Market Overview

Wells Fargo Reports $6.0 Billion in Quarterly Net Income; Diluted EPS of $1.13

Share:

Wells Fargo & Company (NYSE:WFC):

  • Financial results:
    • Net income of $6.0 billion, compared with $4.5 billion in third
      quarter 2017
    • Diluted earnings per share (EPS) of $1.13, compared with $0.83
      • Third quarter 2018 included the redemption of our Series J
        Preferred Stock, which reduced diluted EPS by $0.03 per share
    • Revenue of $21.9 billion, up from $21.8 billion
      • Net interest income of $12.6 billion, up $123 million, or 1
        percent
      • Noninterest income of $9.4 billion, down $31 million
    • Noninterest expense of $13.8 billion, down $588 million, or 4
      percent
    • Average deposits of $1.3 trillion, down $40.0 billion, or 3 percent
    • Average loans of $939.5 billion, down $12.9 billion, or 1 percent
    • Return on assets (ROA) of 1.27 percent, return on equity (ROE) of
      12.04 percent, and return on average tangible common equity
      (ROTCE) of 14.33 percent1
  • Credit quality:
    • Provision expense of $580 million, down $137 million, or 19
      percent, from third quarter 2017
      • Net charge-offs decreased $37 million to $680 million, or 0.29
        percent of average loans (annualized)
      • Reserve release2 of $100 million
    • Nonaccrual loans of $7.1 billion, down $1.6 billion, or 18 percent
  • Strong capital position while returning more capital to shareholders:.
    • Common Equity Tier 1 ratio (fully phased-in) of 11.9 percent3
    • Returned $8.9 billion to shareholders through common stock
      dividends and net share repurchases, which more than doubled from
      $4.0 billion in third quarter 2017
      • Net share repurchases of $6.8 billion, which more than tripled
        from $2.0 billion
      • Period-end common shares outstanding down 216.3 million
        shares, or 4 percent
      • Quarterly common stock dividend of $0.43 per share, up 10
        percent from $0.39 per share

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, 2018,
and may differ materially from the results and disclosures in this
document due to, among other things, the completion of final review
procedures, the occurrence of subsequent events, or the discovery of
additional information.

 

Selected Financial Information

  Quarter ended
Sep 30,   Jun 30,   Sep 30,
    2018   2018   2017
Earnings
Diluted earnings per common share $ 1.13 0.98 0.83
Wells Fargo net income (in billions) 6.01 5.19 4.54
Return on assets (ROA) 1.27 % 1.10 0.93
Return on equity (ROE) 12.04 10.60 8.96
Return on average tangible common equity (ROTCE) (a) 14.33 12.62 10.66
Asset Quality
Net charge-offs (annualized) as a % of average total loans 0.29 % 0.26 0.30
Allowance for credit losses as a % of total loans 1.16 1.18 1.27
Allowance for credit losses as a % of annualized net charge-offs 406 460 426
Other
Revenue (in billions) $ 21.9 21.6 21.8
Efficiency ratio (b) 62.7 % 64.9 65.7
Average loans (in billions) $ 939.5 944.1 952.3
Average deposits (in billions) 1,266.4 1,271.3 1,306.4
Net interest margin   2.94 %   2.93   2.86

(a) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity securities but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity, which utilizes tangible common equity, is a useful
financial measure because it enables investors and others to
assess the Company's use of equity. For additional information,
including a corresponding reconciliation to GAAP financial
measures, see the "Tangible Common Equity" tables on page 36.

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

 

Wells Fargo & Company (NYSE:WFC) reported net income of $6.0 billion, or
$1.13 per diluted common share, for third quarter 2018, compared with
$4.5 billion, or $0.83 per share, for third quarter 2017, and
$5.2 billion, or $0.98 per share, for second quarter 2018.

Chief Executive Officer Tim Sloan said, "In the third quarter, we
continued to make progress in our efforts to build a better Wells Fargo
with a specific focus on our six goals: risk management, customer
service, team member engagement, innovation, corporate citizenship and
shareholder value. We are strengthening how we manage risk and have made
enhancements to our risk management framework. We also continued to make
progress on customer remediation, which is an important step in our
efforts to rebuild trust. In addition, to better serve our customers and
help them succeed financially, we launched Control TowerSM, a
digital experience that simplifies our customers' online financial
lives, and our new Propel® Card, one of the richest
no-annual-fee credit cards in the industry. Furthermore, our ongoing
efforts in corporate citizenship and building stronger communities were
recognized in a recent survey on corporate giving by the Chronicle of
Philanthropy
, which ranked the Wells Fargo Foundation as the No.2
corporate cash giver in the United States. Our focus on shareholder
value included progress on our expense savings initiatives, and we
returned a record $8.9 billion to shareholders through net common stock
repurchases and dividends in the third quarter. I'm confident that our
efforts to transform Wells Fargo position us for long-term success."

Chief Financial Officer John Shrewsberry said, "Wells Fargo reported
$6.0 billion of net income in the third quarter. Revenue increased and
noninterest expense declined both linked quarter and year-over-year. Our
positive operating leverage reflected the benefit of the
transformational changes we are making at Wells Fargo, including our
focus on reducing expenses. In addition, we saw positive business trends
in the third quarter, including growth in primary consumer checking
customers, increased debit and credit card usage, and higher
year-over-year loan originations in auto, small business, home equity
and personal loans and lines. Credit performance and capital levels
remained strong. Our commitment to returning more capital to
shareholders was demonstrated by an increase in net common share
repurchases, which more than tripled from a year ago, and a higher
common stock dividend."

Net Interest Income

Net interest income in the third quarter was $12.6 billion, up $31
million from second quarter 2018. Net interest margin was 2.94 percent,
up 1 basis point from the prior quarter.

Noninterest Income

Noninterest income in the third quarter was $9.4 billion, up $357
million from second quarter 2018. Third quarter noninterest income
included higher other income, market sensitive revenue4,
mortgage banking fees, service charges on deposit accounts, and card
fees, partially offset by lower trust and investment fees.

  • Mortgage banking income was $846 million, up from $770 million in
    second quarter 2018. The production margin on residential
    held-for-sale mortgage loan originations5 increased to
    0.97 percent, from 0.77 percent in the second quarter, primarily due
    to an improvement in secondary market conditions. Residential mortgage
    loan originations were $46 billion, down from $50 billion in the
    second quarter. Net mortgage servicing income was $390 million, down
    from $406 million in the second quarter.
  • Market sensitive revenue was $631 million, up from $527 million in
    second quarter 2018, predominantly due to higher net gains from equity
    securities on lower other-than-temporary impairment (OTTI).
  • Other income was $466 million, compared with $323 million in the
    second quarter. Third quarter results included a $638 million gain
    from sales of $1.7 billion of purchased credit-impaired (PCI)
    Pick-a-Pay loans, compared with a $479 million gain from sales of $1.3
    billion of PCI Pick-a-Pay loans in second quarter 2018.

Noninterest Expense

Noninterest expense in the third quarter declined $219 million from the
prior quarter to $13.8 billion, predominantly due to lower commission
and incentive compensation, outside professional services and charitable
donations expense. These decreases were partially offset by higher
employee benefits, equipment and contract services expense. The
efficiency ratio was 62.7 percent in third quarter 2018, compared with
64.9 percent in the second quarter.

Third quarter 2018 operating losses were $605 million, driven primarily
by remediation expense for a variety of matters, including an additional
$241 million accrual for previously disclosed issues related to
automobile collateral protection insurance (CPI).

Income Taxes

The Company's effective income tax rate was 20.1 percent for third
quarter 2018 and included net discrete income tax expense related to the
re-measurement of our initial estimates for the impacts of the Tax Cuts
& Jobs Act recognized in fourth quarter 2017. The effective income tax
rate in second quarter 2018 was 25.9 percent and included net discrete
income tax expense of $481 million mostly related to state income taxes.
The Company currently expects the effective income tax rate in fourth
quarter 2018 to be approximately 19 percent, excluding the impact of any
future discrete items.

Loans

Total average loans were $939.5 billion in the third quarter, down $4.6
billion from the second quarter. Period-end loan balances were $942.3
billion at September 30, 2018, down $2.0 billion from June 30, 2018.
Commercial loans were down $1.2 billion compared with June 30, 2018,
predominantly due to a $2.8 billion decline in commercial real estate
loans, partially offset by $1.5 billion of growth in commercial and
industrial loans. Consumer loans decreased $746 million from the prior
quarter, driven by:

  • a $1.6 billion decline in automobile loans due to expected continued
    runoff, as well as the reclassification of the remaining $374 million
    of Reliable Financial Services Inc. auto loans to held for sale
  • a $1.2 billion decline in junior lien mortgage loans as payoffs
    continued to exceed originations
  • these decreases were partially offset by:
    • a $1.3 billion increase in 1-4 family first mortgage loans, as
      nonconforming mortgage loan originations were partially offset by
      payoffs and $1.7 billion of sales of PCI Pick-a-Pay mortgage loans
    • a $1.1 billion increase in credit card loans

Additionally, $249 million of nonconforming mortgage loan originations
that would have otherwise been included in 1-4 family first mortgage
loan outstandings were designated as held for sale in third quarter 2018
in anticipation of the future issuance of residential mortgage-backed
securities (RMBS).

 

Period-End Loan Balances

  Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(in millions)   2018   2018   2018   2017   2017
Commercial $ 501,886 503,105 503,396 503,388 500,150
Consumer   440,414     441,160     443,912     453,382     451,723  
Total loans   $ 942,300     944,265     947,308     956,770     951,873  
Change from prior quarter   $ (1,965 )   (3,043 )   (9,462 )   4,897     (5,550 )
 

Debt and Equity Securities

Debt securities include available-for-sale and held-to-maturity debt
securities, as well as debt securities held for trading. Debt securities
were $472.3 billion at September 30, 2018, down $3.2 billion from the
second quarter, predominantly due to a net decrease in
available-for-sale debt securities, as approximately $14.3 billion of
purchases, primarily federal agency mortgage-backed securities (MBS) in
the available-for-sale portfolio, were more than offset by runoff and
sales.

Net unrealized losses on available-for-sale debt securities were $3.8
billion at September 30, 2018, compared with net unrealized losses of
$2.4 billion at June 30, 2018, predominantly due to higher interest
rates.

Equity securities include marketable and non-marketable equity
securities, as well as equity securities held for trading. Equity
securities were $61.8 billion at September 30, 2018, up $4.3 billion
from the second quarter, largely due to an increase in equity securities
held for trading due to stronger customer activity.

Deposits

Total average deposits for third quarter 2018 were $1.3 trillion, down
$5.0 billion from the prior quarter, as consumers continued to move
excess liquidity to higher-rate alternatives. The average deposit cost
for third quarter 2018 was 47 basis points, up 7 basis points from the
prior quarter and 21 basis points from a year ago, primarily driven by
an increase in Wholesale Banking and Wealth and Investment Management
deposit rates.

Capital

Capital in the third quarter continued to exceed our internal target,
with a Common Equity Tier 1 ratio (fully phased-in) of 11.9 percent3,
down from 12.0 percent in the prior quarter. In third quarter 2018, the
Company repurchased 146.5 million shares of its common stock, which
reduced period-end common shares outstanding by 137.5 million. The
Company paid a quarterly common stock dividend of $0.43 per share.

The Company redeemed its 8.00% Non-Cumulative Perpetual Class A
Preferred Stock, Series J, on September 17, 2018, which reduced diluted
earnings per common share in third quarter 2018 by $0.03 per share as a
result of eliminating the purchase accounting discount recorded on these
shares at the time of the Wachovia acquisition.

Credit Quality

Net Loan Charge-offs

The quarterly loss rate in the third quarter was 0.29 percent
(annualized), compared with 0.26 percent in the prior quarter and 0.30
percent a year ago. Commercial and consumer losses were 0.12 percent and
0.47 percent, respectively. Total credit losses were $680 million in
third quarter 2018, up $78 million from second quarter 2018. Commercial
losses were up $85 million driven by higher commercial and industrial
loan charge-offs and lower recoveries, while consumer losses decreased
$7 million.

 

Net Loan Charge-Offs

  Quarter ended
    September 30, 2018   June 30, 2018   September 30, 2017
Net loan   As a % of Net loan   As a % of Net loan   As a % of
charge- average charge- average charge- average
($ in millions)   offs   loans (a)   offs   loans (a)   offs   loans (a)
Commercial:
Commercial and industrial $ 148 0.18 % $ 58 0.07 % $ 125 0.15 %
Real estate mortgage (1 ) (3 ) (0.01 )
Real estate construction (2 ) (0.04 ) (6 ) (0.09 ) (15 ) (0.24 )
Lease financing   7   0.14 15   0.32 6   0.12
Total commercial   152   0.12 67   0.05 113   0.09
Consumer:
Real estate 1-4 family first mortgage (25 ) (0.04 ) (23 ) (0.03 ) (16 ) (0.02 )
Real estate 1-4 family junior lien mortgage (9 ) (0.10 ) (13 ) (0.13 ) 1
Credit card 299 3.22 323 3.61 277 3.08
Automobile 130 1.10 113 0.93 202 1.41
Other revolving credit and installment   133   1.44 135   1.44 140   1.44
Total consumer   528   0.47 535   0.49 604   0.53
Total   $ 680   0.29 % $ 602   0.26 % $ 717   0.30 %
 

(a) Quarterly net charge-offs (recoveries) as a percentage of
average loans are annualized. See explanation on page 33 of the
accounting for purchased credit-impaired (PCI) loans and the
impact on selected financial ratios.

 

Nonperforming Assets

Nonperforming assets decreased $410 million, or 5 percent, from second
quarter 2018 to $7.6 billion. Nonaccrual loans decreased $433 million
from second quarter 2018 to $7.1 billion reflecting both lower consumer
and commercial nonaccruals.

 

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

    September 30, 2018   June 30, 2018   September 30, 2017
   

As a

    As a     As a

% of

% of % of
Total total Total total Total total
($ in millions)   balances   loans   balances   loans   balances   loans
Commercial:
Commercial and industrial $ 1,555 0.46 % $ 1,559 0.46 % $ 2,397 0.73 %
Real estate mortgage 603 0.50 765 0.62 593 0.46
Real estate construction 44 0.19 51 0.22 38 0.15
Lease financing   96   0.49 80   0.41 81   0.42
Total commercial   2,298   0.46 2,455   0.49 3,109   0.62
Consumer:
Real estate 1-4 family first mortgage 3,605 1.27 3,829 1.35 4,213 1.50
Real estate 1-4 family junior lien mortgage 984 2.79 1,029 2.82 1,101 2.68
Automobile 118 0.26 119 0.25 137 0.25
Other revolving credit and installment   48   0.13 54   0.14 59   0.15
Total consumer   4,755   1.08 5,031   1.14 5,510   1.22
Total nonaccrual loans   7,053   0.75 7,486   0.79 8,619   0.91
Foreclosed assets:
Government insured/guaranteed 87 90 137
Non-government insured/guaranteed   435   409   569  
Total foreclosed assets   522   499   706  
Total nonperforming assets   $ 7,575   0.80 % $ 7,985   0.85 % $ 9,325   0.98 %
Change from prior quarter:
Total nonaccrual loans $ (433 ) $ (233 ) $ (437 )
Total nonperforming assets   (410 )       (305 )       (512 )    
 

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded
commitments, totaled $11.0 billion at September 30, 2018, down $154
million from June 30, 2018. Third quarter 2018 included a $100 million
reserve release2, which reflected strong credit performance
and lower loan balances. The allowance coverage for total loans was
1.16 percent, compared with 1.18 percent in second quarter 2018. The
allowance covered 4.1 times annualized third quarter net charge-offs,
compared with 4.6 times in the prior quarter. The allowance coverage for
nonaccrual loans was 155 percent at September 30, 2018, compared with
148 percent at June 30, 2018. The Company believes the allowance was
appropriate for losses inherent in the loan portfolio at September 30,
2018.

Business Segment Performance

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

 
  Quarter ended
Sep 30,   Jun 30,   Sep 30,
(in millions)   2018   2018   2017
Community Banking $ 2,816 2,496 1,877
Wholesale Banking 2,851 2,635 2,314
Wealth and Investment Management   732     445     719
 

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

 

Selected Financial Information

  Quarter ended
Sep 30,   Jun 30,   Sep 30,
(in millions)   2018   2018   2017
Total revenue $ 11,816 11,806 11,520
Provision for credit losses 547 484 650
Noninterest expense 7,467 7,290 7,852
Segment net income 2,816 2,496 1,877
(in billions)
Average loans 460.9 463.8 473.7
Average assets 1,024.9 1,034.3 1,089.6
Average deposits   760.9   760.6     734.6
 

Third Quarter 2018 vs. Second Quarter 2018

  • Net income of $2.8 billion, up $320 million, or 13 percent. Second
    quarter 2018 results included net discrete income tax expense of $481
    million mostly related to state income taxes
  • Revenue was flat at $11.8 billion, as higher service charges on
    deposit accounts, mortgage banking income, gains from sales of PCI
    Pick-a-Pay loans, and card fees were predominantly offset by lower
    market sensitive revenue
  • Noninterest expense was up $177 million, or 2 percent, driven mainly
    by higher operating losses and equipment expense, partially offset by
    lower charitable contributions, outside professional services and
    other expense

Third Quarter 2018 vs. Third Quarter 2017

  • Net income was up $939 million, or 50 percent, predominantly due to
    lower noninterest expense and higher revenue
  • Revenue increased $296 million, or 3 percent, due to a gain from the
    sales of PCI Pick-a-Pay loans and higher net interest income,
    partially offset by lower mortgage banking income, market sensitive
    revenue and service charges on deposit accounts
  • Noninterest expense of $7.5 billion decreased $385 million, or 5
    percent, driven by lower operating losses, partially offset by higher
    personnel expense
  • Provision for credit losses decreased $103 million due to credit
    improvement in the automobile and consumer real estate portfolios

Business Metrics and Highlights

  • Primary consumer checking customers6,7 up 1.7 percent
    year-over-year
  • More than 357,000 branch customer experience surveys completed during
    third quarter 2018, with both ‘Loyalty' and ‘Overall Satisfaction with
    Most Recent Visit' scores up from the prior quarter
  • #1 in retail deposits8, based on the FDIC's recently
    published Summary of Deposits annual survey
  • Debit card point-of-sale purchase volume9 of $87.5 billion
    in the third quarter, up 9 percent year-over-year
  • General purpose credit card point-of-sale purchase volume of $19.4
    billion in the third quarter, up 7 percent year-over-year
  • Business Insider named our Propel® Card the #1
    no-fee credit card on its list of "The 8 Best No-Fee Credit Cards to
    Open in 2018"
  • 29.0 million digital (online and mobile) active customers, including
    22.5 million mobile active users7,10
  • 5,663 retail bank branches as of the end of third quarter 2018,
    reflecting 93 branch consolidations in the quarter and 207 in the
    first nine months of 2018; additionally, we expect to complete the
    previously announced divestiture of 52 branches in Indiana, Ohio,
    Michigan and part of Wisconsin in fourth quarter 2018
  • Home Lending
  • Originations of $46 billion, down from $50 billion in the prior
    quarter, primarily due to seasonality; included home equity
    originations of $713 million, up 3 percent from the prior quarter and
    up 16 percent from the prior year
  • Applications of $57 billion, down from $67 billion in the prior
    quarter, primarily due to seasonality
  • Application pipeline of $22 billion at quarter end, down from $26
    billion at June 30, 2018
  • Production margin on residential held-for-sale mortgage loan
    originations5 of 0.97 percent, up from 0.77 percent in the
    prior quarter, due to an improvement in secondary market conditions
  • For the 10th consecutive year, Wells Fargo received first place in the
    Dynatrace 2018 Mortgage and Home Equity Scorecard, a customer
    experience best practice benchmark of mortgage and home equity digital
    channels
  • Automobile originations of $4.8 billion in the third quarter, up 8
    percent from the prior quarter and up 10 percent from the prior year
  • Originations of personal loans and lines of $684 million in third
    quarter 2018, up 3 percent from the prior year
  • Small Business Lending11 originations of $627 million, up
    28 percent from the prior year

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

 

Selected Financial Information

  Quarter ended
Sep 30,   Jun 30,   Sep 30,
(in millions)   2018   2018   2017
Total revenue $ 7,304 7,197 7,504
Provision (reversal of provision) for credit losses 26 (36 ) 69
Noninterest expense 3,935 4,219 4,234
Segment net income 2,851 2,635 2,314
(in billions)
Average loans 462.8 464.7 463.7
Average assets 827.2 826.4 824.2
Average deposits   413.6     414.0     463.4
 

Third Quarter 2018 vs. Second Quarter 2018

  • Net income of $2.9 billion, up $216 million, or 8 percent
  • Revenue of $7.3 billion increased $107 million, or 1 percent, driven
    by higher net interest income, other income and mortgage banking
    income, partially offset by lower market sensitive revenue
  • Noninterest expense decreased $284 million, or 7 percent, reflecting
    lower operating losses and personnel expense
  • Provision for credit losses increased $62 million driven by higher
    loan losses and lower recoveries

Third Quarter 2018 vs. Third Quarter 2017

  • Net income increased $537 million, or 23 percent, as third quarter
    2018 results benefited from a lower effective income tax rate
  • Revenue decreased $200 million, or 3 percent, primarily due to the
    impact of the sales of Wells Fargo Insurance Services USA (WFIS) in
    fourth quarter 2017 and Wells Fargo Shareowner Services in first
    quarter 2018, as well as lower net interest income, treasury
    management fees and operating lease income
  • Noninterest expense decreased $299 million, or 7 percent, on lower
    expense related to the sales of WFIS and Wells Fargo Shareowner
    Services, lower project-related expense and operating losses,
    partially offset by higher regulatory, risk and technology expense

Business Metrics and Highlights

  • Commercial card spend volume12 of $8.2 billion, up 9
    percent from the prior year on increased transaction volumes primarily
    reflecting customer growth, and flat compared with second quarter 2018
  • U.S. investment banking market share of 3.3 percent year-to-date 201813,
    compared with 3.6 percent year-to-date 201713

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

 

Selected Financial Information

  Quarter ended
Sep 30,   Jun 30,   Sep 30,
(in millions)   2018   2018   2017
Total revenue $ 4,226 3,951 4,256
Provision (reversal of provision) for credit losses 6 (2 ) (1 )
Noninterest expense 3,243 3,361 3,102
Segment net income 732 445 719
(in billions)
Average loans 74.6 74.7 72.4
Average assets 83.8 84.0 83.2
Average deposits   159.8   167.1     184.4  
 

Third Quarter 2018 vs. Second Quarter 2018

  • Net income of $732 million, up $287 million, or 64 percent
  • Revenue of $4.2 billion increased $275 million, or 7 percent,
    primarily due to higher net gains from equity securities primarily on
    lower OTTI from a second quarter that included an impairment of
    $214 million related to the sale of Wells Fargo Asset Management's
    (WFAM) ownership stake in The Rock Creek Group, LP (RockCreek), and
    higher deferred compensation plan investments (offset in employee
    benefits expense)
  • Noninterest expense decreased $118 million, or 4 percent,
    predominantly driven by lower operating losses and personnel expense,
    partially offset by higher employee benefits from deferred
    compensation plan expense (offset in net gains from equity securities)

Third Quarter 2018 vs. Third Quarter 2017

  • Net income up $13 million, or 2 percent, as third quarter 2018 results
    benefited from a lower effective income tax rate
  • Revenue decreased $30 million, driven by lower net interest income and
    brokerage transaction revenue, partially offset by higher asset-based
    fees and net gains from equity securities
  • Noninterest expense increased $141 million, or 5 percent, primarily
    due to higher regulatory, risk and technology expense, higher broker
    commissions and other non-personnel expense

Business Metrics and Highlights

Total WIM Segment

  • WIM total client assets of $1.9 trillion, up 2 percent from a year
    ago, driven by higher market valuations, partially offset by net
    outflows
  • Average loan balances up 3 percent from a year ago largely due to
    growth in non-conforming mortgage loans
  • Third quarter 2018 closed referred investment assets (referrals
    resulting from the WIM/Community Banking partnership) were flat
    compared with a year ago

Retail Brokerage

  • Client assets of $1.6 trillion, up 2 percent from prior year,
    primarily driven by higher market valuations, partially offset by net
    outflows
  • Advisory assets of $560 billion, up 7 percent from prior year,
    primarily driven by higher market valuations

Wealth Management

  • Client assets of $240 billion, flat compared with prior year

Asset Management

  • Total assets under management (AUM) of $483 billion, down 3 percent
    from prior year, as a result of the sale of WFAM's ownership stake in
    RockCreek and removal of the associated AUM, as well as equity and
    fixed income net outflows, partially offset by higher market
    valuations and money market fund net inflows

Retirement

  • IRA assets of $418 billion, up 5 percent from prior year
  • Institutional Retirement plan assets of $398 billion, up 3 percent
    from prior year

Conference Call

The Company will host a live conference call on Friday, October 12, at
7:00 a.m. PT (10:00 a.m. ET). You may participate by dialing
866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The call
will also be available online at https://www.wellsfargo.com/about/investor-relations/quarterly-earnings/
and https://engage.vevent.com/rt/wells_fargo_ao~8888608.

A replay of the conference call will be available beginning at 11:00
a.m. PT (2:00 p.m. ET) on Friday, October 12 through Friday, October 26.
Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406
(International) and enter Conference ID #8888608. 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~8888608.

End Notes

1 Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling interests,
and goodwill and certain identifiable intangible assets (including
goodwill and intangible assets associated with certain of our
nonmarketable equity securities but excluding mortgage servicing
rights), net of applicable deferred taxes. The methodology of
determining tangible common equity may differ among companies.
Management believes that return on average tangible common equity, which
utilizes tangible common equity, is a useful financial measure because
it enables investors and others to assess the Company's use of equity.
For additional information, including a corresponding reconciliation to
GAAP financial measures, see the "Tangible Common Equity" tables on page
36.

2 Reserve build represents the amount by which the provision
for credit losses exceeds net charge-offs, while reserve release
represents the amount by which net charge-offs exceed the provision for
credit losses.

3 See table on page 37 for more information on Common Equity
Tier 1. Common Equity Tier 1 (fully phased-in) is a preliminary estimate
and is calculated assuming the full phase-in of the Basel III capital
rules.

4 Market sensitive revenue represents net gains from trading
activities, debt securities, and equity securities.

5 Production margin represents net gains on residential
mortgage loan origination/sales activities divided by total residential
held-for-sale mortgage originations. See the Selected Five Quarter
Residential Mortgage Production Data table on page 42 for more
information.

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

7 Data as of August 2018, comparisons with August 2017.

8 FDIC data, SNL Financial, as of June 2018. Retail deposit
data is pro forma for acquisitions and caps deposits at $1 billion in a
single banking branch and excludes credit union deposits.

9 Combined consumer and business debit card purchase volume
dollars.

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

11 Small Business Lending includes credit card, lines of
credit and loan products (primarily under $100,000 sold through our
retail banking branches).

12 Includes commercial card volume for the entire company.

13 Year-to-date through September. Source: Dealogic U.S.
investment banking fee market share.

Forward-Looking Statements

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

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

  • current and future economic and market conditions, including the
    effects of declines in housing prices, high unemployment rates, U.S.
    fiscal debt, budget and tax matters (including the impact of the Tax
    Cuts & Jobs Act), geopolitical matters, and any slowdown in global
    economic growth;
  • our capital and liquidity requirements (including under regulatory
    capital standards, such as the Basel III capital standards) and our
    ability to generate capital internally or raise capital on favorable
    terms;
  • financial services reform and other current, pending or future
    legislation or regulation that could have a negative effect on our
    revenue and businesses, including the Dodd-Frank Act and other
    legislation and regulation relating to bank products and services;
  • the extent of our success in our loan modification efforts, as well as
    the effects of regulatory requirements or guidance regarding loan
    modifications;
  • the amount of mortgage loan repurchase demands that we receive and our
    ability to satisfy any such demands without having to repurchase loans
    related thereto or otherwise indemnify or reimburse third parties, and
    the credit quality of or losses on such repurchased mortgage loans;
  • negative effects relating to our mortgage servicing and foreclosure
    practices, as well as changes in industry standards or practices,
    regulatory or judicial requirements, penalties or fines, increased
    servicing and other costs or obligations, including loan modification
    requirements, or delays or moratoriums on foreclosures;
  • our ability to realize 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 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 other-than-temporary impairment on securities held in
    our debt securities and equity securities portfolios;
  • 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 team members, 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; 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, 2017.

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, 2017, as filed with the Securities and Exchange Commission
and available on its website at www.sec.gov.

Any forward-looking statement made by us speaks only as of the date on
which it is made. Factors or events that could cause our actual results
to differ may emerge from time to time, and it is not possible for us to
predict all of them. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by law.

Forward-looking Non-GAAP Financial 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-looking non-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.

About Wells Fargo

Wells Fargo & Company (NYSE:WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo's
vision is to satisfy our customers' financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investments, mortgage, and consumer and
commercial finance through 7,950 locations, 13,000 ATMs, the internet
(wellsfargo.com) and mobile banking, and has offices in 37 countries and
territories to support customers who conduct business in the global
economy. With approximately 262,000 team members, Wells Fargo serves one
in three households in the United States. Wells Fargo & Company was
ranked No. 26 on Fortune's 2018 rankings of America's largest
corporations.

 

Wells Fargo & Company and Subsidiaries

QUARTERLY FINANCIAL DATA

TABLE OF CONTENTS

 
  Pages
 

Summary Information

Summary Financial Data

18
 

Income

Consolidated Statement of Income 20
Consolidated Statement of Comprehensive Income 22
Condensed Consolidated Statement of Changes in Total Equity 22
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 23
Five Quarter Average Balances, Yields and Rates Paid
(Taxable-Equivalent Basis)
25
Noninterest Income and Noninterest Expense 26
 

Balance Sheet

Consolidated Balance Sheet 28
Trading Activities 30
Debt Securities 30
Equity Securities 31
 

Loans

Loans 32
Nonperforming Assets 33
Loans 90 Days or More Past Due and Still Accruing 33
Purchased Credit-Impaired Loans 34
Changes in Allowance for Credit Losses 36
 

Equity

Tangible Common Equity 37
Common Equity Tier 1 Under Basel III 38
 

Operating Segments

Operating Segment Results 39
 

Other

Mortgage Servicing and other related data 41
 

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA
   

% Change

   
Quarter ended

Sep 30, 2018 from

Nine months ended

 

Sep 30,   Jun 30,   Sep 30,

Jun 30,

  Sep 30, Sep 30,   Sep 30, %

($ in millions, except per share amounts)

  2018   2018   2017   2018   2017   2018   2017   Change
For the Period
Wells Fargo net income $ 6,007 5,186 4,542 16 % 32 $ 16,329 16,032 2 %
Wells Fargo net income applicable to common stock 5,453 4,792 4,131 14 32 14,978 14,814 1
Diluted earnings per common share 1.13 0.98 0.83 15 36 3.07 2.94 4
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.27 % 1.10 0.93 15 37 1.15 % 1.11 4
Wells Fargo net income applicable to common stock to average Wells
Fargo common stockholders' equity (ROE)
12.04 10.60 8.96 14 34 11.08 10.97 1
Return on average tangible common equity (ROTCE)(1) 14.33 12.62 10.66 14 34 13.19 13.11 1
Efficiency ratio (2) 62.7 64.9 65.7 (3 ) (5 ) 65.4 62.8 4
Total revenue $ 21,941 21,553 21,849 2 $ 65,428 66,339 (1 )
Pre-tax pre-provision profit (PTPP) (3) 8,178 7,571 7,498 8 9 22,641 24,655 (8 )
Dividends declared per common share 0.43 0.39 0.39 10 10 1.21 1.15 5
Average common shares outstanding 4,784.0 4,865.8 4,948.6 (2 ) (3 ) 4,844.8 4,982.1 (3 )
Diluted average common shares outstanding 4,823.2 4,899.8 4,996.8 (2 ) (3 ) 4,885.0 5,035.4 (3 )
Average loans $ 939,462 944,079 952,343 (1 ) $ 944,813 957,581 (1 )
Average assets 1,876,283 1,884,884 1,938,461 (3 ) 1,892,209 1,932,201 (2 )
Average total deposits 1,266,378 1,271,339 1,306,356 (3 ) 1,278,185 1,302,273 (2 )
Average consumer and small business banking deposits (4) 743,503 754,047 755,094 (1 ) (2 ) 751,030 758,443 (1 )
Net interest margin 2.94 % 2.93 2.86 3 2.90 % 2.88 1
At Period End
Debt securities (5) $ 472,283 475,495 474,710 (1 ) (1 ) $ 472,283 474,710 (1 )
Loans 942,300 944,265 951,873 (1 ) 942,300 951,873 (1 )
Allowance for loan losses 10,021 10,193 11,078 (2 ) (10 ) 10,021 11,078 (10 )
Goodwill 26,425 26,429 26,581 (1 ) 26,425 26,581 (1 )
Equity securities (5) 61,755 57,505 54,981 7 12 61,755 54,981 12
Assets 1,872,981 1,879,700 1,934,880 (3 ) 1,872,981 1,934,880 (3 )
Deposits 1,266,594 1,268,864 1,306,706 (3 ) 1,266,594 1,306,706 (3 )
Common stockholders' equity 176,934 181,386 181,920 (2 ) (3 ) 176,934 181,920 (3 )
Wells Fargo stockholders' equity 198,741 205,188 205,722 (3 ) (3 ) 198,741 205,722 (3 )
Total equity 199,679 206,069 206,617 (3 ) (3 ) 199,679 206,617 (3 )
Tangible common equity (1) 148,391 152,580 152,694 (3 ) (3 ) 148,391 152,694 (3 )
Common shares outstanding 4,711.6 4,849.1 4,927.9 (3 ) (4 ) 4,711.6 4,927.9 (4 )
Book value per common share (6) $ 37.55 37.41 36.92 2 $ 37.55 36.92 2
Tangible book value per common share (1)(6) 31.49 31.47 30.99 2 31.49 30.99 2
Team members (active, full-time equivalent)   261,700     264,500     268,000     (1 )   (2 )   261,700     268,000     (2 )

(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity securities but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company's
use of equity. For additional information, including a
corresponding reconciliation to GAAP financial measures, see the
"Tangible Common Equity" tables on page 36.

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

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

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

(5) Financial information for the prior periods of 2017 has been
revised to reflect the impact of the adoption in first quarter
2018 of Accounting Standards Update (ASU) 2016-01Financial
Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities
.

(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.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA
  Quarter ended
Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
($ in millions, except per share amounts)   2018   2018   2018   2017   2017
For the Quarter
Wells Fargo net income $ 6,007 5,186 5,136 6,151 4,542
Wells Fargo net income applicable to common stock 5,453 4,792 4,733 5,740 4,131
Diluted earnings per common share 1.13 0.98 0.96 1.16 0.83
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.27 % 1.10 1.09 1.26 0.93
Wells Fargo net income applicable to common stock to average Wells
Fargo common stockholders' equity (ROE)
12.04 10.60 10.58 12.47 8.96
Return on average tangible common equity (ROTCE)(1) 14.33 12.62 12.62 14.85 10.66
Efficiency ratio (2) 62.7 64.9 68.6 76.2 65.7
Total revenue $ 21,941 21,553 21,934 22,050 21,849
Pre-tax pre-provision profit (PTPP) (3) 8,178 7,571 6,892 5,250 7,498
Dividends declared per common share 0.43 0.39 0.39 0.39 0.39
Average common shares outstanding 4,784.0 4,865.8 4,885.7 4,912.5 4,948.6
Diluted average common shares outstanding 4,823.2 4,899.8 4,930.7 4,963.1 4,996.8
Average loans $ 939,462 944,079 951,024 951,822 952,343
Average assets 1,876,283 1,884,884 1,915,896 1,935,318 1,938,461
Average total deposits 1,266,378 1,271,339 1,297,178 1,311,592 1,306,356
Average consumer and small business banking deposits (4) 743,503 754,047 755,483 757,541 755,094
Net interest margin 2.94 % 2.93 2.84 2.84 2.86
At Quarter End
Debt securities (5) $ 472,283 475,495 472,968 473,366 474,710
Loans 942,300 944,265 947,308 956,770 951,873
Allowance for loan losses 10,021 10,193 10,373 11,004 11,078
Goodwill 26,425 26,429 26,445 26,587 26,581
Equity securities (5) 61,755 57,505 58,935 62,497 54,981
Assets 1,872,981 1,879,700 1,915,388 1,951,757 1,934,880
Deposits 1,266,594 1,268,864 1,303,689 1,335,991 1,306,706
Common stockholders' equity 176,934 181,386 181,150 183,134 181,920
Wells Fargo stockholders' equity 198,741 205,188 204,952 206,936 205,722
Total equity 199,679 206,069 205,910 208,079 206,617
Tangible common equity (1) 148,391 152,580 151,878 153,730 152,694
Common shares outstanding 4,711.6 4,849.1 4,873.9 4,891.6 4,927.9
Book value per common share (6) $ 37.55 37.41 37.17 37.44 36.92
Tangible book value per common share (1)(6) 31.49 31.47 31.16 31.43 30.99
Team members (active, full-time equivalent)   261,700     264,500     265,700     262,700     268,000

(1) Tangible common equity is a non-GAAP financial measure and
represents total equity less preferred equity, noncontrolling
interests, and goodwill and certain identifiable intangible assets
(including goodwill and intangible assets associated with certain
of our nonmarketable equity securities but excluding mortgage
servicing rights), net of applicable deferred taxes. The
methodology of determining tangible common equity may differ among
companies. Management believes that return on average tangible
common equity and tangible book value per common share, which
utilize tangible common equity, are useful financial measures
because they enable investors and others to assess the Company's
use of equity. For additional information, including a
corresponding reconciliation to GAAP financial measures, see the
"Tangible Common Equity" tables on page 36.

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

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

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

(5) Financial information for the prior quarters of 2017 has been
revised to reflect the impact of the adoption in first quarter
2018 of ASU 2016-01Financial Instruments – Overall
(Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities
.

(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.

 
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME
      Nine months  
Quarter ended September 30, % ended September 30, %
(in millions, except per share amounts)   2018   2017   Change   2018   2017   Change
Interest income    
Debt securities (1) $ 3,595 3,253 11 % $ 10,603 9,652 10 %
Mortgage loans held for sale 210 217 (3 ) 587 590 (1 )
Loans held for sale (1) 35 15 133 107 38 182
Loans 11,116 10,522 6 32,607 31,021 5
Equity securities (1) 280 186 51 732 560 31
Other interest income (1)   1,128   851 33   3,090   2,090 48
Total interest income   16,364   15,044 9   47,726   43,951 9
Interest expense
Deposits 1,499 869 72 3,857 2,082 85
Short-term borrowings 462 226 104 1,171 503 133
Long-term debt 1,667 1,391 20 4,901 3,813 29
Other interest expense   164   109 50   446   309 44
Total interest expense   3,792   2,595 46   10,375   6,707 55
Net interest income 12,572 12,449 1 37,351 37,244
Provision for credit losses   580   717 (19 )   1,223   1,877 (35 )
Net interest income after provision for credit losses   11,992   11,732 2   36,128   35,367 2
Noninterest income
Service charges on deposit accounts 1,204 1,276 (6 ) 3,540 3,865 (8 )
Trust and investment fees 3,631 3,609 1 10,989 10,808 2
Card fees 1,017 1,000 2 2,926 2,964 (1 )
Other fees 850 877 (3 ) 2,496 2,644 (6 )
Mortgage banking 846 1,046 (19 ) 2,550 3,422 (25 )
Insurance 104 269 (61 ) 320 826 (61 )
Net gains from trading activities (1) 158 120 32 592 543 9
Net gains on debt securities 57 166 (66 ) 99 322 (69 )
Net gains from equity securities (1) 416 363 15 1,494 1,207 24
Lease income 453 475 (5 ) 1,351 1,449 (7 )
Other   633   199 218   1,720   1,045 65
Total noninterest income   9,369   9,400   28,077   29,095 (3 )
Noninterest expense
Salaries 4,461 4,356 2 13,289 12,960 3
Commission and incentive compensation 2,427 2,553 (5 ) 7,837 7,777 1
Employee benefits 1,377 1,279 8 4,220 4,273 (1 )
Equipment 634 523 21 1,801 1,629 11
Net occupancy 718 716 2,153 2,134 1
Core deposit and other intangibles 264 288 (8 ) 794 864 (8 )
FDIC and other deposit assessments 336 314 7 957 975 (2 )
Other   3,546   4,322 (18 )   11,736   11,072 6
Total noninterest expense   13,763   14,351 (4 )   42,787   41,684 3
Income before income tax expense 7,598 6,781 12 21,418 22,778 (6 )
Income tax expense   1,512   2,181 (31 )   4,696   6,559 (28 )
Net income before noncontrolling interests 6,086 4,600 32 16,722 16,219 3
Less: Net income from noncontrolling interests   79   58 36   393   187 110
Wells Fargo net income   $ 6,007   4,542 32   $ 16,329   16,032 2
Less: Preferred stock dividends and other   554   411 35   1,351   1,218 11
Wells Fargo net income applicable to common stock   $ 5,453   4,131 32   $ 14,978   14,814 1
Per share information
Earnings per common share $ 1.14 0.83 37 $ 3.09 2.97 4
Diluted earnings per common share 1.13 0.83 36 3.07 2.94 4
Average common shares outstanding 4,784.0 4,948.6 (3 ) 4,844.8 4,982.1 (3 )
Diluted average common shares outstanding   4,823.2   4,996.8   (3 )   4,885.0   5,035.4   (3 )

(1) Financial information for the prior periods of 2017 has been
revised to reflect the impact of the adoption in first quarter
2018 of ASU 2016-01Financial Instruments
Overall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities
.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
  Quarter ended
Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(in millions, except per share amounts)   2018   2018   2018   2017   2017
Interest income
Debt securities (1) $ 3,595 3,594 3,414 3,294 3,253
Mortgage loans held for sale 210 198 179 196 217
Loans held for sale (1) 35 48 24 12 15
Loans 11,116 10,912 10,579 10,367 10,522
Equity securities (1) 280 221 231 239 186
Other interest income (1)   1,128   1,042   920   850   851
Total interest income   16,364   16,015   15,347   14,958   15,044
Interest expense
Deposits 1,499 1,268 1,090 931 869
Short-term borrowings 462 398 311 255 226
Long-term debt 1,667 1,658 1,576 1,344 1,391
Other interest expense   164   150   132   115   109
Total interest expense   3,792   3,474   3,109   2,645   2,595
Net interest income 12,572 12,541 12,238 12,313 12,449
Provision for credit losses   580   452   191   651   717
Net interest income after provision for credit losses   11,992   12,089   12,047   11,662   11,732
Noninterest income
Service charges on deposit accounts 1,204 1,163 1,173 1,246 1,276
Trust and investment fees 3,631 3,675 3,683 3,687 3,609
Card fees 1,017 1,001 908 996 1,000
Other fees 850 846 800 913 877
Mortgage banking 846 770 934 928 1,046
Insurance 104 102 114 223 269
Net gains (losses) from trading activities (1) 158 191 243 (1) 120
Net gains on debt securities 57 41 1 157 166
Net gains from equity securities (1) 416 295 783 572 363
Lease income 453 443 455 458 475
Other   633   485   602   558   199
Total noninterest income   9,369   9,012   9,696   9,737   9,400
Noninterest expense
Salaries 4,461 4,465 4,363 4,403 4,356
Commission and incentive compensation 2,427 2,642 2,768 2,665 2,553
Employee benefits 1,377 1,245 1,598 1,293 1,279
Equipment 634 550 617 608 523
Net occupancy 718 722 713 715 716
Core deposit and other intangibles 264 265 265 288 288
FDIC and other deposit assessments 336 297 324 312 314
Other   3,546   3,796   4,394   6,516   4,322
Total noninterest expense   13,763   13,982   15,042   16,800   14,351
Income before income tax expense 7,598 7,119 6,701 4,599 6,781
Income tax expense (benefit)   1,512   1,810   1,374   (1,642)   2,181
Net income before noncontrolling interests 6,086 5,309 5,327 6,241 4,600
Less: Net income from noncontrolling interests   79   123   191   90   58
Wells Fargo net income   $ 6,007   5,186   5,136   6,151   4,542
Less: Preferred stock dividends and other   554   394   403   411   411
Wells Fargo net income applicable to common stock   $ 5,453   4,792   4,733   5,740   4,131
Per share information
Earnings per common share $ 1.14 0.98 0.97 1.17 0.83
Diluted earnings per common share 1.13 0.98 0.96 1.16 0.83
Average common shares outstanding 4,784.0 4,865.8 4,885.7 4,912.5 4,948.6
Diluted average common shares outstanding   4,823.2   4,899.8   4,930.7   4,963.1   4,996.8

(1) Financial information for the prior quarters of 2017 has been
revised to reflect the impact of the adoption in first quarter
2018 of ASU 2016-01Financial Instruments
Overall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities
.

 

 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  Quarter ended September 30,   %   Nine months ended September 30,   %
(in millions)   2018   2017   Change   2018   2017   Change
Wells Fargo net income   $ 6,007     4,542   32% $ 16,329     16,032   2%
Other comprehensive income (loss), before tax:    
Debt securities (1):
Net unrealized gains (losses) arising during the period (1,468 ) 891 NM (5,528 ) 2,825 NM
Reclassification of net (gains) losses to net income 51 (200 ) NM 168 (522 ) NM
Derivatives and hedging activities (2):
Net unrealized gains (losses) arising during the period (24 ) 104 NM (416 ) 18 NM
Reclassification of net (gains) losses to net income 79 (105 ) NM 216 (460 ) NM
Defined benefit plans adjustments:
Net actuarial and prior service gains arising during the period 11 (100) 6 4 50
Amortization of net actuarial loss, settlements and other to net
income
29 41 (29) 90 120 (25)
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period (9 )   39   NM (94 )   86   NM
Other comprehensive income (loss), before tax (2) (1,342 ) 781 NM (5,558 ) 2,071 NM
Income tax benefit (expense) related to other comprehensive income
(2)
330     (289 ) NM 1,346     (753 ) NM
Other comprehensive income (loss), net of tax (2) (1,012 ) 492 NM (4,212 ) 1,318 NM
Less: Other comprehensive loss from noncontrolling interests     (34 ) (100) (1 )   (29 ) (97)
Wells Fargo other comprehensive income (loss), net of tax (2) (1,012 )   526   NM (4,211 )   1,347   NM
Wells Fargo comprehensive income (2) 4,995 5,068 (1) 12,118 17,379 (30)
Comprehensive income from noncontrolling interests 79     24   229 392     158   148
Total comprehensive income (2)   $ 5,074     5,092       $ 12,510     17,537     (29)

NM – Not meaningful

(1) The quarter and nine months ended September 30, 2017, includes
net unrealized gains (losses) arising during the period from
equity securities of ($13) million and $113 million and
reclassification of net (gains) losses to net income related to
equity securities of $(106) million and $(323) million,
respectively. With the adoption in first quarter 2018 of ASU
2016-01, the quarter and nine months ended September 30, 2018,
reflects net unrealized (gains) losses arising during the period
and reclassification of net (gains) losses to net income from only
debt securities.

(2) Financial information for the prior periods has been revised
to reflect the impact of the adoption in fourth quarter 2017 of
ASU 2017-12 - Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities,
effective
January 1, 2017.

 
 

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
TOTAL EQUITY

  Quarter ended
Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(in millions)   2018   2018   2018   2017   2017
Balance, beginning of period $ 206,069 205,910 208,079 206,617 205,949
Cumulative effect from change in accounting policies (1) (24 )
Wells Fargo net income 6,007 5,186 5,136 6,151 4,542
Wells Fargo other comprehensive income (loss), net of tax (1,012 ) (540 ) (2,659 ) (522 ) 526
Noncontrolling interests 57 (77 ) (178 ) 247 (20 )
Common stock issued 156 73 1,208 436 254
Common stock repurchased (2) (7,382 ) (2,923 ) (3,029 ) (2,845 ) (2,601 )
Preferred stock redeemed (3) (2,150 )
Preferred stock released by ESOP 260 490 231 218 209
Common stock warrants repurchased/exercised (36 ) (1 ) (157 ) (46 ) (19 )
Common stock dividends (2,062 ) (1,900 ) (1,911 ) (1,920 ) (1,936 )
Preferred stock dividends (399 ) (394 ) (410 ) (411 ) (411 )
Stock incentive compensation expense 202 258 437 206 135
Net change in deferred compensation and related plans   (31 )   (13 )   (813 )   (52 )   (11 )
Balance, end of period   $ 199,679     206,069     205,910     208,079     206,617  

(1) The cumulative effect for the quarter ended March 31, 2018,
reflects the impact of the adoption in first quarter 2018 of ASU
2016-04, ASU 2016-01 and ASU 2014-09.

(2) For the quarter ended June 30, 2018, includes $1.0 billion
related to a private forward repurchase transaction that settled
in third quarter 2018 for 18.8 million shares of common stock.

(3) Represents the impact of the redemption of preferred stock,
series J, in third quarter 2018.

 
 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
 
  Quarter ended September 30,
2018   2017
    Interest     Interest
Average Yields/ income/ Average Yields/ income/
(in millions)   balance   rates   expense   balance   rates   expense
Earning assets
Interest-earning deposits with banks (3) $ 148,565 1.93 % $ 721 205,489 1.21 % $ 629
Federal funds sold and securities purchased under resale agreements
(3)
79,931 1.93 390 70,640 1.14 203
Debt securities (4):
Trading debt securities (8) 84,481 3.45 730 76,627 3.21 616
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 6,421 1.65 27 14,529 1.31 48
Securities of U.S. states and political subdivisions (7) 46,615 3.76 438 52,500 4.08 535
Mortgage-backed securities:
Federal agencies 155,525 2.77 1,079 139,781 2.58 903
Residential and commercial (7)   7,318   4.68 85   11,013   5.44 149
Total mortgage-backed securities 162,843 2.86 1,164 150,794 2.79 1,052
Other debt securities (7)(8)   46,353   4.39 512   47,592   3.73 447
Total available-for-sale debt securities (7)(8)   262,232   3.26 2,141   265,415   3.13 2,082
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44,739 2.18 246 44,708 2.18 246
Securities of U.S. states and political subdivisions 6,251 4.33 68 6,266 5.44 85
Federal agency and other mortgage-backed securities 95,298 2.27 539 88,272 2.26 498
Other debt securities   106   5.61 2   1,488   3.05 12
Total held-to-maturity debt securities   146,394   2.33 855   140,734   2.38 841
Total debt securities (7)(8) 493,107 3.02 3,726 482,776 2.93 3,539
Mortgage loans held for sale (5)(7) 19,343 4.33 210 22,923 3.79 217
Loans held for sale (5)(8) 2,619 5.28 35 1,383 4.39 15
Commercial loans:
Commercial and industrial - U.S. 273,814 4.22 2,915 270,091 3.81 2,590
Commercial and industrial - Non U.S. (7) 60,884 3.63 556 57,738 2.89 422
Real estate mortgage 121,284 4.35 1,329 129,087 3.83 1,245
Real estate construction 23,276 5.05 296 24,981 4.18 263
Lease financing (7)   19,512   4.69 229   19,155   4.59 219
Total commercial loans   498,770   4.24 5,325   501,052   3.76 4,739
Consumer loans:
Real estate 1-4 family first mortgage 284,133 4.07 2,891 278,371 4.03 2,809
Real estate 1-4 family junior lien mortgage 35,863 5.50 496 41,916 4.95 521
Credit card 36,893 12.77 1,187 35,657 12.41 1,114
Automobile 46,963 5.20 616 56,746 5.34 764
Other revolving credit and installment   36,840   6.78 630   38,601   6.31 615
Total consumer loans   440,692   5.26 5,820   451,291   5.14 5,823

Total loans (5)

939,462 4.72 11,145 952,343 4.41 10,562
Equity securities (8) 37,902 2.98 283 35,846 2.12 191
Other (8)   4,702   1.47 16   8,656   0.90 20
Total earning assets (7)(8)   $ 1,725,631   3.81 % $ 16,526   1,780,056   3.44 % $ 15,376
Funding sources
Deposits:
Interest-bearing checking $ 51,177 1.01 % $ 131 48,278 0.57 % $ 69
Market rate and other savings 693,937 0.35 614 681,187 0.17 293
Savings certificates 20,586 0.62 32 21,806 0.31 16
Other time deposits (7) 87,752 2.35 519 66,046 1.51 251
Deposits in foreign offices   53,933   1.50 203   124,746   0.76 240
Total interest-bearing deposits (7) 907,385 0.66 1,499 942,063 0.37 869
Short-term borrowings (8) 105,472 1.74 463 99,193 0.91 226
Long-term debt (7)(8) 220,654 3.02 1,667 243,507 2.28 1,392
Other liabilities (8)   27,108   2.40 164   24,851   1.74 109
Total interest-bearing liabilities (7)(8) 1,260,619 1.20 3,793 1,309,614 0.79 2,596
Portion of noninterest-bearing funding sources (7)(8)   465,012     470,442  
Total funding sources (7)(8)   $ 1,725,631   0.87   3,793   1,780,056   0.58   2,596
Net interest margin and net interest income on a
taxable-equivalent basis (6)(7)
2.94 %   $ 12,733   2.86 %   $ 12,780
Noninterest-earning assets
Cash and due from banks $ 18,356 18,456
Goodwill 26,429 26,600
Other (7)(8)   105,867   113,349  
Total noninterest-earning assets (7)(8)   $ 150,652   158,405  
Noninterest-bearing funding sources
Deposits $ 358,993 364,293
Other liabilities (7)(8) 53,845 56,831
Total equity (7) 202,826 207,723
Noninterest-bearing funding sources used to fund earning assets
(7)(8)
  (465,012 ) (470,442 )
Net noninterest-bearing funding sources (7)(8)   $ 150,652   158,405  
Total assets (7)   $ 1,876,283   1,938,461  
 

(1) Our average prime rate was 5.01% and 4.25% for the quarters
ended September 30, 2018 and 2017, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 2.34% and
1.31% for the same quarters, respectively.

(2) Yields/rates and amounts include the effects of hedge and risk
management activities associated with the respective asset and
liability categories.

(3) Financial information for the prior period has been revised to
reflect the impact of the adoption in first quarter 2018 of ASU
2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash
in which we changed the presentation of our cash and cash
equivalents to include both cash and due from banks as well as
interest-earning deposits with banks, which are inclusive of any
restricted cash.

(4) 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.

(5) Nonaccrual loans and related income are included in their
respective loan categories.

(6) Includes taxable-equivalent adjustments of $161 million and
$332 million for the quarters ended September 30, 2018 and 2017,
respectively, predominantly related to tax-exempt income on
certain loans and securities. The federal statutory tax rate was
21% and 35% for the quarters ended September 30, 2018 and 2017,
respectively.

(7) Financial information for the prior period has been revised to
reflect the impact of the adoption in fourth quarter 2017 of ASU
2017-12Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities
.

(8) Financial information for the prior period has been revised to
reflect the impact of the adoption in first quarter 2018 of ASU
2016-01Financial Instruments Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities
.

 
 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
 
  Nine months ended September 30,
2018   2017
    Interest     Interest
Average Yields/ income/ Average Yields/ income/
(in millions)   balance   rates   expense   balance   rates   expense
Earning assets
Interest-earning deposits with banks (3) $ 158,480 1.71 % $ 2,029 206,161 1.01 % $ 1,557
Federal funds sold and securities purchased under resale agreements
(3)
79,368 1.69 1,005 74,316 0.91 505
Debt securities (4):
Trading debt securities (8) 81,307 3.38 2,062 72,080 3.16 1,709
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 6,424 1.66 80 19,182 1.48 212
Securities of U.S. states and political subdivisions (7) 47,974 3.68 1,323 52,748 3.97 1,569
Mortgage-backed securities:
Federal agencies 156,298 2.75 3,220 142,748 2.60 2,782
Residential and commercial (7)   8,140   4.54 277   12,671   5.44 517
Total mortgage-backed securities (7) 164,438 2.84 3,497 155,419 2.83 3,299
Other debt securities (7)(8)   47,146   4.14 1,462   48,727   3.70 1,351
Total available-for-sale debt securities (7)(8)   265,982   3.19 6,362   276,076   3.11 6,431
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44,731 2.19 733 44,701 2.19 733
Securities of U.S. states and political subdivisions 6,255 4.34 204 6,270 5.35 251
Federal agency and other mortgage-backed securities 93,699 2.32 1,632 74,525 2.38 1,329
Other debt securities   460   4.02 14   2,531   2.48 47
Total held-to-maturity debt securities   145,145   2.38 2,583   128,027   2.46 2,360
Total debt securities (7)(8) 492,434 2.98 11,007 476,183 2.94 10,500
Mortgage loans held for sale (5)(7) 18,849 4.15 587 20,869 3.77 590
Loans held for sale (5)(8) 2,706 5.28 107 1,485 3.47 38
Commercial loans:
Commercial and industrial - U.S. 273,711 4.08 8,350 272,621 3.70 7,547
Commercial and industrial - Non U.S. (7) 60,274 3.46 1,559 56,512 2.83 1,197
Real estate mortgage 123,804 4.22 3,910 130,931 3.69 3,615
Real estate construction 23,783 4.82 857 24,949 4.00 747
Lease financing (7)   19,349   4.82 700   19,094   4.78 684
Total commercial loans   500,921   4.10 15,376   504,107   3.66 13,790
Consumer loans:
Real estate 1-4 family first mortgage 283,814 4.05 8,613 276,330 4.04 8,380
Real estate 1-4 family junior lien mortgage 37,308 5.31 1,484 43,589 4.77 1,557
Credit card 36,416 12.73 3,467 35,322 12.19 3,219
Automobile 48,983 5.18 1,899 59,105 5.41 2,392
Other revolving credit and installment   37,371   6.62 1,851   39,128   6.15 1,801
Total consumer loans   443,892   5.21 17,314   453,474   5.11 17,349
Total loans (5) 944,813 4.62 32,690 957,581 4.34 31,139
Equity securities (8) 38,322 2.57 738 35,466 2.16 575
Other (8)   5,408   1.38 56   4,383   0.83 28
Total earning assets (7)(8)   $ 1,740,380   3.70 % $ 48,219   1,776,444   3.38 % $ 44,932
Funding sources
Deposits:
Interest-bearing checking $ 66,364 0.89 % $ 441 49,134 0.43 % $ 156
Market rate and other savings 683,279 0.28 1,416 682,780 0.13 664
Savings certificates 20,214 0.46 70 22,618 0.30 50
Other time deposits (7) 82,175 2.16 1,331 59,414 1.41 625
Deposits in foreign offices   66,590   1.20 599   123,553   0.64 587
Total interest-bearing deposits (7) 918,622 0.56 3,857 937,499 0.30 2,082
Short-term borrowings 103,696 1.51 1,173 97,837 0.69 505
Long-term debt (7) 223,485 2.93 4,901 251,114 2.03 3,813
Other liabilities   27,743   2.14 446   20,910   1.97 309
Total interest-bearing liabilities (7) 1,273,546 1.09 10,377 1,307,360 0.69 6,709
Portion of noninterest-bearing funding sources (7)(8)   466,834     469,084  
Total funding sources (7)(8)   $ 1,740,380   0.80   10,377   1,776,444   0.50   6,709
Net interest margin and net interest income on a
taxable-equivalent basis (6)(7)
2.90 %   $ 37,842   2.88 %   $ 38,223
Noninterest-earning assets
Cash and due from banks $ 18,604 18,443
Goodwill 26,463 26,645
Other (7)(8)   106,762   110,669  
Total noninterest-earning assets (7)(8)   $ 151,829   155,757  
Noninterest-bearing funding sources
Deposits $ 359,563 364,774
Other liabilities (7) 54,088 55,032
Total equity (7) 205,012 205,035
Noninterest-bearing funding sources used to fund earning assets
(7)(8)
  (466,834 ) (469,084 )
Net noninterest-bearing funding sources (7)(8)   $ 151,829   155,757  
Total assets (7)   $ 1,892,209   1,932,201  
 

(1) Our average prime rate was 4.78% and 4.03% for the first nine
months of 2018 and 2017, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 2.20% and 1.20% for the
same periods, respectively.

(2) Yields/rates and amounts include the effects of hedge and risk
management activities associated with the respective asset and
liability categories.

(3) Financial information for the prior period has been revised to
reflect the impact of the adoption in first quarter 2018 of ASU
2016-18 – Statement of Cash Flows (Topic 230): Restricted Cash
in which we changed the presentation of our cash and cash
equivalents to include both cash and due from banks as well as
interest-earning deposits with banks, which are inclusive of any
restricted cash.

(4) 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.

(5) Nonaccrual loans and related income are included in their
respective loan categories.

(6) Includes taxable-equivalent adjustments of $491 million and
$980 million for the first nine months of 2018 and 2017,
respectively, predominantly related to tax-exempt income on
certain loans and securities. The federal statutory tax rate was
21% and 35% for the first nine months of 2018 and 2017,
respectively.

(7) Financial information for the prior period has been revised to
reflect the impact of the adoption in fourth quarter 2017 of ASU
2017-12Derivatives and Hedging (Topic 815): Targeted
Improvements to Accounting for Hedging Activities
.

(8) Financial information for the prior period has been revised to
reflect the impact of the adoption in first quarter 2018 of ASU
2016-01Financial Instruments Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities
.

 
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID
(TAXABLE-EQUIVALENT BASIS) (1)(2)
 
  Quarter ended
    Sep 30, 2018   Jun 30, 2018   Mar 31, 2018   Dec 31, 2017   Sep 30, 2017
Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/
($ in billions)   balance   rates   balance   rates   balance   rates   balance   rates balance rates
Earning assets
Interest-earning deposits with banks (3) $ 148.6 1.93 % $ 154.8 1.75 % $ 172.3 1.49 % $ 189.1 1.27 % $ 205.5 1.21 %
Federal funds sold and securities purchased under resale agreements
(3)
79.9 1.93 80.0 1.73 78.1 1.40 75.8 1.20 70.6 1.14
Debt securities (4):
Trading debt securities (5) 84.5 3.45 80.7 3.45 78.7 3.24 81.6 3.17 76.6 3.21
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 6.4 1.65 6.4 1.66 6.4 1.66 6.4 1.66 14.5 1.31
Securities of U.S. states and political subdivisions 46.6 3.76 47.4 3.91 50.0 3.37 52.4 3.91 52.5 4.08
Mortgage-backed securities:
Federal agencies 155.5 2.77 154.9 2.75 158.4 2.72 152.9 2.62 139.8 2.58
Residential and commercial   7.3   4.68 8.2   4.86 8.9   4.12 9.4   4.85 11.0   5.44
Total mortgage-backed securities 162.8 2.86 163.1 2.86 167.3 2.79 162.3 2.75 150.8 2.79
Other debt securities (5)   46.4   4.39 47.1   4.33 48.1   3.73 48.6   3.62 47.7   3.73
Total available-for-sale debt securities (5)   262.2   3.26 264.0   3.28 271.8   3.04 269.7   3.10 265.5   3.13
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 44.7 2.18 44.7 2.19 44.7 2.20 44.7 2.19 44.7 2.18
Securities of U.S. states and political subdivisions 6.3 4.33 6.3 4.34 6.3 4.34 6.3 5.26 6.3 5.44
Federal agency and other mortgage-backed securities 95.3 2.27 94.9 2.33 90.8 2.38 89.6 2.25 88.3 2.26
Other debt securities   0.1   5.61 0.6   4.66 0.7   3.23 1.2   2.64 1.4   3.05
Total held-to-maturity debt securities   146.4   2.33 146.5   2.38 142.5   2.42 141.8   2.36 140.7   2.38
Total debt securities (5) 493.1 3.02 491.2 3.04 493.0 2.89 493.1 2.90 482.8 2.93
Mortgage loans held for sale 19.3 4.33 18.8 4.22 18.4 3.89 20.5 3.82 22.9 3.79
Loans held for sale (5) 2.6 5.28 3.5 5.48 2.0 4.92 1.5 3.19 1.4 4.39
Commercial loans:
Commercial and industrial - U.S. 273.8 4.22 275.3 4.16 272.0 3.85 270.3 3.89 270.1 3.81
Commercial and industrial - Non U.S. 60.9 3.63 59.7 3.51 60.2 3.23 59.2 2.96 57.7 2.89
Real estate mortgage 121.3 4.35 124.0 4.27 126.2 4.05 127.2 3.88 129.1 3.83
Real estate construction 23.3 5.05 23.6 4.88 24.4 4.54 24.4 4.38 25.0 4.18
Lease financing   19.5   4.69 19.3   4.48 19.4   5.30 19.3   0.62 19.2   4.59
Total commercial loans   498.8   4.24 501.9   4.15 502.2   3.91 500.4   3.68 501.1   3.76
Consumer loans:
Real estate 1-4 family first mortgage 284.1 4.07 283.1 4.06 284.2 4.02 282.0 4.01 278.4 4.03
Real estate 1-4 family junior lien mortgage 35.9 5.50 37.2 5.32 38.8 5.13 40.4 4.96 41.9 4.95
Credit card 36.9 12.77 35.9 12.66 36.4 12.75 36.4 12.37 35.6 12.41
Automobile 47.0 5.20 48.6 5.18 51.5 5.16 54.3 5.13 56.7 5.34
Other revolving credit and installment   36.8   6.78 37.4   6.62 37.9   6.46 38.3   6.28 38.6   6.31
Total consumer loans   440.7   5.26 442.2   5.20 448.8   5.16 451.4   5.10 451.2   5.14
Total loans 939.5 4.72 944.1 4.64 951.0 4.50 951.8 4.35 952.3 4.41
Equity securities (5) 37.9 2.98 37.3 2.38 39.8 2.35 38.0 2.60 35.9 2.12
Other (5)   4.7   1.47 5.6   1.48 6.0   1.21 7.2   0.88 8.7   0.90
Total earning assets (5)   $ 1,725.6   3.81 % $ 1,735.3   3.73 % $ 1,760.6   3.55 % $ 1,777.0   3.43 % $ 1,780.1   3.44 %
Funding sources
Deposits:
Interest-bearing checking $ 51.2 1.01 % $ 80.3 0.90 % $ 67.8 0.77 % $ 50.5 0.68 % $ 48.3 0.57 %
Market rate and other savings 693.9 0.35 676.7 0.26 679.1 0.22 679.9 0.19 681.2 0.17
Savings certificates 20.6 0.62 20.0 0.43 20.0 0.34 20.9 0.31 21.8 0.31
Other time deposits 87.8 2.35 82.1 2.26 76.6 1.84 68.2 1.49 66.1 1.51
Deposits in foreign offices   53.9   1.50 51.5   1.30 94.8   0.98 124.6   0.81 124.7   0.76
Total interest-bearing deposits 907.4 0.66 910.6 0.56 938.3 0.47 944.1 0.39 942.1 0.37
Short-term borrowings 105.5 1.74 103.8 1.54 101.8 1.24 102.1 0.99 99.2 0.91
Long-term debt 220.7 3.02 223.8 2.97 226.0 2.80 231.6 2.32 243.5 2.28
Other liabilities   27.0   2.40 28.2   2.12 27.9   1.92 24.7   1.86 24.8   1.74
Total interest-bearing liabilities 1,260.6 1.20 1,266.4 1.10 1,294.0 0.97 1,302.5 0.81 1,309.6 0.79
Portion of noninterest-bearing funding sources (5)   465.0   468.9   466.6   474.5   470.5  
Total funding sources (5)   $ 1,725.6   0.87   $ 1,735.3   0.80   $ 1,760.6   0.71   $ 1,777.0   0.59   $ 1,780.1   0.58  
Net interest margin on a taxable-equivalent basis 2.94 % 2.93 % 2.84 % 2.84 % 2.86 %
Noninterest-earning assets
Cash and due from banks $ 18.4 18.6 18.9 19.2 18.5
Goodwill 26.4 26.4 26.5 26.6 26.6
Other (5)   105.9   104.6   109.9   112.5   113.3  
Total noninterest-earnings assets (5)   $ 150.7   149.6   155.3   158.3   158.4  
Noninterest-bearing funding sources
Deposits $ 359.0 360.7 358.9 367.5 364.3
Other liabilities (5) 53.9