offs

loans (a)

offs

loans (a)

offs

loans (a)

Commercial:

Commercial and industrial

$

274

0.33

%

$

521

0.55

%

$

147

0.17 %

Real estate mortgage

56

0.18

67

0.22

(8)

(0.02)

Real estate construction

(2)

(0.03)

(1)

(0.02)

(8)

(0.14)

Lease financing

28

0.66

15

0.33

8

0.17

Total commercial

356

0.29

602

0.44

139

0.11

Consumer:

Real estate 1-4 family first mortgage

(1)

-

2

-

(5)

(0.01)

Real estate 1-4 family junior lien mortgage

(14)

(0.22)

(12)

(0.17)

(22)

(0.28)

Credit card

245

2.71

327

3.60

319

3.22

Automobile

31

0.25

106

0.88

76

0.65

Other revolving credit and installment

66

0.80

88

1.09

138

1.60

Total consumer

327

0.30

511

0.48

506

0.46

Total

$

683

0.29 %

$

1,113

0.46 %

$

645

0.27 %

  1. Quarterly net charge-offs (recoveries) as a percentage of average loans are annualized.
  • The TLAC ratio is a preliminary estimate.

- 6 -

Nonperforming Assets

Nonperforming assets increased $378 million, or 5%, from second quarter 2020 to $8.2 billion. Nonaccrual loans increased $417 million from second quarter 2020 to $8.0 billion due to a $304 million increase in consumer nonaccrual loans driven by the residential real estate and automobile portfolios and a $113 million increase in commercial nonaccrual loans predominantly driven by the commercial real estate mortgage and lease financing portfolios.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

September 30, 2020

June 30, 2020

September 30, 2019

As a

As a

As a

Total

% of

Total

% of

Total

% of

($ in millions)

total

total

total

balances

loans

balances

loans

balances

loans

Commercial:

Commercial and industrial

$

2,834

0.88

%

$

2,896

0.83

%

$

1,539

0.44

%

Real estate mortgage

1,343

1.10

1,217

0.98

669

0.55

Real estate construction

34

0.15

34

0.16

32

0.16

Lease financing

187

1.10

138

0.79

72

0.37

Total commercial

4,398

0.91

4,285

4

0.83

2,312

0.45

Consumer:

Real estate 1-4 family first mortgage

2,641

0.90

2,393

0.86

2,261

0.78

Real estate 1-4 family junior lien mortgage

767

3.05

753

2.81

819

2.66

Automobile

176

0.36

129

0.26

110

0.24

Other revolving credit and installment

40

0.12

45

0.14

43

0.12

Total consumer

3,624

0.83

3,320

0.79

3,233

0.73

Total nonaccrual loans

8,022

7,605

5,545

Foreclosed assets:

Government insured/guaranteed

22

31

59

Non-government insured/guaranteed

134

164

378

Total foreclosed assets

156

195

437

Total nonperforming assets

$

8,178

0.89 %

$

7,800

0.83 %

$

5,982

0.63 %

Change from prior quarter:

Total nonaccrual loans

$

417

1,449

(377)

Total nonperforming assets

378

1,392

(317)

Allowance for Credit Losses for Loans

At September 30, 2020, the allowance for credit losses (ACL) for loans, including the allowance for unfunded commitments, totaled $20.5 billion, relatively flat compared with June 30, 2020. While net charge-offs declined in third quarter 2020 and certain economic indicators showed improvement, the ACL reflected continued uncertainty due to the COVID-19 pandemic. The allowance coverage for total loans was 2.22%, compared with 2.19% in second quarter 2020. The allowance covered 7.5 times annualized third quarter net charge-offs, compared with 4.6 times in the prior quarter. The allowance coverage for nonaccrual loans was 255% at September 30, 2020, compared with 269% at June 30, 2020.

- 7 -

Business Segment Performance

Our operating segments are defined by product type and customer segment, and their results are based on our management reporting process. On February 11, 2020, we announced a new organizational structure. We continue to refine the composition of our operating segments and allocation methodologies. Additionally, we are still in the process of transitioning key leadership positions. We now expect to update our operating segment disclosures, including comparative financial results, in fourth quarter 2020. These changes will not impact previously reported consolidated financial results of the Company.

Segment net income (loss) for each of the three current operating segments was:

Quarter ended

(in millions)

Sep 30,

Jun 30,

Sep 30,

2020

2020

2019

Community Banking

$

336

(331)

999

Wholesale Banking

1,488

(2,143)

2,644

Wealth and Investment Management

463

180

1,280

Community Bankingoffers a complete line of diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million in which the owner generally is the financial decision maker. These financial products and services include checking and savings accounts, credit and debit cards, 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 (including funds transfer pricing, capital, liquidity and certain corporate expenses) in support of other segments and results of investments in our affiliated venture capital and private equity partnerships.

Selected Financial Information

Quarter ended

(in millions)

Sep 30,

Jun 30,

Sep 30,

2020

2020

2019

Total revenue

$

10,722

8,766

11,239

Provision for credit losses

556

3,378

608

Noninterest expense

8,947

8,346

8,766

Segment net income (loss)

336

(331)

999

(in billions)

Average loans

457.6

449.3

459.0

Average assets

1,119.8

1,059.8

1,033.9

Average deposits

881.7

848.5

789.7

Third Quarter 2020 vs. Second Quarter 2020

  • Net income of $336 million, up from a net loss of $331 million
  • Revenue of $10.7 billion, up $2.0 billion, or 22%, driven by higher mortgage banking revenue, net gains from debt and equity securities, deposit-related fees, trust and investment fees, and card fees, partially offset by lower net interest income and lower deferred compensation plan investment results (largely offset by lower employee benefits expense)
  • Noninterest expense of $8.9 billion increased $601 million, or 7%, driven by restructuring charges and higher operating losses reflecting increased customer remediation accruals for a variety of matters, partially offset by lower employee benefits expense including lower deferred compensation plan expense (largely offset in revenue by lower deferred compensation plan investment results)
  • Provision for credit losses decreased $2.8 billion to $556 million; second quarter 2020 included a $2.8 billion increase in the allowance for credit losses

Third Quarter 2020 vs. Third Quarter 2019

  • Net income down $663 million, or 66%
  • Revenue decreased $517 million, or 5%, driven by lower net interest income, deposit-related fees, and gains from the sale of purchased credit-impaired mortgage loans, partially offset by higher mortgage banking revenue

- 8 -

  • Noninterest expense increased $181 million, or 2%, predominantly due to restructuring charges, as well as higher personnel expense, FDIC and other deposit assessments expense, and charitable donations, partially offset by lower operating losses and advertising and promotion expense
  • Provision for credit losses decreased $52 million, driven by lower net charge-offs, partially offset by an increase in the allowance for credit losses primarily for the credit card portfolio

Business Metrics and Highlights

  • Primary consumer checking customers6,7 of 24.4 million, up 0.3% from a year ago
  • Debit card point-of-sale purchase volume8 of $102.9 billion in the third quarter, up 11.1% from a year ago
  • General purpose credit card point-of-sale purchase volume of $19.2 billion in the third quarter, down 6% from third quarter 2019
  • 32.0 million digital (online and mobile) active customers, including 25.9 million mobile active customers9
  • 5,229 retail bank branches as of the end of third quarter 2020, reflecting 77 branch consolidations in the quarter
  • Home Lending
    • Originations of $62 billion in third quarter 2020, up from $59 billion in second quarter 2020, driven primarily by lower mortgage loan interest rates and increased purchase activity
      • Originations of loans held-for-sale and loans held-for-investment were $48 billion and $14 billion, respectively
    • Production margin on residential held-for-sale mortgage loan originations4 of 2.16% in third quarter 2020, up from 2.04% in second quarter 2020
    • Applications of $88 billion in third quarter 2020, up from $84 billion in second quarter 2020, driven by lower mortgage loan interest rates and increased purchase activity
    • Unclosed application pipeline of $44 billion at quarter end, down from $50 billion at June 30, 2020, as we actively managed our pipeline
  • Automobile originations of $5.4 billion in the third quarter, down 5% from second quarter 2020, reflecting the continued economic impact of the COVID-19 pandemic
  • Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.

Management uses this metric to help monitor trends in checking customer engagement with the Company.

  • Data as of August 2020, comparisons with August 2019.
  • Combined consumer and business debit card purchase volume dollars.
  • Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device in the prior 90 days.

- 9 -

Wholesale Bankingprovides financial solutions to businesses with annual sales generally in excess of $5 million and to financial institutions globally. Products and businesses include Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, Credit Investment Portfolio, Treasury Management, and Commercial Capital.

Selected Financial Information

Quarter ended

(in millions)

Sep 30,

Jun 30,

Sep 30,

2020

2020

2019

Total revenue

$

5,594

6,563

6,942

Provision for credit losses

219

6,028

92

Noninterest expense

4,013

3,963

3,889

Segment net income (loss)

1,488

(2,143)

2,644

(in billions)

Average loans

455.1

504.3

474.3

Average assets

801.4

863.2

869.2

Average deposits

418.8

441.2

422.0

Third Quarter 2020 vs. Second Quarter 2020

  • Net income of $1.5 billion, up from a net loss of $2.1 billion
  • Revenue of $5.6 billion, down $969 million, or 15%, driven by lower net gains from trading activities, investment banking fees, and net interest income
  • Noninterest expense of $4.0 billion increased $50 million, or 1%, predominantly due to higher personnel expense, partially offset by lower operating losses
  • Provision for credit losses decreased $5.8 billion to $219 million; second quarter 2020 included a $5.5 billion increase in the allowance for credit losses

Third Quarter 2020 vs. Third Quarter 2019

  • Net income down $1.2 billion, or 44%
  • Revenue decreased $1.3 billion, or 19%, driven by lower net interest income, as well as declines in a variety of other income categories including lease income and commercial real estate brokerage fees (due to the sale of Eastdil, our commercial real estate brokerage business, in fourth quarter 2019). These decreases were partially offset by higher net gains from trading activities and deposit-related fees
  • Noninterest expense increased $124 million, or 3%, reflecting higher risk, technology, and charitable contributions expense, partially offset by lower personnel expense
  • Provision for credit losses increased $127 million, predominantly due to higher charge-offs in the oil and gas and commercial real estate portfolios

Business Metrics and Highlights

  • Commercial card spend volume10 of $6.1 billion in third quarter 2020, down 31% from third quarter 2019, primarily due to reduced business spending activity due to the COVID-19 pandemic
  • 2.2 billion ACH payment transactions originated11 in third quarter 2020, up 16% from third quarter 2019, primarily due to increased customer activity
  • U.S. investment banking market share of 3.4% for year-to-date 202012, flat compared with year-to-date 201912
  1. Includes commercial card volume for the entire company.
  2. Includes ACH payment transactions originated by the entire company.
  3. Year-to-datethrough September 30. Source: Dealogic U.S. investment banking fee market share. Market share based on deals with U.S. targets (M&A), U.S. issuers (Equity Capital Markets), and deals both marketed in the U.S. and issued in U.S. dollars (Debt Capital Markets and Loan Syndications). Previous market share data reflected deals with U.S.-headquartered companies (all products). Previously reported market share metrics have been revised to reflect this definitional change.

- 10 -

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, 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 clients' brokerage needs 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)

Sep 30,

Jun 30,

Sep 30,

2020

2020

2019

Total revenue

$

3,794

3,660

5,141

Provision (reversal of provision) for credit losses

(9)

257

3

Noninterest expense

3,184

3,153

3,431

Segment net income

463

180

1,280

(in billions)

Average loans

79.8

78.7

75.9

Average assets

88.2

87.7

84.7

Average deposits

175.3

171.8

142.4

Third Quarter 2020 vs. Second Quarter 2020

  • Net income of $463 million, up $283 million, or 157%
  • Revenue of $3.8 billion, up $134 million, or 4%, predominantly due to higher asset-based fees and net interest income, partially offset by lower net gains from equity securities driven by a $151 million decrease in deferred compensation plan investment results (largely offset by lower employee benefits expense)
  • Noninterest expense of $3.2 billion increased $31 million, or 1%, predominantly due to higher broker commissions and equipment expense, partially offset by lower employee benefits expense driven by a $147 million decrease in deferred compensation expense (largely offset in revenue by lower net gains from equity securities) and lower other personnel expense
  • Reversal of provision for credit losses of $9 million, compared with a provision for credit losses of $257 million; second quarter 2020 included a $255 million increase in the allowance for credit losses

Third Quarter 2020 vs. Third Quarter 2019

  • Net income decreased $817 million, or 64%
  • Revenue decreased $1.3 billion, or 26%, predominantly due to a $1.1 billion gain from the sale of our Institutional Retirement and Trust business in third quarter 2019 and lower net interest income
  • Noninterest expense decreased $247 million, or 7%, predominantly due to lower personnel expense, equipment expense, and operating losses, partially offset by higher regulatory, risk, and technology expense

Business Metrics and Highlights

Total WIM Segment

  • WIM total client assets of $1.9 trillion, flat compared with a year ago, as higher market valuations were offset by net outflows in the Correspondent Clearing business
  • Average loan balances up 5% compared with a year ago
  • Average deposit balances up 23% compared with a year ago

Retail Brokerage

  • Client assets of $1.6 trillion, flat compared with the prior year, primarily driven by higher market valuations, offset by net outflows in the Correspondent Clearing business
  • Advisory assets of $602 billion, up 6% from a year ago, primarily driven by higher market valuations, partially offset by net outflows in the Correspondent Clearing business
  • IRA assets of $437 billion, up 5% from the prior year

- 11 -

Wealth Management

  • Client assets of $229 billion, flat compared with the prior year

Asset Management

  • Total assets under management of $607 billion, up 21% from the prior year, primarily driven by money market fund net inflows and higher market valuations, partially offset by equity net outflows

Conference Call

The Company will host a live conference call on Wednesday, October 14, at 7 a.m. PT (10 a.m. ET). You may listen to the call 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/index.jsp?seid=523.

A replay of the conference call will be available beginning at approximately 11 a.m. PT (2 p.m. ET) on Wednesday, October 14 through Wednesday, October 28. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID: 9189348. 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/index.jsp?seid=523.

- 12 -

Forward-Looking Statements

This document contains forward-looking statements. In addition, we may make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission, 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:

  1. 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, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) the performance of our mortgage business and any related exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (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 any slowdown in global economic growth;
  • the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;
  • 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;
  • developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;
  • our ability to realize any efficiency ratio or expense 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 interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans 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 impairments of securities held in our debt securities and equity securities portfolios;

- 13 -

  • 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 and from other instances where customers may have experienced financial harm, 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 employees, and our reputation;
  • resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;
  • 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;
  • changes to U.S. tax guidance and regulations, as well as the effect of discrete items on our effective income tax rate;
  • our ability to develop and execute effective business plans and strategies; 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, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

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, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov13.

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.

Forward-looking Non-GAAPFinancial Measures. From time to time management may discuss forward-looking non- GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-lookingnon-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.

13 We do not control this website. Wells Fargo has provided this link for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of this website.

- 14 -

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.92 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, investment and mortgage products and services, as well as consumer and commercial finance, through 7,200 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 31 countries and territories to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune's 2020 rankings of America's largest corporations.

Contact Information

Media

Peter Gilchrist, 704-715-3213peter.gilchrist@wellsfargo.com

Ancel Martinez, 415-222-3858ancel.martinez@wellsfargo.com

or

Investor Relations

John M. Campbell, 415-396-0523john.m.campbell@wellsfargo.com

# # #

- 15 -

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

Noninterest Income and Noninterest Expense

24

Five Quarter Deferred Compensation and Related Hedges

25

Balance Sheet

Consolidated Balance Sheet

26

Trading Activities

28

Debt Securities

28

Equity Securities

29

Loans

Loans

30

Nonperforming Assets

31

Loans 90 Days or More Past Due and Still Accruing

31

Changes in Allowance for Credit Losses for Loans

32

Allocation of the Allowance for Credit Losses for Loans

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

- 16 -

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA

Quarter ended

% Change

Nine months ended

Sep 30, 2020 from

($ in millions, except per share amounts)

Sep 30,

Jun 30,

Sep 30,

Jun 30,

Sep 30,

Sep 30,

Sep 30,

%

2020

2020

2019

2020

2019

2020

2019

Change

For the Period

Wells Fargo net income (loss)

$

2,035

(2,379)

4,610

NM

(56)

$

309

16,676

(98)

Wells Fargo net income (loss) applicable to common stock

1,720

(2,694)

4,037

NM

(57)

(932)

15,392

NM

Diluted earnings (loss) per common share

0.42

(0.66)

0.92

NM

(54)

(0.23)

3.43

NM

Profitability ratios (annualized):

Wells Fargo net income (loss) to average assets (ROA)

0.42 %

(0.49)

0.95

NM

(56)

0.02 %

1.17

(98)

Wells Fargo net income (loss) applicable to common stock to

4.22

(6.63)

9.00

NM

(53)

(0.76)

11.64

NM

average Wells Fargo common stockholders' equity (ROE)

Return on average tangible common equity (ROTCE)(1)

5.10

(8.00)

10.70

NM

(52)

(0.91)

13.85

NM

Efficiency ratio (2)

80.7

81.6

69.1

(1)

17

78.7

65.3

21

Total revenue

$

18,862

17,836

22,010

6

(14)

$

54,415

65,203

(17)

Pre-taxpre-provision profit (PTPP)(3)

3,633

3,285

6,811

11

(47)

11,587

22,639

(49)

Dividends declared per common share

0.10

0.51

0.51

(80)

(80)

1.12

1.41

(21)

Average common shares outstanding

4,123.8

4,105.5

4,358.5

-

(5)

4,111.4

4,459.1

(8)

Diluted average common shares outstanding (4)

4,132.2

4,105.5

4,389.6

1

(6)

4,111.4

4,489.5

(8)

Average loans

$

931,708

971,266

949,760

(4)

(2)

$

955,918

949,076

1

Average assets

1,947,672

1,948,939

1,927,415

-

1

1,949,085

1,903,873

2

Average total deposits

1,399,028

1,386,656

1,291,375

1

8

1,374,638

1,274,246

8

Average consumer and small business banking deposits (5)

897,779

857,943

749,529

5

20

845,977

745,370

13

Net interest margin

2.13 %

2.25

2.66

(5)

(20)

2.32 %

2.79

(17)

At Period End

Debt securities

$

476,421

472,580

503,528

1

(5)

$

476,421

503,528

(5)

Loans

920,082

935,155

954,915

(2)

(4)

920,082

954,915

(4)

Allowance for loan losses

19,463

18,926

9,715

3

100

19,463

9,715

100

Goodwill

26,387

26,385

26,388

-

-

26,387

26,388

-

Equity securities

51,169

52,494

63,884

(3)

(20)

51,169

63,884

(20)

Assets

1,922,220

1,968,766

1,943,950

(2)

(1)

1,922,220

1,943,950

(1)

Deposits

1,383,215

1,410,711

1,308,495

(2)

6

1,383,215

1,308,495

6

Common stockholders' equity

161,109

159,322

172,827

1

(7)

161,109

172,827

(7)

Wells Fargo stockholders' equity

181,173

179,386

193,304

1

(6)

181,173

193,304

(6)

Total equity

182,032

180,122

194,416

1

(6)

182,032

194,416

(6)

Tangible common equity (1)

133,179

131,329

144,481

1

(8)

133,179

144,481

(8)

Common shares outstanding

4,132.5

4,119.6

4,269.1

-

(3)

4,132.5

4,269.1

(3)

Book value per common share (6)

$

38.99

38.67

40.48

1

(4)

$

38.99

40.48

(4)

Tangible book value per common share (1)(6)

32.23

31.88

33.84

1

(5)

32.23

33.84

(5)

Headcount (7)

274,900

276,000

272,700

-

1

274,900

272,700

1

  1. Tangible common equity, return on average tangible common equity, and tangible book value per common share are non-GAAP financial measures. 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-taxpre-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. For second quarter 2020 and the nine months ended September 30, 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
  5. Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
  6. 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.
  7. In third quarter 2020, we began reporting headcount rather than active, full-time equivalent employees. Prior period balances have been revised to conform with the current period presentation.

- 17 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA

Quarter ended

($ in millions, except per share amounts)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

For the Quarter

Wells Fargo net income (loss)

$

2,035

(2,379)

653

2,873

4,610

Wells Fargo net income (loss) applicable to common stock

1,720

(2,694)

42

2,546

4,037

Diluted earnings (loss) per common share

0.42

(0.66)

0.01

0.60

0.92

Profitability ratios (annualized):

Wells Fargo net income (loss) to average assets (ROA)

0.42 %

(0.49)

0.13

0.59

0.95

Wells Fargo net income (loss) applicable to common stock to average

4.22

(6.63)

0.10

5.91

9.00

Wells Fargo common stockholders' equity (ROE)

Return on average tangible common equity (ROTCE)(1)

5.10

(8.00)

0.12

7.08

10.70

Efficiency ratio (2)

80.7

81.6

73.6

78.6

69.1

Total revenue

$

18,862

17,836

17,717

19,860

22,010

Pre-taxpre-provision profit (PTPP)(3)

3,633

3,285

4,669

4,246

6,811

Dividends declared per common share

0.10

0.51

0.51

0.51

0.51

Average common shares outstanding

4,123.8

4,105.5

4,104.8

4,197.1

4,358.5

Diluted average common shares outstanding (4)

4,132.2

4,105.5

4,135.3

4,234.6

4,389.6

Average loans

$

931,708

971,266

965,046

956,536

949,760

Average assets

1,947,672

1,948,939

1,950,659

1,941,843

1,927,415

Average total deposits

1,399,028

1,386,656

1,337,963

1,321,913

1,291,375

Average consumer and small business banking deposits (5)

897,779

857,943

779,521

763,169

749,529

Net interest margin

2.13 %

2.25

2.58

2.53

2.66

At Quarter End

Debt securities

$

476,421

472,580

501,563

497,125

503,528

Loans

920,082

935,155

1,009,843

962,265

954,915

Allowance for loan losses

19,463

18,926

11,263

9,551

9,715

Goodwill

26,387

26,385

26,381

26,390

26,388

Equity securities

51,169

52,494

54,047

68,241

63,884

Assets

1,922,220

1,968,766

1,981,349

1,927,555

1,943,950

Deposits

1,383,215

1,410,711

1,376,532

1,322,626

1,308,495

Common stockholders' equity

161,109

159,322

162,654

166,669

172,827

Wells Fargo stockholders' equity

181,173

179,386

182,718

187,146

193,304

Total equity

182,032

180,122

183,330

187,984

194,416

Tangible common equity (1)

133,179

131,329

134,787

138,506

144,481

Common shares outstanding

4,132.5

4,119.6

4,096.4

4,134.4

4,269.1

Book value per common share (6)

$

38.99

38.67

39.71

40.31

40.48

Tangible book value per common share (1)(6)

32.23

31.88

32.90

33.50

33.84

Headcount (7)

274,900

276,000

272,300

271,900

272,700

  1. Tangible common equity, return on average tangible common equity, and tangible book value per common share are non-GAAP financial measures. 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-taxpre-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. In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
  5. Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
  6. 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.
  7. In third quarter 2020, we began reporting headcount rather than active, full-time equivalent employees. Prior period balances have been revised to conform with the current period presentation.

- 18 -

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

Quarter ended September 30,

%

Nine months ended September 30,

%

(in millions, except per share amounts)

2020

2019

Change

2020

2019

Change

Interest income

Debt securities

$

2,446

3,666

(33)%

$

8,864

11,388

(22)%

Mortgage loans held for sale

232

232

-

659

579

14

Loans held for sale

7

20

(65)

26

64

(59)

Loans

7,954

10,982

(28)

26,467

33,652

(21)

Equity securities

101

247

(59)

423

693

(39)

Other interest income

60

1,352

(96)

889

4,112

(78)

Total interest income

10,800

16,499

(35)

37,328

50,488

(26)

Interest expense

Deposits

314

2,324

(86)

2,641

6,563

(60)

Short-term borrowings

(12)

635

NM

262

1,877

(86)

Long-term debt

1,038

1,780

(42)

3,515

5,607

(37)

Other interest expense

92

135

(32)

350

410

(15)

Total interest expense

1,432

4,874

(71)

6,768

14,457

(53)

Net interest income

9,368

11,625

(19)

30,560

36,031

(15)

Provision for credit losses:

Debt securities

18

-

NM

159

-

NM

Loans

751

695

8

14,149

2,043

593

Net interest income after provision for credit losses

8,599

10,930

(21)

16,252

33,988

(52)

Noninterest income (1)

Deposit-related fees

1,299

1,480

(12)

3,888

4,289

(9)

Trust and investment fees

3,514

3,559

(1)

10,439

10,500

(1)

Card fees

912

1,027

(11)

2,601

2,996

(13)

Lending-related fees

352

374

(6)

1,025

1,116

(8)

Mortgage banking

1,590

466

241

2,286

1,932

18

Net gains from trading activities

361

276

31

1,232

862

43

Net gains on debt securities

264

3

NM

713

148

382

Net gains (losses) from equity securities

649

956

(32)

(219)

2,392

NM

Lease income

333

402

(17)

1,021

1,270

(20)

Other

220

1,842

(88)

869

3,667

(76)

Total noninterest income

9,494

10,385

(9)

23,855

29,172

(18)

Noninterest expense (2)

Personnel

8,624

8,604

-

25,863

26,309

(2)

Technology, telecommunications and equipment

791

821

(4)

2,261

2,340

(3)

Occupancy

851

760

12

2,437

2,196

11

Operating losses

1,219

1,920

(37)

2,902

2,405

21

Professional and outside services

1,760

1,737

1

5,042

4,956

2

Leases

291

272

7

795

869

(9)

Advertising and promotion

144

266

(46)

462

832

(44)

Restructuring charges

718

-

NM

718

-

-

Other

831

819

1

2,348

2,657

(12)

Total noninterest expense

15,229

15,199

-

42,828

42,564

1

Income (loss) before income tax expense (benefit)

2,864

6,116

(53)

(2,721)

20,596

NM

Income tax expense (benefit)

645

1,304

(51)

(3,113)

3,479

NM

Net income before noncontrolling interests

2,219

4,812

(54)

392

17,117

(98)

Less: Net income from noncontrolling interests

184

202

(9)

83

441

(81)

Wells Fargo net income

$

2,035

4,610

(56)

$

309

16,676

(98)

Less: Preferred stock dividends and other

315

573

(45)

1,241

1,284

(3)

Wells Fargo net income (loss) applicable to common stock

$

1,720

4,037

(57)

$

(932)

15,392

NM

Per share information

Earnings (loss) per common share

$

0.42

0.93

(55)

$

(0.23)

3.45

NM

Diluted earnings (loss) per common share

0.42

0.92

(54)

(0.23)

3.43

NM

Average common shares outstanding

4,123.8

4,358.5

(5)

4,111.4

4,459.1

(8)

Diluted average common shares outstanding (3)

4,132.2

4,389.6

(6)

4,111.4

4,489.5

(8)

NM - Not meaningful

  1. In third quarter 2020, service charges on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.
  2. In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.
  3. For the nine months ended September 30, 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

- 19 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME

Quarter ended

(in millions, except per share amounts)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Interest income

Debt securities

$

2,446

2,946

3,472

3,567

3,666

Mortgage loans held for sale

232

230

197

234

232

Loans held for sale

7

7

12

15

20

Loans

7,954

8,448

10,065

10,494

10,982

Equity securities

101

116

206

269

247

Other interest income

60

54

775

1,016

1,352

Total interest income

10,800

11,801

14,727

15,595

16,499

Interest expense

Deposits

314

585

1,742

2,072

2,324

Short-term borrowings

(12)

(17)

291

439

635

Long-term debt

1,038

1,237

1,240

1,743

1,780

Other interest expense

92

116

142

141

135

Total interest expense

1,432

1,921

3,415

4,395

4,874

Net interest income

9,368

9,880

11,312

11,200

11,625

Provision (reversal of provision) for credit losses:

Debt securities

18

(31)

172

-

-

Loans

751

9,565

3,833

644

695

Net interest income after provision for credit losses

8,599

346

7,307

10,556

10,930

Noninterest income (1)

Deposit-related fees

1,299

1,142

1,447

1,530

1,480

Trust and investment fees

3,514

3,351

3,574

3,572

3,559

Card fees

912

797

892

1,020

1,027

Lending-related fees

352

323

350

358

374

Mortgage banking

1,590

317

379

783

466

Net gains from trading activities

361

807

64

131

276

Net gains (losses) on debt securities

264

212

237

(8)

3

Net gains (losses) from equity securities

649

533

(1,401)

451

956

Lease income

333

335

353

344

402

Other

220

139

510

479

1,842

Total noninterest income

9,494

7,956

6,405

8,660

10,385

Noninterest expense (2)

Personnel

8,624

8,916

8,323

8,819

8,604

Technology, telecommunications and equipment

791

672

798

936

821

Occupancy

851

871

715

749

760

Operating losses

1,219

1,219

464

1,916

1,920

Professional and outside services

1,760

1,676

1,606

1,789

1,737

Leases

291

244

260

286

272

Advertising and promotion

144

137

181

244

266

Restructuring charges

718

-

-

-

-

Other

831

816

701

875

819

Total noninterest expense

15,229

14,551

13,048

15,614

15,199

Income (loss) before income tax expense (benefit)

2,864

(6,249)

664

3,602

6,116

Income tax expense (benefit)

645

(3,917)

159

678

1,304

Net income (loss) before noncontrolling interests

2,219

(2,332)

505

2,924

4,812

Less: Net income (loss) from noncontrolling interests

184

47

(148)

51

202

Wells Fargo net income (loss)

$

2,035

(2,379)

653

2,873

4,610

Less: Preferred stock dividends and other

315

315

611

327

573

Wells Fargo net income (loss) applicable to common stock

$

1,720

(2,694)

42

2,546

4,037

Per share information

Earnings (loss) per common share

$

0.42

(0.66)

0.01

0.61

0.93

Diluted earnings (loss) per common share

0.42

(0.66)

0.01

0.60

0.92

Average common shares outstanding

4,123.8

4,105.5

4,104.8

4,197.1

4,358.5

Diluted average common shares outstanding (3)

4,132.2

4,105.5

4,135.3

4,234.6

4,389.6

  1. In third quarter 2020, service charges on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.
  2. In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.
  3. In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

- 20 -

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Quarter ended Sep 30,

%

Nine months ended Sep 30,

%

(in millions)

2020

2019

Change

2020

2019

Change

Wells Fargo net income

$

2,035

4,610

(56)%

$

309

16,676

(98)%

Other comprehensive income (loss), before tax:

Debt securities:

Net unrealized gains arising during the period

96

652

(85)

1,582

5,192

(70)

Reclassification of net (gains) losses to net income

(95)

76

NM

(357)

34

NM

Derivative and hedging activities:

Net unrealized gains (losses) arising during the period

(70)

10

NM

2

32

(94)

Reclassification of net losses to net income

52

75

(31)

165

233

(29)

Defined benefit plans adjustments:

Net actuarial and prior service losses arising during the period

(89)

-

-

(760)

(4)

NM

Amortization of net actuarial loss, settlements and other to net income

68

33

106

205

101

103

Foreign currency translation adjustments:

Net unrealized gains (losses) arising during the period

74

(53)

NM

(70)

3

NM

Other comprehensive income, before tax

36

793

(95)

767

5,591

(86)

Income tax benefit (expense) related to other comprehensive income

13

(208)

NM

(206)

(1,375)

(85)

Other comprehensive income, net of tax

49

585

(92)

561

4,216

(87)

Less: Other comprehensive income from noncontrolling interests

1

-

-

-

-

-

Wells Fargo other comprehensive income, net of tax

48

585

(92)

561

4,216

(87)

Wells Fargo comprehensive income

2,083

5,195

(60)

870

20,892

(96)

Comprehensive income from noncontrolling interests

185

202

(8)

83

441

(81)

Total comprehensive income

$

2,268

5,397

(58)

$

953

21,333

(96)

NM - Not meaningful

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Balance, beginning of period

$

180,122

183,330

187,984

194,416

200,037

Cumulative effect from change in accounting policies (1)

-

-

991

-

-

Wells Fargo net income (loss)

2,035

(2,379)

653

2,873

4,610

Wells Fargo other comprehensive income (loss), net of tax

48

766

(253)

328

585

Noncontrolling interests

123

124

(226)

(274)

117

Common stock issued

325

367

1,677

341

278

Common stock repurchased

(3)

(2)

(3,407)

(7,367)

(7,448)

Preferred stock redeemed (2)

-

-

(2,470)

-

(1,550)

Preferred stock released by ESOP

-

249

-

-

142

Preferred stock issued (3)

-

-

1,968

-

-

Common stock dividends

(413)

(2,093)

(2,096)

(2,145)

(2,230)

Preferred stock dividends

(315)

(315)

(339)

(327)

(353)

Stock incentive compensation expense

136

120

181

181

262

Net change in deferred compensation and related plans

(26)

(45)

(1,333)

(42)

(34)

Balance, end of period

$

182,032

180,122

183,330

187,984

194,416

  1. Effective January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-13,Financial Instruments - Credit Losses.
  2. Represents the impact of the redemption of the remaining shares of Preferred Stock, Series K, in first quarter 2020, the partial redemption of Preferred Stock, Series T, in first quarter 2020, and the partial redemption of Preferred Stock, Series K, in third quarter 2019.
  3. Represents the issuance of Preferred Stock, Series Z, in first quarter 2020.

- 21 -

Wells Fargo & Company and Subsidiaries

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

Quarter ended September 30,

2020

2019

Average

Yields/

Interest

Average

Yields/

Interest

(in millions)

income/

income/

balance

rates

expense

balance

rates

expense

Earning assets

Interest-earning deposits with banks

$

216,958

0.11 %

$

58

134,017

2.14 %

$

723

Federal funds sold and securities purchased under resale agreements

80,431

0.02

3

105,919

2.24

599

Debt securities (2):

Trading debt securities

88,021

2.49

548

94,737

3.35

794

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies

8,126

0.87

18

16,040

2.14

87

Securities of U.S. states and political subdivisions

32,326

2.16

174

43,305

3.78

409

Mortgage-backed securities:

Federal agencies

131,182

2.03

665

154,134

2.77

1,066

Residential and commercial

4,051

1.58

16

5,175

4.02

52

Total mortgage-backed securities

135,233

2.02

681

159,309

2.81

1,118

Other debt securities

41,871

1.84

194

42,435

4.12

440

Total available-for-sale debt securities

217,556

1.96

1,067

261,089

3.14

2,054

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies

48,582

2.14

261

44,770

2.18

247

Securities of U.S. states and political subdivisions

14,145

3.84

136

8,688

4.01

87

Federal agency and other mortgage-backed securities

113,646

1.85

525

95,434

2.54

606

Other debt securities

11

1.66

-

50

3.58

-

Total held-to-maturity debt securities

176,384

2.09

922

148,942

2.52

940

Total debt securities

481,961

2.10

2,537

504,768

3.00

3,788

Mortgage loans held for sale (3)

29,426

3.15

232

22,743

4.08

232

Loans held for sale (3)

1,597

1.60

7

1,964

4.17

20

Loans:

Commercial loans:

Commercial and industrial - U.S.

270,998

2.53

1,721

284,278

4.21

3,015

Commercial and industrial - Non-U.S.

64,048

2.14

344

64,016

3.67

593

Real estate mortgage

123,391

2.81

870

121,819

4.36

1,338

Real estate construction

22,216

3.13

175

20,686

5.13

267

Lease financing

17,091

3.41

146

19,266

4.34

209

Total commercial loans

497,744

2.60

3,256

510,065

4.22

5,422

Consumer loans:

Real estate 1-4 family first mortgage

290,607

3.24

2,357

288,383

3.74

2,699

Real estate 1-4 family junior lien mortgage

26,018

4.13

270

31,454

5.66

448

Credit card

35,965

11.70

1,057

39,204

12.55

1,240

Automobile

48,718

4.90

600

46,286

5.13

599

Other revolving credit and installment

32,656

5.25

431

34,368

6.95

601

Total consumer loans

433,964

4.33

4,715

439,695

5.06

5,587

Total loans (3)

931,708

3.41

7,971

949,760

4.61

11,009

Equity securities

25,185

1.61

100

37,075

2.68

249

Other

6,974

(0.02)

-

6,695

1.77

30

Total earning assets

$

1,774,240

2.45 %

$

10,908

1,762,941

3.76 %

$

16,650

Funding sources

Deposits:

Interest-bearing checking

$

49,608

0.07 %

$

8

59,310

1.39 %

$

208

Market rate and other savings

803,942

0.08

157

711,334

0.66

1,182

Savings certificates

24,808

0.83

52

32,751

1.72

142

Other time deposits

46,920

0.64

75

91,820

2.42

561

Deposits in non-U.S. offices

33,992

0.25

22

51,709

1.77

231

Total interest-bearing deposits

959,270

0.13

314

946,924

0.97

2,324

Short-term borrowings

57,292

(0.08)

(12)

121,842

2.07

635

Long-term debt

222,862

1.86

1,038

229,689

3.09

1,780

Other liabilities

27,679

1.33

92

26,173

2.06

135

Total interest-bearing liabilities

1,267,103

0.45

1,432

1,324,628

1.46

4,874

Portion of noninterest-bearing funding sources

507,137

-

-

438,313

-

-

Total funding sources

$

1,774,240

0.32

1,432

1,762,941

1.10

4,874

Net interest margin and net interest income on a taxable-equivalent basis (4)

2.13

%

$

9,476

2.66 %

$

11,776

Noninterest-earning assets

$

21,991

Cash and due from banks

19,199

Goodwill

26,388

26,413

Other

125,053

118,862

Total noninterest-earning assets

$

173,432

164,474

Noninterest-bearing funding sources

Deposits

$

439,758

344,451

Other liabilities

57,961

58,241

Total equity

182,850

200,095

Noninterest-bearing funding sources used to fund earning assets

(507,137)

(438,313)

Net noninterest-bearing funding sources

$

173,432

164,474

Total assets

$

1,947,672

1,927,415

Average prime rate

3.25 %

5.31 %

Average three-month London Interbank Offered Rate (LIBOR)

0.25

2.20

  1. Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
  2. 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.
  3. Nonaccrual loans and related income are included in their respective loan categories.
  4. Includes taxable-equivalent adjustments of $108 million and $151 million for the quarters ended September 30, 2020 and 2019, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% for the periods presented.

- 22 -

Wells Fargo & Company and Subsidiaries

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

Nine months ended September 30,

2020

2019

Average

Yields/

Interest

Average

Yields/

Interest

(in millions)

income/

income/

balance

rates

expense

balance

rates

expense

Earning assets

Interest-earning deposits with banks

$

174,425

0.37 %

$

490

138,591

2.27 %

$

2,352

Federal funds sold and securities purchased under resale agreements

88,095

0.58

385

95,945

2.36

1,692

Debt securities (2):

Trading debt securities

95,018

2.78

1,981

90,229

3.46

2,338

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies

9,448

1.06

75

15,178

2.17

246

Securities of U.S. states and political subdivisions

35,656

2.90

775

45,787

3.95

1,355

Mortgage-backed securities:

Federal agencies

144,425

2.37

2,564

151,806

2.95

3,359

Residential and commercial

4,376

2.25

74

5,571

4.12

172

Total mortgage-backed securities

148,801

2.36

2,638

157,377

2.99

3,531

Other debt securities

40,220

2.67

805

44,746

4.33

1,451

Total available-for-sale debt securities

234,125

2.45

4,293

263,088

3.34

6,583

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies

47,701

2.16

770

44,762

2.19

734

Securities of U.S. states and political subdivisions

13,950

3.83

401

7,277

4.03

220

Federal agency and other mortgage-backed securities

105,393

2.19

1,728

95,646

2.64

1,894

Other debt securities

17

2.64

-

56

3.81

1

Total held-to-maturity debt securities

167,061

2.31

2,899

147,741

2.57

2,849

Total debt securities

496,204

2.47

9,173

501,058

3.13

11,770

Mortgage loans held for sale (3)

25,264

3.48

659

18,401

4.20

579

Loans held for sale (3)

1,577

2.19

26

1,823

4.72

64

Loans:

Commercial loans:

Commercial and industrial - U.S.

289,799

2.88

6,257

285,305

4.39

9,360

Commercial and industrial - Non-U.S.

68,965

2.61

1,345

63,252

3.82

1,808

Real estate mortgage

122,903

3.25

2,987

121,703

4.51

4,101

Real estate construction

21,288

3.66

583

21,557

5.31

856

Lease financing

18,152

4.07

554

19,262

4.56

659

Total commercial loans

521,107

3.01

11,726

511,079

4.39

16,784

Consumer loans:

Real estate 1-4 family first mortgage

288,355

3.43

7,421

286,600

3.86

8,296

Real estate 1-4 family junior lien mortgage

27,535

4.52

932

32,610

5.72

1,397

Credit card

37,415

11.58

3,243

38,517

12.69

3,656

Automobile

48,473

4.95

1,797

45,438

5.18

1,762

Other revolving credit and installment

33,033

5.68

1,405

34,832

7.07

1,841

Total consumer loans

434,811

4.54

14,798

437,997

5.17

16,952

Total loans (3)

955,918

3.70

26,524

949,076

4.75

33,736

Equity securities

30,027

1.89

425

35,139

2.65

697

Other

7,373

0.24

14

5,275

1.73

68

Total earning assets

$

1,778,883

2.83 %

$

37,696

1,745,308

3.90 %

$

50,958

Funding sources

Deposits:

Interest-bearing checking

$

55,407

0.37 %

$

152

57,715

1.42 %

$

615

Market rate and other savings

788,732

0.24

1,446

696,943

0.58

3,038

Savings certificates

27,310

1.16

237

29,562

1.56

344

Other time deposits

62,881

1.23

580

95,490

2.57

1,836

Deposits in non-U.S. offices

41,642

0.73

226

52,995

1.84

730

Total interest-bearing deposits

975,972

0.36

2,641

932,705

0.94

6,563

Short-term borrowings

74,538

0.47

263

115,131

2.18

1,878

Long-term debt

228,067

2.06

3,515

233,186

3.21

5,607

Other liabilities

29,270

1.59

350

25,263

2.17

410

Total interest-bearing liabilities

1,307,847

0.69

6,769

1,306,285

1.48

14,458

Portion of noninterest-bearing funding sources

471,036

-

-

439,023

-

-

Total funding sources

$

1,778,883

0.51

6,769

1,745,308

1.11

14,458

Net interest margin and net interest income on a taxable-equivalent basis (4)

2.32

%

$

30,927

2.79 %

$

36,500

Noninterest-earning assets

Cash and due from banks

$

21,266

19,428

Goodwill

26,386

26,416

Other

122,550

112,721

Total noninterest-earning assets

$

170,202

158,565

Noninterest-bearing funding sources

Deposits

$

398,666

341,541

Other liabilities

57,537

56,664

Total equity

185,035

199,383

Noninterest-bearing funding sources used to fund earning assets

(471,036)

(439,023)

Net noninterest-bearing funding sources

$

170,202

158,565

Total assets

$

1,949,085

1,903,873

Average prime rate

3.63 %

5.43 %

Average three-month London Interbank Offered Rate (LIBOR)

0.79

2.46

  1. Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
  2. 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.
  3. Nonaccrual loans and related income are included in their respective loan categories.
  4. Includes taxable-equivalent adjustments of $367 million and $469 million for the first nine months of 2020 and 2019, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% for the periods presented.

- 23 -

Wells Fargo & Company and Subsidiaries

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

Quarter ended

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

($ in billions)

Average

Yields/

Average

Yields/

Average

Yields/

Average

Yields/

Average

Yields/

balance

rates

balance

rates

balance

rates

balance

rates

balance

rates

Earning assets

Interest-earning deposits with banks

$

217.0

0.11 %

$

176.3

0.12 %

$

129.5

1.18 %

$

127.3

1.63 %

$

134.0

2.14 %

Federal funds sold and securities purchased under resale agreements

80.4

0.02

76.4

0.01

107.6

1.42

109.2

1.72

105.9

2.24

Debt securities (2):

Trading debt securities

88.0

2.49

96.0

2.76

101.1

3.05

103.8

3.12

94.7

3.35

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies

8.1

0.87

9.5

0.83

10.8

1.40

15.6

1.79

16.0

2.14

Securities of U.S. states and political subdivisions

32.3

2.16

35.7

2.98

39.0

3.43

39.5

3.58

43.3

3.78

Mortgage-backed securities:

Federal agencies

131.2

2.03

143.6

2.33

158.6

2.68

161.1

2.58

154.1

2.77

Residential and commercial

4.1

1.58

4.4

2.27

4.6

2.82

4.8

4.40

5.2

4.02

Total mortgage-backed securities

135.3

2.02

148.0

2.33

163.2

2.68

165.9

2.63

159.3

2.81

Other debt securities

41.9

1.84

39.2

2.75

39.6

3.48

40.5

3.88

42.5

4.12

Total available-for-sale debt securities

217.6

1.96

232.4

2.44

252.6

2.87

261.5

2.92

261.1

3.14

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies

48.6

2.14

48.7

2.14

45.9

2.19

45.1

2.19

44.8

2.18

Securities of U.S. states and political subdivisions

14.1

3.84

14.2

3.81

13.5

3.84

12.8

3.88

8.7

4.01

Federal agency and other mortgage-backed securities

113.7

1.85

104.0

2.21

98.4

2.55

95.3

2.49

95.4

2.54

Other debt securities

-

1.66

-

2.58

-

3.10

-

3.28

0.1

3.58

Total held-to-maturity debt securities

176.4

2.09

166.9

2.33

157.8

2.56

153.2

2.51

149.0

2.52

Total debt securities

482.0

2.10

495.3

2.46

511.5

2.81

518.5

2.84

504.8

3.00

Mortgage loans held for sale (3)

29.4

3.15

26.0

3.55

20.4

3.87

24.0

3.90

22.7

4.08

Loans held for sale (3)

1.6

1.60

1.7

1.87

1.5

3.17

1.4

4.13

2.0

4.17

Loans:

Commercial loans:

Commercial and industrial - U.S.

271.0

2.53

310.1

2.58

288.4

3.55

283.7

3.84

284.3

4.21

Commercial and industrial - Non-U.S.

64.0

2.14

72.2

2.48

70.7

3.16

67.3

3.40

64.0

3.67

Real estate mortgage

123.4

2.81

123.5

3.03

121.8

3.92

122.1

4.07

121.8

4.36

Real estate construction

22.2

3.13

21.4

3.37

20.3

4.54

20.1

4.71

20.7

5.13

Lease financing

17.1

3.41

18.1

4.34

19.3

4.40

19.4

4.41

19.3

4.34

Total commercial loans

497.7

2.60

545.3

2.76

520.5

3.65

512.6

3.90

510.1

4.22

Consumer loans:

Real estate 1-4 family first mortgage

290.6

3.24

280.9

3.44

293.5

3.61

292.4

3.66

288.4

3.74

Real estate 1-4 family junior lien mortgage

26.0

4.13

27.7

4.24

28.9

5.14

30.1

5.32

31.5

5.66

Credit card

36.0

11.70

36.5

10.78

39.8

12.21

39.9

12.26

39.2

12.55

Automobile

48.7

4.90

48.5

4.99

48.3

4.96

47.3

5.04

46.3

5.13

Other revolving credit and installment

32.7

5.25

32.4

5.45

34.0

6.32

34.2

6.60

34.3

6.95

Total consumer loans

434.0

4.33

426.0

4.45

444.5

4.83

443.9

4.92

439.7

5.06

Total loans (3)

931.7

3.41

971.3

3.50

965.0

4.20

956.5

4.37

949.8

4.61

Equity securities

25.2

1.61

27.4

1.70

37.5

2.22

38.3

2.81

37.1

2.68

Other

6.9

(0.02)

7.6

(0.02)

7.4

0.77

6.4

1.36

6.6

1.77

Total earning assets

$

1,774.2

2.45 %

$

1,782.0

2.68 %

$

1,780.4

3.35 %

$

1,781.6

3.51 %

$

1,762.9

3.76 %

Funding sources

Deposits:

Interest-bearing checking

$

49.6

0.07 %

$

53.6

0.07 %

$

63.1

0.86 %

$

63.3

1.09 %

$

59.3

1.39 %

Market rate and other savings

804.0

0.08

799.9

0.16

762.1

0.52

732.7

0.59

711.3

0.66

Savings certificates

24.8

0.83

27.1

1.11

30.1

1.47

32.3

1.68

32.8

1.72

Other time deposits

46.9

0.64

59.9

1.01

82.0

1.74

87.1

2.10

91.8

2.42

Deposits in non-U.S. offices

34.0

0.25

37.7

0.44

53.3

1.23

54.8

1.50

51.7

1.77

Total interest-bearing deposits

959.3

0.13

978.2

0.24

990.6

0.71

970.2

0.85

946.9

0.97

Short-term borrowings

57.3

(0.08)

63.5

(0.10)

103.0

1.14

115.9

1.50

121.8

2.07

Long-term debt

222.9

1.86

232.4

2.13

229.0

2.17

230.4

3.02

229.7

3.09

Other liabilities

27.6

1.33

30.0

1.53

30.2

1.90

27.3

2.04

26.2

2.06

Total interest-bearing liabilities

1,267.1

0.45

1,304.1

0.59

1,352.8

1.01

1,343.8

1.30

1,324.6

1.46

Portion of noninterest-bearing funding sources

507.1

-

477.9

-

427.6

-

437.8

-

438.3

-

Total funding sources

$

1,774.2

0.32

$

1,782.0

0.43

$

1,780.4

0.77

$

1,781.6

0.98

$

1,762.9

1.10

Net interest margin on a taxable-equivalent basis

2.13

%

2.25 %

2.58 %

2.53 %

2.66 %

Noninterest-earning assets

Cash and due from banks

$

22.0

21.2

20.6

19.9

19.2

Goodwill

26.4

26.4

26.4

26.4

26.4

Other

125.1

119.3

123.3

113.9

118.9

Total noninterest-earnings assets

$

173.5

166.9

170.3

160.2

164.5

Noninterest-bearing funding sources

Deposits

$

439.7

408.5

347.4

351.7

344.5

Other liabilities

58.0

52.2

62.3

53.9

58.2

Total equity

182.9

184.1

188.2

192.4

200.1

Noninterest-bearing funding sources used to fund earning assets

(507.1)

(477.9)

(427.6)

(437.8)

(438.3)

Net noninterest-bearing funding sources

$

173.5

166.9

170.3

160.2

164.5

Total assets

$

1,947.7

1,948.9

1,950.7

1,941.8

1,927.4

Average prime rate

3.25 %

3.25

4.41

4.83

5.31

Average three-month London Interbank Offered Rate (LIBOR)

0.25

0.60

1.53

1.93

2.20

  1. Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
  2. 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.
  3. Nonaccrual loans and related income are included in their respective loan categories.

- 24 -

Wells Fargo & Company and Subsidiaries

NONINTEREST INCOME

Quarter ended September 30,

%

Nine months ended September 30,

%

(in millions)

2020

2019

Change

2020

2019

Change

Deposit-related fees (1)

$

1,299

1,480

(12)%

$

3,888

4,289

(9)%

Trust and investment fees:

Brokerage advisory, commissions and other fees

2,336

2,346

-

6,935

6,857

1

Trust and investment management

737

729

1

2,125

2,310

(8)

Investment banking

441

484

(9)

1,379

1,333

3

Total trust and investment fees

3,514

3,559

(1)

10,439

10,500

(1)

Card fees

912

1,027

(11)

2,601

2,996

(13)

Lending-related fees (1)

352

374

(6)

1,025

1,116

(8)

Mortgage banking:

Servicing income, net

341

(142)

NM

(77)

499

NM

Net gains on mortgage loan origination/sales activities

1,249

608

105

2,363

1,433

65

Total mortgage banking

1,590

466

241

2,286

1,932

18

Net gains from trading activities

361

276

31

1,232

862

43

Net gains on debt securities

264

3

NM

713

148

382

Net gains (losses) from equity securities

649

956

(32)

(219)

2,392

NM

Lease income

333

402

(17)

1,021

1,270

(20)

Life insurance investment income

156

173

(10)

480

499

(4)

Other (1)

64

1,669

(96)

389

3,168

(88)

Total

$

9,494

10,385

(9)

$

23,855

29,172

(18)

NM - Not meaningful

  1. In third quarter 2020, service charges on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.

NONINTEREST EXPENSE

Quarter ended September 30,

%

Nine months ended September 30,

%

(in millions)

2020

2019

Change

2020

2019

Change

Personnel

$

8,624

8,604

- %

$

25,863

26,309

(2)%

Technology, telecommunications and equipment (1)

791

821

(4)

2,261

2,340

(3)

Occupancy (2)

851

760

12

2,437

2,196

11

Operating losses

1,219

1,920

(37)

2,902

2,405

21

Professional and outside services (1)

1,760

1,737

1

5,042

4,956

2

Leases (3)

291

272

7

795

869

(9)

Advertising and promotion

144

266

(46)

462

832

(44)

Restructuring charges

718

-

NM

718

-

NM

Other (1)

831

819

1

2,348

2,657

(12)

Total

$

15,229

15,199

-

$

42,828

42,564

1

NM - Not meaningful

  1. In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.
  2. Represents expenses for both leased and owned properties.
  3. Represents expenses for assets we lease to customers.

- 25 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Deposit-related fees (1)

$

1,299

1,142

1,447

1,530

1,480

Trust and investment fees:

Brokerage advisory, commissions and other fees

2,336

2,117

2,482

2,380

2,346

Trust and investment management

737

687

701

728

729

Investment banking

441

547

391

464

484

Total trust and investment fees

3,514

3,351

3,574

3,572

3,559

Card fees

912

797

892

1,020

1,027

Lending-related fees (1)

352

323

350

358

374

Mortgage banking:

Servicing income, net

341

(689)

271

23

(142)

Net gains on mortgage loan origination/sales activities

1,249

1,006

108

760

608

Total mortgage banking

1,590

317

379

783

466

Net gains from trading activities

361

807

64

131

276

Net gains (losses) on debt securities

264

212

237

(8)

3

Net gains (losses) from equity securities

649

533

(1,401)

451

956

Lease income

333

335

353

344

402

Life insurance investment income

156

163

161

159

173

Other (1)

64

(24)

349

320

1,669

Total

$

9,494

7,956

6,405

8,660

10,385

  1. In third quarter 2020, service charges on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.

FIVE QUARTER NONINTEREST EXPENSE

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Personnel

$

8,624

8,916

8,323

8,819

8,604

Technology, telecommunications and equipment (1)

791

672

798

936

821

Occupancy (2)

851

871

715

749

760

Operating losses

1,219

1,219

464

1,916

1,920

Professional and outside services (1)

1,760

1,676

1,606

1,789

1,737

Leases (3)

291

244

260

286

272

Advertising and promotion

144

137

181

244

266

Restructuring charges

718

-

-

-

-

Other (1)

831

816

701

875

819

Total

$

15,229

14,551

13,048

15,614

15,199

  1. In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.
  2. Represents expenses for both leased and owned properties.
  3. Represents expenses for assets we lease to customers.

FIVE QUARTER DEFERRED COMPENSATION AND RELATED HEDGES

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Net interest income

$

-

3

12

26

13

Net gains (losses) from equity securities

1

346

(621)

236

(4)

Total revenue (losses) from deferred compensation plan investments

1

349

(609)

262

9

Change in deferred compensation plan liabilities

220

490

(598)

263

5

Net derivative (gains) losses from economic hedges of deferred compensation (1)

(215)

(141)

-

-

-

Personnel expense

5

349

(598)

263

5

Income (loss) before income tax expense

$

(4)

-

(11)

(1)

4

  1. In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments. Changes in the fair value of derivatives used as economic hedges are presented within the same financial statement line as the related business activity being hedged.

- 26 -

Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

(in millions, except shares)

Sep 30,

Dec 31,

%

2020

2019

Change

Assets

Cash and due from banks

$

25,535

21,757

17 %

Interest-earning deposits with banks

221,235

119,493

85

Total cash, cash equivalents, and restricted cash

246,770

141,250

75

Federal funds sold and securities purchased under resale agreements

69,304

102,140

(32)

Debt securities:

Trading, at fair value

73,253

79,733

(8)

Available-for-sale, at fair value (includes allowance for credit losses)

220,573

263,459

(16)

Held-to-maturity, at amortized cost, net of allowance for credit losses

182,595

153,933

19

Mortgage loans held for sale

23,307

23,342

-

Loans held for sale

1,697

977

74

Loans

920,082

962,265

(4)

Allowance for loan losses

(19,463)

(9,551)

104

Net loans

900,619

952,714

(5)

Mortgage servicing rights:

Measured at fair value

6,355

11,517

(45)

Amortized

1,325

1,430

(7)

Premises and equipment, net

8,977

9,309

(4)

Goodwill

26,387

26,390

-

Derivative assets

23,715

14,203

67

Equity securities

51,169

68,241

(25)

Other assets

86,174

78,917

9

Total assets

$

1,922,220

1,927,555

-

Liabilities

Noninterest-bearing deposits

$

447,011

344,496

30

Interest-bearing deposits

936,204

978,130

(4)

Total deposits

1,383,215

1,322,626

5

Short-term borrowings

55,224

104,512

(47)

Derivative liabilities

13,767

9,079

52

Accrued expenses and other liabilities

72,271

75,163

(4)

Long-term debt

215,711

228,191

(5)

Total liabilities

1,740,188

1,739,571

-

Equity

Wells Fargo stockholders' equity:

Preferred stock

21,098

21,549

(2)

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

60,035

61,049

(2)

Retained earnings

160,913

166,697

(3)

Cumulative other comprehensive income (loss)

(750)

(1,311)

(43)

Treasury stock - 1,349,294,592 shares and 1,347,385,537 shares

(68,384)

(68,831)

(1)

Unearned ESOP shares

(875)

(1,143)

(23)

Total Wells Fargo stockholders' equity

181,173

187,146

(3)

Noncontrolling interests

859

838

3

Total equity

182,032

187,984

(3)

Total liabilities and equity

$

1,922,220

1,927,555

-

- 27 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED BALANCE SHEET

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Assets

Cash and due from banks

$

25,535

24,704

22,738

21,757

22,401

Interest-earning deposits with banks

221,235

237,799

128,071

119,493

126,330

Total cash, cash equivalents, and restricted cash

246,770

262,503

150,809

141,250

148,731

Federal funds sold and securities purchased under resale agreements

69,304

79,289

86,465

102,140

103,051

Debt securities:

Trading, at fair value

73,253

74,679

80,425

79,733

79,113

Available-for-sale, at fair value (includes allowance for credit losses)

220,573

228,899

251,229

263,459

271,236

Held-to-maturity, at amortized cost, net of allowance for credit losses

182,595

169,002

169,909

153,933

153,179

Mortgage loans held for sale

23,307

32,355

21,795

23,342

25,448

Loans held for sale

1,697

1,339

1,883

977

1,532

Loans

920,082

935,155

1,009,843

962,265

954,915

Allowance for loan losses

(19,463)

(18,926)

(11,263)

(9,551)

(9,715)

Net loans

900,619

916,229

998,580

952,714

945,200

Mortgage servicing rights:

Measured at fair value

6,355

6,819

8,126

11,517

11,072

Amortized

1,325

1,361

1,406

1,430

1,397

Premises and equipment, net

8,977

9,025

9,108

9,309

9,315

Goodwill

26,387

26,385

26,381

26,390

26,388

Derivative assets

23,715

22,776

25,023

14,203

14,680

Equity securities

51,169

52,494

54,047

68,241

63,884

Other assets

86,174

85,611

96,163

78,917

89,724

Total assets

$

1,922,220

1,968,766

1,981,349

1,927,555

1,943,950

Liabilities

Noninterest-bearing deposits

$

447,011

432,857

379,678

344,496

355,259

Interest-bearing deposits

936,204

977,854

996,854

978,130

953,236

Total deposits

1,383,215

1,410,711

1,376,532

1,322,626

1,308,495

Short-term borrowings

55,224

60,485

92,289

104,512

123,908

Derivative liabilities

13,767

11,368

15,618

9,079

9,948

Accrued expenses and other liabilities

72,271

75,159

76,238

75,163

76,532

Long-term debt

215,711

230,921

237,342

228,191

230,651

Total liabilities

1,740,188

1,788,644

1,798,019

1,739,571

1,749,534

Equity

Wells Fargo stockholders' equity:

Preferred stock

21,098

21,098

21,347

21,549

21,549

Common stock

9,136

9,136

9,136

9,136

9,136

Additional paid-in capital

60,035

59,923

59,849

61,049

60,866

Retained earnings

160,913

159,952

165,308

166,697

166,320

Cumulative other comprehensive income (loss)

(750)

(798)

(1,564)

(1,311)

(1,639)

Treasury stock

(68,384)

(69,050)

(70,215)

(68,831)

(61,785)

Unearned ESOP shares

(875)

(875)

(1,143)

(1,143)

(1,143)

Total Wells Fargo stockholders' equity

181,173

179,386

182,718

187,146

193,304

Noncontrolling interests

859

736

612

838

1,112

Total equity

182,032

180,122

183,330

187,984

194,416

Total liabilities and equity

$

1,922,220

1,968,766

1,981,349

1,927,555

1,943,950

- 28 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER TRADING ASSETS AND LIABILITIES

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Trading assets

Debt securities

$

73,253

74,679

80,425

79,733

79,113

Equity securities

14,058

12,591

13,573

27,440

24,436

Loans held for sale

1,688

1,201

1,673

972

1,501

Gross trading derivative assets

57,990

60,644

72,527

34,825

39,926

Netting (1)

(35,662)

(39,885)

(49,821)

(21,463)

(26,414)

Total trading derivative assets

22,328

20,759

22,706

13,362

13,512

Total trading assets

111,327

109,230

118,377

121,507

118,562

Trading liabilities

Short sales

18,779

20,213

17,603

17,430

18,290

Gross trading derivative liabilities

51,241

54,985

67,891

33,861

38,308

Netting (1)

(39,278)

(44,901)

(53,598)

(26,074)

(29,708)

Total trading derivative liabilities

11,963

10,084

14,293

7,787

8,600

Total trading liabilities

$

30,742

30,297

31,896

25,217

26,890

  1. Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

FIVE QUARTER DEBT SECURITIES

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Trading debt securities

$

73,253

74,679

80,425

79,733

79,113

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies

5,975

7,983

11,036

14,960

16,549

Securities of U.S. states and political subdivisions

31,511

33,011

38,144

40,337

40,503

Mortgage-backed securities:

Federal agencies

135,227

144,835

160,214

162,453

167,535

Residential and commercial

3,884

4,100

4,430

4,761

5,079

Total mortgage-backed securities

139,111

148,935

164,644

167,214

172,614

Other debt securities

43,976

38,970

37,405

40,948

41,570

Total available-for-sale debt securities

220,573

228,899

251,229

263,459

271,236

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies

48,587

48,578

48,569

45,541

44,774

Securities of U.S. states and political subdivisions

14,232

14,277

14,304

13,486

12,719

Federal agency and other mortgage-backed securities (1)

119,766

106,133

107,013

94,869

95,637

Other debt securities

10

14

23

37

49

Total held-to-maturity debt securities

182,595

169,002

169,909

153,933

153,179

Total debt securities

$

476,421

472,580

501,563

497,125

503,528

Allowance for credit losses for debt securities (2):

Available-for-sale debt securities (included in fair value)

$

79

114

161

-

-

Held-to-maturity debt securities (netted against amortized cost)

26

20

11

-

-

Total allowance for credit losses for debt securities

$

105

134

172

-

-

  1. Predominantly consists of federal agency mortgage-backed securities.
  2. Represents the allowance for credit losses for debt securities as a result of our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020.

- 29 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER EQUITY SECURITIES

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Held for trading at fair value:

Marketable equity securities

$

14,058

12,591

13,573

27,440

24,436

Not held for trading:

Fair value:

Marketable equity securities (1)

2,412

6,426

7,708

6,481

6,639

Nonmarketable equity securities

8,583

8,322

6,895

8,015

7,293

Total equity securities at fair value

10,995

14,748

14,603

14,496

13,932

Equity method:

Low-income housing tax credit investments

11,295

11,294

11,290

11,343

11,068

Private equity

2,841

3,351

3,351

3,459

3,425

Tax-advantaged renewable energy

4,142

3,940

3,991

3,811

3,143

New market tax credit and other

356

377

387

387

390

Total equity method

18,634

18,962

19,019

19,000

18,026

Other:

Federal Reserve Bank stock and other at cost (2)

3,585

3,794

4,512

4,790

5,021

Private equity (3)

3,897

2,399

2,340

2,515

2,469

Total equity securities not held for trading

37,111

39,903

40,474

40,801

39,448

Total equity securities

$

51,169

52,494

54,047

68,241

63,884

  1. Includes $206 million, $191 million, $3.1 billion, $3.8 billion and $3.5 billion at September 30, June 30 and March 31, 2020, and December 31 and September 30, 2019, respectively, related to securities held as economic hedges of our deferred compensation plan liabilities. In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments.
  2. Includes $3.5 billion, $3.8 billion, $4.5 billion, $4.8 billion and $5.0 billion at September 30, June 30 and March 31, 2020, and December 31 and September 30, 2019, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.
  3. Represents nonmarketable equity securities accounted for under the measurement alternative.

- 30 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER LOANS

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Commercial:

Commercial and industrial

$

320,913

350,116

405,020

354,125

350,875

Real estate mortgage

121,910

123,967

122,767

121,824

121,936

Real estate construction

22,519

21,694

20,812

19,939

19,921

Lease financing

16,947

17,410

19,136

19,831

19,600

Total commercial

482,289

513,187

567,735

515,719

512,332

Consumer:

Real estate 1-4 family first mortgage

294,990

277,945

292,920

293,847

290,604

Real estate 1-4 family junior lien mortgage

25,162

26,839

28,527

29,509

30,838

Credit card

36,021

36,018

38,582

41,013

39,629

Automobile

48,450

48,808

48,568

47,873

46,738

Other revolving credit and installment

33,170

32,358

33,511

34,304

34,774

Total consumer

437,793

421,968

442,108

446,546

442,583

Total loans

$

920,082

935,155

1,009,843

962,265

954,915

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. The following table presents total non-U.S. commercial loans outstanding by class of financing receivable.

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Non-U.S. commercial loans:

Commercial and industrial

$

61,594

67,015

78,753

70,494

64,418

Real estate mortgage

6,228

6,460

6,309

7,004

7,056

Real estate construction

1,898

1,697

1,478

1,434

1,262

Lease financing

1,156

1,146

1,120

1,220

1,197

Total non-U.S. commercial loans

$

70,876

76,318

87,660

80,152

73,933

- 31 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Nonaccrual loans:

Commercial:

Commercial and industrial

$

2,834

2,896

1,779

1,545

1,539

Real estate mortgage

1,343

1,217

944

573

669

Real estate construction

34

34

21

41

32

Lease financing

187

138

131

95

72

Total commercial

4,398

4,285

2,875

2,254

2,312

Consumer:

Real estate 1-4 family first mortgage (1) (2)

2,641

2,393

2,372

2,150

2,261

Real estate 1-4 family junior lien mortgage (2)

767

753

769

796

819

Automobile

176

129

99

106

110

Other revolving credit and installment

40

45

41

40

43

Total consumer

3,624

3,320

3,281

3,092

3,233

Total nonaccrual loans

$

8,022

7,605

6,156

5,346

5,545

As a percentage of total loans

0.87 %

0.81

0.61

0.56

0.58

Foreclosed assets:

Government insured/guaranteed

$

22

31

43

50

59

Non-government insured/guaranteed

134

164

209

253

378

Total foreclosed assets

156

195

252

303

437

Total nonperforming assets

$

8,178

7,800

6,408

5,649

5,982

As a percentage of total loans

0.89 %

0.83

0.63

0.59

0.63

  1. Amounts are not comparative due to our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020. Prior to January 1, 2020, pools of individual purchased credit-impaired (PCI) loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of ASU 2016-13, the pools were discontinued and performance is based on contractual terms for individual loans.
  2. Real estate 1-4 family mortgage loans predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) are not placed on nonaccrual status because they are insured or guaranteed.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Total:

$

11,698

9,739

7,023

7,285

7,130

Less: FHA insured/VA guaranteed (1)

11,041

8,922

6,142

6,352

6,308

Total, not government insured/guaranteed

$

657

817

881

933

822

By segment and class, not government insured/guaranteed:

Commercial:

Commercial and industrial

$

61

101

24

47

6

Real estate mortgage

47

44

28

31

28

Real estate construction

-

-

1

-

-

Total commercial

108

145

53

78

34

Consumer:

Real estate 1-4 family first mortgage (2)

97

93

128

112

100

Real estate 1-4 family junior lien mortgage (2)

28

19

25

32

35

Credit card

297

418

528

546

491

Automobile

50

54

69

78

75

Other revolving credit and installment

77

88

78

87

87

Total consumer

549

672

828

855

788

Total, not government insured/guaranteed

$

657

817

881

933

822

  1. Represents loans whose repayments are largely insured by the FHA or guaranteed by the VA.
  2. Amounts are not comparative due to our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020. Total loans 90 days or more past due and still accruing exclude PCI loans of $102 million and $119 million at December 31 and September 30, 2019, respectively.

- 32 -

Wells Fargo & Company and Subsidiaries

CHANGES IN ALLOWANCE FOR CREDIT LOSSES FOR LOANS

Quarter ended September 30, Nine months ended September 30,

(in millions)

2020

2019

2020

2019

Balance, beginning of period

$

20,436

10,603

10,456

10,707

Cumulative effect from change in accounting policies (1)

-

-

(1,337)

-

Allowance for purchased credit deteriorated (PCD) loans (2)

-

-

8

-

Balance, beginning of period, adjusted

20,436

10,603

9,127

10,707

Provision for credit losses

751

695

14,149

2,043

Interest income on certain impaired loans (3)

(41)

(34)

(117)

(112)

Loan charge-offs:

Commercial:

Commercial and industrial

(327)

(209)

(1,260)

(590)

Real estate mortgage

(59)

(2)

(134)

(28)

Real estate construction

-

-

-

(1)

Lease financing

(34)

(12)

(66)

(35)

Total commercial

(420)

(223)

(1,460)

(654)

Consumer:

Real estate 1-4 family first mortgage

(20)

(31)

(63)

(101)

Real estate 1-4 family junior lien mortgage

(22)

(27)

(70)

(90)

Credit card

(339)

(404)

(1,225)

(1,278)

Automobile

(99)

(156)

(413)

(485)

Other revolving credit and installment

(94)

(168)

(372)

(497)

Total consumer

(574)

(786)

(2,143)

(2,451)

Total loan charge-offs

(994)

(1,009)

(3,603)

(3,105)

Loan recoveries:

Commercial:

Commercial and industrial

53

62

132

151

Real estate mortgage

3

10

13

26

Real estate construction

2

8

19

13

Lease financing

6

4

14

15

Total commercial

64

84

178

205

Consumer:

Real estate 1-4 family first mortgage

21

36

65

148

Real estate 1-4 family junior lien mortgage

36

49

101

140

Credit card

94

85

276

258

Automobile

68

80

194

266

Other revolving credit and installment

28

30

84

95

Total consumer

247

280

720

907

Total loan recoveries

311

364

898

1,112

Net loan charge-offs

(683)

(645)

(2,705)

(1,993)

Other

8

(6)

17

(32)

Balance, end of period

$

20,471

10,613

20,471

10,613

Components:

Allowance for loan losses

$

19,463

9,715

19,463

9,715

Allowance for unfunded credit commitments

1,008

898

1,008

898

Allowance for credit losses for loans

$

20,471

10,613

20,471

10,613

Net loan charge-offs (annualized) as a percentage of average total loans

0.29 %

0.27

0.38

0.28

Allowance for loan losses as a percentage of total loans

2.12

1.02

2.12

1.02

Allowance for credit losses for loans as a percentage of total loans

2.22

1.11

2.22

1.11

  1. Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020.
  2. Represents the allowance for credit losses for PCI loans that automatically became purchased credit-deteriorated (PCD) loans with the adoption of ASU 2016-13.
  3. Certain impaired loans with an allowance for credit losses calculated by discounting expected cash flows using the loan's effective interest rate over the remaining life of the loan recognize changes in the allowance for credit losses attributable to the passage of time as interest income.

- 33 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES FOR LOANS

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Balance, beginning of quarter

$

20,436

12,022

10,456

10,613

10,603

Cumulative effect from change in accounting policies (1)

-

-

(1,337)

-

-

Allowance for purchased credit-deteriorated (PCD) loans (2)

-

-

8

-

-

Balance, beginning of quarter, adjusted

20,436

12,022

9,127

10,613

10,603

Provision for credit losses

751

9,565

3,833

644

695

Interest income on certain loans (3)

(41)

(38)

(38)

(35)

(34)

Loan charge-offs:

Commercial:

Commercial and industrial

(327)

(556)

(377)

(212)

(209)

Real estate mortgage

(59)

(72)

(3)

(10)

(2)

Real estate construction

-

-

-

-

-

Lease financing

(34)

(19)

(13)

(35)

(12)

Total commercial

(420)

(647)

(393)

(257)

(223)

Consumer:

Real estate 1-4 family first mortgage

(20)

(20)

(23)

(28)

(31)

Real estate 1-4 family junior lien mortgage

(22)

(18)

(30)

(28)

(27)

Credit card

(339)

(415)

(471)

(436)

(404)

Automobile

(99)

(158)

(156)

(162)

(156)

Other revolving credit and installment

(94)

(113)

(165)

(177)

(168)

Total consumer

(574)

(724)

(845)

(831)

(786)

Total loan charge-offs

(994)

(1,371)

(1,238)

(1,088)

(1,009)

Loan recoveries:

Commercial:

Commercial and industrial

53

35

44

44

62

Real estate mortgage

3

5

5

6

10

Real estate construction

2

1

16

-

8

Lease financing

6

4

4

4

4

Total commercial

64

45

69

54

84

Consumer:

Real estate 1-4 family first mortgage

21

18

26

31

36

Real estate 1-4 family junior lien mortgage

36

30

35

44

49

Credit card

94

88

94

86

85

Automobile

68

52

74

75

80

Other revolving credit and installment

28

25

31

29

30

Total consumer

247

213

260

265

280

Total loan recoveries

311

258

329

319

364

Net loan charge-offs

(683)

(1,113)

(909)

(769)

(645)

Other

8

-

9

3

(6)

Balance, end of quarter

$

20,471

20,436

12,022

10,456

10,613

Components:

Allowance for loan losses

$

19,463

18,926

11,263

9,551

9,715

Allowance for unfunded credit commitments

1,008

1,510

759

905

898

Allowance for credit losses for loans

$

20,471

20,436

12,022

10,456

10,613

Net loan charge-offs (annualized) as a percentage of average total loans

0.29 %

0.46

0.38

0.32

0.27

Allowance for loan losses as a percentage of:

Total loans

2.12

2.02

1.12

0.99

1.02

Nonaccrual loans

243

249

183

179

175

Nonaccrual loans and other nonperforming assets

238

243

176

169

162

Total net loan charge-offs (annualized)

716

422

308

346

379

Allowance for credit losses for loans as a percentage of:

Total loans

2.22

2.19

1.19

1.09

1.11

Nonaccrual loans

255

269

195

196

191

Nonaccrual loans and other nonperforming assets

250

262

188

185

177

  1. Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020.
  2. Represents the allowance for credit losses for PCI loans that automatically became PCD loans with the adoption of ASU 2016-13.
  3. Loans with an allowance for credit losses measured by discounting expected cash flows using the loan's effective interest rate over the remaining life of the loan recognize changes in the allowance for credit losses attributable to the passage of time as interest income.

- 34 -

Wells Fargo & Company and Subsidiaries

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES FOR LOANS

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Jan 1, 2020

Dec 31, 2019 (1)

ACL

ACL

ACL

ACL

ACL

as %

as %

as %

as %

as %

($ in millions)

ACL

of loan

ACL

of loan

ACL

of loan

ACL

of loan

ACL

of loan

class

class

class

class

class

Commercial:

Commercial and industrial

$

7,845

2.44 %

$

8,109

2.32 %

$

4,231

1.04 %

$

2,490

0.70 %

$

3,600

1.02 %

Real estate mortgage

2,517

2.06

2,395

1.93

848

0.69

702

0.58

1,236

1.01

Real estate construction

521

2.31

484

2.23

36

0.17

42

0.21

1,079

5.41

Lease financing

659

3.89

681

3.91

164

0.86

149

0.75

330

1.66

Total commercial

11,542

2.39

11,669

2.27

5,279

0.93

3,383

0.66

6,245

1.21

Consumer:

Real estate 1-4 family first mortgage

1,519

0.51

1,541

0.55

836

0.29

845

0.29

692

0.24

Real estate 1-4 family junior lien

710

2.82

725

2.70

125

0.44

78

0.26

247

0.84

mortgage

Credit card

4,082

11.33

3,777

10.49

3,481

9.02

2,913

7.10

2,252

5.49

Automobile

1,225

2.53

1,174

2.41

1,016

2.09

719

1.50

459

0.96

Other revolving credit and installment

1,393

4.20

1,550

4.79

1,285

3.83

1,188

3.46

561

1.64

Total consumer

8,929

2.04

8,767

2.08

6,743

1.53

5,743

1.29

4,211

0.94

Total

$

20,471

2.22 %

$

20,436

2.19 %

$

12,022

1.19 %

$

9,126

0.95 %

$

10,456

1.09 %

  1. Amounts are not comparative due to our adoption of ASU 2016-13,Financial Instruments - Credit Losses, on January 1, 2020.

- 35 -

Wells Fargo & Company and Subsidiaries

TANGIBLE COMMON EQUITY

We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights (MSRs)) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. These tangible common equity ratios are as follows:

  • Tangible book value per common share, which represents tangible common equity divided by common shares outstanding; and
  • Return on average tangible common equity (ROTCE), which represents our annualized earnings contribution as a percentage of tangible common equity.

The methodology of determining tangible common equity may differ among companies. Management believes that tangible book value per common share and return on average tangible common equity, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the Company's use of equity.

The tables below provide a reconciliation of these non-GAAP financial measures to GAAP financial measures.

(in millions, except ratios)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Tangible book value per common share:

Total equity

$

182,032

180,122

183,330

187,984

194,416

Adjustments:

Preferred stock

(21,098)

(21,098)

(21,347)

(21,549)

(21,549)

Additional paid-in capital on preferred stock

159

159

140

(71)

(71)

Unearned ESOP shares

875

875

1,143

1,143

1,143

Noncontrolling interests

(859)

(736)

(612)

(838)

(1,112)

Total common stockholders' equity

(A)

161,109

159,322

162,654

166,669

172,827

Adjustments:

Goodwill

(26,387)

(26,385)

(26,381)

(26,390)

(26,388)

Certain identifiable intangible assets (other than MSRs)

(366)

(389)

(413)

(437)

(465)

Goodwill and other intangibles on nonmarketable equity

(2,019)

(2,050)

(1,894)

(2,146)

(2,295)

securities (included in other assets)

Applicable deferred taxes related to goodwill and other

842

831

821

810

802

intangible assets (1)

Tangible common equity

(B)

$

133,179

131,329

134,787

138,506

144,481

Common shares outstanding

(C)

4,132.5

4,119.6

4,096.4

4,134.4

4,269.1

Book value per common share

(A)/(C)

$

38.99

38.67

39.71

40.31

40.48

Tangible book value per common share

(B)/(C)

32.23

31.88

32.90

33.50

33.84

Quarter ended

Nine months ended

(in millions, except ratios)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

Sep 30,

Sep 30,

2020

2020

2020

2019

2019

2020

2019

Return on average tangible common equity:

Net income applicable to common stock

(A)

$

1,720

(2,694)

42

2,546

4,037

(932)

15,392

Average total equity

182,850

184,108

188,170

192,393

200,095

185,035

199,383

Adjustments:

Preferred stock

(21,098)

(21,344)

(21,794)

(21,549)

(22,325)

(21,411)

(22,851)

Additional paid-in capital on preferred stock

158

140

135

(71)

(78)

145

(84)

Unearned ESOP shares

875

1,140

1,143

1,143

1,290

1,052

1,361

Noncontrolling interests

(761)

(643)

(785)

(945)

(1,065)

(730)

(968)

Average common stockholders' equity

(B)

162,024

163,401

166,869

170,971

177,917

164,091

176,841

Adjustments:

Goodwill

(26,388)

(26,384)

(26,387)

(26,389)

(26,413)

(26,386)

(26,416)

Certain identifiable intangible assets (other than

(378)

(402)

(426)

(449)

(477)

(401)

(508)

MSRs)

Goodwill and other intangibles on nonmarketable

(2,045)

(1,922)

(2,152)

(2,223)

(2,159)

(2,040)

(2,158)

equity securities (included in other assets)

Applicable deferred taxes related to goodwill and

838

828

818

807

797

828

787

other intangible assets (1)

Average tangible common equity

(C)

$ 134,051

135,521

138,722

142,717

149,665

136,092

148,546

Return on average common stockholders' equity (ROE)

(A)/(B)

4.22 %

(6.63)

0.10

5.91

9.00

(0.76)

11.64

(annualized)

Return on average tangible common equity (ROTCE)

(A)/(C)

5.10

(8.00)

0.12

7.08

10.70

(0.91)

13.85

(annualized)

  1. Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

- 36 -

Wells Fargo & Company and Subsidiaries

COMMON EQUITY TIER 1 UNDER BASEL III - STANDARDIZED APPROACH (1)

Estimated

(in billions, except ratio)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Total equity

$

182.0

180.1

183.3

188.0

194.4

Adjustments:

Preferred stock

(21.1)

(21.1)

(21.3)

(21.5)

(21.5)

Additional paid-in capital on preferred stock

0.1

0.1

0.1

(0.1)

(0.1)

Unearned ESOP shares

0.9

0.9

1.1

1.1

1.1

Noncontrolling interests

(0.9)

(0.7)

(0.6)

(0.8)

(1.1)

Total common stockholders' equity

161.0

159.3

162.6

166.7

172.8

Adjustments:

Goodwill

(26.4)

(26.4)

(26.4)

(26.4)

(26.4)

Certain identifiable intangible assets (other than MSRs)

(0.4)

(0.4)

(0.4)

(0.4)

(0.5)

Goodwill and other intangibles on nonmarketable equity securities (included

(2.0)

(2.1)

(1.9)

(2.1)

(2.3)

in other assets)

Applicable deferred taxes related to goodwill and other intangible assets (2)

0.8

0.8

0.8

0.8

0.8

CECL transition provision (3)

1.9

1.9

-

-

-

Other

-

(0.1)

-

0.2

0.3

Common Equity Tier 1 under Basel III

(A)

134.9

133.0

134.7

138.8

144.7

Total risk-weighted assets (RWAs) anticipated under Basel III (4)

(B)

$

1,184.4

1,213.1

1,262.8

1,245.8

1,246.2

Common Equity Tier 1 to total RWAs anticipated under Basel III (4)

(A)/(B)

11.4 %

11.0

10.7

11.1

11.6

  1. Basel III capital rules, adopted by the Federal Reserve Board on July 2, 2013, revised the definition of capital, increased minimum capital ratios, and introduced a minimum Common Equity Tier 1 (CET1) ratio. The rules are being phased in through the end of 2021. The Basel III capital requirements for calculating CET1 and tier 1 capital, along with RWAs, are fully phased-in.
  2. Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.
  3. In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of the current expected credit loss (CECL) accounting standard on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-yearphase-out of the benefits. The impact of the CECL transition provision on our regulatory capital at September 30, 2020, was an increase in capital of $1.9 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $11.5 billion increase in our ACL under CECL from January 1, 2020, through September 30, 2020.
  4. The final Basel III capital rules provide for two capital frameworks: the Standardized Approach and the Advanced Approach applicable to certain institutions. Accordingly, in the assessment of our capital adequacy, we must report the lower of our CET1, tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach. Based on preliminary estimates, our CET1 ratio as of September 30, 2020, was lower under the Basel III Standardized Approach RWAs. Our CET1 ratio for June 30 and March 31, 2020, and December 31 and September 30, 2019, was lower under the Basel III Standardized Approach RWAs.

- 37 -

Wells Fargo & Company and Subsidiaries

OPERATING SEGMENT RESULTS (1)

(income/expense in millions,

Community

Wholesale

Wealth and

Consolidated

Investment

Other (2)

average balances in billions)

Banking

Banking

Management

Company

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Quarter ended September 30,

Net interest income (3)

$

5,587

6,769

3,481

4,382

771

989

(471)

(515)

9,368

11,625

Provision (reversal of provision) for

556

608

219

92

(9)

3

3

(8)

769

695

credit losses

Noninterest income

5,135

4,470

2,113

2,560

3,023

4,152

(777)

(797)

9,494

10,385

Noninterest expense

8,947

8,766

4,013

3,889

3,184

3,431

(915)

(887)

15,229

15,199

Income (loss) before income tax expense

1,219

1,865

1,362

2,961

619

1,707

(336)

(417)

2,864

6,116

(benefit)

Income tax expense (benefit) (4)

703

667

(127)

315

153

426

(84)

(104)

645

1,304

Net income (loss) before noncontrolling

516

1,198

1,489

2,646

466

1,281

(252)

(313)

2,219

4,812

interests

Less: Net income (loss) from

180

199

1

2

3

1

-

-

184

202

noncontrolling interests

Net income (loss)

$

336

999

1,488

2,644

463

1,280

(252)

(313)

2,035

4,610

Average loans

$

457.6

459.0

455.1

474.3

79.8

75.9

(60.8)

(59.4)

931.7

949.8

Average assets

1,119.8

1,033.9

801.4

869.2

88.2

84.7

(61.7)

(60.4)

1,947.7

1,927.4

Average deposits

881.7

789.7

418.8

422.0

175.3

142.4

(76.8)

(62.7)

1,399.0

1,291.4

Nine months ended September 30,

Net interest income (3)

$

18,073

21,083

11,508

13,451

2,374

3,127

(1,395)

(1,630)

30,560

36,031

Provision (reversal of provision) for

5,652

1,797

8,535

254

256

6

(135)

(14)

14,308

2,043

credit losses

Noninterest income

10,911

13,711

6,466

7,667

8,795

10,143

(2,317)

(2,349)

23,855

29,172

Noninterest expense

24,409

23,667

11,739

11,609

9,440

9,980

(2,760)

(2,692)

42,828

42,564

Income (loss) before income tax expense

(1,077)

9,330

(2,300)

9,255

1,473

3,284

(817)

(1,273)

(2,721)

20,596

(benefit)

Income tax expense (benefit) (4)

(1,319)

1,929

(1,959)

1,049

369

819

(204)

(318)

(3,113)

3,479

Net income (loss) before noncontrolling

242

7,401

(341)

8,206

1,104

2,465

(613)

(955)

392

17,117

interests

Less: Net income (loss) from

82

432

3

3

(2)

6

-

-

83

441

noncontrolling interests

Net income (loss)

$

160

6,969

(344)

8,203

1,106

2,459

(613)

(955)

309

16,676

Average loans

$

456.5

458.3

481.2

474.9

79.0

75.1

(60.8)

(59.2)

955.9

949.1

Average assets

1,073.1

1,024.8

849.7

855.4

88.0

83.9

(61.7)

(60.2)

1,949.1

1,903.9

Average deposits

843.0

777.7

438.8

414.1

166.2

146.3

(73.4)

(63.9)

1,374.6

1,274.2

  1. The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
  2. Includes the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels.
  3. Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets as well as interest credits for any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities as well as funding charges for any funding provided from other segments.
  4. Income tax expense (benefit) for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of$469 million and $1.4 billion for the third quarter and first nine months of 2020, respectively, and $422 million and $1.3 billion for the third quarter and first nine months of 2019, respectively.

- 38 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER OPERATING SEGMENT RESULTS (1)

Quarter ended

(income/expense in millions, average balances in billions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

COMMUNITY BANKING

Net interest income (2)

$

5,587

5,699

6,787

6,527

6,769

Provision for credit losses

556

3,378

1,718

522

608

Noninterest income

5,135

3,067

2,709

3,995

4,470

Noninterest expense

8,947

8,346

7,116

9,029

8,766

Income (loss) before income tax expense (benefit)

1,219

(2,958)

662

971

1,865

Income tax expense (benefit)

703

(2,666)

644

497

667

Net income (loss) before noncontrolling interests

516

(292)

18

474

1,198

Less: Net income (loss) from noncontrolling interests

180

39

(137)

45

199

Segment net income (loss)

$

336

(331)

155

429

999

Average loans

$

457.6

449.3

462.6

462.5

459.0

Average assets

1,119.8

1,059.8

1,039.2

1,039.3

1,033.9

Average deposits

881.7

848.5

798.6

794.6

789.7

WHOLESALE BANKING

Net interest income (2)

$

3,481

3,891

4,136

4,248

4,382

Provision for credit losses

219

6,028

2,288

124

92

Noninterest income

2,113

2,672

1,681

2,311

2,560

Noninterest expense

4,013

3,963

3,763

3,743

3,889

Income (loss) before income tax expense (benefit)

1,362

(3,428)

(234)

2,692

2,961

Income tax expense (benefit) (3)

(127)

(1,286)

(546)

197

315

Net income (loss) before noncontrolling interests

1,489

(2,142)

312

2,495

2,646

Less: Net income from noncontrolling interests

1

1

1

2

2

Segment net income (loss)

$

1,488

(2,143)

311

2,493

2,644

Average loans

$

455.1

504.3

484.5

476.5

474.3

Average assets

801.4

863.2

885.0

877.6

869.2

Average deposits

418.8

441.2

456.6

447.4

422.0

WEALTH AND INVESTMENT MANAGEMENT

Net interest income (2)

$

771

736

867

910

989

Provision (reversal of provision) for credit losses

(9)

257

8

(1)

3

Noninterest income

3,023

2,924

2,848

3,161

4,152

Noninterest expense

3,184

3,153

3,103

3,729

3,431

Income before income tax expense

619

250

604

343

1,707

Income tax expense

153

63

153

85

426

Net income before noncontrolling interests

466

187

451

258

1,281

Less: Net income (loss) from noncontrolling interests

3

7

(12)

4

1

Segment net income

$

463

180

463

254

1,280

Average loans

$

79.8

78.7

78.5

77.1

75.9

Average assets

88.2

87.7

88.1

85.5

84.7

Average deposits

175.3

171.8

151.4

145.0

142.4

OTHER (4)

Net interest income (2)

$

(471)

(446)

(478)

(485)

(515)

Provision (reversal of provision) for credit losses

3

(129)

(9)

(1)

(8)

Noninterest income

(777)

(707)

(833)

(807)

(797)

Noninterest expense

(915)

(911)

(934)

(887)

(887)

Loss before income tax benefit

(336)

(113)

(368)

(404)

(417)

Income tax benefit

(84)

(28)

(92)

(101)

(104)

Net loss before noncontrolling interests

(252)

(85)

(276)

(303)

(313)

Less: Net income from noncontrolling interests

-

-

-

-

-

Other net loss

$

(252)

(85)

(276)

(303)

(313)

Average loans

$

(60.8)

(61.0)

(60.6)

(59.6)

(59.4)

Average assets

(61.7)

(61.8)

(61.6)

(60.6)

(60.4)

Average deposits

(76.8)

(74.8)

(68.6)

(65.1)

(62.7)

CONSOLIDATED COMPANY

Net interest income (2)

$

9,368

9,880

11,312

11,200

11,625

Provision for credit losses

769

9,534

4,005

644

695

Noninterest income

9,494

7,956

6,405

8,660

10,385

Noninterest expense

15,229

14,551

13,048

15,614

15,199

Income (loss) before income tax expense (benefit)

2,864

(6,249)

664

3,602

6,116

Income tax expense (benefit)

645

(3,917)

159

678

1,304

Net income (loss) before noncontrolling interests

2,219

(2,332)

505

2,924

4,812

Less: Net income (loss) from noncontrolling interests

184

47

(148)

51

202

Wells Fargo net income (loss)

$

2,035

(2,379)

653

2,873

4,610

Average loans

$

931.7

971.3

965.0

956.5

949.8

Average assets

1,947.7

1,948.9

1,950.7

1,941.8

1,927.4

Average deposits

1,399.0

1,386.7

1,338.0

1,321.9

1,291.4

  1. The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
  2. Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets as well as interest credits for any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities as well as funding charges for any funding provided from other segments.
  3. Income tax expense (benefit) for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of$469 million, $465 million, $491 million, $478 million, and $422 million for the quarters ended September 30, June 30 and March 31, 2020, and December 31 and September 30, 2019, respectively.
  4. Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels.

- 39 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

MSRs measured using the fair value method:

Fair value, beginning of quarter

$

6,819

8,126

11,517

11,072

12,096

Servicing from securitizations or asset transfers (1)

351

462

461

654

538

Sales and other (2)

-

(1)

(31)

-

(4)

Net additions

351

461

430

654

534

Changes in fair value:

Due to changes in valuation inputs or assumptions:

Mortgage interest rates (3)

(294)

(600)

(3,022)

405

(718)

Servicing and foreclosure costs (4)

157

(349)

(73)

45

13

Discount rates

-

-

27

(34)

188

Prepayment estimates and other (5)

(80)

(182)

(189)

(54)

(445)

Net changes in valuation inputs or assumptions

(217)

(1,131)

(3,257)

362

(962)

Changes due to collection/realization of expected cash flows (6)

(598)

(637)

(564)

(571)

(596)

Total changes in fair value

(815)

(1,768)

(3,821)

(209)

(1,558)

Fair value, end of quarter

$

6,355

6,819

8,126

11,517

11,072

  1. Includes impacts associated with exercising cleanup calls on securitizations and our right to repurchase delinquent loans from Government National Mortgage Association (GNMA) loan securitization pools. MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.
  2. Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.
  3. Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.
  4. Includes costs to service and unreimbursed foreclosure costs.
  5. Represents other changes in inputs or assumptions, including prepayment speed estimation changes that are independent of mortgage interest rate changes.
  6. Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Amortized MSRs:

Balance, beginning of quarter

$

1,361

1,406

1,430

1,397

1,407

Purchases

6

7

8

35

25

Servicing from securitizations or asset transfers

32

48

34

69

33

Amortization (1)

(74)

(100)

(66)

(71)

(68)

Balance, end of quarter

$

1,325

1,361

1,406

1,430

1,397

Fair value of amortized MSRs:

Beginning of quarter

$

1,401

1,490

1,872

1,813

1,897

End of quarter

1,400

1,401

1,490

1,872

1,813

  1. Includes recorded impairment of $7 million and $30 million, and an associated valuation allowance of $37 million and $30 million, for the third and second quarters of 2020, respectively.

- 40 -

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)

Quarter ended

(in millions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Servicing income, net:

Servicing fees (1)

$

717

644

758

780

806

Amortization (2)

(74)

(100)

(66)

(71)

(68)

Changes due to collection/realization of expected cash flows (3)

(A)

(598)

(637)

(564)

(571)

(596)

Net servicing fees

45

(93)

128

138

142

Changes in fair value of MSRs due to valuation inputs or assumptions (4)

(B)

(217)

(1,131)

(3,257)

362

(962)

Net derivative gains (losses) from economic hedges of MSRs

513

535

3,400

(477)

678

Market-related valuation changes to MSRs, net of hedge results

296

(596)

143

(115)

(284)

Total servicing income (loss), net

$

341

(689)

271

23

(142)

Total changes in fair value of MSRs carried at fair value

(A)+(B)

$

(815)

(1,768)

(3,821)

(209)

(1,558)

  1. Includes contractually specified servicing fees, late charges and other ancillary revenues, net of unreimbursed direct servicing costs.
  2. Includes recorded impairment of $7 million and $30 million, and an associated valuation allowance of $37 million and $30 million, for the third and second quarters of 2020, respectively.
  3. Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.
  4. Refer to the changes in fair value MSRs table on the previous page for more detail.

(in billions)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Managed servicing portfolio (1):

Residential mortgage servicing:

Serviced and subserviced for others

$

920

992

1,041

1,065

1,086

Owned loans serviced

342

335

341

343

346

Total residential servicing

1,262

1,327

1,382

1,408

1,432

Commercial mortgage servicing:

Serviced and subserviced for others

579

578

573

575

560

Owned loans serviced

123

125

124

124

122

Total commercial servicing

702

703

697

699

682

Total managed servicing portfolio

$

1,964

2,030

2,079

2,107

2,114

Total serviced for others, excluding subserviced for others

$

1,488

1,558

1,602

1,629

1,634

Ratio of MSRs to related loans serviced for others

0.52 %

0.52

0.60

0.79

0.76

Weighted-average note rate (mortgage loans serviced for others)

4.13

4.13

4.20

4.25

4.29

  1. The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

- 41 -

Wells Fargo & Company and Subsidiaries

SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA

Quarter ended

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2020

2020

2020

2019

2019

Net gains on mortgage loan origination/sales activities (in millions):

Residential

(A)

$

1,039

866

360

503

461

Commercial

45

83

23

101

106

Residential pipeline and unsold/repurchased loan management (1)

165

57

(275)

156

41

Total

$

1,249

1,006

108

760

608

Application data (in billions):

Wells Fargo first mortgage quarterly applications

$

88

84

108

72

85

Refinances as a percentage of applications

56 %

60

65

51

50

Wells Fargo first mortgage unclosed pipeline, at quarter end

$

44

50

62

33

44

Residential real estate originations:

Purchases as a percentage of originations

49 %

38

48

50

60

Refinances as a percentage of originations

51

62

52

50

40

Total

100 %

100

100

100

100

Wells Fargo first mortgage loans (in billions):

Retail

$

33

30

23

27

27

Correspondent

29

28

25

33

30

Other (2)

-

1

-

-

1

Total quarter-to-date

$

62

59

48

60

58

Held-for-sale

(B)

$

48

43

33

42

38

Held-for-investment

14

16

15

18

20

Total quarter-to-date

$

62

59

48

60

58

Total year-to-date

$

169

107

48

204

144

Production margin on residential held-for-sale mortgage originations

(A)/(B)

2.16

%

2.04

1.08

1.21

1.21

  1. Predominantly includes the results of sales of modified GNMA loans, interest rate management activities and changes in the estimate of our liability for mortgage loan repurchase losses.
  2. Consists of home equity loans and lines.

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Wells Fargo & Company published this content on 14 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 October 2020 12:49:07 UTC