Wells Fargo mpany : Q3 2023 presentation

3Q23 Financial Results

October 13, 2023

© 2023 Wells Fargo Bank, N.A. All rights reserved.

3Q23 results

Financial Results

ROE: 13.3%

ROTCE: 15.9%1

Efficiency ratio: 63%2

Credit Quality

Capital and Liquidity

CET1 ratio: 11.0%3

LCR: 123%6

TLAC ratio: 24.0%7

• Net income of $5.8 billion, or $1.48 per diluted common share, included:
• • $349 million, or $0.09 per share, of discrete tax benefits related to the resolution of prior period tax matters
  • The sale of ~$2 billion of private equity investments, which had a minimal impact to net income, but resulted in an increase of ~14 bps to our Common Equity Tier 1 (CET1) ratio3
• Revenue of $20.9 billion, up 7%
• • Net interest income of $13.1 billion, up 8%
  • Noninterest income of $7.8 billion, up 4%
• Noninterest expense of $13.1 billion, down 8%
• Pre-taxpre-provision profit4 of $7.7 billion, up 47%
• Effective income tax rate of 12.3% included $349 million of discrete tax benefits
• Average loans of $943.2 billion
• Average deposits of $1.3 trillion, down 5%
• Provision for credit losses5 of $1.2 billion
• • Total net loan charge-offs of $850 million, up $451 million, with net loan charge-offs of 0.36% of average loans (annualized)
  • Allowance for credit losses for loans of $15.1 billion, up $1.8 billion
• CET1 capital of $136.2 billion3
• CET1 ratio of 11.0% under the Standardized Approach and 12.0% under the Advanced Approach3
• Liquidity coverage ratio (LCR) of 123%6

Comparisons in the bullet points are for 3Q23 versus 3Q22, unless otherwise noted.

1. Tangible common equity and return on average tangible common equity (ROTCE) are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" table on page 17.
2. The efficiency ratio is noninterest expense divided by total revenue.
3. The Common Equity Tier 1 (CET1) ratio calculated under the Standardized Approach is our binding CET1 ratio. See page 18 for additional information regarding CET1 capital and ratios. CET1 is a preliminary estimate.
4. 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.
5. Includes provision for credit losses for loans, debt securities, and other financial assets.
6. Liquidity coverage ratio (LCR) represents average high-quality liquid assets divided by average projected net cash outflows, as each is defined under the LCR rule. LCR is a preliminary estimate.
7. Represents total loss absorbing capacity (TLAC) divided by risk-weighted assets (RWAs), which is our binding TLAC ratio, determined by using the greater of RWAs under the Standardized and Advanced Approaches. TLAC is a preliminary estimate.

3Q23 Financial Results

2

Capital and liquidity

Common Equity Tier 1 Ratio under the Standardized Approach1

	10.6%	10.8%	10.7%	11.0%	8.9%
10.3%		Regulatory
					Minimum
					and Buffers2
					as of
					10/1/23
					(9.2% at
					9/30/23)
3Q22	4Q22	1Q23	2Q23	3Q23
				Estimated

Capital Position

• Common Equity Tier 1 (CET1) ratio of 11.0%1 at September 30, 2023 remained above our regulatory minimum and buffers of 9.2%2
• CET1 ratio up ~70 bps from 3Q22 and up ~30 bps from 2Q23, which included:
• • A decline in accumulated other comprehensive income driven by higher interest rates and wider mortgage-backed securities spreads, which resulted in declines in the CET1 ratio of 8 bps from 3Q22 and 16 bps from 2Q23
  • A ~14 bps increase resulting from the 3Q23 sale of certain private equity investments and the resulting removal of the related goodwill and other intangible assets on investments in consolidated portfolio companies
• As of 10/1/23, the Company's stress capital buffer (SCB) decreased to 2.9%, which decreased our CET1 regulatory minimum and buffers to 8.9%

Capital Return

• Period-endcommon shares outstanding down 157.5 million, or 4%, from 3Q22
• • $1.5 billion in gross common stock repurchases, or 33.8 million shares, in 3Q23
• 3Q23 common stock dividend increased to $0.35 per share, up from $0.30 per share in 2Q23

Total Loss Absorbing Capacity (TLAC)

• As of September 30, 2023, our TLAC as a percentage of total risk-weighted assets was 24.0%3 compared with the required minimum of 21.5%

Liquidity Position

• Strong liquidity position with a 3Q23 liquidity coverage ratio4 of 123% which remained above our regulatory minimum of 100%

1. The Common Equity Tier 1 (CET1) ratio calculated under the Standardized Approach is our binding CET1 ratio. See page 18 for additional information regarding CET1 capital and ratios. 3Q23 CET1 is a preliminary estimate.
2. Includes a 4.50% minimum requirement, a stress capital buffer of 2.90% as of 10/1/23, which declined from 3.20% as of 9/30/23, and a G-SIB capital surcharge of 1.50%.
3. Represents total loss absorbing capacity (TLAC) divided by risk-weighted assets (RWAs), which is our binding TLAC ratio, determined by using the greater of RWAs under the Standardized and Advanced Approaches. TLAC is a preliminary estimate.
4. Liquidity coverage ratio (LCR) represents average high-quality liquid assets divided by average projected net cash outflows, as each is defined under the LCR rule. 3Q23 LCR is a preliminary estimate.

3Q23 Financial Results

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3Q23 earnings

				Quarter ended				$ Change from
$ in millions, except per share data	3Q23	2Q23	3Q22		2Q23		3Q22
Net interest income	$13,105		13,163	12,098	($58)		1,007
Noninterest income	7,752		7,370	7,468	382		284
Total revenue	20,857		20,533	19,566	324		1,291
Net charge-offs	864		764	399	100		465
Change in the allowance for credit losses	333		949	385	(616)		(52)
Provision for credit losses1	1,197		1,713	784	(516)		413
Noninterest expense	13,113		12,987	14,306	126		(1,193)
Pre-tax income	6,547		5,833	4,476	714		2,071
Income tax expense (benefit)	811		930	912	(119)		(101)
Effective income tax rate (%)	12.3	%	15.8	20.2		(352) bps	(792)
Net income	$5,767		4,938	3,592	$829		2,175
Diluted earnings per common share	$1.48		1.25	0.86	$0.23		0.62
Diluted average common shares (# mm)	3,680.6		3,724.9	3,825.1	(44)		(145)
Return on equity (ROE)	13.3 %	11.4	8.1	184	bps	515
Return on average tangible common equity (ROTCE)2	15.9		13.7	9.8	221		616
Efficiency ratio	63		63	73	(38)		(1,024)

1. Includes provision for credit losses for loans, debt securities, and other financial assets.
2. 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" table on page 17.

3Q23 Financial Results

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Credit quality: net loan charge-offs

Provision for Credit Losses1 and Net Loan Charge-offs($ in millions)

			1,713	764	850
	560	604
	1,207			1,197
399	957
784			0.32%	0.36%
	0.23%	0.26%
0.17%
	1
3Q22	4Q22	1Q23	2Q23	3Q23

Provision for Credit Losses1		Net Loan Charge-offs
Net Loan Charge-off Ratio

• Commercial net loan charge-offs down $12 million to 13 bps of average loans (annualized) as a $26 million decrease in commercial and industrial net loan charge- offs was partially offset by a $14 million increase in commercial real estate (CRE) net loan charge-offs
• Consumer net loan charge-offs up $98 million to 67 bps of average loans (annualized) primarily on $49 million higher auto net loan charge-offs from 2Q seasonal lows and a $24 million increase in credit card net loan charge-offs
• Nonperforming assets of $8.2 billion, up $1.2 billion, or 17%, as higher CRE nonaccrual loans were partially offset by lower commercial and industrial nonaccrual loans
• • CRE nonaccrual loans of $3.9 billion, up $1.4 billion driven by a $1.3 billion increase in CRE office nonaccrual loans

Comparisons in the bullet points are for 3Q23 versus 2Q23, unless otherwise noted.

1. Includes provision for credit losses for loans, debt securities, and other financial assets.

3Q23 Financial Results

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